CHAPTER 1 UA Lee) “Any idiot with a strong enough stomach can make quick money, sometimes a lot of it, by slashing costs and milking customers, employees, or a company’s reputation. But clearly that’s not the way.to make a lot of money for a long time. The way to do that is to create so much value that your customers wouldn't dream of looking for another supplier. Indeed, the idea is to build a value creation system of superior products, service, teamwork, productivity, and cooperation with the buyer.” — Thomas Teal in Fortune Magazine The learners shall be able to: Differentiate the three categories of economic activities; Illustrate the important features and characteristics of business as an economic activity; Demonstrate the importance of ethics in business; Evaluate the relationship between ethics and business; Justify the morality of profit; and Critiques ethics and morality in business. a AVP wo All business organizations and the entire society need ethics. Inall aspects and operations of an organization, ethics is a must to be implemented. It is expected that organizations shall be able to attain a long-term efficiency if ethics could be implemented successfully. It is quite a regret that numerous organizations are not able to execute ethics because of human nature and mismanagement. Ethics is very beneficial to business organizations if properly implemented. With successful execution of ethics, organizations are able to attain better-quality performance. This is the result of attracting and retaining highly qualified employees and satisfying stakeholders such as customers, suppliers and investors. Yet implementing successfully ethics in the organization requires a lot of time and effort. Due to the very nature of human beings as not morally faultless, this could not be achieved automatically. Scanned with CamScanner‘\urparate Social Responsibility and Good Governance In the Millennial Age * #8rrano NATURE OF BUSINESS According to Urwick and Hunt, “Business is any enterprise which makes, distributes or provides any service which other members of the community need and are willing to pay for it”. By its nature, man has unappeasable and innumerous wants. In order to satisfy his unquenchable needs he works harder to maximize the use of limited resources around him. Making full use of meager resources to the best satisfaction of human wants is known as economic activity. Economic activities are those undertaken by man to earn income, money, and wealth for his life and to secure greatest satisfaction of wants with inadequate and limited means. For this intention, each person may pursue an activity based on his interest, capacity, knowledge and training. Economic activities are classified therefore into three categories, namely: 1. Profession-Profession is an occupation carried on by professional people like doctors, lawyers, engineers, teachers and others. They provide specialized services in return for fees. In order to become a professional, a man requires specialized knowledge and professional qualification. For instance, a doctor needs specialized knowledge in medicine; while a lawyer needs a degree in law, and so on. 2. Employment-Employment is a type of occupation under which one person provides his services, physical or mental to someone else in return for whom he gets salary or wage. The person who employs is called employer and the person who is employed is called employee or worker. 3. Business-Business is an economic activity concerned with production and distribution of goods and services with the aim of earning profit. It includes all those activities which are directly or indirectly concerned with production, purchase and sale of goods and services. So the production, marketing, advertising, warehousing, insurance, banking, and others are all business activities, : Scanned with CamScannerBusiness as an economic activity has very important features and characteristics, which are the following: 1. Production or acquisition of goods - Business is an economic activity of production and distribution of goods and services. Every business whether small or large scale deals with goods and services. The goods may be produced, manufactured or procured and then to supply for a cost to those who are in need of them. The goods may either be consumers’ goods (cloth, books, electronics appliances, medicine and others) or producer goods (machinery, tools and so on) or services (courier or transport services). 2. Generates employment - Business generates employment in various sectors of the society. It is also an activity that creates utilities to satisfy human needs and wants. The society gets income from businesses that bring industrial and economic growth and development of the country. 3. Continuous process - Business is not a single time operation. It is a recurring, process of production and distribution of goods and services. Recurrence of dealing is a must to be termed as a business. A business must be done regularly in order to grow and achieve expected returns. A business should also constantly engage in research and developmental activities to achieve competitive advantage. A constant improvement strategy helps to boost profitability of the business organization. 