BUSINESS ETHICS AND CORPORATE SOCIAL RESPONSIBILITY coffee for a foreign market has not damaged the local
coffee for a foreign market has not damaged the local way of life, will find that
CHAPTER 1. Business Ethics as Foundation of CSR
1. Why is ethical management important to business?
- Ethical management is practically considered by all business leaders as relevant
to business survival and corporate reputation.
- When I do good, I feel good; when I do bad, I feel bad. That’s my religion.” -
Abraham Lincoln
The Importance of Business Ethics to a Company:
- Working as an ethical business has many benefits, not least of which is the
ability to attract and keep investors, employees and customers.
o Knowing that the company they deal with has stated their morals and
made a promise to work in an ethical and responsible manner allows
investors peace of mind that their money is being used in a way that
aligns with their own moral standing.
o When working for a company with strong Business Ethics, employees
are comfortable in the knowledge that they are not by their own action
or inaction allowing unethical practices to continue.
o Customers are at ease buying products or services from a company
they know to source their materials and labour in an ethical and
responsible way.
- For example, a coffee company which states all their raw beans are picked from
sustainable plants where no deforestation (act or result of cutting down or
burning all the trees in an area) has occurred, by people paid a good living wage,
in an area where investments have been made to ensure that producing the
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all these elements of their buying strategy become themselves a selling point for
their final product.
- A company which sets out to work within its own ethical guidelines is also less at
risk of being fined for poor behaviour, and less likely to find themselves in
breach (violate) of one of the multitude of laws concerning required behaviour –
for example, laws around payments to corrupt regimes, or environmental
practice policies.
o The whole company can be fined, the directors can be fined, and
individual employees can be fined if the responsibility for an infraction
(breaking) falls on their shoulders.
- Reputation is one of a company’s most important assets, and one of the most
difficult to rebuild should it be lost. Upholding the promises it has made is
crucial to maintaining that reputation.
2. Is the term “business ethics” an oxymoron (combination of words that have
opposite meanings)?
- The concepts of “business” and “ethics” are strange bedfellows (connected with
another)
- For example, the terms silent scream, peace force, living dead, and educated
guess, business ethics is an oxymoron, a manner that produces an effect by self-
contradiction.
- In the traditional sense, people get involve into business to maximize profit
(huge profit). Wala namang tao na papasok sa business na ayaw makakuha ng
 huge profit tiba. While ethics deals with anything other than profit, yung hindi
lang para kumita.
- In the field of philosophy, ethics is a specialized study of what is right or wrong.
- However, there is a problem “doing the right thing”.
- It seems that one who stands for moral principles is usually poorer while the
crook (criminal) becomes richer. Katulad nalang sa ating pamahalaan, kung sino
pa yung mga namamahala, sila pa yung nagnanakaw sa kaban ng bayan. Sila na
nga yung gumagawa ng masama, sila pa ang lalong yumayaman.
- The problem arises because ethical behavior is not always rewarded and
unethical behavior is rarely punished.
5 most common unethical behaviors in the workplace: (accdg. To Arthur Schwartz,
guest columnist from Philadelphia Business Journal)
1. Misusing company time
- Whether it is covering for someone who shows up late or altering a time sheet,
misusing company time tops the list. This category includes knowing that one of
your co-workers is conducting personal business on company time.
- By "personal business" the survey recognizes the difference between making
cold calls to advance your freelance business and calling your spouse to find out
how your sick child is doing.
2. Abusive behavior
- Too many workplaces are filled with managers and supervisors who use their
position and power to mistreat or disrespect others.
- Unfortunately, unless the situation you're in involves race, gender or ethnic
origin, there is often no legal protection against abusive behavior in the
workplace.
3. Employee thef
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- According to a recent study by Jack L. Hayes International, one out of every 40
employees in 2012 was caught stealing from their employer. Even more startling
(shocking) is that these employees steal on average 5.5 times more than
shoplifters.
- Employee fraud is also on the uptick (addition), whether its check tampering,
not recording sales in order to steal money that you have been trusted with, or
manipulating expense reimbursements.
4. Lying to employees
- The fastest way to loose the trust of your employees is to lie to them, yet
employers do it all the time.
- One out of every five employees report that their manager or supervisor has lied
to them within the past year.
5. Violating internet policies
- Cyberslackers, Cyberloafers. These are terms used to identify people who surf
the Web when they should be working.
