Business Ethics
and Social Responsibility
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Comparison of Business Ethics and
Social Responsibility
Business Ethics: The principles and
standards that define
acceptable conduct in
business.
Social
Responsibility:
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A business’s obligation to
maximize its positive impact
and minimize its negative
impact on society.
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Ethical Issue
An identifiable problem, situation, or
opportunity that requires a person to
choose from among several actions that
may be evaluated as right or wrong,
ethical or unethical.
FAST FACT:
The most common types of observed misconduct
are lying, withholding information, and abusive /
intimidating behavior.
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Reasons for Not Reporting
Observed Misconduct
1. Fear of not being considered a team player
2. Didn’t believe corrective action would be taken
3. Feared retribution or retaliation from supervisor or
management
4. No one else cares about business ethics so why
should I
5. Didn’t trust organization to keep report
confidential
Source: 1997 Society for Human Resource Management/Ethics
Resource Center Business Ethics Survey Report, p. 21.
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Ethical Issue Categories
•
•
•
•
Conflict of interest
Fairness and honesty
Communications
Business relationships
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Conflict of Interest
• Occurs when a person must choose
whether to advance their own personal
interest or those of others.
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Fairness and Honesty
• Are at the heart of business ethics and
relate to the general values of decision
makers.
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Communications
• False and misleading advertising and
deceptive personal-selling tactics
anger customers and may cause a
business to fail.
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Business Relationships
• Businesspeople must be ethical
toward their customers, suppliers, and
others in their workplace.
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Questions to Consider in Determining
Whether an Action is Ethical
• Are there any potential legal restrictions or
violations that could result from the action?
– Question: If I do this will break any laws?
• Does your company have a specific code of
ethics or a policy on the action?
– Question: If I do this will I go against the
employee handbook?
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Questions to Consider in Determining
Whether an Action is Ethical
• Is this activity customary in your
industry? Are there any industry trade
groups that provide guidelines or
codes of conduct that address this
issue?
– Question: If I do this will I violate any
trade practices?
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Questions to Consider in Determining
Whether an Action is Ethical
• Would this activity be accepted by your
coworkers? Will your decision or action
withstand open discussion with coworkers
and managers and survive untarnished?
– Question: Will my action cause peer acceptance
or rejection, or any peer pressure?
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Questions to Consider in Determining
Whether an Action is Ethical
• How does this activity fit with your
own beliefs and values?
– Question: Will my action violate any of
my personal ethics, religious beliefs, or
social values?
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Three Factors that Influence
Business Ethics
Individual
Standards
and
Values
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Managers’
and
Coworkers’
Influence
Opportunity:
Codes and
Compliance
Requirements
Ethical/Unethical
Choices
in Business
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Codes of Ethics
• Formalized rules and standards that
describe what a company expects of
its employees.
FAST FACTS:
Written ethics standards are more
often found in larger companies than
smaller ones.
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Whistleblowing
• The act of an employee exposing the
employer’s wrongdoing to outsiders,
such as the media or government
regulatory agencies.
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The Facts on Business
Ethics Today
• 50% of employees surveyed reported that
their organizations have an ethics officer or
a phone line for ethics advice.
• 84% reported that their organizations offer
mandatory ethics training.
• 54% reported that ethics training was useful
at work.
» Source: Ethics Resource Center, 2000 National
Business Ethics Survey: How Employees Perceive
Ethics at Work.
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The Nature of Social
Responsibility
•
Four Dimensions:
1.
2.
3.
4.
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Economic – earn profits
Legal – comply with the law
Ethical – not just “for profit” only
Voluntary & Philanthropic – promote
human welfare and goodwill
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Source: Adapted from Archie B. Carroll, “The Pyramid of Corporate
Social Responsibility: Toward the Moral Management of
Organizational Stakeholders.” Business Horizons 34 (July/August 1991): 42.
The Pyramid of Social Responsibility
Voluntary
Responsibilities
being a
“good corporate citizen”;
contributing to the
community and quality of life
Ethical Responsibilities
being ethical; doing what is right, just,
and fair; avoiding harm
Legal Responsibilities
obeying the law (society’s codification of right
and wrong)
Economic Responsibilities
being profitable
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America’s Best
Corporate Citizens
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Procter & Gamble
Hewlett-Packard
Fannie Mae
Motorola
IBM
Sun Microsystems
Herman Miller
Polaroid
St. Paul Cos.
Freddie Mac
Source: Philip Johnansson, “The Best 100 Corporate Citizens,” Business
Ethics, March/April 2001, p. 15.