4. Profit is the basic motive — Profit is essential for survival, growth and expansion of the business. Behind any business, the stimulus and assurance to continue survival of the business is profit. Profit is a sign of success and failure of business. The principal aim of a business is generally to gain the highest possible level of profit from the manufacture and sale of goods and services. It is a return on investment or the compensation of all those individuals engaged in a particular business. An efficient businessman tries to double and redouble his effort and creates plans to serve the business community to gain more profit. 5. Risk or uncertainty of future - It is a reality that future is risky and uncertain. A business focuses on the future; hence there is always risk and uncertainty while carrying on its operations. Scanned with CamScanner_ Corporate Social Responsiplity and 6° yy is always related with every business, The ment of the risk. is essential to guarantee organization. It is risk and uncertain ‘onsiders when he gets involve in 4 Risk and uncertaint estimate and manage! the success of a business which every businessman C business activity. ji siness organizations have Si Sede aaa ideas forthe production a Proton of goods and services. These organizations should come out with bright, latest and ingenious things and ways. With the dynamic and changing economic, social and technological environment, a businessman should be innovative. In order to satisfy the increasing and ever shifting needs of customers, a business must always come out with new products and services, 7. Customer satisfaction — The phase of business has changed and now adopts a consumer-oriented approach. Today, the vital aim of all economic activities is customer satisfaction. Through providing quality product at a reasonable price, a modern business is able to satisfy its customers. Profit is just secondary to customer satisfaction for a good businessman. When they get real value for their purchase, customers are satisfied. Hence, customers keep on coming back and make a lot of purchases, Social Activity - Business is also. socio-economic activity. Business and society are mutually interdependent. Contemporary businesses operate with social responsibility in mind towards the society. In turn, to properly function they need the assistance of different social groups such investors, employees, customers, creditors and others by making goods and services accessible to different segments of the society. Indeed, businesses perform a vital social role and satisfy social needs. Government control — The government ha ; iS some control over the operations of busin ss Organizations. Rules and regulations Passed by the government are required to be followed by business ° ene ane ee makes certain that businesses operate . Through strict co i isi of the laws and tules, te areas businesses to provide satistyi Sovernment is able to direct businesses Ying good products and services to consumers. Scanned with CamScanner10. Optimum utilization of resources — The inadequate resources are brought into optimum use by businesses. This is for the intention of satisfying the needs and wants of the consumers. Both the material and non-material resources are utilized fully to attain economic progress of a country. THE IMPORTANCE OF ETHICS IN BUSINESS Ethics tries to form logic of right and wrong in the organizations. Often when the law does not succeed, it is the ethics that may discontinue organizations from destructing the society or environment. Ethics needs to be practiced to make sense for a business organization. Everyone wants businesses that are fair, clean and beneficial to the society. Certainly, for this intention to happen, business organizations should be ethical and follow rules while they are engaging in competition for the benefit of the consumer, the society and the organization itself. Ethics is very important for these reasons, namely: 1. Satisfying basic needs - One the basic human needs is being fair, honest and ethical. Each employee wants to remain himself and to work hard for an organization that is fair and ethical in all its practices. 2. Building credibility - An ethical business organization that is propelled by moral values is highly respected in the society. Although with less or without information about the organization still this perception remains for a business having good corporate governance and social responsibility programs. This view is held everywhere even by those who are not yet familiar with what business the organization is into. 3. Connecting leaders and employees — An organization driven by moral values is well-regarded by its employees too. They are the common string that binds the employees and the decision- makers together on a general stand. Although, to align behaviors would take time and big effort to do before the realization of one common goal or mission. Scanned with CamScanner4. Enhancing decision-making - The future of an organization 1 is the total amount of all.its decisions throughout its lifetime. Hence, decisions must be driven by moral values. It is a fact that competition is always present in the world of business. Emerging from a stiff competition through wiping out competitors and creating a monopoly in the market is not a.good decision of an ethical business organization. 5. Continuing gains - Ethical businesses guided by moral values are profitable for a long period of time. Possibly it may seem to lose money but that would only be on a short-term basis. There / were numerous businesses that have been observed on the threshold of decline, yet still operate ethically and were later able to overcome. Some companies failed to do well at some point, yet are now doing good because they remained to be ethical despite some failures. 