- A survey conducted recently by Salary.com found that everyday at least 64% of
employees visit websites that have nothing to do with their work.
- Who would have thought that checking your Facebook page is becoming an
ethical issue?
Work ethics is like invisible employee behavior, noticeable by its absence. Some common
workplace ethics include:
Written by: Asma Zaineb
1. Punctuality
- Arriving to work on time, adhering to lunch and breaks on time and being absent
for valid reasons.
2. Responsibility
- Utilizing work time to complete tasks and deadlines and not for personal work.
3. Professional image
 - Be well dressed and adhere to the company dress code.
4. Teamwork
- Respect others and work well together and be a good team player.
5. Attitude
- Being pleasant and polite, and take on difficult tasks smilingly.
3. What is business ethics?
- Business ethics is a form of applied ethics that examines ethical rules, theories,
and principles in business environment. It includes correct understanding of
any moral duties or obligations (orthodoxy, belief) that apply to persons who
are engaged in commerce (business) (orthopraxis).
- Generally speaking, business ethics is a normative (usual or correct way of doing
something) discipline, whereby particular ethical standards are advocated
(supported) and then applied.
- Investopedia defines business ethics as: The study of proper business policies
and practices regarding potentially controversial issues, such as corporate
governance, insider trading (the illegal activity of buying and selling a
company’s stocks while using secret information from a person who works for
the company), bribery (suhol), discrimination, corporate social responsibility
and fiduciary (relating to or involving trust) responsibilities.
o Business ethics are often guided by law, while other times provide a
basic framework that businesses may choose to follow in order to gain
public acceptance.
o Investopedia explaines business ethics: Are implemented in order to
ensure that a certain required level of trust exists between consumers
and various forms of market participants with businesses.
 For example: A portfolio (finance) manager must give the same
consideration to the portfolios of family members and small
individual investors. Such practices ensure that the public is
treated fairly.
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- The practitioner asks the questions: Is it true? Or is it deceitful (dishonest)? Or
is it unjust (unreasonable)? Does it cause bodily or emotional harm to others?
Is it the right thing to do? Ethical questions range from practical, narrowly
defines issues, such as a company’s obligation to be honest with its customers,
to broader social and philosophical questions, such as company’s responsibility
to preserve the environment and protect employee rights.
- Managers are caught in a balancing act between the ideal and the practical, such
as the need to produce a reasonable profit for the shareholders and at the same
time to maintain integrity by paring correct taxes to the government.
o Although there are some exceptions, it appears that those who choose
to conduct business in an ethical manner, will, in the long run, perform
better than those who do not. (Valor, 2005; Teehankee, 2005; Rothman
and Scott, 2004; Maximiano, 2003; De George, 1999; Carroll, 1999).
4. What is the role of ethics in management?
a. Ethical management in the workplace
 Ethical management is the foundation of CSR (Corporate Social
Responsibility) in the workplace, which covers those ethical issues arising
from the employer-employee relationship, such as the rights and obligations
justly owed between them.
 Preventing discrimination issues in the workplace include the practice of
affirmative action and fighting sexual harassment, child labor, and other
discriminatory practices on the bases of age, gender, race, religion, and
physical attractiveness.
 In this area, moral challenges affecting the privacy of the employer, the
practice of whistle blowing (a person who tells police, reporters, etc; about
something (such as crime) that has been kept secret), and working
conditions and occupational safety may take place-and the moral leader and
 practitioners should be in a position to face those challenges in a direct and
honest way.
b. Ethical management regarding intellectual property rights
 According to World Trade Organization, Intellectual property rights are the
rights given to persons over the creations of their minds. They usually give
the creator an exclusive right over the use of his/her creation for a certain
period of time.
o Intellectual property rights are customarily divided into two main
areas:
(i) Copyright and rights related to copyright.
Industrial property can usefully be divided into two main areas:
 One area can be characterized as the protection of
distinctive signs, in particular trademarks (which distinguish
the goods or services of one undertaking from those of
other undertakings) and geographical indications (which
identify a good as originating in a place where a given
characteristic of the good is essentially attributable to its
geographical origin).
The protection of such distinctive signs aims to stimulate
and ensure fair competition and to protect consumers, by
enabling them to make informed choices between various
goods and services. The protection may last indefinitely,
provided the sign in question continues to be distinctive.

