RAWALPINDI WOMEN UNIVERSITY

BS PSYCHOLOGY SEMESTER 1 SECTION-B

Assignment no: 1
Chapter # 4 Demanding Ethical and Socially Responsible Behavior
Member no: Name: Roll no:
1 Sidra Majeed 21111041098
2 Amina Shakoor 21111041099
3 Arooj Zahra 21111041100
4 Esha Sohail 21111041101
5 Bibi Ayesha 21111041102
Submitted to: Ma’am Ramzana Bahir
Date of submission: 21-12-2021
 Name: Sidra Majeed

Roll no: 21111041098

Member #: 1

Question-1

Explain why obeying the law is only the first step in behaving ethically?

Answer: While the number of accounting fraud cases pursued by the Securities and Exchange
Commission (SEC) fell from its typical level of more than 25 percent of the SEC’s enforcement efforts
before the Great Recession to just 11 percent in 2013, experts predict this number will rise in the near
future. Why? One reason is that new data mining technology will allow the SEC to more easily identify
companies that may be making earnings misstatements. 2 One danger in writing new laws to correct
behavior is that people may begin to think that any behavior that is within the law is also acceptable.
The measure of behavior then becomes “Is it legal?” A society gets into trouble when people consider
only what is illegal and not also what is unethical. Ethics and legality are two very different things.
Although following the law is an important first step, behaving ethically requires more than that. Ethics
reflects people’s proper relationships with one another: How should we treat others? What
responsibility should we feel for others? Legality is narrower. It refers to laws we have written to protect
ourselves from fraud, theft, and violence. Many immoral and unethical acts fall well within our laws. For
example, gossiping about your neighbor or sharing something told to you in confidence is unethical, but
not illegal. In the early 2000s, the U.S. public was shocked to learn that Enron, the giant energy trading
company, had created off-the-books partnerships to unlawfully hide its debts and losses. The Enron
disgrace was soon followed by more scandals at major companies such as WorldCom, Tyco
International, ImClone, HealthSouth, and Boeing. (See the nearby Making Ethical Decisions box for a
brief summary of one of the more notorious corruption cases.) In recent years, greedy borrowers and
lenders alike were among those who brought the real estate, mortgage, and banking industries to the
edge of a financial crisis that threatened the entire U.S. and world economies. 1 Given the ethical lapses
prevalent today, how can we restore trust in the free-market system and in leaders in general? First,
those who have broken the law should be punished accordingly. New laws making accounting records
more transparent (easy to read and understand) and businesspeople and others more accountable for
their actions may also help. But laws alone don’t make people honest, reliable, or truthful. If they did,
crime would disappear.

Ethical Standards Are Fundamental

We define ethics as society’s accepted standards of moral behavior, that is, behaviors accepted by
society as right rather than wrong. Many Americans today have few moral absolutes. Many decide
situationally whether it’s OK to steal, lie, or text and drive. They seem to think that what is right is
whatever works best for the individual—that each person has to work out for himself or herself the
difference between right and wrong. Such thinking may be part of the behavior that has led to scandals
in government and business. This isn’t the way it always was. When Thomas Jefferson wrote that all men
have the right to life, liberty, and the pursuit of happiness, he declared it to be a self-evident truth.
Going back even further in time, the Ten Commandments were not called the “Ten Highly Tentative
Suggestions.” In the United States, with so many diverse cultures, you might think it is impossible to
identify common standards of ethical behavior. However, among sources from many different times and
places—such as the Bible, Aristotle’s Ethics, the Koran, and the Analects of Confucius—you’ll find the
following common statements of basic moral values: Integrity, respect for human life, self-control,
honesty, courage, and self-sacrifice are right. Cheating, coward- ice, and cruelty are wrong.
Furthermore, all the world’s major religions sup- port a version of what some call the Golden Rule: Do
unto others as you would have them do unto you.

Question: 2

Ask the three questions you need to answer when faced with a potentially unethical action?

