BUSINESS ETHICS & SOCIAL RESPONSIBILITY

HAND-OUT #5

RESPONSIBILITY – refers to the duty or obligation to satisfactorily perform or complete a task that one must fulfill, and
which has a consequent penalty for failure.

ACCOUNTABILITY – refers to the obligation of an individual or organization to account for its activities, accept
responsibility for them, and to disclose the results in a transparent manner. It includes the responsibility for money or
other entrusted property.

DIFFERENCE OF ACCOUNTABILITY AND RESPONSIBILITY

Responsibility Accountability
- Can be shared - Cannot be shared
- In ethics and governance, it refer to - Being accountable not only means being responsible for something
being in charge, being the owner of a but also ultimately being answerable for your actions.
task or event - It is something you hold a person to only after a task is done or not
- It does not necessarily owe an done
explanation - In ethics and governance, it is answerability, blameworthiness,
- Involves having authority over one’s liability, and the expectation of account-giving.
actions - It owes an explanation
- You are liable or answerable for one’s action
In order to be responsible, you must be accountable and vice versa. If you are responsible for something, you are also
accountable (Paul Gillard & Rachel Radwinsky). Being accountable means that you have responsibility for the results
(Sam Harrop).

Entrepreneurs have a moral obligation to reconcile and balance the rights and obligation of their stakeholders such as
customers, employees, suppliers, and other stakeholders.

SOCIAL RESPONSIBILITY TO CUSTOMERS

Customer is one of the most critical stakeholders.

Eight Basic Rights that Customers are entitled:

1. Right to Basic Needs – customers must not be deprived of the basic needs for survival. These basic needs include
food, clothing, shelter, education, and healthcare. They should be made available at affordable prices.
2. Right to Safety – consumers should be safeguarded against goods and services that are hazardous to human health.
3. Right to Information – consumers have the right to be properly informed and not be misled by dishonest
advertisements, labels, or packaging. They are entitled honest and truthful information so they can select the best
products and services.
4. Right to Choose – consumers are free to select from an array of quality products and services available in the
market.
5. Right to Representation – consumers have the right to participate in the formulation and execution of policies and
guidelines on consumer welfare and protection.
6. Right to Redress – consumers have the right to be compensated or reimbursed on any purchase or availment of
goods and services which do not meet the expected standards of quality.
7. Right to Education – consumers have the right to acquire the skills needed to always be an informed customer.
8. Right to a Healthy Environment – consumers have the right to safe and conducive place to live and work free from
any form of danger.

RESPONSIBILITIES AND ACCOUNTABILITIES TO THE CUSTOMERS

1. Ensure quality products and services
2. Ensure customer’s health and safety
3. Provide easy-to-use products
4. Provide free training
5. Be fair in prices
6. Be honest in advertising and marketing
7. Be honest in dealings
8. Attend to complaints
9. Service even after sales – provide maintenance of goods during the period of warranty
10. Respect customers’ time – do not decide the time and venue as per your availability and comfort. Do not arrive too
early nor too late. Do not keep your customers waiting. Your loss someone else’s gain.
11. Treat customers well
12. Ensure regular supply
13. Research and develop to increase customer’s satisfaction – for improvement of the quality and reduce cost
14. Avoid monopolistic competition

Deceptive practices – can be defined as illegal acts that mislead a person or group of persons to believe what is untrue or
disbelieve what is true.

Example of deceptive practices:

- Company representatives give false information about the feature of a product or service with the aim of
enticing (tempting) consumers to buy.
- Use of defective weighing scales to tamper with the weight of goods
- Overcharging
- Selling low-quality products
It is a social responsibility of manufactures or service providers to honor or comply with the provisions of sales contracts.
They should disclose the true nature of the product or service and these must live up the expectations of the customer.
They should inform of the terms and conditions of the purchase such as product features, price, warranties for equipment
or appliances, as well as after-sales service and delivery.

SOCIAL RESPONSIBILITY TO EMPLOYEES

Employees are the most important asset in an organization.

Basic Rights of Employees are:

1. Pay salary or wages
2. Create and maintain a safe workplace
Working Condition – refers to the physical environment particularly the physical setup of the work area, as well as
the procedures and practices that are relevant in performing a task.
- Employees should be provided with a safe work area with proper seats, good lighting and ventilation, adequate
passageways, exits, fire-fighting equipment, separate facilities for men and women, gear, masks, safety shoes, coats
and uniforms, medicine, medical supplies, and first aid kits. They should not be exposed to distracting noise, and
dangerous and toxic materials that may harm their health.

