Chapter Two

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Chapter Two

• Business Ethicsand Social Responsibility

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Comparison of Business Ethics and Social
Responsibility

• Business Ethics Refers to the principles and
  standards that define acceptable
  conduct in the world of business.
• Social Refers to a businesss obligation
  Responsibility 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.

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Reactions to Unethical Employers

• What happened when surveyed employees found out
  their employers were doing something that was
  against the employees ethical standards
• tried to resolve the situation without losing
  job 40
• talked to boss 38
• did nothing 9
• quit 5
• other 1
• not sure 7

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Source Yankelovich Partners Survey,PRNewswire,
October 6, 1998.
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Reasons for Not Reporting Observed Misconduct

• 1. Fear of not being considered a team player
• 2. Didnt believe corrective action would be
  taken
• 3. Feared retribution or retaliation form
  supervisor or management
• 4. No one else cares about business ethics so why
  should I?
• 5. Didnt trust organization to keep report
  confidential

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Source 1997 Society for Human Resource
Management/EthicsResource Center Business Ethics
Survey Report, p. 21.
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Ethical Issue Categories

• Conflict of interest
• Fairness and honesty
• Communications
• Business associations

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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?
• Does you company have a specific code of ethics
  or a policy on the action?
• Is this activity customary in your industry? Are
  there any industry trade groups that provide
  guidelines or codes of conduct that address this
  issue?

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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?
• How does this activity fit with your own beliefs
  and values?
• How would you feel if your actions were published
  in the newspaper?

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Framework for Ethical and Moral Decision making

• Recognize a moral issue
• Get the facts
• Evaluate the alternatives from various moral
  perspectives
• Make a decision
• Act, then reflect on the decision later

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Codes of Ethics
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• Formalized rules and standards that describe what
  a company expects of its employees

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Three Factors that Influence Business Ethics
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Whistle Blower Cases

• Who paid? SmithKline Beecham Clinical
  Laboratories
• How much? 325 million
• Whistle-blower share? 52 million (42.3
  million being appealed)
• Allegations? Paid kickbacks to doctors and
  billed Medicare for unordered tests

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Source Taxpayers Against Fraud, USA
Today,November 9, 1998, p. 15B.
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Whistle Blower Cases

• Who paid? United Technologies
• How much? 150 million
• Whistle-blower share? 22.5 million
• Allegations? Billed U.S. military for work
  not yet performed

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Source Taxpayers Against Fraud, USA
Today,November 9, 1998, p. 15B.
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Arguments for Social Responsibility
VoluntaryResponsibilitiesbeing a good
corporate citizencontributing to thecommunity
and quality of life
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Ethical Responsibilitiesbeing ethical doing
what is right, just,and fair avoiding harm
Legal Responsibilitiesobeying the law (societys
codification of rightand wrong) playing by the
rules of the game
Economic Responsibilitiesbeing profitable
Source Adapted from Archie B. Carroll, The
Pyramid of CorporateSocial Responsibility
Toward the Moral Management of Organizational
Stakeholders. Business Horizons 34 (July/August
1991) 42.
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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.
• 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 businessearning 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.
• 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
• Employee relations
• Consumer relations
• Environmental concerns
• animal rights
• pollution
• Community relations

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John F. KennedysConsumer Bill of Rights

• Right to safety
• Right to be informed
• Right to choose
• Right to be heard

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Solve the Dilemma

• a. What are some of the ethical issues involved
  in giving a customer an award for
  consumption behavior without notifying
  him/her first?
• b. Do you see this as a potential violation of
  privacy?
• c. How would you handle the situation if you
  were Barnard?

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Explore Your Career Options
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• 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 favour employees and/or the general
  public?
• 3. The right to be heard is one of the four
  rights of consumers. 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 behaviour in organizations? a. au
  thority of an employees superiors b. an
  employees perception of the ethics of coworkers
  and managers c. an employees personal beliefs
  about what is right or wrong d. investors
  perceptions of ethics
• 2. Copying someone elses work and presenting it
  as you own is a. ethics. b. bribe. c. plagiaris
  m. 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 businesss activities
  on society.
• 4. Which one of the following is NOT one of the
  four rights provided in John F. Kennedys
  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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VIDEO QUESTIONS

• Is it the responsibility of coffee consumers to
  ensure that small producers receive a fair price
  for their product? Why or why not?
• If the price paid to the growers represents only
  ten percent of the retail price of coffee, why is
  the retail price of Fair Trade coffee
  approximately double the regular price?
• Who benefits the most from the higher price paid
  by consumers for Fair Trade labeled coffee?
• What alternative approach to the problem of
  poverty among small producers can you suggest?

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