Answer: Ethics Begins with Each of Us

It is easy to criticize business and political leaders for moral and ethical shortcomings. Both managers
and workers often cite low managerial ethics as a major cause of U.S. businesses’ competitive woes. But
employees also frequently violate safety standards and goof off during the work week. U.S. adults in
general are not always as honest or honorable as they should be. Even though volunteerism is at an all-
time high according to the U.S. Census Bureau, three of every four citizens do not give any time to the
community in which they live because they think it will take too much time or they don’t think they are
qualified. 4 Plagiarizing material from the Internet, including cutting and pasting information from
websites without giving credit, is the most common form of cheating in schools today. To fight this
problem, many instructors now use services like TurnItIn.com, which scans students’ papers against
more than 40 billion online sources to pro- vide evidence of copying in seconds. 5 In a recent study,
most teens said they were prepared to make ethical decisions in the work- force, but an alarming 51
percent of high school students admit that they have cheated on tests in the last year. Studies have
found a strong relationship between academic dishonesty among undergraduates and dishonesty at
work. 6 In response, many schools are establishing heavier consequences for cheating and requiring
students to perform a certain number of hours of community service to graduate. Do you think such
policies make a difference in student behavior? Choices are not always easy, and the obvious ethical
solution may have personal or professional drawbacks. Imagine that your supervisor has asked you to do
something you feel is unethical. You’ve just taken out a mortgage on a new house to make room for
your first baby, due in two months. Not carrying out your supervisor’s request may get you fired. What
should you do? Sometimes there is no easy alternative in such ethical dilemmas because you must
choose between equally unsatisfactory alternatives. It can be difficult to balance ethics and other goals,
such as pleasing stakeholders or advancing in your career. According to management writer Ken
Blanchard and religious leader Norman Vincent Peale, it helps to ask yourself the following questions
when facing an ethical dilemma. 71. Is my proposed action legal? Am I violating any law or company
policy? Whether you’re thinking about having a drink and driving home, gathering marketing
intelligence, designing a product, hiring or firing employees, getting rid of industrial waste, or using a
questionable nickname for an employee, think about the legal implications. This is the most basic
question in business ethics, but it is only the first. 2. Is it balanced? Am I acting fairly? Would I want to be
treated this way? Will I win everything at the expense of another? Win–lose situations often become
lose– lose situations and generate retaliation from the loser. Not every situation can be completely
balanced, but the health of our relationships requires us to avoid major imbalances over time. An ethical
businessperson has a win–win attitude and tries to make decisions that benefit all.3. How will it make
me feel about myself? Would I feel proud if my family learned of my decision? My friends? Could I
discuss the proposed situation or action with my supervisor? The company’s clients? Will I have to hide
my actions? Has someone warned me not to disclose them? What if my decision were announced on
the evening news? Am I feeling unusually nervous? Decisions that go against our sense of right and
wrong make us feel bad—they erode our self-esteem. That is why an ethical businessperson does what
is proper as well as what is profitable. Individuals and companies that develop a strong ethics code and
use the three questions above have a better chance than most of behaving ethically. The Spotlight on
Small Business box features a story about how one woman chose to help others. If you would like to
know which style of recognizing and resolving ethical dilemmas you favor, fill out the ethical orientation
questionnaire.

Name: Amina Shakoor

Roll no: 21111041099
Member # 2
Question-3
Describe management’s role in setting ethical standards.

Answer: MANAGING BUSINESS ETHICALLY AND RESPONSIBLY

Ethics is caught more than it is taught. That is, people learn their standards and values from observing
what others do, not from hearing what they say. This is as true in business as it true at home.
Organizational ethics begins at the top, and the leadership and example of strong managers can help instill
corporate values in employees.
Trust and corporation between workers and managers must be based on fairness, honesty, openness, and
moral integrity. The same applies to relationships among business and between nations. A business
should be managed ethically for many reasons: to maintain a good reputation; to keep existing customers
and attract new ones; to avoid lawsuits; to reduce employee turnover; to avoid government intervention in
the form of new laws and regulations controlling business activities; to please customers, employees, and
society; and simply to do the right thing.
Some managers think ethics is a personal matter- either individuals have ethical principles or they don’t.
These managers believe that they are not responsible for an individual’s misdeeds and that ethics has
nothing to do with management. But a growing number of people think that ethics has everything to do
with management. Individuals do not usually act alone; they need the implied, if not the direct,
corporation of others to behave unethically in a corporation. For example there have been reports of cell
phone services representatives who actually lie to get customers to extend their contracts- or even extend
their contracts without the customer’s knowledge. Some phone reps intentionally hang up on callers to
prevent them from cancelling their contracts. Why do these sales reps sometimes resort to overly
aggressive tactics? Because poorly designed incentive programs reward them for meeting certain goals,
sometimes doubling or tripling their salaries with incentive. Do their managers say directly, “Deceive the
customers”? No, but the message is clear. Overly ambitious goals and incentives can create an
environment in which unethical actions like this can occur.

