BUSINESS ETHICS| Ella Lee

LESSON 1: CORPORATE SOCIAL

RESPONSIBILITY
- Not continuous
SOCIAL RESPONSIBILITY
- Cooperation
THE DECADE OF
- Social responsibility is an ethical framework says
that an individual has an obligation to work
ORGANIZATIONS (1970)
- A number of business associations organizations
cooperate with other individuals and organization
were established to address the common concerns
for the benefit of the community that will inherit
of the poor.
the world said individual leaves behind.
- These organizations were the Bishops
Businessmen Conference of the Philippines
CORPORATE SOCIAL
(BBCP), the Associations Foundations (AF), the
RESPONSIBILITY (CSR) Philippine Business for Social Progress (PBSP).
- Showing the companies concern on the - Community investment
environment and the economy - Corporate affair
- is a company’s commitment to manage the social
environmental, and economic effects of its THE DECADE OF
operations responsibly and in line with public
INVOLVEMENT (1980)
expectations - The Philippine economy continued to shrink in
THE EVOLUTION OF CORPORATE SOCIAL size with the worsening debt crisis. Many
RESPONSIBILITY IN THE PHILIPPINES companies responded and offered services to
communities. This form of assistance was also
To Corporate To
To
to
Sustainable known as community relations or COMREL.
from Profit Community Community
Philanthropy Investment Business
focused Affairs COMREL improved economic conditions by
a company passive strategic strategic intergrated
only exists donations
for short to charities
giving partnership
linked to
into
business,
promoting peaceful business operations.
s initiated
term when business by functions, - Simple involvement of people in the business
shareholde requested interests company goals,
r profit no (includes, investment strategy
cause-
Focus on
profit
maximizati
voluntary
action related partnership
marketing) s with
Continuou
s THE DECADE OF
Local
on to help the
community
Governme
nt Units
INSTITUTIONALIZATION
(1990’s)
- The notion of corporate citizenship emerged. It
suggested that corporations must contribute to
THE DECADE OF DONATIONS society’s well-being beyond COMREL. Corporate
(1960) citizenship involved policy formulation and
- Companies helped ease the social problem by
networking
giving charitable institutions donations in cash
and in kind. Such activities were sporadic,
fragmented, and uncoordinated
- Social unrest
- Social equality
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 BUSINESS ETHICS| Ella Lee

- For example: PBSP pushed for the participation of

THE DECADE OF
corporate citizens in improving access to basic
CONTINUOUS services, education, credit and the development of
IMPROVEMENT (2000) new skills for the workforce to help them improve
- Social organizations persisted in their quest to help their lives
the poor using management frameworks

LESSON 2: THE THREE MODELS OF

CORPORATE SOCIAL RESPONSIBILITY
The three models of corporate social responsibility
1. Traditional conflict model
2. Added value model
3. Multiple goals model
1. TRADITIONAL CONFLICT
MODEL
- Social values and benefits are seen as in conflict
with shareholder profits
- Under this model, corporations opting to practice
forms of social responsibility are likely to see
added costs for doing so. Proponents of this
conceptual model generally argue that the nature
of business is one of the trade-offs between
economic and moral values, and corporate
managers will inevitably be forced to decide
between their social and fiduciary responsibilities
or their commitment to shareholder equity value
2. ADDED VALUE MODEL
- For conceptualizing corporate social responsibility
is to see social and environmental commitments as
a means to increase profits
- While proponents of this model tend to
acknowledge that conflicts persist in business
decisions, they also believe that CSR investments
are also capable of generating new revenues. This
model tend to focus on issues like the value of CSR
in attracting socially conscious consumers, finding
socially conscious employees and managing the
risks of negative press
3. MULTIPLE GOALS MODEL
- Posits a role for social values in corporate decisions
that are untethered to economic values
- Under this model, corporations have goals beyond
shareholder value, including the enhancement of
their community without respect to monetary gain.
Proponents of this model emphasize quality of life
as the basis of economic activity

LESSON 3: THE CORPORATE

RESPONSIBILITY FRAMEWORKS
The different Corporate Social Responsibility 2. Caroll’s CSR Pyramid
Framework 3. Ackerman’s CSR Model

