Business Ethics and Social Responsibility

Aasim siddiqui (Lecturer) Dept. of Management studies FIT Meerut

Meaning and Definition of Ethics  According to Mackenzie Ethics is the study of what is right or good in human conduct or the Science of the ideal involve in human life . of Management studies FIT Meerut .  According to Webster ethics is the discipline dealing with that which is good and bad and with moral duty an obligations Aasim siddiqui (Lecturer) Dept.

To be more specific. would it be right for a store manager to break a promise to a customer and sell some merchandise to someone else? If you innocently came across secret information about a competitor. of Management studies FIT Meerut . These ethics guide the thinking and decision making with respect to what is good and what is bad. For example.Introduction to Business Managerial Ethics Managerial ethics are the standards of behavior that guide individual managers in their work. right and wrong and just and unjust actions of businessmen.  Aasim siddiqui (Lecturer) Dept. it is the study of good and evil. would it be permissible for you to use it for your own advantage?  It refers to the application of ethics to business.

 To earn reasonable profit.  To charge fair prices from the customers.Examples of Business Ethics  To give fair and equitable treatment to the employees.  To use fair weights for measurement of commodities.  To pay taxes to government and other bodies honestly. of Management studies FIT Meerut .  To become a good corporate citizen. Aasim siddiqui (Lecturer) Dept.

Law Cannot Protect Society. ethics can succeed. Aasim siddiqui (Lecturer) Dept. decisions which are in the interest of the public. Ethics Can: Where law fails. of Management studies FIT Meerut .. their employees and the company s Ethics and Profit Go Together: A company which is inspired by ethical conduct is also profitable one.e.Importance of Ethics in Business      Values Create reliability with the Public: A company perceived by the public to be ethically and socially responsive will be honored and respected even by those who have no intimate knowledge of its actual working. i. Values Give Management reliability with Employees: Values help Better Decision Making: Another point of great importance is that an ethical attitude helps the management make better decisions. An ethical oriented management takes measures to prevent pollution and protect workers health even before being mandated by law.

From a small child s relationship with parents to a manager s relationship with an employee. A duty is an obligation to take specific steps-to-pay steps-totaxes.g. industry. charge reasonable prices due to its value systems in spite of its monopoly position in the industry. someone else has a duty to repeat it. These decisions reflect our values and our concern for ethics. Values represent moral convictions society. relationships are a pervasive aspect of moral life. We constantly decide how to maintain and take care of them. and to obey the law in other respects. e. Whenever someone has a right. These relationships exist because we need one another for mutual support and to accomplish our goals..  Human Relationships: Every human being is connected to others in a web of relationships. y Aasim siddiqui (Lecturer) Dept.Tools of ethics Values: Values: Values are the moral beliefs held by an individual.  Rights and Duties: rights are correlated with duties. of Management studies FIT Meerut . For example. and are relatively permanent. an organization and a society. a company may permanent.

should get the consent of others before using their property. respect for property is a corollary of respect for individuals. According to the principles of mutual aid.  Aasim siddiqui (Lecturer) Dept. individuals should help one another if the cost of doing so is not great. Common Morality: Promise Keeping:  Mutual Aid: Human communities are sustained by the recognition that people depend on each other and help each other. of Management studies FIT Meerut . If you think of people as own their own bodies. Blood donation and the United Way are good examples.  Respect for Property: most people. most of the time.  Respect for Persons: Common morality also requires us to regard other people.

M. religious affiliations and income groups.  Aasim siddiqui (Lecturer) Dept. educational standards..  A majority of the managers welcomed the idea of a code of conduct and felt it would help to improve the ethical climate in the country. areas. Monappa of 115 business executives attending the middle and senior management Programme of the I. of Management studies FIT Meerut . Ahmedabad and belonging to different industries. has revealed some notable results regarding Indian managers attitude towards Business Ethics.I.SHIFT TO ETHICS A survey undertaken by Prof.  Dishonest methods used by competitors and the unethical climate in the industry were often cited as deterrents to the honest transaction of business.  Managers were dis-satisfied with the idea that profits disshould be the only guidelines for a businessman in decision making. The findings are reproduced below.

etc. through whom the company policy is most often transmitted. Corruption and greed of government officials were considered as a barrier to ethical business behavior. was considered important in influencing ethical action. Formal education and training did not seem to have simulated the desire to act honestly. The problems that caused managers the greatest concern were those which involved using gifts. Most managers do take time in making a decision to consider the ethical implications.       The attitudes and reactions of the older business managers to situations demonstrated a greater ethical awareness than those of younger ones. of Management studies FIT Meerut . The size of the company. personal favors. The influence of supervisors. by and large. bribes. decisionAasim siddiqui (Lecturer) Dept. had no discernible influence on ethical decision-making.