Question: 4
Distinguish between compliance-based and integrity-based ethics codes, and list the six steps in
setting up a corporate ethics code.

Answer: SETTING CORPORATE EHTICAL STANDARDS

More and more companies have adopted written codes of ethics. Although these codes vary greatly, they
can be replaced into two categories: compliance-based and integrity-based. Compliance-based ethics
codes emphasize preventing unlawful behavior by increasing control and penalizing wrongdoers.
Integrity-based ethics codes define the organization’s guiding values, create an environment that supports
ethically sound behavior, and stress shared accountability.
Here are six steps many believe can improve U.S business ethics:
1. Top management must adopt and unconditionally support an explicit corporate code of conduct.
2. Employees must understand that expectations from ethical behavior begin at the top and that senior
management expects all employees to act accordingly.
3. Managers and other must be trained to consider the ethical implications of all business decisions.
4. An ethics office must be set up with which employees can communicate anonymously. Whistleblowers
(insiders who report illegal or unethical behavior) must feel protected from retaliation. The Sarbanes-
Oxley Act protects whistleblowers by requiring all public corporations to allow employee concerns about
accounting and auditing to be submitted confidentially and anonymously. The act also requires
reinstatement and back pay to people who were punished by their employees for passing information
about brand on to authorities. In 2010 the Dodd-Frank Wall Street Reform and Consumer Protection Act
was signed into law. The law includes a ‘bounty’ provision that allows corporate whistleblowers who
provide information that leads to a successful enforcement action to collect 10-30 percent of the total
penalty for violations that exceed $1 million. A whistleblower in the Enron case received a $1 million
reward from the IRS (and, yes, it is taxable).
5. Outsiders such as suppliers, subcontractors, distributors, and customers must be told about the ethics
program. Pressure to put aside ethical considerations often comes from the outside, and it helps the
employees resist such pressure when everyone knows what the ethical standards are.
6. The ethics code must be enforced with timely action if any rules are broken. That is the most forceful
way to communicate to all employees that the code is serious.
This last step is perhaps the most critical. No matter how well intended a company’s ethics code, it is
worthless of not enforced. Enron had a written code of ethics. B y ignoring it, Enron’s board and
management sent employees son & Johnson’s response to a cyanide poisoning crisis in the 1980s show
that enforcing ethics codes can enhance profit. Although not legally required to do so, the company
recalled its Tylenol products and won great praise and a reputation for corporate integrity.
An important factor in enforcing an ethics code is selecting an ethics officer. The most effective ethics
officers set a positive tone, communicate effectively, and relate well to employees at every level. They are
equally comfortable as counselors and investigators and ca be trusted to maintain confidentially, conduct
objective investigations, and ensure fairness. They can demonstrate to stakeholders that ethics are
important in everything the company does.
 Name: Arooj Zahra

Roll no: 1100

Member #: 3

Date: 17-12-2021

Question No: 5

Define corporate social responsibility and compare corporation’s responsibilities to various

stakeholders.

Answer: CORPORATE SOCIAL RESPONSIBILITY

Just as you and I need to be good citizens, contributing, what we can to society, corporations need to be
good citizens as well. Corporate Social Responsibility (CSR) is the concern business have for the welfare
of society, not just for their owners. CSR goes well beyond being ethical. It is based on a commitment to
integrity, fairness and respect. You may be surprised to know that not everyone thinks that CSR is a
good thing. Some critics of CSR believe that a manager’s role is to compete and win in the marketplace.
The late U.S economist Milton Friedman made the famous statement that only social responsibility of
business is to make money for stockholders. He thought doing anything else was moving dangerously
toward socialism. Other CSR critics believe that managers who pursue CSR are doing so with other
people’s money which they invested to make more money, not to improve society. In this view spending
money on CSR activities is stealing from investors. CSR defenders, in contrast believe that businesses
owe their existence to the societies they serve and cannot succeed in societies that fail. Firms have
access to society’s labor pool and its natural resources, in which every member of society has a stake.
Even Adam Smith, the father of capitalism, believed that self-interested pursuit of profit was wrong and
that benevolence was the highest virtue. CSR defenders acknowledge that business have deep
obligations to investors and should not attempt government-type social responsibility projects.
However, they also argue that CSR makes more money for investors in the long run. Studies show that
companies with good ethical reputations attract and retain better employees, draw more customers,
and enjoy greater employee loyalty.