- Workloads should not be beyond what the employees can undertake. Workers should be protected when
undertaking jobs that will expose them to danger. Example, some jobs carry more risks like pilots, seamen, firemen,
and miners. Degree of exposure to risk should be considered in their compensation and benefits package, such as
higher insurance.

- Equal employment opportunity is an employment practice wherein employers do not discriminate against an
applicant or employee on the basis of age, color, race, religion, civil status, or gender and also prohibits
discrimination against people with disabilities. They should have the right to be promoted to higher position if they
are qualified.

Due Process – NO EMPLOYEES CAN BE DISMISSED FROM WORK WITHOUT DUE PROCESS. Due Process – is the
employee’s right to be heard before a decision for termination is made. It is a very important right and it
encompasses all the other rights of employees. It allows the management to impose appropriate disciplinary action
and implement progressive discipline on an erring employee.
3. Facilitate workers’ compensation insurance
4. Enforce anti-discrimination
5. Create and maintain a favorable working environment – in Mitsubishi electric endeavors to develop workplace
conditions that allow employee to both excel in their careers and meet the duties of raising families.
6. Respect human rights – enforce code of ethics (sexual harassment)
7. Support career development – create opportunities for employee to develop and grow. Pay attention to the
permanent education and improvement of employees in all employment levels.
8. Train and educate employee – attend business schools, specialization, professional conferences, seminars, and
trainings
9. Manage performance – performance evaluation, whatever the target, it must be achieved or exceeded
10. Give rewards and benefits

RESPONSIBILITIES AND ACCOUNTABILITIES TO THE CREDITORS

1. Give correct information – owners should be provided with correct information about the company to enable them to
decide about further investment
2. Provide fair return on investment (ROI)
3. Strengthen share prices – let them know the growth, innovation, and diversification to protect their own interest
4. Honor fiduciary (katiwala) duties – when a corporation becomes insolvent – the corporation cannot pay its debts as
they become due

RESPONSIBILITIES AND ACCOUNTABILITIES TO THE GOVERNMENT

1. Observe laws, rules, and regulations
2. Pay taxes
3. Follow environmental regulations
4. Abide by labor law
5. Avoid restrictive trade practices – no develop monopolies within a particular sector
6. Disclose financial statements
7. Avoid corruption
8. Assist in implementing socio-implementing policies – the government expects cooperation and help from the
business sector to help them implementing programs and policies relating to social and economic development
9. Help earn foreign exchange – the government expects from a business organization that it will earn foreign currency
by exporting goods in the foreign market. The government requires this foreign currency for importing valuable and
important products.
10. Advise the government – the business offers services of its leaders to the government to work on different
committees.
11. Complete promptly government contracts – tie-up project between business and government to complete the project
through a contract. It is responsibility of the business to complete the work in time and maintain a high level of
quality of the work.
12. Contribute to government treasury – the commercial organization must contribute the funds to the government
during emergencies and natural calamities.
13. Contribute to political stability – stable government often brings more return and peace in a democratic country.
SOCIAL RESPONSIBILITY TO SUPPLIERS
Suppliers should be treated as the company’s partners

RESPONSIBILITIES AND ACCOUNTABILITIES TO THE SUPPLIERS

1. Practice fair pricing and licensing
2. Avoid coercion (force) and litigation
3. Maintain stability – established long-term stability relationship enable to have pay back good value, quality, and
reliability
4. Maintain confidentiality – no unnecessary disclosure of information shared by the company and its activities
5. Pay on time
6. Select suppliers with discernment – three fundamental requirements every company must need from their suppliers:
legal compliance, quality control, and environmental conservation

Bribery is the most common form of unethical practice.

- It is defined as the giving of gifts or favors to influence a person’s or a company’s decision. Both the person who
bribes and the one who accepts the bribe commit on unethical action.
- One of the consequences of bribery is the awarding of contracts to suppliers of inferior products or services, wherein
the quality is compromised that leads to poor product quality and eventually affects customer’s patronage. Once
discovered, bribery negatively affects employee morale.
- Ethical practices to address bribery include having clear rules on acceptance of gifts and how to set aside personal
interests and uphold the company’s welfare.

RESPONSIBILITIES AND ACCOUNTABILITIES TO THE GENERAL PUBLIC

To maintain a positive public image and attract new clients
1. Be fiscally (monetary) responsible – do not use the money of the company for your own interest (executive greed)
such raiding corporate account, gave themselves loan using company’s money without control.
2. Consider public input – a company should reach out to its customers and benefit from the insight of what customers
are looking for in product improvement.
3. Take care of the community – responsibility of business towards community and society includes spending a part of
profits towards civic and educational facilities. Rehabilitating the population displaced by business units, housing
colonies for workers.

