BUSFF021

BUSINESS ORGANISATIONS
LECTURE 2
BUSINESS ETHICS &CSR

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 LEARNING OBJECTIVES

• Distinguish ethics from social responsibility

• Define individual ethics and managerial ethics
• Explain the relevance of ethics in the workplace and
ways to handle ethical dillemma
• Understand the concept of social responsibility and
its importance toward environment, customers,
employees and investors
• Describe four general approaches to social
responsibility

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Encountered any of these?

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Real or Fake?

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Familiar?

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 ETHICS IN THE WORKPLACE

• Ethics
– beliefs about what is right and wrong or good and
bad in actions that affect others
– The code of moral principles and values that
govern the behaviours of a person or group with
respect to what is right or wrong.
• Ethical Behaviour
– Behavior that conforms to individual beliefs and
social norms

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 ETHICS IN THE WORKPLACE

• Business Ethics
– refers to ethical or unethical behaviours by
employees and managers in the context of their
jobs

– What about the laws?

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 BUSINESS AND MANAGERIAL ETHICS
• Managerial Ethics
• standards of behavior that guide individual
managers in their work

Behavior toward Employees

Behavior toward the Organisation

Behavior toward Other Economic Agents

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 ETHICAL DILEMMA

• A situation that arises when all alternative choices or

behaviors have been deemed undesirable
https://www.youtube.com/watch?v=7yHsiTmUnPk (4:56, to pay or not to pay?
Ransomware - Norwegian aluminium producer)

• Of potentially negative ethical consequences, making

it difficult to distinguish right from wrong

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 CRITERIA FOR
ETHICAL DECISION MAKING
• Most ethical dilemmas involve:
– Conflict between needs of the part & whole
- Individual versus the organisation
- Organisation versus society as a whole

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 COMPANY PRACTICES AND
BUSINESS ETHICS

• Encouraging Ethical Behavior Involves:

– Instituting ethics programs
– Adopting written codes of conduct
– Establishing ethical hotlines for reporting and discussing
unethical behavior and activities
– Having top management support of ethical standards
– https://www.digi.com.my/sustainability/ethics-and-compliance.html (Digi)

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 CORE PRINCIPLES AND
ORGANISATIONAL VALUES

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MODEL OF ETHICAL JUDGMENT MAKING

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 SOCIAL RESPONSIBILITY

• Social Responsibility
– refers to the overall way in which a business
attempts to balance its commitments to
relevant groups and individuals in its social
environment
– Integration of social & environmental
concerns into business operations on a
voluntary basis

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WHY THE NEED FOR SOCIAL RESPONSIBILITY

• Business & society are interdependent

• To sustain, companies must be seen to be

acting responsibly & conform to societal
norms/expectations

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 SOCIAL RESPONSIBILITY

• Organisational Stakeholders
– those groups, individuals, and organisations
that are directly affected by the practices of
an organisation and who therefore have a
stake in its performance
– https://www.youtube.com/watch?v=WcR-V3vdhG8 (Coca-cola CSR)

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MAJOR CORPORATE STAKEHOLDERS

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 AREAS OF SOCIAL RESPONSIBILITY

Responsibility Toward Customers

▪ Consumerism
– social activism dedicated to protecting the rights of
consumers in their dealings with businesses
▪ Basic Consumer Bill of Rights
– The right to safe products
– The right to be heard and informed
– The right to be educated about purchases
– The right to be treated courteously
– The right to choose what to buy

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 AREAS OF SOCIAL RESPONSIBILITY

• Responsibility Toward Customers

▪ Unfair Pricing
– Collusion: When two or more firms agree to
collaborate on such wrongful acts as price
fixing
– Price gouging: Responding to increased
demand with overly steep (and often
unwarranted) price increases
▪ Ethics in Advertising
– Truth in advertising
– Morally objectionable advertising
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 RESPONSIBILITY TOWARD EMPLOYEES

• Provide opportunities to balance work and life

pressures and preferences
• Help employees maintain job skills
• Treat terminated or laid-off employees with
respect and compassion

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RESPONSIBILITY TOWARD EMPLOYEES

• Not discriminate
• A safe workplace
• Provide opportunities to balance work and life
• Provide protection for whistleblowers

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RESPONSIBILITY TOWARD THE ENVIRONMENT

• Air pollution
• Water pollution
• Noise pollution
• Land pollution
– Toxic waste disposal
– Recycling

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 RESPONSIBILITY TOWARD INVESTORS

• Responsibility Toward Investors

– Proper financial management (no insider trading)
– Proper financial reporting
• Insider trading
– using confidential information to gain from the
purchase or sale of stocks.
• Misrepresentation of finances

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 IMPLEMENTING SOCIAL
RESPONSIBILITY PROGRAM

• Arguments Against Social Responsibility

– The cost of SR threatens profits.
– Business has too much control over which SR
issues would be addressed.
– Business lacks expertise in SR matters.
• Arguments For Social Responsibility
– SR should take precedence over profits.
– Corporations as citizens should help others.
– Corporations have the resources to help.
– Corporations should solve problems they create. 25
 MANAGING SOCIAL
RESPONSIBILITY PROGRAMS

1. Social responsibility must start at the top and be

part of strategic planning.
2. Top managers must plan for the level of
management support.
3. One executive must be put in charge of the firm’s
agenda.
4. The organisation must conduct occasional social
audits—systematic analyses of its success in using
funds earmarked for its social responsibility goals.
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 APPROACHES TO SOCIAL RESPONSIBILITY

• Obstructionist Stance
– A company does as little as possible and may
attempt to deny or cover up violations
• Defensive Stance
– A company does everything required of it legally
but no more
• Accommodative Stance
– A company meets its legal and ethical
requirements and may go further
• Proactive Stance
– A company actively seeks to contribute to the
well-being of groups and individuals
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 APPROACHES TO
SOCIAL RESPONSIBILITY

Spectrum of Approaches to Corporate Social Responsibility

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 SOCIAL RESPONSIBILITY &
THE SMALL BUSINESS

• Large Business versus Small Business

– Differences are primarily differences of scale
– More issues are questions of individual ethics
• Ethics and social responsibility are decisions faced by
all managers in all organisations, regardless of rank
or size

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 READINGS

• Business Essentials, Ebert & Griffin, 12th Global

Edition, Chapter 2: Understanding Business Ethics
and Social Responsibility

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