UNIVERSITY OF SOUTHERN MINDANAO

Ethics and Social

Responsibility
An Ethical Perspective
 Topic Outline
• An Ethical Perspective
• Approaches to Business Ethics
• Establishing Ethical framework
• Social Responsbility

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 Intended Learning Outcomes
• Define business ethics and level of
standards
• Determine approaches to business
• Explain how to establish and maintain high
ethical standards
• Discuss the difference between
entrepreneurs and traditional entrepreneur
• Describe business’s responsibility
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 What is Business Ethics
• Ethics is they study of moral obligation
involving distinction between and wrong. As
a consequences, the study of ethics paved
the way for the adaption of the general rules
of conduct in society.
• Adherence to ethical standards contributes
to the smooth flow of business exchanges. It
establishes trust between buyers and seller
and between lenders and borrowers
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 Ethics
• Ethics – the moral values and behavioral
standards business people draw on as they
make decisions and solve problems.
• Complicating ethical issues is that, in some
cases, there is no conflict between right
and wrong; instead, there are only the
conflicting interests among a company’s
stakeholders.

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 What is Business Ethics
• The rules about how entrepreneurs ought to behave are
referred to as business ethics. The ethical behavior
required of entrepreneurs is determined by the following:
• Business ethics involves the moral values and behavioral
standards that businesspeople draw on as they make
decisions and solve problems. It originates in a
commitment to do what is right.
• Ethical behavior—doing what is “right” as opposed to
what is “wrong”—starts with the entrepreneur. The
entrepreneur’s personal values begin to shape the
business from day one. Entrepreneurs’ personal values
and beliefs influence the way they lead their companies
and are apparent in every decision they make, every
policy they write, and every action they take.

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 Business Ethics and Social
Responsibility
• Business ethics – the fundamental moral values
that form the foundations for the people in an
organization as they make decisions and interact
with stakeholders.

• Social responsbility – the awareness by a

company’s manager of the social environmental,
political, human and financial consequences its
actions produce

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 An Ethical Perspective
Business ethics consists of the fundamental moral
values and behavioral standards that form the
foundation for the people of an organization as
they make decisions and interact with stakeholders
Three Levels of Ethical Standards
• 1. The Law
• 2. The policies and procedures of the organization
• 3. The moral stance individuals take when faces
with decisions not governed by formal rules.

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 Moral Management
• 1.Immoral management – are motivated by selfish
reasons such as their own gains or those of the
company. Driving force is greed

• 2. Amoral management – The principal goal of amoral

managers is to earn a profit, but their actions differ
from those of immoral managers in one key way. It
does not consider ethical impact on others

• 3. Moral management – sees the law as a minimum

standard of behavior

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 Top Five Reasons to Run a
Business Ethically
• 1. Protect brand and company reputation
• 2. It is the right thing to do
• 3. Maintain customers’ trust and loyalty
• 4. Maintain investors’ confidence
• 5. Earn public acceptance and recognition

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 Top Five Factors That Drive
Business Ethics
• 1. Corporate scandals
• 2. Marketplace competition
• 3. Demands by investors
• 4. Pressure from customers
• 5. Globalization

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 An Establishing an Ethical
Framework
• Step 1: Identify the personal moral and ethical
principles that shape all business decisions
• Step 2. Recognize the ethical dimensions involved in
the dilemma or decision
• Step 3: Identify the key stakeholders involved and
determine how the decision will affect them
• Step 4: Generate alternative choices and distinguish
between ethical and unethical responses.
• Step 5: Choose the “best” ethical response and
implement it

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 Why Ethical Lapses Occur
• 1. An Unethical Employee – “ bad apple”
• 2. An Unethical Organizational Culture – “ bad
barrel”
• 3. Moral Blindness
• 4. Competitive Pressures
• 5. Opportunity Pressures
• 6. Globalization of Business

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 Establishing Ethical Standards
• 1. The Utilitarian principles - the option that
offers the greatest good for the greatest
number of people.
• 2. Kant’s categorical imperative - Act in such a
way that the action taken under the
circumstances could be a universal law or rule
of behavior.
• 3. The professional ethic - Take only those
actions that a disinterested panel of
professional colleagues would view as proper.
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 Establishing Ethical Standards
• 4. The Golden Rule - Treat other people the way
you would like them to treat you
• 5. The television test - Would you and your
colleagues feel comfortable explaining your
actions to a national television audience?
• 6. The family test - Would you be comfortable
explaining to your children, your spouse, and your
parents why you took this action?

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 Ten Ethical Principles to Guide
Behavior
• 1. Honesty
• 2. Promise-keeping
• 3. Fidelity
• 4. Fairness
• 5. Caring for others.
• 6 Respect for others
• 7. Responsible citizenship
• 8. Pursuit of excellence
• 9. Integrity
• 10. Accountability

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 Maintaining Ethical Standards
• Set the tone
• Create a company credo
• Develop a code of ethics
• Enforce the code fairly and consistently
• Conduct ethical training
• Hire the right people.

