E thics and Social
R esp cnsibilit!:I
K E Y TERMS
II ethics the moral
prin ciples or va lues that
gen erally gove rn th e
condu ct of an individual or a group
111!!11 morals the rul es peop le
lii(i develop as a result of
cultu ra l values and norms
code of ethics a guid elin e to
help marketing managers and other
employees ma ke better deLisions
Foreign Corrupt Practices Act
(FCPA) a law tha t proh ibits U.S.
corporations from making ill ega l
payments to public officials of foreig n
governm ents to obtai n business
right s or to enhance the ir bu si ness
dealings in those cou ntrie s
11!11 corporat e social
- responsibility (CSR)
a bu siness's concern for
society's welfare
sustainabilit y the idea that
socially responsible co mpanies w ill
outperform their peers by fo cusing
on the world 's social problems and
viewing them as opportunities to
build profits and help the wo rld at the
same time
pyramid of corporate social
responsibility a model
that sugg ests corporate social
respo~sibilit y is composed of
economic, legal, ethical, and
philanthropi c responsibilities and that
the firm 's economic performance
supports the entire structure
green marketing the
development and marketing of
products designed to minimize
negative effects on the physical
environment or to improve the
environment
KEY CONCEPTS
11!11
-
Explain the concept of ethical behavior. Ethics are the moral principles
or values tha t generally govern the conduct of an individual or group. They
are standards of behavior by which conduct is judged. Though many of these
sta ndards are considered legal, they are unethical. An ethics violation offends a person's
sense of justice or fairness. Ethics basically constitute the unwritten rules developed to
guid e interactions. Many ethical questions arise from balancing the need to produce profit
1
fo r sha reholders and t he expectation of a business to operate honestly and with respect to
enviro nm ental and social issues.
- Describe et h ical behavior in business. Bu.siness ethics .may be viewed
- as a subset of the va lu es of society as a whole, with a foundation based on
the cultu ra l values and norms that constitute a culture's morals. The ethical
conduct of businesspeople is shaped by societal elements, including family, education,
and rel igious institutions. As members of society, businesspeople are morally obligated to
consider the ethical implications of their decisions. Ethical decision making can be grouped
into three basic approaches. The first approach examines the consequences of decisions.
The seco nd approach relies on rules and laws to guide decision making . The third
approach is based on a theory of moral development that places individuals or groups in
one of three developmental stages: preconventional morality, conventional morality, or
postconventional morality.
In addition to personal influences, there are many business influences on ethical
decision making. Some of the most influential include the extent of ethical problems
within the organization, top management's actions on ethics, potential magnitude of the
consequences, social consensus, probability of a harmful outcome, length of time between
the decision and the onset of consequences, and the number of people affected .
Many companies develop a code of ethics to help their employees make eth ica l
decisions. A code of ethics ca n help employees identi fy acce ptabl e bu sin ess p ractices, be an
effective internal control on behavior, help em ployees avoid confusion w hen d etermining
whether decisions are ethical, and faci litate di scussi on about w hat is ri ght and w rong.
Studies show that ethical beliefs vary little from co untr y to coun try. However, there
are enough cultural differences, such as bribes or gift givin g, that laws such as th e Foreign
Corrupt Practices Act (FCPA) have been put in place to discourag e b ribery an d attempt to
modify the current acceptance of such prac ti ces.
Some Factors Attributing to Ethical Conduct
Ethical Decision-Making Processes
·.·- : ' ~-
Examine Consequences Religion Fami ly
Follow Rules and Laws
Social
Education
Movements
© CENGAGE LEARNING 20 11
II
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Discuss corpora te So
cial responsibility. Responsibility in business refers
. . .
to a firm's concern fo r the way its decisions_ affect soc1 ~ty. Socia~ responsibility
has four compo nents: economic, legal, ethical, and phila nthropic. These are
· d t the most fundamental is earni ng a profit. If a firm does not earn a profit
1ntertw1ne , ye '
the other three responsibilities are moot. Most busi nessp eople bel ieve th ey should do
more than pursue profits. Although a co mpany mu st consider its economic needs first,
it must also operate within the law, do what is ethical and fa ir, and be a good corporate
citizen. Sustainability is the concept that socially responsi ble compani es wi ll outperform
their peers by focusing on the world 's social probl em s and vievving them as an opportunity
to earn profits and help th e wo rld at the sam e time. Social re:ponsib ili ty is growing, but
it can be costly and the benefits are not always immediate. However, ignoring social
responsibility can be even more expensive if custom ers perceive they are being taken
advantage of. One branch of social responsibility is green marketing, which aids the
environment and often the bottom line of a business.

Philanthropic responsibilities
Be a good corporate citizen.
Contribute resources to the
community; improve the
quality of life.

Ethical responsibilities - - -
Be ethical.
D~ what is right, just, and
fair. Avoid harm.

Legal resp "b• .

Ob ons1 •hties
ey the law
La w ·is society's
· ..
of right and cod1f1cation
the rules oftwh rong. Play by
e game.
Economic r
Be profitab~SPonsibilities
Profit is the ef.
ound t·
on Which all ot a ion
respo 'b• her
., © CENGAGE LEARNING 2011 ns1 1lities rest.