6. Protecting the society - Often ethics succeeds law in safeguarding the society. Law as a machinery is often found acting as a mute witness, incapable to save the society and the environment. Technology, for example is growing at such a fast pace that by the time law comes up with a regulation there is a newer technology with new threats in substitute of the older one. Lawyers and public interest litigations may not help a great deal but ethics can. THE RELATIONSHIP BETWEEN ETHICS AND BUSINESS Ethics has a big role in the operations of a business. A bad business could be the consequence of unethical business practices. While effective practices could be the outcomes of good and valuable ethical practices. This simply proves that ethics and business really go hand and hand. Indeed, ethics must have a place in every business organization. Ethics should actually start from the time the goals and intentions are being framed at the beginning of the venture. So that oncea business is launched, ethics already becomesa part ofits internal infrastructure. Ethics should be part of the management structure of any business. It must be a component of the core rules of business operation for an effective management. In every relationship inside _} Scanned with CamScannerCorporate Social Responsibility and Good Governance in the Millennial Age * Serrano the business, an organization needs ethics as its foundation such as that of employers and employees, business itself and its partners and the organization and its customers. For instance, an employer must have its moral obligation to his employees in the form of respect and loyalty, just and fair wage and good working condition. There must always be the motive to contribute some social benefits despite the primary objective of a business to produce profit. A business needs to satisfy a need or a want in order to offer something of value to its customers. Indeed, in this case a business must consider social needs and should involve ethics in doing so. Obviously, while espousing ethics, a business must not forget its primary objective which is generating profits. Ethics must be regarded as a support and not a hinder in making money for the business. Being hand and hand, both profit motive and contribution motive should go along well. Businesses that demonstrate and support strong corporate ethics often turn to be profitable in the long run. In today’s highly competitive environment, there is a pressure to stay profitable for the sake of good return of investments to please stakeholders. Often this pressure however, leads to unethical decisions just to deliver positive results. When a decision-maker justifies such act knowing it is wrong, this may develop into becoming part of the organizational structure sooner or later. Eventually, subordinates will see this as an example and such short of moral judgment will multiply. The society nowadays desires immediate satisfaction and people look forward to instant outcomes. This could possibly be the main explanation on the unethical practices of some businesses. Certainly, bad business practices when tolerated may cultivate unsound moral philosophies which would decline moral acts. When this happen defective or faulty products, invalidated firing of employees, and misrepresentations of products to consumers will grow to be common in the business environment. These practices may present an appearance of profit, yet in the long run will have | a negative and costly impact to the business. The reputation of any ... business will suffer ultimately with these unethical acts. The business , may not necessarily close down but due to corrupt practices, may not | have the chance to boost revenues to its maximum potential. 7 Scanned with CamScannerCorporate Social Responsibility and Good Governance in the Millennial Age * Serrano There must be no basis why a business organization cannot create ethical decisions and cannot act ethically while still making profit. Deceitful and dishonesty do not add value to a business and may also affect its operation negatively. Employees and good reputation are two vital assets of a company that need to be enhanced by encouraging a morally ethical environment for both employees and customers. Trust and confidence coming from consumers can serve a lot of benefits to the business company. Once a business becomes popular as a company that treats everyone fairly, with expertise and very knowledgeable staff about the company, more customers would be attracted to buy because of such reputation of honesty and integrity. The large network that would be created will result to a lot of economic benefits for the business. In this case, the company should continue to promote ethically good behavior in the workplace as its primary objective for its best interest. Indeed a positive image of a company would mean higher profits and a lot of better services intended to its customers. In order to be an effective company, ethics and business should not be separated. In the long run it will be a win-win situation for everyone if a strong ethical policy is truly implemented. These days of highly competitive business environment, the best way to promote success on all levels is integrating ethics within the business operations. THE MORALITY OF PROFIT In order to understand