The Role of

Business in Social
and Economic
Development
L E S S O N 1 : T H E N A T U R E A N D F O R M S O F B U S I N E S S O R G A N I Z AT I O N S
LESSON 2: THE SOCIAL FUNCTIONS OF BUSINESS
L E S S O N 3 : C O R E P R I N C I P L E S O F FA I R N E S S , A C C O U N TA B I L I T Y, A N D
T RA N S PARE NC Y
LESSON 4: CODES OF ETHICS AND BUSINESS CONDUCT
More than profit-making,
there is a greater and
more noble cause for
doing business.

BUSINESS ETHICS AND SOCIAL RESPONSIBILIT Y

Lesson 1:
The Nature and Forms of Business
Organizations

WHAT IS BUSINESS? WHAT IS PROFIT?

◦ It is an activity that is part and parcel of human ◦ It is the difference between the amount earned
society; it is an entity in which economic and the amount spent in buying, operating, or
resources or inputs, such as materials and labor, producing something.
are put together and processed to provide goods
and services or outputs to customers.
◦ It is usually a complex enterprise involving major
activities like purchasing, manufacturing,
marketing, advertising, selling, and accounting.
◦ Its objective is to earn profit (although this is not
the sole purpose as we shall see further).
Furthermore, it is also about satisfying the needs
and wants of the consumers.
The fundamental reason for
examining the activities of business
from a moral point of view is that
business organizations, in principle,
have an obligation to help in the
promotion of the common good
and in the protection of
persons’ rights and interest.

“WHY LOOK AT BUSINESS FROM THE LENS OF ETHICS OR

MORALIT Y?”
 Service businesses
Three types of business provide services
rather than
operated for profit products to
customers.

Merchandising
business sells Manufacturing business
products they change basic inputs into
purchase from products that are sold to
other businesses customers.
to customers.
The Various Forms of
Business Organization
A BUSINESS ORGANIZATION MAY TAKE THE FORM OF A
PROPRIETORSHIP, PARTNERSHIP, OR CORPORATION.
Sole Proprietorship
◦ a business owned by one person.
◦ Advantages:
◦ (a) total undivided authority;
◦ (b) low organizational cost and license fees;
◦ (c) tax savings; and
◦ (d) no restrictions on type of business (as long as it is legal).

◦ Disadvantages:
◦ (a) unlimited liability;
◦ (b) limitation on size (and thus on fund-raising power); and
◦ (c) limited by management’s ability to be jack-of-all-trades.
Sole Proprietorship Business Examples
◦ Bookkeeping Business
◦ Financial Planning Services
◦ Landscaping Services
◦ Computer Repair Services
◦ Catering Services
◦ Housecleaning Services
◦ Freelance Writing
◦ Tutoring Services
◦ Virtual Assistance Services
Partnerships
◦ an association of two or more people as partners; it refers to an arrangement in which the individuals
share profits and liabilities of a business venture.
◦ Its chief characteristics are: (a) associations of individuals; (b) mutual agency; (c) limited life; (d) unlimited
liability; and (e) coownership of property.
Partnership Business Examples
◦ Medical Services
◦ Legal Services
◦ Real Estate
◦ Creative Concept Planning
Corporation
◦ an entity created by law that is separate and distinct from its owners and its continued existence is
dependent upon the corporate statutes of the state in which it is incorporated.
Business Corporations in the Philippines
The Role of Each Form of Business
Organization in the Economy
◦ Small and large businesses drive economic stability and growth by providing valuable services,
products and tax that directly contribute to the health of the community. They also provide jobs,
strengthening the economic health of each community where a business is based.

◦ Business is directly related to the economic health and well-being of the citizens of the city, region,
state or country in which those businesses are active. Profitable businesses drive economic health,
which translates to a better quality of life for the citizens.
Lesson 2:
The Role of Business in Social and
Economic Development
How society forms businesses…
If we want to know what a business is, we have to start with its purpose. And its purpose must lie outside of
the business itself. In fact, it must lie in the society since a business enterprise is an organ of society. There is only
one valid definition of business purpose: to create a customer.
Markets are not created by God, nature or economic forces but by businessmen. The want they satisfy may
have been felt by the customer before he was offered the means of satisfying it. It may indeed, like the want for
food in a famine, have dominated the customer’s life and filled all his waking moments. But it was a theoretical
want before; only when the action of businessmen makes it effective demand when there is a customer, or a
market. It may been an unfelt want. There may have been no want at all until business action created it – by
advertising, by salesmanship, or by inventing something new. In every case, it is busines action that creates the
customers.
It is the customer who determines what a business is. For it is the customer, and he alone, who through
being willing to pay for a good or for a service, converts economic resources into wealth, things into goods. What
the business thinks it produces is not of first importance – especially not to the future of the business and to its
success. What the customer thinks he is buying, what he considers as valuable is decisive – it determines what a
business is, what it produces and whether it will prosper.
- Peter Drucker, The Daily Drucker
Business in the Modern Society
1. Supply of Good and Services