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 Maintaining Ethical Standards
• Establish high standards of behavior not just rules
• Set an impeccable ethical examples at all times
• Create a culture that emphasizes two way
communication
• Involve employees in establishing ethical
standards

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 Laws and regulations
requiring ethical behavior
• Product safety and quality
• Fair employment practices
• Fair marketing and selling practices
• The use of confidential information for personal
gain
• Community involvement
• Bribery
• Illegal payments to foreign governments to
obtain business
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Product safety and quality

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Fair Employment Practices

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Fair marketing and selling practices

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The use of confidential
information for personal gain

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Community Involvement

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Bribery
Illegal payments to foreign
governments to obtain business

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 Difference between entrepreneurs
and traditional entrepreneur
• Entrepreneurship traditionally defined as the
process of designing, launching and running a
new business, which typically beings as a small
business, such as a start-up company, offering a
product or service for sale or hire and the people
who do so are called ‘entrepreneurs’
• It has been defined as the “capacity and
willingness to develop, organize, and manage a
business venture along with any of its risks in
order to make a profit.”

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 Difference between entrepreneurs
and traditional entrepreneur

• Traditional entrepreneurs seek opportunities to

create market value and profit.
• Social entrepreneurs use entrepreneurship to
pursue opportunities to create social value by
creating innovative solutions to society’s most
vexing problems

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 Social Entrepreneurship
• Whereas traditional entrepreneurs seek opportunities
to create market value, there is a growing trend to
use entrepreneurship to pursue opportunities to
create social value. These social entrepreneurs,
people who start businesses so that they can create
innovative solutions to society’s most vexing
problems, see themselves as change agents for
society.
• Social entrepreneurs are finding the resources to
tackle challenging problems confronting the global
economy, including pollution, habitat destruction,
human rights, AIDS, hunger, poverty, and others.
Social entrepreneurship can be characterized by the
following:
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 Social Entrepreneurship
• 1. Social entrepreneurs seek solutions for social
problems that are met by neither the market nor
government.
• 2. Creating social benefit rather than commercial
success motivates social entrepreneurs.
• 3. Social entrepreneurs tackle social problems by
taking full advantage of natural market forces.

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 Social Responsibility
• The concept of social responsibility has evolved
from that of a nebulous “do-gooder” to one of
"social steward” with the expectation that
businesses will produce benefits not only for
themselves but also for society as a whole. Society
is constantly redefining its expectations of business
and now holds companies of all sizes to high
standards of ethics and social responsibility.
• Companies must go beyond “doing well”—simply
earning a profit—to “doing good”—living up to
their social responsibility. They also must recognize
the interdependence of business and society.

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 Business’s Responsibility to
the Environment
• Socially responsible business focus on the 3 R’s
• Reduce – the amount of materials used in your
company
• Reuse – whatever you can
• Recycle – the materials that you must dispose of

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 Business’s Responsibility to
Employees
• Listening to employees and respecting their opinions
• Asking for their input and involving them in the
decision-making process
• Providing regular feedback—positive and negative—
to employees
• Telling them the truth—always
• Letting them know exactly what’s expected of them
• Rewarding employees for performing their jobs well
• Trusting them; creating an environment of respect
and teamwork

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 “SPLENDID”
• How can entrepreneurs achieve unity through
diversity? The only way is by managing diversity in the
workforce.
Study-
Plan –
Lead –
Encourage –
Notice-
Discussion –
Inclusion-
Dedication -

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 Business’s Responsibility to
Customers
• 1. Right to Know
• 2. Right to Be Heard
• 3. Right to Education
• 4. Right to Choice

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 Business’s Responsibility to
Investors
• Companies have the responsibility to provide
investors with an attractive return on their
investments. Although earning a profit may be a
company’s first responsibility, it is not its only
responsibility; meeting its ethical and social
responsibility goals is also a key to success.
Investors today want to know that entrepreneurs
are making ethical decisions and acting in a
socially responsible manner

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 Business’s Responsibility to
the Community
• Act as volunteers for community groups such as
the American Red Cross, United Way, literacy
programs, and community food banks.
• Participate in projects that aid the elderly or
economically disadvantaged.
• Adopt a highway near the business to promote a
clean community.
• Volunteer in school programs, such as Junior
Achievement

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 Summary
• ILO1: Business ethics involves the fundamental
moral values and behavioral standards that form the
foundation for the people of an organization as they
make decisions and interact with organizational
stakeholders. Small business managers must
consider the ethical and social as well as the
economic implications of their decisions
• ILO2: Philosophers throughout history have
developed various tests of ethical behavior: the
utilitarian principle, Kant’s categorical imperative,
the professional ethic, the Golden Rule, the
television test, and the family test

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 Summary
• ILO3: Philosophers throughout history have
developed various tests of ethical behavior: the
utilitarian principle, Kant’s categorical imperative,
the professional ethic, the Golden Rule, the
television test, and the family test.
• ILO4: Traditional entrepreneurs seek
opportunities to create market value and profit.
Social entrepreneurs use entrepreneurship to
pursue opportunities to create social value by
creating innovative solutions to society’s most
vexing problems

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 Summary
• ILO5: Companies have a duty to act toward to
the environment, employees, customers,
investors and community

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 References
• Essentials of Entrepreneurship and Small
Business Management, 8th Edition, Norman
M. Scarborough, 2016

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