 The rights of authors of literary and artistic works (such as books

and other writings, musical compositions, paintings, sculpture,
computer programs and films) are protected by copyright, for a
minimum period of 50 years after the death of the author.

 Also protected through copyright and related (sometimes

referred to as “neighbouring”) rights are the rights of
performers (e.g. actors, singers and musicians), producers of
phonograms (sound recordings) and broadcasting
organizations. The main social purpose of protection of
copyright and related rights is to encourage and reward
creative work.

(ii) Industrial property

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  Other types of industrial property are protected primarily to
stimulate innovation, design and the creation of technology.
In this category fall inventions (protected by patents),
industrial designs and trade secrets.
The social purpose is to provide protection for the results of
investment in the development of new technology, thus
giving the incentive and means to finance research and
development activities.
A functioning intellectual property regime should also
facilitate the transfer of technology in the form of foreign
direct investment, joint ventures and licensing.
The protection is usually given for a finite term (typically 20
years in the case of patents).
c. Ethical management in sales, advertising, and marketing
 Business ethics and social responsibility deal with the issues on pricing and
price fixing, moral dimension of the anti-trust or anti-cartel law, bait and
switch, viral marketing, pyramid scandal, and sex in advertising. Cases may
include Benetton.
 Benetton case: - the Italian clothing retailers which created the line United
Colors of Benetton “shock advertising”, deliberately, rather than
inadvertently, startles and offends its audience by violating norms for social
values and personal ideas.
o Benetton Group has had several shocking ads of a priest and nun
kissing, a black woman breastfeeding a white baby, and death row
inmates’ thoughts
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 Following ethical guidelines in pricing means prices have to be clear without
hidden charges. The consumer has to know how much he is going to pay
when he makes the purchase. Your prices have to reflect both the cost you
incur in delivering the product or service and the value the customer
expects to receive.
d. Ethical management in production
 This area of business ethics deals with the duties of a company to ensure
that products and production processes do not cause harm.
o Stakeholders involved: Consumers , the general public, and almost
always the environment.
o Discussions may include moral relations between business and the
environment and ethics problems arising out of new technologies
such as mobile-phone radiation and genetically (involving) modified
food.
o Well known cases:
 Ford Pinto - , in the year 1960’s there was strong
competition for Ford in the American small car market from
Volkswagen and several Japanese companies. In order to
fight the competition, Ford rushed its newly made car the
Pinto into production in much less than it usually required
developing a car. Basically time to produce an automobile is
43 months, but Ford took 25 months. However, before the
production Ford engineers found a major flaw in the cars
design. This is because all rear-end crash test collisions, the
Pinto’s fuel system would rupture extremely easy.

 Bhopal disaster - also referred to as the Bhopal gas
tragedy, was a gas leak incident in India, considered the
world's worst industrial disaster
 Bhopal memorial for those killed and disabled by
the 1984 toxic gas release
 Date : 2 December 1984–3 December 1984
Location: Bhopal, Madhya Pradesh
 Cause: Gas leak from Union Carbide India Limited
storage tank
 Deaths: At least 3,787; over 16,000 claimed
 Injuries: At least 558,125
 Civil and criminal cases were filed in the District
Court of Bhopal, India, involving UCC and Warren
Anderson, UCC CEO at the time of the disaster. In
June 2010, seven ex-employees, including the
former UCIL chairman, were convicted in Bhopal of
causing death by negligence and sentenced to two
years imprisonment and a fine of about $2,000
each, the maximum punishment allowed by Indian
law. An eighth former employee was also convicted,
but died before the judgement was passed.
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 and the use of asbestos.
 It is now known that prolonged inhalation of
asbestos fibers can cause serious and fatal illnesses
including malignant lung cancer, mesothelioma, and
asbestosis (a type of pneumoconiosis).
e. Ethical management in finance, accounting, and auditing
 The best cases are Enron and Worldcom, where the issues comprise
executive compensation, (criminal) manipulation of the financial markets,
bribery, facilitation payments, fraud, and false reporting.
 Its practical CSR application is corporate governance, accountability, and
value-based management.
5. How is business ethics linked with CSR?
- “When business does not attempt to see a rigorous (careful) respect for the
moral, cultural, and spiritual requirements, based on the dignity of the person
and on the proper identity of each community… then all the rest (availability of
goods, abundance of technical resources applied in daily life, a certain level of
material-being) will prove unsatisfactory and in the end contemptible (shameful)
6. Can a company become a corporate citizen without being critical?
- NO. Business ethics seeks to determine whether a particular behavior, decision,
or action of an individual or organization is morally right or wrong.
 - It not subjective (based on feeling/opinions). Rather, it is objective (based on
facts), and the basis is a universal standard common to all.
- Business ethics is related to corporate social responsibility, although the former
(business ethics) is primarily personal and CSR is mainly social (Maximiano,
2003; Richardson, 2003).
- The wisest thing to do, it seems, is to practice business ethics first, and then
practice CSR.
o Business ethics knocks on one’s conscience before the individual makes
business decision, while CSR nags the moral accountability of a group of
individuals (Rothman and Scott, 2004).
o Before CSR is practiced correctly, it is assumed that practitioners are
ethical.
o It means that business leader or entrepreneur and the other members
of the organization are will-founded in business ethics before doing
corporate citizenship.
o We cannot practice CSR without ethics.
7. How can business ethics become a philosophy of management?
- Indeed (clearly, business ethics can become a philosophy of management – if
the practitioner chooses to do so. Whereas ethics is principally personal, CSR is
social and corporate. Inasmuch as it is a practical guidepost in one’s private and
professional life, business ethics is personal.
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- In most cases, however, the ethical behavior of a corporation depends to a large
extent on the moral (right) conviction (sureness) of its CEO and managers,
meaning to say that the company CSR in a certain degree depends on the
personal ethics of the CEO. Of course, it is for all time desirable that ethics
should also become a corporate affair and the conviction of the rank and file as
well.
8. Does ethical management go beyond public relations and profitability?
- It might happen, as a consequence of practicing social responsibility and ethical
management that sales go up because the company projects an angelic image.
However, individuals do not practice business ethics and corporations do not
benchmark CSR to do public relations and increase sales.
- Those results are not what drive CSR. You practice ethics because it is your
philosophy of management; you benchmark CSR because it is the right thing to
do (Maximiano, 2005).
9. What is the biggest challenge?
- The biggest challenge is to actually implement and sustain ethical management.
Actually, both ethical management and CSR are dedicated to the mutual
interests existing between business growth and social development.
- In practice, this means demonstrating how profit motive and corporate gain
serve the interests of the various stakeholders: host community, customers,
employees, competitors, the government and the environment (Freeman,
1984).

