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Business Ethics and Social Responsibility


2 Chapter Business Ethics and Social Responsibility * Although profits and employment remain important, today many factors ... – PowerPoint PPT presentation

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Title: Business Ethics and Social Responsibility

Business Ethics and Social Responsibilityhttp/
Learning Goals
Explain the concepts of business ethics and
social responsibility Describe the factors that
influence business ethics. List the stages in the
development of ethical standards and discuss how
organizations shape ethical behavior.
Describe how businesses social responsibility is
measured and summarize the responsibilities of
business to the general public, customers, and
employees. Explain why investors and the
financial community are concerned with business
ethics and social responsibility.
Concern for Ethical and Societal Issues
  • Business Ethics
  • The standards of conduct and moral values
    governing actions and decisions in the work
  • Social responsibility
  • Balance between whats right and whats
  • Often no clear-cut choices
  • Often shaped by the organizations ethical
  • Sarbanes-Oxley Act
  • A 2002 law that added oversight for the nations
    major companies and a special oversight board to
    regulate public accounting firms that audit the
    financial records of these corporations.

The Contemporary Ethical Environment
  • High-profile investigations and arrests in
  • Vast majority of businesses are ethical.
  • New corporate officers charged with deterring
    wrongdoing and ensuring ethical standards.

Business Approach to Ethics and Social
  • Engage in traditional corporate philanthropy,
    which involves giving to worthy causes.
  • Anticipate and manage risks.
  • Identify opportunities to create value by doing
    the right thing.
  • See how Walmart highlights corporate
    responsibility on its website.

Individuals Make a Difference
  • Individuals can make the difference in ethical
    expectations and behavior.
  • Putting own interest ahead of the organization
  • Lying to employee
  • Misrepresenting hours
  • Safety violations
  • Internet abuse
  • Technology is expanding unethical behavior.

Development of Individual Ethics
On-the-Job Ethical Dilemmas
Situation in which a business decision may be
influenced for personal gain.
Telling the truth and adhering to deeply felt
ethical principles in business decisions.
Employees disclosure of illegal, immoral, or
unethical practices in the organization.
Businesspeople expect employees to be loyal and
truthful, but ethical conflicts may arise.
How Organizations Shape Ethical Conduct
Ethical Awareness
Code of Conduct Formal statement that defines
how the organization expects and requires
employees to resolve ethical questions.
Ethical Education
Codes of conduct cannot detail a solution for
every ethical situation, so corporations provide
training in ethical reasoning.
Ethical Action
Helping employees recognize and reason through
ethical problems and turning them into ethical
actions. TI Ethics Quick Test
Ethical Leadership
  • Executives must demonstrate ethical behavior in
    their actions.
  • use clear, explicit language rather than
    euphemisms for corrupt behavior
  • encourage behavior that generates and fosters
    ethical values
  • practice moral absolutism, insisting on doing
    right even if it proves financially costly

Acting Responsibly to Satisfy Society
  • Social Responsibility
  • Managements consideration of profit, consumer
    satisfaction, and societal well-being of equal
    value in evaluating the firms performance.
  • Contributions to the overall economy, job
    opportunities, and charitable contributions and
  • Organizations measure through social audits.

Areas of Responsibility
Responsibilities to the General Public
  • Public Health Issues. What to do about inherently
    dangerous products such as alcohol, tobacco,
    vaccines, and steroids.
  • Protecting the Environment. Using resources
    efficiently, minimizing pollution.
  • Green marketing
  • Sustainability
  • Developing the Quality of the Workforce.
    Enhancing quality of the overall workforce
    through education and diversity initiatives.
  • Corporate Philanthropy. Cash contributions,
    donations of equipment and products, and
    supporting the volunteer efforts of company

Responsibilities to Customers
  • The Right to Be Safe. Safe operation of products,
    avoiding product liability.
  • The Right to Be Informed. Avoiding false or
    misleading advertising and providing effective
    customer service.
  • The Right to Choose. Ability of consumers to
    choose the products and services they want.
  • The Right to Be Heard. Ability of consumers to
    express legitimate complaints to the appropriate

Responsibilities to Employees
  • Workplace Safety. Monitored by Occupational
    Safety and Health Administration.
  • Quality-of-Life Issues. Balancing work and family
    through flexible work schedules, subsidized child
    care, and regulation such as the Family and
    Medical Leave Act of 1993.
  • Ensuring Equal Opportunity on the Job. Providing
    equal opportunities to all employees without
    discrimination many aspects regulated by the
    Equal Employment Opportunity Commission.
  • Age Discrimination. Age Discrimination in
    Employment Act of 1968 protects workers age 40 or
  • Sexual Harassment and Sexism. Avoiding unwelcome
    actions of a sexual nature equal pay for equal
    work without regard to gender.

Responsibilities to Investors
  • Obligation to make profits for shareholders.
  • Expectation of ethical and moral behavior.
  • Protection of investors by the Securities and
    Exchange Commission and state regulations.
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