The social performance of a company has several dimensions:

1: Corporate philanthropy includes charitable donations to non-profit groups of all kinds. Eighty
percent of the business leaders surveyed in a recent study said that their companies participate in
philanthropic activities. Some make long-term commitments to one cause, such as McDonald’s Ronald
McDonald Houses for families whose critically ill children require treatment away from home. The Bill &
Melinda Gates Foundation is by far the nation’s largest philanthropic foundation, with assists of
approximately $40 billion.

2: Corporate social initiatives include enhanced forms of corporate philanthropy. Corporate social
initiatives differ from traditional philanthropy in that they are more directly related to the company’s
competences. For example, logistics giant TNT keeps a 50- person emergency response team on standby
to go anywhere in the world at 48 hours’ notice to provide support in aviation, warehousing,
transportation, reporting and communication.

3: Corporate Responsibility includes everything from hiring minority workers to making safe products,
minimizing pollution, using energy wisely and providing a safe work environment-essentially everything
that has to do with acting responsibility within society.

4: Corporate Policy refers to the position a firm takes on social and political issues. For example,
Patagonia’s corporate policy includes this statement: “A love of wild and beautiful places demands
participation in the fight to save them, and to help reverse the steep decline in the overall environment
health of our planet. We donate our time, services and at least 1%of our sales to hundreds of grassroots
environmental group all over the world who work to help reverse the tide.

The problems corporations cause get so much news coverage that people tend to get a negative view of
their impact on society. But businesses make positive contributions too. Few people know, for example,
that a Xerox program called Social Service Leave allows employees to take up to a year to work for a
non-profit organization while earning their full Xerox salary and benefits, including job security. IBM and
Wells Fargo Bank have similar programs.

In fact, many companies allow employees help to social agencies of all kinds. The recent research was
that many corporations approach corporate philanthropy. Now they are often likely to give time and
goods rather than money. Many companies are now encouraging employees to volunteer more-on
company time. For Example, Mars Incorporated encourages community involvement by offering paid
time off to clean parks, aid medical clinic and plant gardens. Volunteers enter a zip code or indicate the
geographic area in which they’d like to work, and the programs list organizations that could use their
help. Even those who support the idea of social responsibility can’t agree on what it is.

Responsibility to Customers

President John F. Kennedy proposed four basic rights of consumers: (1) the right to safety, (2) the right
to be informed, (3) the right to choose, and (4) the right to be heard. These rights will be achieved only if
businesses and consumers recognize them and take action in the marketplace.

A recurring theme of this book is the importance of pleasing customers by offering them real value.
Since three of five new businesses fail, we know this responsibility is not easy to meet as it seems. One
sure way of failing to please customers is to be less than honest with them. The payoff for socially
conscious behavior, however, can be new customers who admire the company’s social efforts.
Consumer behavior studies show that, all else being equal, a socially conscious company is likely to be
viewed more favorably than others. In fact, a recent Nielsen survey showed that 50 percent of the
consumers were willing to pay more for goods from socially responsible companies.

Given the value place on social efforts, how do companies make customers aware of such efforts? One
too many companies use to raise awareness of their social personality efforts is social media. The
primary value of using social media to communicate CSR efforts is to allow companies to reach diverse
groups, allows them to connect directly with customers in a low-cost, efficient way and enables them to
interact with specific groups more easily than through more traditional efforts.
 It's not enough for companies to brag about their social responsibility efforts; they must live up to the
expectations they raise or face the consequences. When herbal tea maker Celestial Seasonings ignored
advertised image of environmental stewardship by poisoning prairie dogs on its property, it incurred
customers’ wrath. Customers prefer to do business with companies they trust and even more important,
don’t want to do business with those they don’t trust. Companies earn customers’ trust by
demonstrating credibility over time; they can lose it at any point.

