Republic of the Philippines

NORTHERN ILOILO POLYTECHNIC STATE COLLEGE

AJUY CAMPUS
Ajuy, Iloilo
  ENTREPRENEURSHIP DEPARTMENT
Instructional Module In Entrep 27
ENTREPRENEURSHIP INTEGRATION

PROF.PORTIA B. STA. ANA

Asst. Professor II

SOCIAL RESPONSIBILITY

Module 2, Lesson 1
Time allotment: 3 hrs
Introduction
The words “Corporate Responsibility” may have entered the Philippine
consciousness only in the past 10 years, but the concept and practices of
making profit and reaching out communities has been far and longer than that.
In 1900s, companies have realized that they have greater responsibilities
to help those in need aside from their employees and families. Companies, big
or small, were simply driven to share their gains with their neighbors, a
reflection of deeply ingrained Filipino values like “Bayanihan” (cooperation)
Today, it has become more essential for business establishments to
integrate Corporate Social Responsibility (CSR) activities into their business
strategies should they wish to survive in these trying times.
This module provides an opportunity to learners to learn and apply the
various theories of social responsibility and the right to the concerns, job
orientation, and business ethics.

Learning Outcomes: Upon completion of this module, you should have:

1. Explain to the learner social responsibility to future customers, suppliers,

stockholders, fellow businessmen, government, to the community, and to
his employees.
2. Discuss such business relationship measured by fairness, honesty, and
justice.
3. Explain the rights of consumers, creation of jobs, and business ethics.

Learning Content/Topic:

1. Social Responsibility Explained

2. Historical Development of Social Responsibility
3. Theories on Social Responsibility
4. Arguments Against Social Responsibility
5. Social Responsibility to Consumer
6. Social Responsibility to the Community
7. Other Social Responsibility
8. Business Ethics
 Republic of the Philippines
NORTHERN ILOILO POLYTECHNIC STATE COLLEGE
AJUY CAMPUS
Ajuy, Iloilo
  ENTREPRENEURSHIP DEPARTMENT
Discussion

Social Responsibility Explained

Professor Howard Bowen defines social responsibility as “the obligation of

businessmen to pursue their policies, to make those decisions, or to follow those
lines of actions which are desirable in terms of the objectives and values of society.
It is a business relationship measured by fairness, honesty, and justice.
The entrepreneur must:

a. Sell quality products at fair price.

b. Fair with his suppliers by paying them on time as agreed upon.
c. Give reasonable profits to stockholders for their investment.
d. Must pay correct taxes to the government.
e. Promote the welfare of his employees.

Historical Development of Social Responsibility

During ancient times, the Greeks despise trade and commerce. Only slaves
and low – class citizens engaged in business. The Romans preferred to be soldiers
and farmers rather than engaging in business. Those who became businessmen
were guided by personal ethics and moral judgement and mostly influenced by
religious beliefs. The Code of Hammurabi regulated the commercial activities. One
law of the Code says “If a man hires laborer, he shall pay him 8 GUR of grains per
year.”

During the medieval age, business activities were influence by Christian

doctrines. The most famous doctrine was the Compensatory Justice of St.
Thomas Aquinas which states that the businessman should pay fair wage to his
workers. He should likewise charge reasonable price for his products and services.

The influence of the church faded during the Industrial Revolution in early
1600. The State adopted the laissez – faire policy, French words which mean the
absence of government interference in business activities. This lead to the
exploitation of most businessmen to their workers, customers and suppliers.
Children and old individuals worked up to 18 hours a days and were underpaid.

Theory of Karl Marx

Karl Marx developed his theory of Scientific Social Evolution. He stated

that in the beginning, when society was still primitive, there was social equilibrium.
However, when new ideas and new tools of doing things were introduced, the old
system was distributed. As a result, man became greedy for power and wealth.
Man became greatly concerned with material wealth. This led to a class struggle
 Republic of the Philippines
NORTHERN ILOILO POLYTECHNIC STATE COLLEGE
AJUY CAMPUS
Ajuy, Iloilo
  ENTREPRENEURSHIP DEPARTMENT
between the workers and the capitalists. The latter wanted to amass wealth at the
expense of the workers.

