Business%20Ethics,%20Social%20Responsibility

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Chapter 3
Business Ethics, Social Responsibility
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Business Ethics doing well by doing good
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Why Study Business Ethics

• Perhaps when business people ask why they should
  be ethical, they have a different question in
  mind what is the motivation for being good? Is
  their something in it for them?
• There is no denying that one can often do well by
  doing good.
• An ethical company is more likely to build a good
  reputation, which is more likely to bring
  financial rewards over the long term.

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What is Ethics?

• Ethics defined as the set of moral principles
  that distinguish what is right from what is
  wrong.

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Arguments Supporting Business Ethics

• Ethics applies to all human activities.
• Business cannot survive without ethics.
• Ethics is consistent with profit seeking.
• Customers, employees, and people in general care
  about ethics.
• Studies suggest ethics does not detract from
  profits and seems to contribute to profits.

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Why Behave Ethically?

• Managers should behave ethically to avoid harming
  others.
• Managers are responsible for protecting and
  nurturing resources in their charge.
• Unethical managers run the risk for loss of
  reputation.
• This is a valuable asset to any manager!
• Reputation is critical to long term management
  success.
• All stakeholders are judged by reputation.

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Stakeholders and Ethics

• Stakeholders
• A person, group, or organization that has direct
  or indirect stake in an organization because it
  can affect or be affected by the organization's
  actions, and policies.
• Key stakeholders in a business organization
  include creditors, customers, directors,
  employees, owners (shareholders), suppliers, and
  the community from which the business draws its
  resources.

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Types of Company Stakeholders
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Sources of Ethics
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1. Social Ethics

• Social Ethics
• Standards that direct how members of a society
  should deal with one another in matters involving
  issues such as fairness, justice, poverty, and
  the rights of the individual
• People behave ethically because they have certain
  values, beliefs, and norms

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2. Occupational Ethics

• Occupational Ethics
• Standards that direct how members of a
  profession, trade should conduct themselves when
  performing work-related activities
• Medical legal ethics

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3. Individual Ethics

• Individual Ethics
• Personal standards and values that determine how
  people view their responsibilities to other
  people and groups
• How they should act in situations when their own
  self-interests are at stake

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4. Organizational Ethics

• Organizational Ethics
• Guiding practices and beliefs through which a
  particular company and its managers view their
  responsibility toward their stakeholders
• Top managers play a crucial role in determining
  a companys ethics

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Company Practices and Business Ethics

• Encouraging Ethical Behavior Involves
• A company can encourage ethical behavior in a
  number of ways. These include
• Adopting written codes of conduct
• Having top management support of ethical
  standards
• Instituting ethics programs
• Establishing ethical hotlines for reporting and
  discussing unethical behavior and activities

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Code of Ethics

• Code of ethics is a written document that
  clearly states what acceptable and unacceptable
  behaviors are for all of the employees in the
  organization.
• Employees working under the code of ethics have a
  standard by which they can judge their own
  behavior and that of others within the
  organization.
• Worldwide, McDonald's employees follow a standard
  ethical code.

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Corporate Social Responsibility

• Corporate social responsibility refers to a
  corporations responsibilities or obligations
  toward society.

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Managers Response to Social Responsibility

• There are many ways managers respond to this
  duty
• 1. Obstructionist response ((????? managers
  choose not to be socially responsible.
• Managers behave illegally and unethically.
• They hide and cover-up problems.
• 2. Defensive response ?????)) managers stay
  within the law but make no attempt to exercise
  additional social responsibility.
• Put shareholder interest above all other
  stakeholders.
• Managers say society should make laws if change
  is needed.

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• 3. Accommodative response(??????) managers
  realize the need for social responsibility.
• Try to balance the interests of all stakeholders.
• 4. Positive response managers actively support
  social responsibility.
• Go out of their way to learn about and help
  stakeholders.

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Levels of Responsibility