Business Ethics &

Social
Responsibility
 Learning Objectives
2-1Define business ethics and social responsibility and
examine their importance.
2-2Detect some of the ethical issues that may arise in
business.
2-3Specify how businesses can promote ethical behavior.
2-4Explain the four dimensions of social responsibility.
2-5Debate an organization’s social responsibilities to
owners, employees, consumers, the environment
and the community.
Business Ethics and Social Responsibility 1

Business ethics versus personal ethics

Acceptable business behavior determined by:
• The organization
• Stakeholders: customers, suppliers, competitors,
government regulators, interest groups, and the public
• An individual’s personal principles and values
An organization’s culture influences its ethical
behavior
Business Ethics and Social Responsibility 2

Social responsibility
• Business’s obligation to maximize its positive impact
and minimize its negative impact on society
Social responsibility and ethics differ
• Ethics: decisions made by an individual or work group
that society evaluates as right or wrong
• Social responsibility: impact of the entire
organization’s activities on society
Business Ethics and Social Responsibility 3

Business law
• Refers to the laws and regulations that govern the
conduct of business
• Many problems and conflict could be avoided if
owners, managers, and employees knew more about
business law and the legal system
 The Role of Ethics in Business 1
Society’s judgment directly affects an
organization’s ability to achieve its goals
Many firms are recognized for ethical conduct
Legal and ethical issues
• Ethical conflicts can evolve into legal disputes
• Business ethics goes beyond legal issues
• Not limited to for-profit organizations
 The Role of Ethics in Business 2
Recognizing Ethical Issues in Business
• An ethical issue is an identifiable problem, situation, or
opportunity that requires a person to choose from
among several actions that may be evaluated as right
or wrong, ethical or unethical
• Bribery: payments, gifts, or special favors intended to
influence the outcome of a decision
 The Role of Ethics in Business 3
Recognizing Ethical Issues in Business continued
• Misuse of company time

Misuse of company time through personal social media use and online
shopping is very costly to businesses.
 The Role of Ethics in Business 4
Recognizing Ethical Issues in Business continued
• Abusive and intimidating behavior
• Most common ethical problem for employees
• Includes actions such as: physical threats, false accusations,
profanity, insults, yelling, ignoring someone
• Difficult to assess and manage
• Intent must be considered
• Bullying is associated with a hostile workplace
Table 2.3 Actions Associated with Bullies
 The Role of Ethics in Business 5
Recognizing Ethical Issues in Business continued
• Misuse of company resources
• Spending excessive time on personal e-mails
• Submitting personal expenses on company reports
• Using company copier for personal use
• Many companies are implementing official policies delineating
acceptable use of company resources
 The Role of Ethics in Business 6
Recognizing Ethical Issues in Business continued
• Conflict of interest
• When a person must choose whether to advance personal
interests or those of others
• To avoid, employees must separate personal financial interests
from business dealings
• Insider trading: the buying or selling of stocks by insiders who
possess material information that is still not public
 The Role of Ethics in Business 7
Fairness and Honesty
• Communications
• False and misleading advertising
• Deceptive personal-selling tactics
• Product labeling

• Business relationships
• Keep company secrets
• Meet obligations and responsibilities
• Avoid undue pressure forcing others to act unethically

• Plagiarism
 The Role of Ethics in Business 9
Improving Ethical Behavior in Business
• Ethical decisions in organizations are influenced by
three key factors:
Individual moral standards and values
Influence of managers and co-workers
Opportunity to engage in misconduct

• Professional codes of ethics

• Whistleblowing
The Nature of Social Responsibility 1
Corporate citizenship
• For example, companies introducing eco-friendly
products and marketing efforts
Social Responsibility Issues
• Relations with owners and stockholders
• Maintain proper accounting procedures
• Provide investors will all relevant information
• Protect owners’ rights and investments
Table 2.7 Social Responsibility Requirements
The Nature of Social Responsibility 2
Social Responsibility Issues continued
• Employee relations
• Provide a safe workplace
• Pay them adequately
• Keep employees informed of what is happening in their
company
• Listen to their grievances and treat them fairly
• Provide equal opportunities for all employees
The Nature of Social Responsibility 3
Social Responsibility Issues continued
• Consumer relations
• Consumerism
• John F. Kennedy’s 1962 consumer bill of rights
• Right to safety
• Right to be informed
• Right to choose
• Right to be heard
The Nature of Social Responsibility 4
Social Responsibility Issues continued
• Sustainability issues
• Pollution
• Water
• Air
• Land
The Nature of Social Responsibility 5
Social Responsibility Issues continued
• Alternative energy
• Fossil fuels are problematic
• Sources include wind power, solar power, nuclear power,
biofuels, electric cars, and hydro- and geothermal power
• Will likely require government subsidies
The Nature of Social Responsibility 6
Social Responsibility Issues continued
• Response to environmental issues
• Greenwashing
• Recycling
• Green business
The Nature of Social Responsibility 7
Social Responsibility Issues continued
• Community relations
• Many businesses want to make their communities better places
for everyone to live and work
• Most common way is through donations to local and national
charitable organizations