1. BUSINESS ETHICS &
SOCIAL RESPONSIBILITY

2. Ethics
• Ethics
Beliefs about what’s right and wrong
• Ethical Behavior
Behavior conforming to individual beliefs and
social norms about what’s right and good
• Unethical Behavior
Behavior conforming to individual beliefs and social
norms about what is defined as wrong and bad

3. Ethics, Contd.
 Sources of individual ethics:
 Childhood responses to adult behavior
 Influence of peers
 Experiences in adulthood
 Managerial ethics
 Behavior toward employees
 Behavior toward the organization
 Behavior toward other economic agents—
customers, competitors, stockholders, and
environment

4. Assessing Ethical Behavior
 Three-step model for applying ethical
judgments to situations:
 gather relevant factual information
 determine the most appropriate moral
values
 make an ethical judgment based on the
rightness or wrongness of the proposed
activity or policy

5. Four Ethical Norms
 Utility—does a particular act optimize what is
best for those who are affected by it?
 Rights—does it respect the rights of the
individual involved?
 Justice—is it consistent with what we regard
as fair?
 Caring—is it consistent with people’s
responsibilities to each other?

6. Business Ethics
 Business Ethics refer to the application of
moral standards of right and wrong to business
situations.

7. Factors Affecting Ethical Business
Behavior
 Employees
 Personal values & ethics
 Social Factors
 Cultural
norms
 Coworkers – peer pressure
 Opportunity
 Whether a business rejects or condones unethical
behavior (look the other way).

8. Methods Companies Use to
Encourage Ethical Conduct
 Top level management involvement
 Establish a written code of ethics
 Conduct ethics training programs
 Hire ethical people
 Whistle-blower hotline

9. Code of Ethics
 A Code of Ethics is a written guide to
acceptable and ethical behavior. Outlining
uniform policies, standards, and punishments
for violations.

10. Social Responsibility
 Social responsibility is an obligation for
businesses to consider society in its decision
making and actions.

11. Stakeholder Model of Social
Responsibility
 Business is responsible to ALL stakeholders
(employees, communities, environment, etc.)–
not just stockholders.
 Business is part of society and can’t ignore
social issues
 Business can create a more stable
environment for long-term profitability by
resolving social issues.
 Prevents government intervention, which could
force businesses to do what they fail to do
voluntarily
 Can be profitable and have public relations

12. Spending for Social
Responsibility
AGAINST
 Companies are only responsible to
stockholders, who want return on investment
 Corporate time, money, and talent should be
used to maximize profits, not solve society’s
problems
 Business should not be expected to solve
social problems
 Social issues are responsibility of elected
officials and the government

13. Methods companies use to develop
a program of social responsibility
includes:
 Commitment of top executives, policy
 Part of strategic planning
 Appointment of a director
 Social Audit

14. Areas of Social Responsibility
 Environment green -- house gases, water,
packaging, sustainability, product modification
 EX: disposal of toxic waster, recycling; control of
air, land & water pollution, Green Marketing
 Customers -- advertising, labeling, pricing
 EX: for consumers -- quality products at fair
prices
 Employees – fair recruiting, hiring, training,
promoting, compensation, termination, whistle
blowers
 Investors – no abuse of resources,
misrepresenting finances, excessive salaries,

15. Implementing Social Responsibility
Programs
 Approaches to Social Responsibility

16. Social Responsibility and the Small
Business
 Large Business versus Small Business
 Differences are primarily differences of scale
 More issues are questions of individual ethics
 Ethics and social responsibility are decisions
faced by all managers in all organizations,
regardless of rank or size