Robert Owen, The Social Utopian

Robert Owen was a product of University experience.

 The “Father of Socialism and Cooperatives”
 Shop boy at age 10,
 At 20 headed the large Manchester cotton mill
 Director and co – owner of a large textile factory in New Lanark,
Scotland
 Abolished child labor
 Reduced working hours to 11
 Build houses for the workers and replaced all liquor stores with
provision stores selling quality goods at cost to the workers.
 Sponsored beautification, health, and sanitation projects and became a
model manufacturing village in Great Britain.
 Believed that society must completely restructured on the basis of
common ownership, equal rights, and collective labor.
 Introduced machines during the Industrial Revolution
 Propagate the cooperative association
 Preached ideas of socialism or 40 years
The Influence of Labor Unions
The laissez – faire situation cause people to work more than 60 hours and
there is no minimum wage law. Benefits and overtime pay were not given by
almost all enterprise and work areas are unsafe and crowded.
Due to abuses, workers formed labor unions. They demanded for better
working conditions and security of tenure. However, the government even more
supported the side of the employers and branded the labor organizations as tools of
communists.

Theories of Social Responsibility

1. Economic Model. Claims that the society, will benefit most from business of
left alone on its operations. Business has done its social responsibility to the
needs of the consumers, by creating job and by paying taxes to the
government.
2. Social Economic Model. It believes that the businessmen have their
responsibility to stockholders, as well as to their employees, customers,
suppliers and the general public.
3. Classical Model. An enterprise is socially responsible if it stresses to use,
as efficiently as possible, the resources at its disposal, in producing the goods
and the services that society needs, at a price consumers are willing to pay.
 Republic of the Philippines
NORTHERN ILOILO POLYTECHNIC STATE COLLEGE
AJUY CAMPUS
Ajuy, Iloilo
  ENTREPRENEURSHIP DEPARTMENT

Arguments for Social Responsibility

1. Business cannot and should not ignore social problems because it is a part of
society.
2. Business has resources, like financial, technical and managerial, that ae
required for solving social problems.
3. Business can earn more profits in the long run by helping eliminate or reduce
social problems.
4. Business can expect less government intervention if it performs its social
responsibility.

Arguments Against Social Responsibility

1. Business managers are primarily responsible to stockholders. Thus, their job

is to earn profit for their investors.
2. The resources of the enterprise – time, money, and talent should be used to
maximize profit, not to solve the problems of the society.
3. The effects of social problems on society is very general, businesses should
not be expected to solve social problems. Thus, is their fundamental
responsibility to the voters.

Social Responsibility to consumers

It was President John Kennedy who introduced the four basic rights of
consumers. These are:

1. The right to safety. This means products are safe for their intended use,
contain clear and complete instructions for their proper use, and have tested
by the manufacturers for quality and reliability.
2. The right to be informed. This refers to the availability of complete and
correct information about the use of the products.
3. The right to choose. It is the policy of the government to encourage
competition among sellers or producers, so that consumers can choose the
best product in the market.
4. The right to be heard. This is based on the concept that “the customer is
always right.” Sellers should listen to their buyers and act immediately on
their complaints.

Social Responsibility to the Community

The price of the economic growth is destruction of the environment through

pollution of the air, land, and water. Such pollution has adversely affected the lives
of both human and animal lives, as well as those the plant kingdom. As a result,
the incomes of farmers and fishermen have declined. These are the evils created
by industrial enterprises.
 Republic of the Philippines
NORTHERN ILOILO POLYTECHNIC STATE COLLEGE
AJUY CAMPUS
Ajuy, Iloilo
  ENTREPRENEURSHIP DEPARTMENT
Thus, it is the responsibility of the all enterprises to take care of the
environment while earning income.

Business Ethics

Business ethics is the application of moral standards on business decisions

and actions. It involves relationships with employees, investors, customers,
creditors and competitors. There are businessmen who are not fair and honest in
dealing with the said groups.

Peter Drucker, an internationally famous management consultant, said: “The

first responsibility to society is to operate at a profit…Business is the wealth –
creating and wealth – producing organ of society…But what is most important is
that management realizes that it must consider the impact of every business policy
and business action upon society. It has to consider whether the action is likely to
promote the public good, to advance the basic beliefs of society, to contribute to its
stability, strength and harmony… the ultimate responsibility of management, to
itself, to the enterprise, to our heritage, to our society, and to our way of life.”

