CAPITOL UNIVERSITY

Cagayan de Oro City

SENIOR HIGH SCHOOL

LESSON PACKET

SUBJECT: Organization and Management

ESSENTIAL TOPICS:
The Ethical Environment of the Firm
>Business Ethics and Management
>Perspectives on Ethics
>Corporate Integrity
>Corporate Social Responsibility
LESSON CODE: Wk 7 / L7
LEARNING OBJECTIVES:
At the end of this lesson, the students will be able to:
 Determine ethical issues in business,
 Identify the five perspectives in ethics,
 Explain the relevance of corporate social responsibility in an organization,
 Discuss corporate integrity and its dimensions,
 Differentiate social obligation from social responsiveness, and
 Describe how organizations apply social responsibility in their activities.

BUSINESS ETHICS AND MANAGEMENT

An ethical issue refers to a concern on which a individual must decide based on several alternatives of
what is morally right or wrong. In business, these issues play a crucial role in decision making. Any manager
should be guided by a set of business ethics which are moral principles and standards that guide business
people in their transactions. Generally, business ethics sets the moral standards for any kind of business
function. However, the line separating these standards sometimes overlap which makes decision making
difficult, with negative effects. That is why it is important for managers to still have their own set of moral
standards and values in ultimately deciding which decision or action is most ethical for their company.

PERSPECTIVES ON ETHICS

In deciding on ethical issues, five guiding principles may be used.

1. Universalism - This is the principle which states that all people should have certain values like honesty,
respect, and cooperation. Universalism requires every person to reenact these values in the same way under
all circumstances and at all times.

2. Egoism - This is the principle which promotes the greatest good to oneself. It is focused on the perspective
that people ultimately act for self-advancement, no matter how good their intentions are. Based on this view,
it is permissible for a person to cooperate with others as long as this will serve his or her own interest.

3. Utilitarianism - This is the principle which focuses on the greatest good for the greatest number of people.
In this perspective, the ultimate concern of managers is to make decisions that are beneficial to the greatest
number of people.

4. Relativism - This is the principle which states that ethical behavior is based on a person’s own and other
relevant people’s opinions and viewpoints. It acknowledges that there are different standards for each culture.
Therefore, business transactions may proceed differently from one culture to another.

5. Virtue ethics - This is the principle which states that morality depends on the maturity of a person with good
moral character. Based on a society’s moral standards, a moral person can interpret these as the application of
personal virtues like faith, honesty, and others. Thus, what is right is based on the level of one’s moral
judgment.

CORPORATE INTEGRITY

Corporate integrity refers to that sense of “wholeness” created by the right relationships among the
members of the corporation. It has five dimensions: cultural, interpersonal, organizational, social, and natural.
 Of all the dimensions, the cultural dimension has the most impact on the internal relationships among
the company. Culture is what unites employees, and cultural aspects such as language, rituals, behavioral
patterns, and beliefs from the framework that determines the manner by which people relate with one another
and engage with experiences and situations. Managers are encouraged to establish an open atmosphere that
will facilitate communication among people with different cultures and backgrounds. The interpersonal
dimension focuses on the relationships among people. Important relationships that impact the organization
include family relations, civic life, and work relations. The organizational dimension considers the main
purposes of the business, particularly the economic and financial purposes, managerial purpose, and civic
purpose. Corporations are agents whose actions are in line with these purposes, as embedded in their
mission/vision statements. The social dimension views the organization as actively engaging with society. The
business must be seen not only as a business leader, but also as a significant social element in its community.
The natural dimension looks into how the organization relates to nature. Managers should consider how their
business operations and activities impact the environment. These five dimensions are interrelated and
interdependent. Thus, it is a challenge for companies to integrate all of these with company decisions to
achieve corporate integrity.

On the cultural level, one of the challenges is to recognize various cultures and the differences among
them, which may include conflicts and disagreements. On the interpersonal level, the challenge is to recognize
the relationships and to cultivate them according to interactions established by people with consideration to
different identities. The different family and social backgrounds of the people determine their relationships at
work. People’s belongingness to a family, civic society, and work settings requires that each person’s need for
security in the family, their right to participate in civic activities, and their inclination to establish relationships
at work are acknowledged.

On the organizational level, there is constant challenge to ensure consistency in achieving the mission
of the organization and in the conduct of its members. On the social level, the company is challenged to
establish cooperation and mutual relationships with other companies and agents.

The natural dimension calls for corporations to exercise concern for the natural environment. To have
corporate integrity, a company should not gain profit at the expense of nature. All business functions should
be performed while giving principal consideration to the effects they may bring to the environment.

CORPORATE SOCIAL RESPONSIBILITY

The age of globalization brought about an increasing need for companies around the world to comply
with certain corporate practices. For the most part, these corporate practices are homogeneous despite the
differences in cultures of nations.

One business practice which is considered vital to current international standards of business
operations is corporate social responsibility. This refers to business operations and activities that have the
welfare of society in mind. A firm should aim to pursue long-term goals which will benefit the society. Business
operations, therefore, should be strategized to pursue economic goals while upholding the welfare of society.

Social responsibility is closely related to the concepts of social obligation and social responsiveness.
These define the extent to which a company is able to exercise social responsibility in its operations and
activities.

Social obligation refers to complying with legal and ethical standards to uphold social welfare. Social
responsiveness, on the other hand, goes beyond prescribed standards and implements actions that aim to
make an impact on society. It also means that the firm adapts to social conditions and engages in activities
that will respond to pressing social needs.

Corporate social responsibility enhances a company’s image. Companies should always observe good
and responsible practices to maintain a positive image among the public. All companies strive to incorporate
elements of social responsibility in their operations. In terms of economic responsibility, the company should
produce goods and services with reasonable prices. The goods and services should also satisfy the needs of its
customers, stakeholders, and other members of society even as they ensure sustainability and growth. For its
legal responsibility, the organization should comply with local and international laws that apply to its business
operations.

A company’s ethical responsibilities include establishing norms, standards, and practices that reflect
fairness to the consumers, employees, shareholders, and the community. Lastly, its philanthrophic
responsibilities include the initiation of voluntary activities such as establishing corporate programs, donating
to charitable institutions, and other similar charitable causes.

REFERENCES
Organization and Management by Cynthia A. Zarate