RESPONSIBILITIES AND ACCOUNTABILITIES TO THE ENVIRONMENT

1. Comply with environmental legislation
- Regarding emissions of air
- Store waste safely and securely (hospital waste)
- Manage business waste for recycling by separating papers, card, plastic, metals, and glass prior to collection
- Ensure you do not cause a statutory nuisance (noise, smoke, odors, dust)
- Get permission from water company before you allow trade affluent such as waste chemicals, detergents
- Make sure that you comply with restrictions in the storage of hazardous substances (chemicals, oil, pesticides)
2. Dispose waste properly
3. Recycle
4. Conserve and protect biodiversity – biodiversity refers to all species of plants and animals
5. Prevent and remedy damages to environment
6. Report an incident – such as damage or danger to the natural environment, pollution to water or land, incidents ate
waste sites, unusual drops in river flow
7. Use scarce natural resources sparingly – such as start by recycling paper, making the most of digital way and reusing
the recording sheets. Separate garbage dumps abd avoid using disposable plates, especially Styrofoam. Implement
energy savings system such as a LED lighting and turn off lights and equipment when not in use, encourage the use of
bicycles and car-pooling (magsabay sa isang car), invite to perform activities such as tree planting and others.

INTELLECTUAL PROPERTY RIGHTS

Intellectual Property – is defined by the World Intellectual Property Organization (WIPO), the officiating body for all
participating countries, as the “knowledge, creative ideas, or expressions of human mind that have commercial value and
are protectable under copyright, patent, service mark or trademark, or trade secret laws from imitation, infringement,
and dilution.”
- Intellectual property includes brand names, discoveries, inventions, knowledge, registered designs, software, and
work of artistic, literary, or musical nature.

Two Categories of intellectual property:

1. Industrial property – includes trademarks or service marks, layout designs of integrated circuits, commercial
names and designations, as well as geographical indications, and protection against unfair competition.
- The protection comes from the prohibition in using these signs to mislead or misinform consumers and cautioning
companies from misleading practice.
2. Copyright – refers to all “artistic creations like poems, novels, music, paintings, and cinematographic works.” Only
the author who can make copies of a literary or artistic work such as a book, a painting, a sculpture, a photograph, or
a motion picture.
- The author’s rights include the prevention of reproduction of such literary or artistic work except when there is an
authorization obtained from him or her.

Two main reason to protect intellectual property

1. It is an expression and protection of the moral and economic rights of creator and authors in their pieces of work.
2. This can promote creativity, as well as support economic and social development.
TYPES OF INTELLECTUAL PROPERTY UNDER INDUSTRIAL PROPERTY

PATENTS – is a right given to an inventor to exclude anyone from using or benefitting from the invention for a period of
20 years. Within this period, the inventor is given benefits like the exclusivity of use of his or her invention, provided that
there is full disclosure of the said invention for public consumption so that others can benefit and at the same time be
given the chance to further develop the said invention.
- Also refers to the act of filling for a patent application through the national or regional patent office to justify that the
said invention is new and is completely different from existing technologies in the same field.

INDUSTRIAL DESIGN – refers to the aesthetic aspect of a material. Aesthetics refers to the shape, pattern, or color of the
object or material.
- Under intellectual rights it refers to the right granted to protect the nonfunctional features of a product which
constitute its visual appeal that can attract or induce consumers to purchase the said product.
- The creators of the industrial design are given the exclusive right to “make, import, sell, hire or offer for sale articles
to which the design is applied or in which the design is embodied.” The maximum holding period for the said grant is
from 10 to 25 years.

INTEGRATED CIRCUITS
- Refer to the designs or schematics used in the manufacture of electrical equipment such as radio, computer, washing
machine, and other appliances. These electrical circuits involve high-capital investment because of the expensive
parts used in the design. It is very easy to copy the design so protection is needed to avoid any unwanted copying.

TRADEMARK
- Is a sign or a combination of signs in the form of words, numerals, pictures, shapes, and colors which differentiate
one product or service from another. A trademark is used in the marketing of goods. The sign may be seen in the
container, wrapper, or packaging of the goods. A sound, three dimensional (3D) signs, or olfactory signs (such as
scents of perfume) are considered trademarks in some countries. In some parts of the world, only visual signs are
allowed. The period of protection varies from one country to another but trademark can be renewed for an indefinite
period.

TRADE NAME
- Identifies a company or an organization . The protection given under intellectual property is that the name cannot be
used by another organization. In many countries, trade names may be registered in a government like Department of
Trade and Industry and Securities and Exchange Commission in the Philippines.

GEOGRAPHIC INDICATION
- Is a sign used for goods which have specific geographical origins and have certain characteristics of their particular
places of origin.