Chapter 2Business Ethics and Social Responsibility

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.

Identify common ethical dilemmas in the workplace.

Discuss how organizations shape ethical behavior.

Describe how businesses’ social responsibility is measured.

Summarize the responsibilities of business to the general public, customers, and employees.

Explain why investors are concerned with business ethics and social responsibility.

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Concern for Ethical and Societal Issues

Sarbanes-Oxley Act 2002 law that added oversight for the nation’s major companies and a special oversight board to regulate public accounting firms that audit the financial records of these corporations.

Business Ethics The standards of conduct and moral values governing actions and decisions in the work environment.

• Social responsibility.

• Balance between what’s right and what’s profitable.

• Often no clear-cut choices.

• Often shaped by the organization’s ethical climate.

THE NEW ETHICAL ENVIRONMENT

• High profile investigations and arrests in headlines.• Vast majority of businesses ethical.• New corporate officers charged with deterring

wrongdoing and ensuring ethical standards.

Source: “Our Company, Our Credo,” Johnson & Johnson Web site

Individuals Make a Difference

• Personal ethics matter.

• Survey of British workers found 30 percent spent 30 minutes daily doing personal business online.

• Technology expanded abuses.

• Data theft.

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.

Businesspeople expect employees to be loyal and truthful, but ethical conflicts may arise.

Employee’s disclosure of illegal, immoral, or unethical practices in the organization.

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 Reasoning

• 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.

Ethical Leadership

• Executives must demonstrate ethical behavior in their actions.

ACTING RESPONSIBLY TO SATISFY SOCIETY

Social Responsibility Management’s acceptance of the obligation to consider profit, consumer satisfaction, and societal well-being of equal value in evaluating the firm’s performance.

• For example, contributions to the overall economy, job opportunities, and charitable contributions and service.

• Measured 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.

Responsibilities to the General Public

Public Health Issues What to do about inherently dangerous products such as alcohol, tobacco, vaccines, and steroids.

Responsibilities to the General Public

Public Health Issues What to do about inherently dangerous products such as alcohol, tobacco, vaccines, and steroids.

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.

•  Recycling Reprocessing used materials for reuse.

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 employees.

Responsibilities to Customers

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 parties.

Responsibilities to Employees

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 law.

Age Discrimination Age Discrimination in Employment Act of 1968 protects workers age 40 or older.

Sexual Harassment and Sexism Avoiding unwelcome actions of a sexual nature; equal pay for equal work without regard to gender.

Responsibilities to Investors and the Financial Community

• Obligation to make profits for shareholders.

• Expectation of ethical and moral behavior.

• Investors protected by regulation by the Securities and Exchange Commission and state regulations.