2. Harnessing capital and other resources in production

3. Self-employment and provision of employment

4. Preservation of natural resources

5. Research, Development, and Innovation

 How Entrepreneurs Drive
Economic Development
◦ Investing in products and services which the people need.
◦ Providing employment opportunities.
◦ Commerce and regional economic integration
◦ New technologies promote efficiency
◦ Addressing environmental challenges
 The Role of Business in
Poverty Alleviation
Businesses can help alleviate poverty with programs and projects that aim to improve
the living conditions in underdeveloped communities. With the alleviation of poverty, people
become more capable workers and professionals able to take advantage of the goods and
services that businesses have to offer. When businesses thrive, so does the entire
community.
 Importance of Business to the
Society
◦ Business produces and distributes goods and services to satisfy certain public needs. To accomplish,
business has to be very flexible and constantly researching what the consumer demands. Businesses,
although it is profit and revenue oriented, must always take in consideration what the consumers
demands are and responds to that needs by creating the goods or services.
◦ …a venue providing opportunity to expand job opportunities to others and creates opportunities to pay
salaries and wages.
◦ Tax collection and essential investments
◦ A business also helps enlighten and educate people and encourages their further personal growth.
…So, when you make this crucial
decision to embark on a business
enterprise, bear it in mind that it
is a way to serve your society…
Lesson 3:
Core Principles of Fairness,
Accountability, and Transparency
STEWARDSHIP
(vis a vis Respect for other’s property)

◦ Principle of Neighborliness – the principle that directs us on how we ought to treat other persons.

◦ CHARITY and JUSTICE – underlying virtues of being a neighbor to another.

◦ Respecting others’ property requires the virtue of JUSTICE, (Social Justice, in particular).
 SOCIAL JUSTICE

JUSTICE ◦ It regulates of rights of persons towards the weaker

• Rendering what is due to a members of the community – those who are poor and needy.
person.
• Gives us sense of owing. ◦ “…those who have less in life must have more in law…”
(Ramon Magsaysay)
• “…the firm and constant will to
give to each his due…” (St.
Thomas Aquinas, Summa ◦ MAIN POINT:
Theologica, II-II, 58)
“GIVING WHAT ONE NEEDS IN ORDER TO LIVE A DECENT LIFE,
• Simply said, it gives us the duty THAT IS, A SUSTAINABLE LIFE FOR HIM AND HIS FAMILY.”
to respect the rights of a person.
• RIGHT - moral power residing in a
person, - a power which all
others are bound to respect – of
doing, possessing, or requiring
something.
 GOAL OF SOCIAL JUSTICE
VITALIANO GOROSPE
◦ “In practice, he says, magpakatao para sa
kapwa means two things:
◦ (1) sharing with others especially the poor;
◦ (2) ‘subversion’ in the sense of struggling for structural
and cultural change, simplicity of life style, because by
having more and more, the great majority of the poor may
have less and less”.
CATHOLIC CHURCH
◦ “The goal of social justice is the promotion of
equal chances and opportunities in life.” (Pius
XI, Quadregesimo Anno, 1931.)
◦ “from less human conditions to those which
are more human” or “the passage from misery
towards the possession of necessities, victory
over social scourges, the growth of knowledge,
the acquisition of culture” (Paul VI, Populorum
Pregressio, #20, #21.)
 Our Duties Towards Our
Neighbors
WHAT IS DUTY? WHAT IS OUR DUTY TO OTHERS THEN?

◦ Taken objectively, is anything we are bound to
do or omit.
◦ Taken subjectively, it is a moral obligation
incumbent upon a person to do, omit, or avoid
something.
◦ Every person has the right of ownership over
things honesty acquired.
◦ “Property” refers to external and material
goods which, strictly speaking, can be
possessed, disposed of, or consumed, such as
food, clothes, house, land, and money.
◦ On every person is imposed the
corresponding reciprocal duty to respect
the property of the neighbor in all its forms.