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Arguments for Social
Responsibility
1.
Business helped to create many of the social
problems that exist today, so it should play a
significant role in solving them, especially in the
areas of pollution reduction and cleanup.
2. Businesses should be more responsible because they
have the financial and technical resources to help
solve social problems.
3. As members of society, businesses should do their
fair share to help others.
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Arguments for Social
Responsibility
4. Socially responsible decision making by businesses
can prevent increased government regulation.
5. Social responsibility is necessary to ensure
economic survival: If businesses want educated and
healthy employees, customers with money to
spend, and suppliers with quality goods and
services in years to come, they must take steps to
help solve the social and environmental problems
that exist today.
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Arguments Against Social
Responsibility
1. It sidetracks managers from the primary
goal of business–earning profits. Every
dollar donated to social causes or otherwise
spent on society's problems is a dollar less
for owners and investors.
2. Participation in social programs gives
businesses greater power, perhaps at the
expense of particular segments of society.
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Arguments Against Social
Responsibility
3. Some people question whether business has
the expertise needed to assess and make
decisions about social problems.
4. Many people believe that social problems
are the responsibility of government
agencies and officials, who can be held
accountable by voters.
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Social Responsibility Issues
• Organizational relationships with owners
and stockholders – profit and ROI
• Employee relations – provide a safe
workplace, adequate pay, information about
the company, listen to grievances, and treat
employees fairly
• Consumer relations – respect the rights of
customers and provide them with safe and
satisfying products
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Social Responsibility Issues
• Environmental issues
– animal rights
– pollution
– global warming
• Community relations – business’s
responsibility to the general welfare of the
community and society in which they
operate
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John F. Kennedy’s 1962
Consumer Bill of Rights
•
•
•
•
The right to safety
The right to be informed
The right to choose
The right to be heard
FAST FACT:
John F. Kennedy was the 35th
President of the United States.
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The Ethics Officer
An emerging trend in corporate America
• Provides advice about ethics to employees
and management
• Distributes the company’s code of ethics
• Answers ethics questions anonymously
• Takes action on ethics violations
• Reviews and modifies the code of ethics as
needed
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Solve the Dilemma
1.What are some of the ethical issues
involved in giving a customer an
award for consumption behavior
without notifying him/her first?
2. Do you see this as a potential violation
of privacy? Explain.
3. How would you handle the situation if
you were Barnard?
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Explore Your Career Options
How do you explain the
emergence of career opportunities
in the field of business ethics and
social responsibility?
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Additional Discussion Questions
and Exercises
1. What makes ethical decisions so difficult?
2. Many organizations are primarily concerned
with earning a profit or a return on their
investment. Does this concern for owners and
investors present an ethical dilemma for
companies when weighing business decisions
that favor employees and/or the general public?
3. The right to be heard is one of the four rights in
the consumer bill of rights. How are some
corporations addressing this consumer concern?
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Additional Discussion Questions
and Exercises
4. Find examples of environmental issues
in newspapers or business journals. Do
these issues influence businesses?
5. Imagine you are a salesperson. When
does offering a gift, such as basketball
tickets, become a bribe rather than just
a sales practice?
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Chapter 2 Quiz
1. Which of the following has the greatest effect on ethical
behavior in organizations?
a. authority of an employee’s superiors
b. an employee’s perception of the ethics of coworkers and
managers
c. an employee’s personal beliefs about what is right or wrong
d. investors perceptions of ethics
2. Copying someone else’s work and presenting it as your own is
a. ethics.
b. bribe.
c. plagiarism.
d. greenmail.
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Chapter 2 Quiz
3. A code of ethics is
a. a set of formalized rules and standards describing what the
company expects of its employees.
b. a government legislation enforced by government agencies.
c. a set of principles that describe what a person believes is
the right way to behave.
d. the impact of a business’s activities on society.
4. Which one of the following is NOT one of the four rights
provided in John F. Kennedy’s consumer bill of rights?
a. right to safety
b. right to be informed
c. right to sue
d. right to choose
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Multiple Choice Questions
about the Video
1. Milton Hershey had a library, a hotel, a museum, theaters, etc.
built during the Great Depression mainly to
a. keep his employees employed.
b. diversify the activities of his company.
c. involve employees in cultural activities.
d. promote ethical behavior.
2. Hershey’s commitment to the environment and its
contributions to worthy causes are examples of
a. its code of ethics.
b. ethical issues.
c. its economic responsibilities.
d. social responsibility.
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