1. Friedman’s CSR Doctrine

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 BUSINESS ETHICS| Ella Lee

2. Intensive study of the problem by hiring

FRIEDMAN’S CSR
experts and getting their suggestions to make
DOCTRINE it operational
- A business ethics theory which states that the 3. Managers take up the project actively and work
objective of the company should be to maximize hard
the returns for the shareholders 4. Evaluating of the project by addressing the
- States that shareholders are owners of company, issues
and they should work to satisfy their shareholders
- Since the introduction of this theory, several CARROLL’S CSR PYRAMID
companies have been following it. Most business - Helps explain the social, ethical, legal and
currently work to maximize shareholder value, economic responsibilities by which a business
rather than focus on CSR should operate
- Over the years, several studies, researchers, and
experts have also confirmed the influence of this
theory in dictating the company’s operation Philathropic
Responsibility
FRIEDMAN THEORY
- Company has no social responsibility unless the Ethical Responsibility
shareholder decide so
- It is shareholders who must decide on us of the Legal Responsibility
company’s resources for social purposes
- It must not be made mandatory for a company to
Economic Responsibility
take up social responsibility. Final decision to rest
with shareholders
- Follows a Traditional View for CSR
 Philanthropic Responsibility – a business is
ACKERMAN’S CSR MODEL responsible for giving back to society and
4th Stage improving the quality of life in the community
EVALUAT
3rd stage
IMPLEMEN ION  Ethical responsibility – a business is
2nd stage TATION
PLANNING
responsible for being just, moral and fair. It must
1st stage
AWARENESS avoid causing harm
 Legal Responsibility – obeying all national
and international rules, laws, and regulation for
- More on internal policies and its relationship with
their industry
the Corporate Social Responsibility
 Economic Responsibility – being profitable.
- This model has emphasized on the internal policy
From this foundation, they can invest in the
goals and their relations to the CSP
community by creating jobs, supporting local
- Four stages
organizations and partnering with nonprofits
1. Corporate leader gets to know the most
common social problem and express a There is something called the TRIPLE BOTTOM LINE. It
willingness to take a particular project which means the company should focus of three things
will solve some social problems
1. Economic Responsibility (profit)

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 BUSINESS ETHICS| Ella Lee

2. Social Responsibility (people) 3. Environmental Responsibility (planet) and the

company shows commitment towards society’s
sustainability

LESSON 4: SOCIAL RESPONSIBILITY OF AN

ENTREPRENEUR TOWARDS DIFFERENT
SECTORS OF THE SOCIETY
Ethics and Social Responsibility for an Entrepreneur - Adequate basic facilities like safe drinking water,
electricity, canteen, hygienic toilets
1. PUBLIC IMAGE - Skill development programs
- They need to maintain their image
- Good and safe working environment
- Need to practice moral standards
- Retirement benefits and pension schemes
- To do what is right and maintain a good reputation
- Collective bargaining
2. EMPLOYEE SATISFACTION - Insurance cover and medical facilities
- Right compensation
- Need to fulfill Collective Bargaining
- Should follow rules in accordance to employment
 Labor Union – acts as a middle man during
disputes between employees and company.
laws
This protects the rights of the employees
- Provide fair wages, and skill development
and/or laborers
programs
 Collective Bargaining – the process
3. ETHICAL LEADERSHIP  Collective Agreement – a written document
- To inspire the employees
that states the mutual agreement between
- A leader is the one who creates action (Role
employee and business
model)
2. Responsibility Towards Customers:
4. SOCIAL ENTREPRENEUR - Charge reasonable price for products or services.
- Skills to teach others - Supply of right quality of goods in right quantity.
- Provide training services to teach other people to - No use of manipulated or false advertisements.
earn profit - Avoid unfair selling practices.
- Fair guarantee of product
5. ENVIRONMENTAL MANAGEMENT
- To be considerate of the environment and the - Fair pricing
effects of the business to it  Perceive customer value – cost
 Is it worth it? (in terms of quality)
6. CUSTOMER AWARENESS
- Need to consider customer’s rights 3. Responsibility Towards Shareholders:
- A fair return on investment.
Social Responsibility of an Entrepreneur Towards - Regular Payment if dividend
Different Sections of the Society - Safety of invested capital.

1. Responsibility towards employees - Regular and complete information about the

- Fair wages and salaries performance and progress of company.