- Revenues are not meant to fill up the pockets of those who run business; they
are meant to be shared to all—in accordance with distributive justice. The big
challenge is to actually share resources to all, particularly those in dire (urgent)
needs, and sustain the program.
10. Should there be a CSR department?
- It is advantageous if that a company has its CSR department, which should be
not be headed by a lawyer. It should not be headed by a lawyer because ethical
management is beyond legal and regulatory compliance. It requires the
involvement of everyone.
- Because it is primarily social, CSR includes code of conduct, corporate
citizenship, employee volunteerism, resource sharing and management, social
investment and sustainable development.
- CSR is interested in broadening participation in social development efforts by
getting more people to participate in poverty alleviation (improvement)
programs and community involvement. I believe that the more people are
engaged in ethical management the better.
- Ethical management is a tool towards corporate excellence. While others are
contented with the minimal requirements of the moral norms and code of
conduct, the goal of both business ethics and CSR is the moral excellence of all
players of business.
- The goal of business ethics is personal excellence and that of CSR is corporate
excellence. Excellence is an open-ended goal, which means a personal and
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corporate decision to enter the room for improvement and become better
citizens of the world (Maximiano, 2003; De George, 1999).
CHAPTER 2. Business Ethics and CSR Compared
11. What do authors/experts say about business ethics and CSR?
Difference Between Business Ethics and Social Responsibility:
SUMMARY:
1. There are good things for society that are not good for business and this is where
social responsibility comes in. There are also good things in business that are not
good for society and this is where business ethics comes in.
2. Social responsibility is more of a policy or an obligation to the community, while
business ethics is more of a conscience.
3. Business is focused on profits but with social responsibility. It is still obliged to
perform beneficial activities for society, while business ethics should make a positive
move for society.
4. Without social responsibility, the community will not benefit, however, without
business ethics, business is capitalism at its worst.
Read more: Difference Between Business Ethics and Social Responsibility |
Difference Between | Business Ethics vs Social Responsibility
http://www.differencebetween.net/business/difference-between-business-
ethics-and-social-responsibility/#ixzz3dzZOJEpF
 - In other words, there is only one universal language for all business practitioners
and professionals everywhere—the true, the just, the fair and the good.

13. Are they pragmatic and practical?

12. What do you mean when you say that both business ethics and CSR are born with
universal values
- Both business ethics and CSR deal with the human conduct, practices, decisions,
way of doing things, including both external observable behaviors and internal
unobservable intentions, including universal moral values.
- Ethics and CSR necessarily deal with universal moral values.
- Business ethics and CSR are neither just a code of right conduct nor purely a
good-sounding working paperwork, formulated by the public relations office or
the legal department.
- On the contrary, CSRis the application of the fundamental principles to concrete
situations of life. Both are not concerned only with the orthodoxy (belief) but
also with orthopraxis (best practice).