The Code of Ethics for Business

A code of ethics is a guide of principles designed to help professionals

conduct business honestly and with integrity. A code of ethics document may
outline the mission and values of the business or organization, how professionals
are supposed to approach problems, the ethical principles based on the
organization's core values, and the standards to which the professional is held.

A code of ethics, also referred to as an "ethical code," may encompass areas

such as business ethics, a code of professional practice, and an employee code of
conduct.

 A code of ethics sets out an organization's ethical guidelines and best

practices to follow for honesty, integrity, and professionalism.
 For members of an organization, violating the code of ethics can result in
sanctions including termination.
 In some industries, including banking and finance, specific laws govern
business conduct. In others, a code of ethics may be voluntarily adopted.
 The main types of codes of ethics include a compliance-based code of ethics,
a value-based code of ethics, and a code of ethics among professionals.
 A focus on climate change has become an integral part of companies' codes
of ethics, detailing their commitment to sustainability.
 Republic of the Philippines
NORTHERN ILOILO POLYTECHNIC STATE COLLEGE
AJUY CAMPUS
Ajuy, Iloilo
  ENTREPRENEURSHIP DEPARTMENT
What Is Business Ethics?

Business ethics is the study of appropriate business policies and practices

regarding potentially controversial subjects including corporate governance, insider
trading, bribery, discrimination, corporate social responsibility, and fiduciary
responsibilities. The law often guides business ethics, but at other times business
ethics provide a basic guideline that businesses can choose to follow to gain public
approval.

 Business ethics refers to implementing appropriate business policies and

practices with regard to arguably controversial subjects.
 Some issues that come up in a discussion of ethics include corporate
governance, insider trading, bribery, discrimination, social responsibility, and
fiduciary responsibilities.
 The law usually sets the tone for business ethics, providing a basic guideline
that businesses can choose to follow to gain public approval.

Examples of Business Ethics

Here are a few examples of business ethics at work as corporations attempt
to balance marketing and social responsibility. For example, Company XYZ sells
cereals with all-natural ingredients. The marketing department wants to use the
all-natural ingredients as a selling point, but it must temper enthusiasm for the
product versus the laws that govern labeling practices.

Some competitors' advertisements tout high-fiber cereals that have the

potential to reduce the risk of some types of cancer. The cereal company in
question wants to gain more market share, but the marketing department cannot
make dubious health claims on cereal boxes without the risk of litigation and fines.
Even though competitors with larger market shares of the cereal industry use
shady labeling practices, that doesn't mean every manufacturer should engage in
unethical behavior.

For another example, consider the matter of quality control for a company

that manufactures electronic components for computer servers. These components
must ship on time, or the manufacturer of the parts risks losing
a lucrative contract. The quality-control department discovers a possible defect,
and every component in one shipment faces checks.

Unfortunately, the checks may take too long, and the window for on-time
shipping could pass, which could delay the customer's product release. The quality-
control department can ship the parts, hoping that not all of them are defective, or
delay the shipment and test everything. If the parts are defective, the company
that buys the components might face a firestorm of consumer backlash, which may
lead the customer to seek a more reliable supplier.
 Republic of the Philippines
NORTHERN ILOILO POLYTECHNIC STATE COLLEGE
AJUY CAMPUS
Ajuy, Iloilo
  ENTREPRENEURSHIP DEPARTMENT
Assessment:

1. What exactly is social responsibility of the entrepreneur?

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2. What are the main rights of the consumer? Give example of each right?
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3. Explain how Owen helped his workers? How did it work with the lives of
workers?
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 Republic of the Philippines
NORTHERN ILOILO POLYTECHNIC STATE COLLEGE
AJUY CAMPUS
Ajuy, Iloilo
  ENTREPRENEURSHIP DEPARTMENT
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References:

1. Asor,Winefreda B. ”Entrepreneurship in the Philippine Setting. (2010).

2. https://www.investopedia.com/terms/b/business-ethics.asp