4

- Expectations to generate income from their
investment and transparency should be shown
4. Responsibility Towards Suppliers, Creditors:
- Maintain healthy and cooperative inter-business
relationship bet different businesses.
- Provide accurate and relevant information to
creditors.
- Payment of price of materials on time.
- Prompt payment of interest on borrowed funds.
- Producing original documents for credit
processing.
- Networking skills and interpersonal skills of the
entrepreneur
5. Responsibility Towards Public in General:
- Help the weaker section of the society.
- Creation of job opportunities.
- Improvement in living standards.
- Building of basic infrastructure like roads,
sewerage.
- Health and educational development schemes.
LESSON 5: MAJOR ETHICAL ISSUES IN
ENTREPRENEURSHIP
ETHICAL ISSUE
- A problem or situation that requires a situation to
choose between alternatives that must be evaluated
as right or wrong
ETHICAL DILEMMA
- Arises in situation concerning right or wrong when
values are in conflict
MAJOR ETHICAL ISSUES
A. Basic Fairness
a.1 Discrimination in the Workplace- includes
refusal to hire, unlawful firing, forced
resignation and harassment.
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BUSINESS ETHICS| Ella Lee
- To make best use of society’s resources for their
welfare.
- impact
6. Responsibility towards Government:
- Payment of corporate tax in correct amount with
no manipulation profit figures.
- To avoid corrupting public servants by offering
bribe.
- To encourage fair trade practices.
- To avoid monopoly practices.
- To improve national income.
- taxes
Some government agencies that regulate business
operations
- Bureau of Internal Revenue (BIR)
- Office of the City Treasurer
- Department of Labor and Employment (DOLE)
- Social Security System, Philhealth, Pag-ibig
- Department of Trade and Industry
- Securities Exchange Commissions
- Bureau of Food and Drugs
a.2 Marketing practices- includes customer
perceptions, pricing and promotions.
a.3 Accounting- the financial statements present
fairly the results of operations and cash flows
for the year ended in conformity with
generally accepted accounting principles.
Basic Consumer Rights
Right General Issues
To choose Access to variety of products at
competitive reasonable prices
To Safety Protection of health, safety and
financial well-being in the
marketplace
To be Informed Opportunity to have accurate and
adequate information on which to
base decisions and protection from
misleading or deceptive

information
To be Heard Consideration given to consumer
interests in government processes
To redress Opportunity to express
dissatisfaction and to have the
complaint resolved effective
The right to be compensated for
misrepresentation, shoddy goods
or unsatisfactory services
To privacy Protection of consumer
information and its use
THE WORKERS BASIC RIGHTS
I. Security of Tenure- is a right of an employee
and mandated by protects them from being unjustly
terminated from employment by their employer
Just Cause refers to any wrongdoing committed by an
employee include:
1. serious misconduct
2. willful disobedience of employers' lawful
orders connected with work
3. gross and habitual neglect of duty
4. fraud or willful breach of trust
5. commission of crime or offense against the
employer, employer's member/s or
representative
II. Authorized Cause refers to an economic
circumstance the employee's fault, including:
1. the introduction of labor-saving devices
2. retrenchment to prevent losses
3. closure or cessation of business
III. Due Process in cases of just cause involves:
1. notice to employee of intent to dismiss and
grounds for dismissal
2. opportunity for employee to explain his or her
side
3. notice of decision to dismiss
B. Fraud
- misrepresentation of facts with a view to induce the
other to enter into contract
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BUSINESS ETHICS| Ella Lee
- altered financial information
- misappropriation of assets, inappropriate expenses
and income, among others
b.1 Corruption
- is dishonest behavior by those in positions of pow
as managers or government officials.
- The abuse of entrusted power for personal gain
b.2 Embezzlement
- is a form of fraud wherein a person or
entity intentionally misappropriates assets
for personal use.
- Theft or misappropriation of funds placed
in one’s trust or belonging to one’s
employer
C. Business Communication and
Legal Issues
c.1 Defamation
- is refers to unconsented & unprivileged publication
of a false idea which injures the reputation of a
person in a society.
- The act of communicating false statements about a
person that injure the reputation of that person
c.2 Invasion of Privacy- is a legal term used to
describe a circumstance where an individual or
organization knowingly intrudes upon a person
c.3 Counterfeiting
- the act of illegally creating facsimiles of a prod
document, or currency: In general, counterfeiters
are accused of create these fake items at a low cost
and selling them at a high value in order to make a
profit.
- Unlawful act that imitates something authentic with
the intent to steal, destroy or replace the original for
use in illegal transactions
c.4 Copyright Infringement - is the illegal
duplication or theft of someone else’s creative
work that has been protected by a copyright.
c.5 Breach of Contract - is a violation of any of the
agreed-upon terms and conditions of a binding
contract.
 BUSINESS ETHICS| Ella Lee