Name: Esha Sohail

Roll no: 101
Member no: 4
Date 17-12-2000
Responsibility to investors:
Ethical behavior:
Ethical behavior does not subtract from the bottom lines it adds to it. In contrast unethical behavior, even
if it seems to work in the short term does financial damage. Those cheated are the shareholders
Themselves.
For example:
In just 11 business days in June 2002, 44 CEOs left U.S corporations amid accusations of wrongdoing,
and the stock prices of their companies plummeted.
Investors believe:
Many investors believe that it makes financial as well as moral sense to invest in companies that plan
A head to create a better environment. By choosing to put their money into companies whose goods and
services benefit the community and the environment, investors can improve their own financial health
while improving society.
Unethical means:
Unethical means to improve their financial health.
For example:
Insider trading uses private company information to further insiders own fortunes of those of their
family and friends.
2011 cases:
In 2011 one of the biggest in besides trading cases in history went to trial in New York. Billionaire
Rajaratnam was convicted of mass terminding and insider trading ring that made his Galleon Group
Hedge $64 million richer. Of course, he did not do this all by himself.
Trade Illegally:
Rajaratnam trade illegally or more than 35 stocks, including Intel, Hilton, IBM, and eBay. Rajaratnam
was sentenced to 11 years in prison and lost an appeal in 2013.
Trading is not limited:
Insider trading is not limited to company executives and their friends. Before it was publicly known that
IBM was going to take over Lotus development, an IBM secretary told her husband, who told two co-
workers, who told friends, relatives, business associates, and even a pizza delivery man.
People Traded:
A total of 25 people traded illegally on the insider tip within a six hour period. When the deal was
Announced publicly, Lotus stock soured 89 percent. One of the inside traders passed the information to
A few customers, made $468,000 in profit. U.S Securities and Exchange Commission field charges
against the secretary, her husband, and 23 others.
Four defendants:
Four defendants settled out of court by paying penalties of twice their profits. Prosecutors are
increasingly perusing insider trading cases to ensure that the securities market remains fair and equally
accessible to all.
Insider trader cases:
Insider trader cases was made public in the early 2000s, the SEC adopted a new rule called Regulation.
The rule does not specify what information can and cannot be disclosed. It simplify requires companies
that release any information to share it with everybody, not just a few select people. In other words, if
companies tell anyone, they must tell to the everyone at the same time.
Companies have misused information:
Companies have misused information for their own benefit at investor expense. When WorldCom
Admitted to accounting irregularities misrepresenting its profitability, investors who had purchased its
stock on the basis of the false financial reports saw share prices free fall from the mid teeters in January
2002 to less than a dime the following July.
Responsibility to Employees:
Businesses responsibility:
Businesses have responsibility to create jobs if they want to grow. Once they have done so, they must
see to it that hard work and talent are fairly rewarded.
Employee’s needs:
Employees needs realistic hope of a better future, which comes only through a chance for upward
Mobility. One of the most powerful influences on a company effectiveness and financial performance is
responsible human resource management.
Company treats employees:
Company treats employees with respect, those employees usually will respect the company as well.
Mutual respect:
Mutual respect can make a huge difference to a company‘s profit. In their book Contented Cows Still
Give Better Milk, Bill Catlette and Richard Hadden compared “contented cow’’ companies with
“common cow’’ companies.
Contented employees:
The companies with contented employees outgrew their counterparts by four to one for more than 10
Years. They also out earned the “common cow” companies by nearly $40 billion and generated 800,000
more jobs. Catlett and Haden attribute this difference in performance to the commitment and caring
the outstanding companies demonstrated for their employees.
Company commitment:
One way a company can demonstrate commitment and carying is to give employees’ salaries and
benefits that help them reach their personal goals.
Benefit packages:
The wage and benefit packages offered by warehouse retailer Costco are among the best in hourly
retail. Even part-time workers are covered by Cost-co’s health plan, and the workers pay less for their
coverage than at other retailers such as Walmart. Increased benefits reduce employees turnover, which
at Costco is less than a third of the industry average.
Powerful incentives:
Getting even is one of the most powerful incentives for good people to do bad things.Few disgruntled
workers are desperate enough to commit violence in the workplace, but a great number relieve their
frustrations in subtle ways: blaming mistakes on others, not accepting responsibility, manipulating, bud
gets and expenses, making commitments they intend to ignore, hoarding resources, doing the minimum
needed to get by, and making results look better than they are.