- When we talk of business ethics and CSR, we talk of values (corporate and
personal ones). It is undeniable that there are things everyone holds valuable
like honesty, telling the truth, providing assistance to a needy person, patience, - “It is not enough to recall principles, state intentions, point to crying unjustice,
protecting the environment, business integrity and keeping one's word. and utter prophetic denunciations,” declared Pope Paul VI. “Words will lack real
weight unless they are accompanied for each individual by a livelier awareness
- On the other hand, fooling a client, verbally abusing a worker, sexual harassment of personal responsibility and by effective action.” (Octogesima adveniens, 48)
in the workplace and price fixing are morally wrong. It goes without saying there
are values that are universally valid, which means recognized by all and
everywhere.

- Lexicons (dictionaries) in the business literature have CSR impact, such as false
advertising, bribery and extortion, technology piracy, misrepresentation, - We do not simply plan our corporate social involvement; we apply it day-to-day
collusion or cartel, tax evasion, unfair competition, rights and duties, operations as part of our core business. We just don’t read ethics books.
truthfulness and others, which are comprehensible to any Swiss, Indonesian,
Italian, Filipino or Saudian business leader in his/her respective language.

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 - Ethics and CSR can become an integral part of the work ethic of a company.
Since they do not end in memorized codes and principles, business ethics and
CSR are practical (useful), pragmatic (realistic), and alive.

15. Is total human development an issue in CSR and ethical management?

- If the emphasis in CSR is the correct management of all corporate resources,

- Former Caritas Manila Executive director Francisco Tantoco Jr. has put it in
simpler words: “Morality should not only be lectured in classrooms. It should be
an operative experience that is founded on personal and corporate integrity”
(cited in Maximiano, 2001).
- Universal values and timeless truth are nothing without praxis (action/practice),
since fine words can never actually substitute for a meaningful living. Corporate
social responsibility is the result of a deep conviction that there is something
more superior than the truth, and that is social involvement.
- A good theory with daily living is deceased, just as faith without deed is dead
(Letter of James).
16. What are the common philosophical links?
- For this reason, it is always harder and far more challenging to live with the truth
and get involved than to memorize some business codes of conduct.
14. Are both ethical management and CSR about firm conviction?
- Yes, business ethics is about firm conviction. Corporate involvement is not about
feelings, since ethical standards are not just emotional or sentimental issues.
- Emotions are important, and no one denies that. But we cannot rely on them
too much because they are changeable, fleeting (not lasting), and almost always
capricious (inconsistent).
goods and services, it is because business is for the betterment of everyone’s
well-being.
- But everyone’s well-being cannot be reduced to one’s physical or material
welfare. Lest it be forgotten, I need to stress that business is for every man and
woman, and all business activities (including CSR) are only a means for the total
and wholesome development of the human person.
- Economic development itself is not an end. It is a means to an end, and the end
is the total welfare of man, that is, for the whole human person. (Paul VI, 1968).
- The human person is the central issue in social philosophy, business ethics, and
CSR.
- Between business and total human advancement – corporate interest and
personal growth- there are, in fact, profound links, which include links of an (1)
anthropological order (anthropos, human level).
- It is because the person who works for or manages business is not just as
abstract being or mere intelligent being but t human person with dignity who is
subject to socio political, moral, and economic issues.
- The social nature of man shows there is interdependence between his personal
betterment and the improvement of society.

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 - Man by his very nature stands completely in need of interpersonal cooperation,
synergy, and participation in society, a person for others and with others. He is
the beginning, the subject, and object of socio-business organization and
activities, including corporate citizenship.

17. What is the link in the theological-philosophical order?

- The other link between business and total human development is in the
theologico-philosophical order (theo, diving-spiritual level).

- One cannot dissociate the divine plan of creation and the plan of redemption
from the day-to-day business ventures.

- CSR contemplates and discusses the human person, not so much on his financial
and material aspect, but more specifically from the point of view of his
relationship with God, with himself, his family and fellowmen (employees,
customers, suppliers, partners, etc.), and the environment.

- It is my belief that, in the ethico-philosophical sense, man is not sufficient in

himself to attain his full development, and that he definitely needs God, others,
society, and nature to attain his goal. The human person is a microcosmic (little
world) specie, a businessman or a consumer, but also a social being that “has
been elevated to the supernatural order,” emphatically pronounced by Pope
John XXIII (cited in Maximiano, 2003).

- Coporate citizenship advances its conviction that business should be at the

service of the human person, and not human person at the service of business,
that ethics is above technology and spirit above matter (Libertatis consciente,
72).

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