Chapter 2

Business Ethics and Social Responsibility

Go als
a rni ng 5 Discuss how organizations shape
Le ethical behavior.
Explain the concepts of business
1 6 Describe how businesses’ social
ethics and social responsibility. responsibility is measured.

2 Describe the factors that influence 7 Summarize the responsibilities of

business ethics. business to the general public,
customers, and employees.
3 List the stages in the development
of ethical standards. 8 Explain why investors
Identify common ethical dilemmas are concerned with
4 business ethics and
in the workplace.
social responsibility.
Concern for Ethical and Societal Issues
Sarbanes-Oxley Act 2002 law that added oversight for the
nation’s major companies and a special oversight board
to regulate public accounting firms that audit the
financial records of these corporations.
Business Ethics The standards of conduct and moral values
governing actions and decisions in the work environment.
• Social responsibility.
• Balance between what’s right and what’s profitable.
• Often no clear-cut choices.
• Often shaped by the organization’s ethical climate.
THE NEW ETHICAL ENVIRONMENT
• High profile investigations and arrests in headlines.
• Vast majority of businesses ethical.
• New corporate officers charged with deterring
wrongdoing and ensuring ethical standards.
Source: “Our Company, Our Credo,” Johnson &
Johnson Web site
Individuals Make a Difference
• Personal ethics matter.
• Survey of British workers found 30 percent spent
30 minutes daily doing personal business online.
• Technology expanded abuses.
• Data theft.
Development of Individual Ethics
 On-the-Job Ethical Dilemmas

Situation in which a Telling the truth

business decision and adhering to
may be influenced deeply felt
for personal gain. ethical principles
in business
decisions.

Employee’s
Businesspeople
disclosure of
expect
illegal,
employees to be
immoral, or
loyal
unethical
and truthful, but
practices in the
HOW ORGANIZATIONS SHAPE
ETHICAL CONDUCT
Ethical Awareness
• Code of Conduct Formal statement that defines how the
organization expects and requires employees to
resolve ethical questions.
Ethical Reasoning
• Codes of conduct cannot detail a solution for every
ethical situation, so corporations provide training
in ethical reasoning.
Ethical Action
• Helping employees recognize and reason through
ethical problems and turning them into ethical
actions.
Ethical Leadership
• Executives must demonstrate ethical behavior in their
actions.
ACTING RESPONSIBLY TO SATISFY
SOCIETY
Social Responsibility Management’s acceptance of the
obligation to consider profit, consumer
satisfaction, and societal well-being of equal value
in evaluating the firm’s performance.
• For example, contributions to the overall economy,
job opportunities, and charitable contributions and
service.
• Measured through social audits.
Areas of responsibility
Responsibilities to the General Public
Public Health Issues What to do about inherently
dangerous products such as alcohol, tobacco,
vaccines, and steroids.
Responsibilities to the General Public
Public Health Issues What to do about inherently
dangerous products such as alcohol,
tobacco, vaccines, and steroids.
Responsibilities to the General Public
Public Health Issues What to do about inherently
dangerous products such as alcohol,
tobacco, vaccines, and steroids.
Responsibilities to the General Public
Public Health Issues What to do about inherently
dangerous products such as alcohol,
tobacco, vaccines, and steroids.
Protecting the Environment Using resources
efficiently, minimizing pollution.
•  Recycling Reprocessing used materials
for reuse.
Developing the Quality of the Workforce Enhancing
quality of the overall workforce through
education and diversity initiatives.
Corporate Philanthropy Cash contributions,
donations of equipment and products, and
supporting the volunteer efforts of
company employees.
Responsibilities to Customers
Responsibilities to Customers
The Right to Be Safe Safe operation of
products, avoiding
product liability.
The Right to Be Informed Avoiding false or
misleading advertising and providing
effective customer service.
The Right to Choose Ability of consumers
to choose the products and services they
want.
The Right to Be Heard Ability of consumers to
express legitimate complaints to the
appropriate parties.
Responsibilities to Employees
Responsibilities to Employees
Workplace Safety Monitored by
Occupational Safety and Health Administration.
Quality-of-Life Issues Balancing work and family
through flexible work schedules, subsidized child

care, and regulation such as

the Family and Medical Leave Act of 1993.
Ensuring Equal Opportunity on the Job
Providing equal opportunities to all employees
without discrimination; many aspects regulated by
law.
Age Discrimination Age Discrimination in Employment Act
of 1968 protects workers age 40 or older.
Sexual Harassment and Sexism Avoiding unwelcome actions
of a sexual nature; equal pay for equal work
without regard to gender.
Responsibilities to Investors and the Financial
Community
• Obligation to make profits for
shareholders.
• Expectation of ethical and moral behavior.
• Investors protected by regulation by the
Securities and Exchange Commission
and state regulations.