Loss of employee commitment:
The loss of employee commitment, confidence, and trust in the company and its management can be
costly indeed. Employee fraud costs U.S. businesses approximately 5 percent of annual revenue and
causes 30 percent of all business failure, according to the Association of Certified Fraud Examiners.
Responsibility to Society and the Environment:
More than a third of U.S. workers receive salaries from nonprofit organizations that receive funding
from others, that in turn receive their money from business. Foundations, universities, and other
nonprofit organizations own billions of shares in publicly held companies. As stock prices of those firms
increase, businesses create more wealth to benefit society.
Businesses responsible:
Businesses are also party responsible for promoting social justice. Many companies believe they have a
role in building communities that goes well beyond simplify giving back. To them, charity is not enough.
Their social contributions include cleaning up the environment , building community toilets, providing
computer lessons, caring for elderly people and supporting children and low income families.
Climate change increased:
As concern about climate change increased the green movement emerged in nearly every aspect of
daily life. Some believe that a product carbon footprint the amount of carbon released during
production, distribution , consumption, and disposal.
Contributes:
Many variables contributes to a product carbon footprint. The carbon footprint of a package of, say ,
frozen corn includes not only the carbon released by the fertilizer to grow the corn but also the carbon
in the fertilizer itself, the gas use to run te farm equipment and transport the corn to market, the
electricity to make the plastic packages and power the freezes, and so on.
Guidelines:
No specific guidelines define a carbon footprint of products, businesses, or individuals or outline how to
communicate then to consumer PepsiCo presence carbon information with a label on backs of cheese
and onion potato chips.
Green movement:
The green movement has provided consumer with lots of product choices. However, making those
choices means sorting through the many and confusing claims made by manufacturers. The noise in the
market place challenges even the most dedicated green activities, but taking of the easy route of buying
what most readily available violates the principles of the green movement.
Environmental efforts:
Environmental efforts may increase a company cost, but they also allow a company to charge higher
prices, increase market share, or both. Ciba specialty Chemicals, a Swiss textile dye manufacturer,
developed dyes that require less salt than traditional dyes.
Environmental strategies:
Environmental strategies are as financially beneficial as Ciba however. In the early 1990s , tuna
producers Starkist to consumer concerns about dolphins in the eastern pacific dying in nets set out for
yellow fin tuna.
Customer unwilling:
Customers were unwilling to pay a premium for dolphin save tuna and considered the taste of skipjack
inferior: Nor was there a clear environmental gain :for every dolphin saved in the eastern Pacific,
thousand of immatue tuna and dozens of sharks turtles, and other marine animals died in the western
Pacific fishing process.
Environmental quality:
Environmental quality is a public goods; that is everyone gets to enjoy it regardless of who pays for it.
The challenges for companies is find the public goods that will appeal to their customers. Many
corpirations are publishing reports that document their net social contribution.
Social Auditing:
A social audit is a systematic evaluation of an organization progress toward implementing socially
responsible and responsive program.
Major problems:
Major problem of conducting a social audit is establishing procedures for measuring a firm activities
and their effects on society.
Many consider workplace issues, the environment, product safety, community relations, military
weapons contracting , international operations and human rights, and respect for the rights of local
people.
They are conducted, social audit force organization to consider their social responsibility beyond the
level of just feeling good or managing public relations.
Social audits conducted:
Social audits conducted by companies themselves, five types of groups serve at watchdogs to monitor.
Socially conscious investors:
Socially conscious investors insist that a company extend its own high standard to its suppliers. Social
responsibility investing is on the rise, with nearly $3.7 trillion invested in SRI funds in the united states
already.
Socially Conscious research:
Socially conscious research organizations, such as Ethisphere, analyse and report on corporate social
responsibility efforts.
Environmentalists apply:
Environmentalists apply pressure by naming companies that do not abide by environmentalist
standard. After months of protest coordinted by the Sab Franciso based rain forest action network ,
JPMorgan chase and co adopted guidelines.
Union officials:
Union officials hunt down violations and force companies to comply to avoid negative publicity.
Buying decisions:
Customers make buying decision base on their social conscience. Many companies surved are
adjusting their environmenrtal and social responsibility.Number of customers that are founded in the
buying decision

