Chapter 2

Business Ethics and Social Responsibility

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1

Explain the concepts of business

ethics and social responsibility.

2 Describe the factors that influence

business ethics.

3 List the stages in the development

of ethical standards.

4 Identify common ethical dilemmas

in the workplace.

5 Discuss how organizations shape

ethical behavior.

6 Describe how businesses social

responsibility is measured.

7 Summarize the responsibilities of

business to the general public,
customers, and employees.

8 Explain why investors

are concerned with
business ethics and
social responsibility.

Concern for Ethical and Societal

Issues
Sarbanes-Oxley Act 2002lawthataddedoversightforthenationsmajor
companiesandaspecialoversightboardtoregulatepublicaccountingfirms
thatauditthefinancialrecordsofthesecorporations.
Business Ethics Thestandardsofconductandmoralvaluesgoverningactions
anddecisionsintheworkenvironment.
Socialresponsibility.
Balancebetweenwhatsrightandwhatsprofitable.
Oftennoclearcutchoices.
Oftenshapedbytheorganizationsethicalclimate.

THE NEW ETHICAL ENVIRONMENT

Highprofileinvestigationsandarrestsinheadlines.
Vastmajorityofbusinessesethical.
Newcorporateofficerschargedwithdeterringwrongdoingandensuringethical
standards.

Source:OurCompany,OurCredo,Johnson&JohnsonWebsite

Individuals Make a Difference

Personalethicsmatter.
SurveyofBritishworkersfound30percentspent30minutesdailydoing
personalbusinessonline.
Technologyexpandedabuses.
Datatheft.

Development of Individual Ethics

On-the-Job Ethical Dilemmas

Situationinwhichabusiness
decisionmaybeinfluenced
forpersonalgain.

Employeesdisclosure
ofillegal,immoral,or
unethicalpracticesin
theorganization.

Tellingthetruthand
adheringtodeeplyfelt
ethicalprinciplesin
businessdecisions.

Businesspeopleexpect
employeestobeloyal
andtruthful,butethical
conflictsmayarise.

HOW ORGANIZATIONS SHAPE

ETHICAL CONDUCT

Ethical Awareness
Code of Conduct Formalstatementthatdefineshowtheorganizationexpects
andrequiresemployeestoresolveethicalquestions.

Ethical Reasoning
Codesofconductcannotdetailasolutionforeveryethicalsituation,so
corporationsprovidetraininginethicalreasoning.

Ethical Action
Helpingemployeesrecognizeandreasonthroughethicalproblemsandturning
themintoethicalactions.

Ethical Leadership
Executivesmustdemonstrateethicalbehaviorintheiractions.

ACTING RESPONSIBLY TO SATISFY

SOCIETY
Social Responsibility Managementsacceptanceoftheobligationtoconsider
profit,consumersatisfaction,andsocietalwellbeingofequalvaluein
evaluatingthefirmsperformance.
Forexample,contributionstotheoveralleconomy,jobopportunities,and
charitablecontributionsandservice.
Measuredthroughsocialaudits.

Areasofresponsibility

Responsibilities to the General

Public
Public Health IssuesWhattodoaboutinherentlydangerous
productssuchasalcohol,tobacco,vaccines,andsteroids.

Responsibilities to the General

Public
Public Health IssuesWhattodoaboutinherentlydangerous
productssuchasalcohol,tobacco,vaccines,andsteroids.

Responsibilities to the General

Public
Public Health IssuesWhattodoaboutinherentlydangerous
productssuchasalcohol,tobacco,vaccines,andsteroids.

Responsibilities to the General

Public
Public Health IssuesWhattodoaboutinherentlydangerous
productssuchasalcohol,tobacco,vaccines,andsteroids.
Protecting the EnvironmentUsingresourcesefficiently,
minimizingpollution.
Recycling Reprocessingusedmaterials
forreuse.
Developing the Quality of the WorkforceEnhancing
qualityoftheoverallworkforcethrougheducationand
diversityinitiatives.
Corporate PhilanthropyCashcontributions,donationsof
equipmentandproducts,andsupportingthevolunteerefforts
ofcompanyemployees.

Responsibilities to Customers

Responsibilities to Customers
The Right to Be SafeSafeoperationofproducts,avoiding
productliability.
The Right to Be Informed Avoidingfalseormisleading
advertisingandprovidingeffectivecustomerservice.
The Right to Choose Abilityofconsumers
tochoosetheproductsandservicesthey
want.
The Right to Be HeardAbilityofconsumersto
expresslegitimatecomplaintstotheappropriateparties.

Responsibilities to Employees

Responsibilities to Employees
Workplace SafetyMonitoredbyOccupationalSafetyand
HealthAdministration.
Quality-of-Life Issues Balancingworkandfamily
throughflexibleworkschedules,subsidizedchild
care,andregulationsuchastheFamilyand
MedicalLeaveActof1993.
Ensuring Equal Opportunity on the Job
Providingequalopportunitiestoallemployeeswithout
discrimination;manyaspectsregulatedbylaw.
Age DiscriminationAgeDiscriminationinEmployment
Actof1968protectsworkersage40orolder.
Sexual Harassment and SexismAvoidingunwelcome
actionsofasexualnature;equalpayforequalworkwithout
regardtogender.

Responsibilities to Investors and

the Financial Community
Obligationtomakeprofitsforshareholders.
Expectationofethicalandmoralbehavior.
Investorsprotectedbyregulationbythe
SecuritiesandExchangeCommission
andstateregulations.