if gaining profit is really advantageous’ and desirable, one must know the goals of a life well-lived. Every individual lives with double-purpose intentions, which are survival and flourishing. The goal of perpetuating ones biological being and averting to experience poverty, downfall, and death is known as survival. While flourishing is being able to control and manage material reality and take advantage of more elements for the sense of self-love so as to un-stick one’s self from a present situation and make a start'to grow as a human being. In life, every individual will obtain some benefits from material reality only if he acts and utilizes his reasoning. For a person Scanned with CamScannerto act in the ways he desires there will be expenses that he needs to spend. When a man’s gains are equal to his expenses, that means a break-even for him, and he survived. Simply, this means he is no worse off neither is he better off than he was when he started. When a man wants to flourish, his gains should be greater than his expenses. Hence, it necessitates for him to produce a profit. The only way to flourish is to gain profit. In order to control and manage material reality, a person must not lose any assets or just have a break-even. Profits come in a lot of different shapes. One may grow material reality from intellectual profits or gains of knowledge. A person may also obtain profits from technical means or gains of skill, and material profits or gains of property. A gain in health and fitness is also known as physiological profits. A gain in valuable relationships is called social profits. A gain of money is termed as monetary profits. Each person values these types of profits ina different degree depending on the ways in which that individual desires to flourish. Practically speaking no one ever denounce every type of profit. Ironically, however the type of profit that draws the greatest criticism is monetary profit. This criticism is completely unjustifiable. When a person possesses monetary profit he can easily control everything in the quest of the greatest diversity of ends. Certainly, money cannot buy absolutely everything, yet it can help in fulfilling one’s life objectives. Money being a medium of exchange is always use in trading a broad variety of goods and services very conveniently. In order for an individual to gain knowledge and skills, he needs money to purchase books or pay for his tuition fee in school. Money is also use to procure gym stuff if a person desires to enhance his physical health and vigor. In revitalizing one’s energy, relax and reduce stress, a person may buy leisure goods with money. Most people purchase gift items especially during special occasions to preserve positive social relations. Obviously, some people invest their money into obtaining valuable assets to make more money. Money indeed performs a big role in attaining the flourishing goal in life. Profit that is used to flourish and elevate one’s life from poverty is moral. By its very nature money cannot destroy a man’s 9 Scanned with CamScannerCorporate Social Responsibility and Good Governance in the Millennial Age » Serrano life. Although, some people assert that money may unmake the lives of others. This also is something very impossible to happen. A man may basically generate profits in two ways. First he can take an action beneficial to himself but is immaterial to the rest of people. Possibly, he may pursue an action towards his individual’s self-improvement or a direct change of nonliving things without the involvement of anyone. In this situation, no person is placed in danger and there will be a lot of indirect advantages to other people coming from the results of the person’s self-improvement and his direct change of nonliving things. Secondly, he may secure the participation and team with other people to attain an objective that is helpful to everyone. An individual may connect with a charitable trade with someone or work in partnership with others ona project or - just bond in a mutually cherished friendship. Here, in this con: there would be direct advantages to other people, which earning a Profit might be one of them. Man needs to be free in obtaining profit. He must rely on his own reasoning to make a choice on what is profitable for him and decide on how he does it. He cannot act in his best interest or flourish up to his ceiling if he would be restricted to follow his choice or someone shall enforce unbeneficial strategy on him. He needs laissez- faire capitalism to let him flourish freely. Laissez-faire capitalism is a political, social, and economic system which allows everyone to do profit-seeking activities without any complications or interventions, Under the principle of laissez-faire, anyone has the autonomy to make a decision on the value he will give to each kind of profit, the manners he will use to gain said profit and kinds of connections he will pursue with others to flourish. In addition, in order for businessman to gain profit on the free market, he must monitor and remove arbitrage opportunities which come from extensive inaccuracies of opinion. Arbitrage opportunity is an investment strategy that gives way toa positive profit with positive likelihood but without any risk disadvantage. The businessman may attempt to discover a better way to distribute resources at hand which is different from what he had done before. A better way of allocating resources must be done if