NAME: BIBIAYESHA

CLASS: BS- 1st SEMESTER (B)

ROLL NO: 1102

MEMBER NO: O5

Question #: 06

Analyze the role of U.S business in influencing ethical behavior and social responsibility in global markets?

INTERNATIONAL ETHICS

AND SOCIAL RESPONSIBILITY

Ethical problems and issues of social responsibility are not unique to the United States. Influence-peddling or bribery
charges have been brought against top officials in Japan, South Korea, China, Italy, Brazil, Pakistan, and Zaire. What
is new about the moral and ethical standards by which government leaders are being judged? They are much
stricter than in the past. Top leaders are now being held to higher standards.
Many U.S businesses also demand socially responsible behavior from their international suppliers, making sure they
don’t violate U.S human rights and environment standards. Sears will not import products made by Chinese prison
labor. Clothing manufacturer PVH (makers of such brands by Calvin Klein and Tommy Hilfiger) will cancel orders
from suppliers that violate its ethical, environmental, and human rights code. Dow Chemical expects suppliers to
conform to tough U.S pollution and safety laws rather than just to local laws of their respective countries. McDonald’s
denied rumors that one of its suppliers grazes cattle on cleared rain-forest land but wrote a ban on the practice
anyway.
In contrast are companies criticized for exploiting workers in less developed Countries. Nike, the world’s largest
athletic shoe company has been accused by human rights and labor groups of treating its workers poorly while
lavishing millions of dollars on star athletes to endorse its products. Cartoonist Garry Trudeau featured an anti-Nike
campaign in his popular syndicated series Doonesbury.

Nike worked hard to improve its reputation. Nike monitors efforts to improve labor conditions in its 700 contract
factories that are subject to local culture and economic conditions. The company released the names and locations of
its factories, both as a show of transparency and to encourage its competitors to work on improving conditions as
well. The company shared its audit data with a professor at MIT’s Sloan school of Management. He concluded that
despite “significant efforts and investments by Nike. Workplace conditions in almost 80% of its suppliers have either
remained the same or worsened over time.” In 2014, a Nike supplier shut down a factory after four people were shot
during a strike over higher wages. This followed the 2013 collapse of a factory in Bangladesh that killed more than
1’000 workers.
Why has Nike’s monitoring program not been as successful as the company hoped? One reason is that in emerging
economies, government regulations tend to be weak, which leaves companies to police their suppliers. That’s a
major task for a company like Nikes, which produces 98 percent of its shoes in hundreds of factories in many
different countries. Another reason is that as a buyer; Nike has different degrees of leverage. This leverage is based
on how long Nike has worked with supplier or how much of factory’s revenue depends on Nike alone.

The fairness of requiring international suppliers to adhere to U.S ethical standards is not as clear-cut as you might
think. For example, a gift in one culture can be bribe in another. Is it always ethical for companies to demand
compliance with the standards of their own countries? What about countries where child labor is accepted the
families depend on children’s salaries for survival? Should foreign companies doing business in the United States
expect companies to comply with their ethical? Should foreign companies doing business in the United States expect
U.S. companies to comply with their standards? Since multinational corporations span different societies, should they
conform to any society’s standards? Why is Sears applauded for not importing goods made in Chinese prisons when
there are many prison-based enterprises in the United States? None of these questions are easy to answer; but they
suggest they suggest the complexity of social responsibility in international markets (See the nearby Reaching
beyond Our borders box for an example of an ethical culture clash.)

In the 1970s, the foreign corrupt practices Act sent a chill throughout the U.S. business community by criminalizing
the act of paying foreign business or government leaders to get business. Many U.S. executive complained that
thus law put their businesses at a competitive disadvantage when bidding against non-U.S. companies, since foreign
companies don’t have to abide by it.
To identify some form of common global ethics and fight corruption in global markets, partners, in the organization of
American States signed the Inter-American convention Against Corruption. The Unites Nations adopted a formal
condemnation of corporate bribery, as did the European Union and the Organization for Economic Cooperation
and Development. The international Organization for Standardization (ISO) published a standard on social
responsibility called ISO 26000, with guidelines on product manufacturing, fair pay rates, appropriate, employee,
treatment, and hiring practices. These standards are advisory only will not be used for certification purposes. The
formation of a single set of International rules governing multinational corporations is unlikely in the near future. In
many places “Fight corruption” remains just a slogan, is a start.