Chapter 2

Business Ethics and Social Responsibility

5 Discuss how organizations shape

ethical behavior.

6 Describe how businesses social

Explain the concepts of business
1
ethics and social responsibility. responsibility is measured.
Describe the factors that influence
2 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
are concerned with
4 Identify common ethical dilemmas business ethics and
in the workplace.
social responsibility.
Concern for Ethical and Societal
Issues
Sarbanes-Oxley Act 2002 law that added oversight for the nations 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 whats right and whats profitable.
Often no clear-cut choices.
Often shaped by the organizations 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 business Telling the truth and

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

Employees disclosure
Businesspeople expect
of illegal, immoral, or
employees to be loyal
unethical practices in
and truthful, but ethical
the organization.
conflicts may arise.
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 Managements acceptance of the obligation to consider
profit, consumer satisfaction, and societal well-being of equal value in
evaluating the firms 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.