Chapter 3: Ethics & Social Responsibility
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What is Ethics?
 Ethics

Code of moral principles.

Set standards of “good” and “bad” as opposed to “right” and
“wrong.”
 Ethical behavior

What is accepted as good and right in the context of the governing moral code.

 Law, values, and ethical behavior:
 Legal behavior is not necessarily ethical behavior.
 Most ethical problems in the workplace arise when people are asked to do, or find themselves about to do, something that violates their personal beliefs.
 Personal values help determine individual ethical behavior.
 Terminal values (preferences about desired end states/ goals you strive to achieve in life—self-respect, happiness, family security)
 Instrumental values (preferences regarding means to desired ends—honesty, courage, imagination, self-discipline)


Moral rights examples—free speech, privacy, religion, health & safety

Justice view examples—legal rules and standards such as wearing a seatbelt in a car, or not on a cell phone while driving

 Examples: Sweatshop
 Cultural relativism: You would be okay if your company used sweatshops in countries that it is deemed acceptable (even if you don’t believe in this type of work)= cost savings
 Ethical Imperialism: Because you are against sweatshops, you would never run sweatshops, even if it is acceptable in that country = extra costs

 An ethical dilemma occurs when choices, although having potential for personal and/or organizational benefit, may be considered unethical.
 Ethical dilemmas include:
 Discrimination
 Sexual harassment
 Conflicts of interest
 Customer confidence
 Organizational resources

 Ethical behavior can be rationalized by convincing yourself that:

Behavior is not really illegal.

Behavior is really in everyone’s best interests.

Nobody will ever find out.

The organization will “protect” you.

 Ethics training:
 Structured programs that help participants to understand ethical aspects of decision making.
 Whistleblowers
 People who expose misdeeds of others
 Ethical role models:
 Top managers serve as ethical role models.
 All managers can influence the ethical behavior of people who work for and with them.

 Codes of ethics:

Formal statement of an organization’s values and ethical principles regarding how to behave in situations susceptible to the creation of ethical dilemmas.
 Areas often covered by codes of ethics:

Bribes and kickbacks

Political contributions

Honesty of books or records

Customer/supplier relationships

Confidentiality of corporate information

 Corporate social responsibility:
 Looks at ethical issues on the organization level.
 Obligates organizations to act in ways that serve both its own interests and the interests of society at large.
 Organizational Stakeholders
 Those persons, groups, and other organizations directly affected by the behavior of the organization and holding a stake in its performance.

 Classical view—

Management’s only responsibility is to maximize profits.
 Socioeconomic view—

Management must be concerned for the broader social welfare, not just profits.

 Arguments against social responsibility:

Reduced business profits

Higher business costs

Dilution of business purpose

Too much social power for business

Lack of public accountability
 Arguments in favor of social responsibility:

Adds long-run profits

Improved public image

Avoids more government regulation

Businesses have resources and ethical obligation


Someone who recognized that certain groups in their communities area experiencing difficulties and they seek new ways to solve the problems.

They undertake tasks for the benefit of society rather than for personal profit.

They search out things that are not working for those who need them.

They see to solve the problem first by changing the system, then by spreading the solution, and lastly by working to persuade entire societies to take up the challenge to change.