chapter 2 business ethics and social responsibility

2chapter

Business Essentials, 7th EditionEbert/Griffin

© 2009 Pearson Education, Inc.

Business Ethics and Social Responsibility

Instructor Lecture PowerPointsPowerPoint Presentation prepared by Carol Vollmer Pope Alverno College

Ethics in the Workplace

• Ethics– Beliefs about what’s right and wrong or good and bad

• 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

• Business Ethics– The ethical or unethical behaviors by employees in the context of

their jobs


Individual Values and Codes

• Sources of Personal Codes of Ethics– Childhood responses to adult behavior– Influence of peers– Experiences in adulthood– Developed morals and values


Business and Managerial Ethics

• Managerial Ethics– The standards of behavior that guide individual managers

in their work– Ethics affect a manager’s behavior toward:

• Employees• The organization• Other economic agents—customers, competitors, stockholders,

suppliers, dealers, and unions

• Ethical Concerns– Ambiguity (e.g., financial disclosure)– Global variation in business practices (e.g., bribes)


Assessing Ethical Behavior

• Simple Steps in Applying Ethical Judgments

– Gather the relevant factual information

– Analyze the facts to determine the most appropriate moral values

– Make an ethical judgment based on the rightness or wrongness of the proposed activity or policy


Assessing Ethical Behavior• Ethical Norms and the Issues They Entail

– Utility: Does a particular act optimize the benefits to those who are affected by it? Do all relevant parties receive “fair” benefits?

– Rights: Does the act respect the rights of all individuals involved?

– Justice: Is the act consistent with what’s fair?

– Caring: Is the act consistent with people’s responsibilities to each other?


Social Responsibility

• Social Responsibility– The overall way in which a business attempts to balance its

commitments to relevant groups and individuals (stakeholders) in its social environment

• Organizational Stakeholders– Groups, individuals, and organizations that are directly

affected by the practices of an organization and, therefore, have a stake in its performance


The Stakeholder Model of Responsibility

• Customers– Businesses strive to treat customers fairly and honestly

• Employees– Businesses treat employees fairly, make them a part of the team, and

respect their dignity and basic human needs• Investors

– Businesses follow proper accounting procedures, provide information to shareholders about financial performance, and protect shareholder rights and investments

• Suppliers– Businesses emphasize mutually beneficial partnership arrangements

with suppliers• Local and International Communities

– Businesses try to be socially responsible


Contemporary Social Consciousness

• The Concept of Accountability– The expectation of an expanded role for business

in protecting and enhancing the general welfare of society


Areas of Social Responsibility

• Responsibility Toward the Environment– Properly disposing of toxic waste– Engaging in recycling– Controlling air, water, and land pollution – Green Marketing

• The marketing of environmentally friendly goods• Includes a number of strategies and practices:

– Production processes

– Product modifications

– Carbon offsets

– Packaging reduction

– Sustainability

• Greenwashing: Using advertising to project a green image without substantially altering processes or products

• Federal Trade Commission (FTC) started hearings in January 2008 regarding green marketing claims


Areas of Social Responsibility (cont’d)

• Responsibility Toward Customers– Involves providing quality products and pricing products fairly

• Consumerism– Social activism dedicated to protecting the rights of consumers in their

dealings with businesses• Basic Consumer Bill of Rights

– To possess safe products– To be informed about all relevant aspects of a product– To be heard– To choose what to buy– To be educated about purchases– To receive courteous service



• Unfair Pricing– Collusion: When two or more firms agree to

collaborate on such wrongful acts as price fixing– Price gouging: Responding to increased demand

with overly steep (and often unwarranted) price increases

• Ethics in Advertising– Truth in advertising– Morally objectionable advertising



• Responsibility Toward Employees– Legal and social commitments to:

• Not practice illegal discrimination• Provide a physically and socially safe workplace• Provide opportunities to balance work and life• Provide protection for whistleblowers (an employee who

discovers and tries to put an end to a company’s unethical, illegal, or socially irresponsible actions by publicizing them)

• Responsibility Toward Investors– Proper financial management (no insider trading)– Proper representation of finances


Implementing Social Responsibility (SR) Programs

• Arguments Against SR– The cost of SR threatens profits.– Business has too much control over which SR issues would

be addressed and how SR issues would be addressed.– Business lacks expertise in SR matters.

• Arguments for SR– SR should take precedence over profits.– Corporations as citizens should help others.– Corporations have the resources to help.– Corporations should solve problems they create.


Approaches to Social Responsibility

• Obstructionist Stance– A company does as little as possible and may attempt to

deny or cover up violations• Defensive Stance

– A company does everything required of it legally but no more

• Accommodative Stance– A company meets its legal and ethical requirements and

also goes further in certain cases• Proactive Stance

– A company actively seeks to contribute to the well-being of groups and individuals in its social environment


chapter 2 business ethics and social responsibility

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