VOCABULARY  LIBEL – a published false statement that is

damaging to a person’s reputation
 COPYRIGHT – these includes book,
pamphlets, articles, musical compositions,  SLANDER – the action or crim of making a
drawing, painting, architecture, etc. false spoken statement damaging to person’s
reputation
 FRAUD – the intentional deception to secure
unfair or unlawful gain

LESSON 6: SOCIAL
ENTREPRENEURSHIP
SOCIAL Social firm
- Employ those in the community who need jobs
ENTREPRENEURSHIP
- Focus is to provide employment
- An approach by individuals, group, start-up
companies, or entrepreneurs, in which they develop,
Socially responsible business
fund and implement solutions to social, cultural or - These companies support social missions as a part of
environmental issues. their day-to-day business operations
- This concept may be applied to a wide range of - CSR
organizations, which vary in size, aims and beliefs

Social enterprises typically measure success based on the

For-profit
- These businesses are profit-first but donate funds,
triple bottom line:
raise awareness, or otherwise support causes
1. People – impact of the business to people - Maximize wealth
2. Planet – environmental impact
3. Profit – making money to sustain the business
Benefits of social entrepreneurship
1. Implements a societal change – enhance quality
Forms of Social Entrepreneurship of life
2. Enhances quality of life
Nonprofit 3. A positivity magnet – have a positive mindset;
- Tax-exempt, non-business entity that invests excess
funds back into the mission societal entrepreneurship

- donations 4. Earned support – get support from customers

5. Enhanced reputation – have a good image
Cooperative 6. Better customer relationships – should be open,
- A business organized by and for its members transparent and responsive
- Examples: Credit Unions, community grocery stores 7. Improved insight – better insight on customer
purchasing patterns
Social purpose business 8. Employee satisfaction – team-oriented culture
- Theses businesses start on the foundation of
9. Increased productivity – by open collaboration
addressing a social mission
and productivity
- Example: UNICEF
10. More innovation
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Characteristics of social entrepreneurs
SOCIAL ENTREPRENEUR
- A person who pursues an innovative idea with the
potential to solve a community problem
- Posses characteristics similar to usual entrepreneurs
but prioritize social impact and development more
than other entrepreneurship motivations
- Focus to solve community or environmental
problems
Some traits that social entrepreneurs posses:
Deep Empathy
- Social entrepreneurs have deep empathy for social
issues that requires a solution
- They find this empathy as their motivation to
convert the problem into a business opportunity and
fix what’s wrong with society
Cooperative strategy
- Generally, social entrepreneurs employ cooperative
strategies rather than competitive owing to their
social mission of entrepreneurs, poor working
capital and market orientation
Social commitment
- Committed to serving society at large
- They believe in making a change while earning
money to support change
Innovative mindset
- Such entrepreneurs come up with innovative ideas
that help to solve a social problem
Change-maker attitude
- Altruistic entrepreneurs are real change-makers who
change the way people do things or look at social
problems
Future-oriented
- These entrepreneurs believe the future is in our
hands and take steps to develop a better future for
society
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BUSINESS ETHICS| Ella Lee
Decisiveness
- Firm with their decision to bring social change with
their solutions
Pragmatism
- The quality of dealing with a problem in a sensible
way that suits the conditions that really exist, rather
than following fixed theories, ideas or rule
Persistence
- Social entrepreneurship isn’t easy
- Such entrepreneurs have to compete with money-
motivated entrepreneurs and have to be persistent
to win over them
Risk Tolerance
- Entrepreneurship comes with its own set of risks.
Adding a social aspect to it adds more risks to the
journey of a social entrepreneur
Business Beyond Profit
Motivation
Reasons to do business beyond profit
1. Profit is an output, not a purpose
2. Companies with a purpose beyond profit tend to
make more money
3. Business needs purpose than profit to make it
through
4. What is the purpose of doing business if it in not
being profitable? The starting point of great
companies is purpose.
5. Businesses with a strong sense of purpose are more
successful
Four main types of Purpose according to Nikos
Mourkogiannis
a) Discovery has rooted in the intuition that life is a
kind of adventure. Example: Apple and their goal
to always come up with the new/most innovative
products
b) Excellence implies standards and purports the
belief that excellent performance in our role in life
 BUSINESS ETHICS| Ella Lee

