Chapter 4: BUSINESS ETHICS AND SOCIAL RESPONSIBILITY

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Chapter 4 BUSINESS ETHICS AND SOCIAL
RESPONSIBILITY

• Doing Well by Doing Good

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ETHICS AND SOCIAL RESPONSIBILITY
ETHICS Beliefs about right and wrong.
SOCIAL RESPONSIBILITY The obligation of a
business to contribute to society.
A close relationship, but not the same
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ETHICS MURKIER THAN YOU THINK
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UNIVERSAL ETHICAL STANDARDS
Developed by Character Counts, a nonpartisan
organization of educators, community leaders, and
ethicists.
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BUSINESS ETHICS NOT AN OXYMORON

• Ethical Dilemma
• Two unfavorable options with Negative
  consequences.
• most challenging business decisions seem to arise
  when values are in conflict
• Business Ethics the application of right and
  wrong in the workplace
• Ethical Lapse Clear misconduct

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ETHICS AND THE INDIVIDUAL

• Framework for Ethical Decisions
• Do you understand the dimensions of the problem?
• Who would benefit? Who would suffer?
• Are the alternative solutions legal? Are they
  fair?
• Does your decision make you comfortable?
• Could you defend your decision on the nightly
  news? Or to your mother? Or to God?

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Creating and Maintaining an Ethical Organization

• Organizational Culture sets the ethical culture
  and is led by Top Management
• An effective Code of Ethics has
• Executive buy-in
• Clear expectations
• Integrated approach
• Global and local
• Whistleblower support
• Reporting and enforcement

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ETHICS FAME AND SHAME
Ethics Hall of Shame
Ethics Hall of Fame
Dennis Kozlowski, former CEO of Tyco was
convicted of looting millions from the company.
Sheron Watkins, former vice president of Enron
reported the accounting irregularities that led
to the discovery of corporate fraud.
Martha Stewart was convicted of obstructing
justice in a 40,000 well- timed stock sale.
Paul Newmans food company donates 100 of the
profits to charity, totaling more than 150
million to date.
Brian Mulroney, former Prime Minister of Canada,
admitted he accepted 225,000 in cash, six years
after doing so (and then paid tax on half of it.)
Pierre Omidyar, the founder of eBay has given
away over 100 million to help give economic
power to the worlds poor.
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SOCIAL RESPONSIBILITYa commitment to minimize
business negative effects and maximize the
positive ones.
Responsibility to Whom?
Stakeholders are any groups that have a stake
or a personal interest - in the performance
and actions of an organization.
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RESPONSIBILITY TO
EMPLOYEES
Creating Jobs that Work
CUSTOMERS
Value, Honesty, and Communication
INVESTORS
Fair Stewardship and Full Disclosure
COMMUNITY
Business and being good citizens
ENVIRONMENT
Sustainable Development
GOVERNMENT
Follow laws, regulations, pay taxes
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RESPONSIBILITY TO EMPLOYEES CREATING JOBS THAT
WORK

• Meet legal standards
• Workplace safety
• Minimum wage/Overtime requirements
• Value employees
• Provide work/life balance

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RESPONSIBILITY TO CUSTOMERS

• CONSUMERISM
• The Right to Be Safe
• The Right to Be Informed
• The Right to Choose
• The Right to be Heard

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ROTTEN APPLE?
Planned Obsolescence Deliberately designing
products to fail in order to shorten the time
between consumer repurchases

• APPLE COMPUTERS
• iPods had irreplaceable battery.
• Batteries died after 18 months.
• Customers were encouraged to purchase new iPods
• Two customers posted high profile protest movies
  online.
• APPLE announced replacement program.

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RESPONSIBILITY TO INVESTORS
FAIR STEWARDSHIP AND FULL DISCLOSURE

• Legal requirements
• U.S. Sarbanes-Oxley Act
• Responsible use of corporate resources
• Is optimism or pessimism socially responsible?

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RESPONSIBILITY TO COMMUNITY
Corporate Philanthropy - business donations to
nonprofit groups, including both money and time.
Corporate Responsibility - The actions of the
business rather than donations of money and time.
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RESPONSIBILITY TO ENVIRONMENT
Green Marketing marketing environmental
products and practicesto gain a competitive
edge. Greenwashing marketing environmental
practices when there is no real green effort.
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RESPONSIBILITY TO ENVIRONMENT

• Responsibility to environment is a part of
  responsibility to community
• Reducing the amount of trash is more important
  than recycling
• Although consumers support green marketing, they
  may not be willing to sacrifice quality

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ETHICS AND SOCIAL RESPONSIBILITY IN THE GLOBAL
ARENA

• Corruption is part of the culture in many
  countries
• Bribes or gifts
• Labour issues in host countries can be
  complicated
• Living wage
• Child labour
• Code of Conduct

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MONITORING ETHICS AND SOCIAL RESPONSIBILITY
SOCIAL AUDIT A systematic evaluation of how well
a firm is meeting its ethics and social
responsibility objectives