Aasim siddiqui (Lecturer) Dept.SOCIAL RESPONSIBILITY OF BUSINESS  Social responsibility means obligation of decisiondecision-makers to take actions which protect and improve the welfare of society as a whole along with their own interests. of Management studies FIT Meerut .  Social responsibility refers to the obligations and duties of business to the society.

of Management studies FIT Meerut .Responsibility of Business towards Different Sections of Society Aasim siddiqui (Lecturer) Dept.

participation management etc. Mental. wholeResponsibility of business towards employees is in the form of training. safety. consolidating financial position of business. promotion. comfortable working conditions. health. ensuring fair and regular return on capital employed. The workers should be offered incentives for raising their performance.Employees No organization can be successful without the whole-hearted cooperation of the employees. economic and cultural satisfaction of employees should be taken care of.  Aasim siddiqui (Lecturer) Dept. worker s education. physical. The employees should be taken into confidence while taking decisions affecting their interests. proper selection fair wages.  Owners: Business is accountable towards owners as well such as managing business profitably. of Management studies FIT Meerut . guaranteeing capital appreciation so as to enable the owners to withstand any business contingencies.

 Aasim siddiqui (Lecturer) Dept. and pay taxes honestly and in time. (ii) Marketing. risks. execute government contracts.Consumers: Responsibility of business towards consumer extends to: (i) Product.  Government: a number of legislatives are formed from time to time by the government for proper regulation and control of business. the consumer should be provided full information about the products including their adverse effects. Quality goods should be produced and supplied. Businessmen should comply with all legal requirements. Distribution system should make goods easily available to avoid artificial scarcities and after sales service should be prompt. of Management studies FIT Meerut . To avoid being misled by wrong claims about products through improper advertisements or otherwise. Buying capacity and consumer preferences should be taken into consideration while deciding the manufacturing policies.

(ii) Pollution Control.  Aasim siddiqui (Lecturer) Dept. of Management studies FIT Meerut .  Environment: Business should protect the environment which has acquired great importance all over the world. The alternative sources can also to found out to save natural resources like to save forests alternative to wood and pulp can be found. the use of coal can be reduced by alternative source of energy. Business can discharge the responsibility of protecting environment in following way (i) Preservation of Natural Resources. Every industrial undertaking should take steps to dispose off industrial wastes in such a way that ecological balance is maintained and environmental pollution is prevented.Community: Responsibility of business towards community and society includes spending a part of profits towards civic and educational facilities. Appropriate steps should be taken to prevent environmental pollution and to preserve ecological balance. Scarce natural resources should be used very carefully as these are depleting at a very fast rate.

So ultimately it is the consumer only who bears the burden of social obligation. Deviation from Main Objective. Lack of Social Skill. 2. Economic efficiency of business is a top priority and a deviation from this would divert the business from its mission. The main goal of Objective. Businessmen who are good at Skill. He may not have the required skill to solve complex social problems. A businessman devotes all his energies in running his business efficiently and smoothly. Cost of social responsibility will be Prices. When a business house is required to spend money on performing social obligations. Aasim siddiqui (Lecturer) Dept. managing business may not be good at solving social problems. Increase in Prices. of Management studies FIT Meerut . 3. the money spent on social welfare will be collected from consumer only by way of increased prices of goods and services. business is profit maximization.ARGUMENTS AGAINST SOCIAL RESPONSIBILITY 1. passed on the society in the form of increased prices.

of Management studies FIT Meerut . It has to regulate the business in public interest. a business promoting social equalities. Government Regulations. If business does not respond positively Regulations. Aasim siddiqui (Lecturer) Dept. the business should discharge its obligations to society. business will not only be in the interest of society but in its own interest also. One of main arguments for social responsibility is that public expectations from business have changed. Favorable for Business. Business can exist only with public support and only if business fulfills needs of society. cultural values have long and rich heritage. consumer employerservice will enjoy better social position. healthy employer-employee relations. Before government stretches its long arms. Therefore if business wishes to remain in existence in long term it must respond to society s needs and give society what society wants. Performance of social obligation by Business. In country like India where social and Norms. A business working against traditional values will face criticism from society. SocioSocio-cultural Norms.ARGUMENTS FOR SOCIAL RESPONSIBILITY OF BUSINESS     Public Requirements. then it may be compelled to do so through government laws and regulations. to the needs of society.

Sign up to vote on this title
UsefulNot useful