mistakes in people’s knowledge presently cause resources to be inefficiently distributed away from their most advantageous uses. If the businessman gains profit this way, it means Scanned with CamScannerCorporate Social Responsibility and Good Governance in the Millennial Age + Serrano he is able to place the resources to an improved application than before. Simply, people around him are agreeable to pay him more than previously because of this new allocation of resources. Through removing arbitrage opportunities, business people are able to correct market flaws and balance supply and demand to fully satisfy human needs Further, mandatory economic rules would stop every individual in discovering how to flourish in his own approach, other people might be harmed. Those market flaws that have been corrected might come back, remain and shall keep on resulting to misappropriated resources. A lot of beneficial and worthwhile trades for everyone will be hindered. Sadly, numerous people will discontinue improving themselves and limitations on certain activities such as money-making will not flourish. In its place, there will be great losses because of the useless and damaging rigid system. If flourishing is moral and improving oneself is moral, then the pursuit of profit is the same. If pursuing profit is moral, so men could do economic activities freely. Hence, with this line of logic everyone supports the highest economic autonomy under the principle of laissez-faire capitalism. Profit for Christians The Bible is the base ethics of all Christians. Profit is a very difficult issue, considering most Christians have the viewpoint that the Word of God says any point of it is unethical. Using the principle of good stewardship, the idea of profit is indispensable. The évidence that a businessman was able to generate more benefits than cost is the resulting profit. In the present time, profit is actually a reward for doing something that is helpful to other people. Obviously, one must not take advantage of one’s suffering by taking the situation as an opportunity for profit. The presence of difficulties, offers everyone the chance to practice charity. It is the duty of everyone to be a Good Samaritan by extending assistance to other people who are in need. Basically, meeting severe human needs prompts business people to provide answers to those needs W Scanned with CamScannervorporate Social Responsibility and Good Governalive Ii tie uae ge = swe: with profit as the vital motivation. In the normal business operation, it is those profit-seeking business people who are able to relieved people from hunger and not those charitable institutions. Most of the times, food is able to reach places where it is needed through profit motivation. Businesses are able to relieve people in some way, but they must practice of course honesty. For instance, a drug company generates profit from reducing pain or curing certain illnesses. The housing problem could be answered by a construction business through building shelters for a profit. Schools make profits by offering courses that would increase the knowledge of students. The wages of employees are their profit in exchange for using their time and abilities by their employers. In reality, there are a lot of human needs but inadequate resources in this world; however with profit these needs are answered. When utilizing resources for a much pressing need, higher profit is estimated. While lower profit is expected when filling a need that is not much vital and not much urgent. Humans are not “all-knowing, hence profit serves as an important signal to good stewardship. Deciding on various opposing needs is also critical. Say for instance that a person has a million pesos for his disposal with the requirement of spending them for a much critical needs, so how will he use such amount of money? The answer for numerous Christians would primarily be donating the money to the ministry of the gospel. However, such quantity of money could also be spent into other advantageous uses such as food and clothing. While in this world, Christians as humans also need to consider materials things as necéssary like food, clothing, shelter, medical care and education among others. Once again the important sign is given by profit. To some scope, even in the operational efforts of charitable organizations, profit also serves as a guide. Charitable assistance requires the idea of profit. Donors need the information about prices + and profits in order to know which goods and services are in the shortest supply. Thus, said information would be of help in deciding, which goods and services would be highly useful when provided. Scanned with CamScannerCorporate Social Responsibility and Good Governance in the Millennial Age + Serrano Making profit is not a sin. Earning profit through dishonest means makes it immoral. In fact, profit is necessary in support to Christian stewardship. What Makes Profits Unethical The profit motive is indispensable particularly to businesses because it is their primary goal. Businesses have the option to grow and maximize profits either ethically or unethically. The choice of unethical business practices such as deceiving customers through dishonest advertising, cutting down incentives of employees, selling low quality products, or damaging the natural environment may result to tarnish brand reputation or disloyalty among consumers. Employees Reducing or even not providing