represents the supreme good example: Warren  Community contribution and fairness
Buffett  Influencing others
c) Altruism/Achievement is purpose built in serving
its customers in a way that is beyond the standard Strategic principle
obligation. Example: The body shop - Tend to be used as guidance in setting the direction
of the business. It is used to help decide how things
d) Heroism demonstrates achievement, often with a
are done within the business
charismatic and visionary leader. Example:
 Integration of sustainability into the
Microsoft
organization
The idea of a sustainable Social enterprise  Minimizing risk and maximizing
- Businesses that are changing the world for the better opportunity
- It also tackles social problems and improves  Transparency and accountability
communities, people’s life chances and the
environment 3 pillars of sustainable business
- A proper business that makes its money in a socially
responsible way
- It also exists to make a direct positive social or
environmental impact on the world

Social enterprise is innovative and unique

because:
- It aims to make a profit, and then use this profit to
support its charitable, social, or environmental goals
- It also provides products and services that benefit
that community
- It also has social aims and ethical values
Social Enterprise Mission Orientation
Sustainability issues:
- It is vital to any business, and social enterprise is not Mision Centric Unrelated to mission
Mission Related
<- Mission Motive Profit Motive->
an exception
The enterprise is The enterprise is the enterprise is not
- It means that the business can sell its product or central to the realted to the related to the
organization's social organization's organization's
service for more and the demand can grow in the mission mission or core mission, or intended
these social social value for to advacne the
medium to long term basis enterprises are programs and mission other than
created for the generating economic by generating
- Another point of view in social enterprise is that express purpose of value to subsidize income for its social
advancing the the organization's programs and
some social projects and social enterprises may have mission using a self- social progreams operating costs
financing model and/or opertaing
a limited life expenses

2 types of principles for sustainable business

Operational principles A social enterprise may be structures as a

- Practical and addresses the question of what we do
department, program, or profit center within a
and how we do business on a day to day basis
nonprofit and may also be a subsidiary of its
 Good employer
 Environmental responsibility
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 BUSINESS ETHICS| Ella Lee

nonprofit parent, registered as a for-profit or non- payer

Low-income Similar to Healthcare Creative
profit. Here are the three social enterprise structures client fee-for- (prescriptions distribution
service in , eyeglasses), systems, lower
terms of utility production and
Embedded offering programs marketing
- The enterprise and the social program are one and services to costs, high
clients but operating
the same focuses on efficiencies
providing
- The business is created to server clients (central to access to
those who
the mission)
couldn’t
otherwise

Integrated Cooperative
afford it
Provides Bulk Members have
- The business activities overlap with the social members purchasing, common
with benefits collective interests/needs
programs through bargaining , are key
collective (union), stakeholders
- The business is created as a funding mechanism and
services agricultural and investors
to ex coops, credit
unions
Market Facilities Import- Does not sell
External linkage trade
relationships
export,
market
clients’
products but
- Social and business activities are separate and may between research, and connects
clients and broker clients to
or may not be related to the mission of the
the external services markets
organization market
Service Sells Consulting, Can leverage
- The business is created mainly as a funding subsidization products or counselling, tangible assets
services to an employment (building, land,
mechanism to support social activities external training, employees) or
market to leasing, intangible
Kim Alter defined the nine types of business models which help fund printing (expertise,
other social services and methodologies
social entrepreneurs can use in order to achieve their goals programs. so forth or relationship)
and objectives. The nine social business models are the This model is
integrated
following: with the non-
profit
Business How it Examples Key success organization,
Model works factors the business
Entrepreneur Sells business Microfinance Appropriate activities and
Support support to its organizations, training for the social
target consulting, or entrepreneur programs
population tech support overlap
Market Provide Supply Low start-up Organizationa Similar to Similar to Similar to
intermediary services to cooperative costs, allows l support service service service
clients to like fair trade, clients to stay subsidization subsidization subsidization
help them agriculture and work in , but — implement
access and their applying the any type of
markets handicraft community external business that
organizations model; leverages its
Employment Provide Disabilities or Job training business assets
employment youth appropriatenes activities are
opportunity organizations s and separate
and job providing commercial from social
training to work viability programs
clients and opportunities
then sells its in landscape,
products or cafes,
services on printing, or
the open other
market business
Fee-for-service Selling social Membership Establishing
services organizations, the appropriate
directly to museums and fee structure
clients of a clinics vis-à-vis the
third-party benefits

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