1. Business Ethics and
Social Responsibility
Chapter 2

2. 1
Learning Objectives
2
3
4
5
Explain the concern for ethical and
societal issues.
Describe the contemporary ethical
environment.
Discuss how organizations shape ethical
conduct.
Describe how businesses can act
responsibly to satisfy society.
Explain the ethical responsibilities of
businesses to investors and the
financial community.

3. 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
Concern for Ethical and
Societal Issues

4. The Contemporary Ethical
Environment
High-profile investigations and arrests in
headlines.
Vast majority of businesses are ethical.
New corporate officers charged with deterring
wrongdoing and ensuring ethical standards.
See how Walmart highlights corporate
responsibility on its website.

5. Sarbanes-Oxley Act
A 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.
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.
Business Approach to Ethics and
Social Responsibility

6. 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.
Individuals Make a Difference

7. Development of Individual Ethics

8. On-the-Job Ethical Dilemmas
Situation in which a
business decision may
be influenced for
personal gain.
Employee’s
disclosure of illegal,
immoral, or
unethical practices
in the organization.
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.

9. How Organizations Shape Ethical
Conduct

10. Ethical Awareness
Code of Conduct: Formal
statement that defines how
the organization expects
and requires employees to
resolve ethical questions.

11. Ethical Education
Codes of conduct cannot
detail a solution for every
ethical situation, so
corporations provide training
in ethical reasoning.

12. Ethical Action
Helping employees
recognize and reason
through ethical problems
and turning them into ethical
actions.
TI Ethics Quick Test

13. 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

14. Acting Responsibly to Satisfy
Society
Social Responsibility
Management’s consideration of profit, consumer
satisfaction, and societal well-being of equal value in
evaluating the firm’s performance.
Contributions to the overall economy, job
opportunities, and charitable contributions and
service.

15. Areas of Responsibility

16. 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 employees.

17. Responsibilities to Customers
CONSUMERISM
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.

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

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