the required benefits due to employees to minimize costs is one of the most common unethical practices in companies. In almost all industries, the largest percentage of expense concerns payroll. This bad practice of getting rid of benefits has become an ethical issue that results to poor. morale among employees in the workplace. In small businesses that have only few employees, this could lead to destructive outcomes. This strategy is fast, established and useful for many companies though very unethical in the eyes of the public. Cutting costs at the expense of employees may move a business down to a risky route toward bankruptcy. Marketing A company’ marketing may contribute a lot to its generating of profits. A strong marketing strategy may increase brand awareness, pull customers towards the company and eventually produce profits. In the field of marketing, the intention of maximizing profits often times leads companies into an ethical dilemma of choosing the right from wrong decision. Some ethical issues in marketing includes sexy advertisement to attract male customers particularly in liquor and wine products, advertisements targeting young people even if they may look cute and innocent enough and making use of violence in presenting advertisements for a product or service. Scanned with CamScannerEnvironmental The process of producing some goods and the delivery of some services are sometimes done using unethical environmental practices. Often, companies wanted to generate profits to the detriment of the environment. Some of these unethical environmental practices include increasing pollutants, water supply contamination and deforestation. The common reason for these unethical practices is cost. It is highly costly for companies to positively impact the environment, especially for small businesses. There is a need for a lot of extra cash to continuously operate a much safer factory or plant. Producing pollutants may seem to be an advantage and less costly although it may bring a negative impact to the environment. Environmental pollution could be in the form of: 1. Air Pollution - It is any alteration of the physical, chemical and biological properties of the atmospheric air. 2. Water Pollution - It is any alteration of the physical, chemical, biological or radiological properties of a body of water resulting in the impairment of its purity or quality. 3. Noise Pollution — It is the excessive sound that causes hearing loss, stress, fatigue, irritability, tension, headaches, and high blood pressure. 4. Soil Pollution — It is chiefly caused by chemicals in pesticides, such as poisons that are used to kill agricultural pests like insects and herbicides that are used to get rid of weeds. Quality Producing goods and providing services especially premium onesare costly. This is possibly the rationale of companies in trimming down the quality of goods by using substandard materials but still selling at the same price to gain more profits. However, this kind of practice crosses the boundary towards an unethical business practice. The practice of maximizing profit at the cost of quality may stain the company’s brand name and reputation. Thus, this unethical practice leads to the loss of the respect, trust and loyalty of customers. It will Scanned with CamScannerCorporate Social Responsibility and Good Governance in the Millennial Age + Serrano be also have vital consequences on the slow growth and reduced revenue of both small and big businesses. ETHICS AND MORALITY IN BUSINESS It is basically ethics that decides whether certain actions, conducts and behavior are right or wrong, good or bad, moral or immoral and just or unjust. In general, ethics creates the rules and standards that direct the proper behavior of both individuals and groups. It considers honesty of primary intention, possible would-be harm and harmony with customary values and rules. On the other hand, morals are judgments, standards and rules of right conduct in the society. Morals provide direction to people on acceptable behavior regarding basic values. Business owner or leader can draw effective decisions and strategies using his understanding of values, ethics and morals together with ethical principles. The motivation to include ethical principles into the decision-making formation shows willingness in encouraging equality and avoiding possible ethical issues to happen. Features of Business Ethics Business ethics is a form of applied ethics, which studies ethical principles, morals and problems that happen in the business environment. It is nothing but the integration of day to day morals and ethical norms to business and applies to all types of business. Here are the features of business ethics, namely: 1. Code of conduct - Business ethics is a code of conduct. It tells what to do and what not to do for the welfare of the society. It is the code of conduct which businessmen should follow while conducting their normal business activities. 2. Based on moral and social values - Business ethics is based on well-accepted moral and social values. It contains moral and social principles of conduct for businessmen. This includes self- control, consumer protection and welfare, service to society, fair treatment to social groups, and not to exploit others. 15 Scanned with CamScannerCorporate Social Responsibility and Good Governance in the Millennial Age « Serrano 3. Gives protection to social groups — Business ethics give protection to different social groups such as consumers, employees, small businessmen, government, shareholders, creditors, and other stakeholders. 4. Provides basic framework - Business ethics provide a basic framework for conducting business. It suggests legal, social, moral, economic and cultural limits within which business has to be operated. Business must be conducted within these limits. It suggests what is good and what is bad in business. j 5. Voluntary acceptance for enforcement - Business ethics must be voluntary. The businessmen must accept business ethics on their | own. Business ethics must be like self-discipline. It must not be | enforced by law. It should come from within the businessmen. | 6. Requires education and guidance - Businessmen must be given proper education and guidance before introducing business ethics. The businessmen must be motivated to follow ethical business practices. They must be informed about the advantages of using business ethics. Trade Associations and Chambers of * Commerce must also play an active role in this matter. 7. Relative Term - Business ethics is a relative term. That is, it changes from one business to another. It also changes from one country to another. What is considered as good in one country may be taboo in another country. 8. Not against profit making — Business Ethics is not against fair profit making. However, it is against profiteering by cheating and exploiting consumers, employees or investors. It supports expansion of business activities but by fair means and not through illegal activities or corrupt practices. Sources of Business Ethic Basically, ethics in business is affected by three important sources which are culture, religion and laws of the state. Thus, there are no uniform or totally the same standards across the globe. These three factors places influence on humans in different degrees that eventually mirtors the ethics of the organization. These sources are as follows: Scanned with CamScannerCorporate Social Responsibility and Good Governance in the Millennial Age + Serrano Religion A religion is a custom and observance of a conception on what is real and significant (for example God, Allah, the Tao, and Brahman). It is the belief that wrongdoing, vice, disillusionment, and illusion may be defeated by grace, prayer, practices. In addition, living in _ harmony, unity, or friendship with what is real and significant are all part of religion. A Christian faith for instance, may bepknowledgeable by Jesus’ radical teaching about loving one’s neighbor, being a Good Samaritan, loving one’s enemies, and the like. Religion is one of the oldest foundations of ethical standards. There are numerous religions which exist across the whole world. Every religion gives an expression of what is wrong and right in business and other walks of life. It is believed that ethics is a sign of the Divine and so it draws a line between the good and the bad in the society. The principle of reciprocity towards one’s fellow beings is found in all the religions. Great religions advocate the inevitability for an orderly social system and stress upon social responsibility with an objective to contribute to the general welfare. With these fundamentals, each religion generates its own code of conduct. Culture The other source of business ethics is the culture. Culture is the set of significant understandings that members of a community share in common that are transferred from one generation to another. It also refers to the pattern of development reflected in a society's pattern of knowledge, ideology, values, laws, social norms and everyday rituals differs from society to society. It is the culture that primarily determines what is wrong and what is right and defines certain behavior as acceptable and others as unacceptable. Culture facilitates the generation of commitment to something larger than one’s individual self interest. Culture encourages the members of the organisation to give priority to organizational goals over and above their personal interests. Culture also serves as a sense making and control mechanism that guides and shapes the attitudes and behavior of people. Managers have to run an industrial 7 Scanned with CamScanner‘“orporate Social Responsibility and Good Governance in the Millennial Age + Serrano ‘ enterprise on the cutting edge of cultural experience. The tension that their actions create makes the business ethically more complex. Law ' Laws are procedures and code of conduct that are laid down by the legal system of the state. They are meant to guide human behavior within the social fabric. The major problem with the law is that all the ethical expectations cannot be covered by the law and specially with ever changing outer environment the law keeps on changing but often fails to keep pace. In business, complying with the tule of law is taken as ethical behavior, but organizations often break laws by evading taxes, compromising on quality, service norms and so on. The legal system of any country, guide the human behavior in the society. Whatever ethics the law defines is binding on the society. The society expects the business to abide by the law. Although it is expected that every business should be law abiding, seldom do the businesses adhere to the rules and regulations. Law breaking in business is common such as tax evasion, hoarding, adulteration, poor quality & high priced products, environment pollution etc. Scanned with CamScanner