Social Responsibility

and Business Ethics

“There is no conflict between
profit and social responsibility.”

- Peter Drucker, Wall Street Journal, 1975

Social responsibility in Business
• People and Organizations behaving
and conducting business ethically
and with sensitivity towards social,
cultural, economic, and
environmental issues.
• Striving for social responsibility helps
individuals, organizations, and
governments have a positive impact
on development, business, and
society.
 Business Ethics and Corporate Social Responsibility

• Definition and Characteristics

Corporate social responsibility is

similar to ideas of social responsibility
for individuals and businesses.
Corporate social responsibility is a
specific business approach that
began in the 1950s and 1960s, with
definitions expanding in the ensuing
decades.
 Business Ethics and Corporate Social Responsibility

• Differentiate corporate social

responsibility from other
activities:
• Partly or Entirely benefit society
and/or general interests
• Obligated by law.
 Business Ethics and Corporate Social
Responsibility
• Environment friendliness
• Community support
• Local products promotion
• Fair employee treatment and more
• Stakeholders
• Employees
• Suppliers
• Customers
• Communities
 Business Ethics and Corporate Social
Responsibility
• The environment, investors & regulators.

• Policies and activities include cause-related

marketing (marketing programs that combine
sales objectives and helping worthy causes)

• Sponsorship (connecting worthy causes to a

brand or organization for money)

• Corporate philanthropy (charitable donations).

 Business Ethics and Corporate Social
Responsibility
• Corporate social responsibility activities for
intrinsic reasons:
• To help out and make societal contributions.
• Another motive is extrinsic,
• Which relates to a company expecting financial or
other benefits for socially responsible behavior.
• Finally, a third motive for corporate social
responsibility activities is meeting societal
expectations and stakeholder pressure.
 Benefits of Corporate Social Responsibility

• Smart business decisions are not just

a matter of counting short-term
dollars and cents.
• Wise decision makers consider the
future impact of today’s choices –
 On people
 On the community
 On the opinions of customers
 Objectives And Social Responsibilities of Business

Economic Objectives:

 The owners
 The employees
 The customers
Human Objectives:

 The employees
 The customers
Objectives And Social Responsibilities of
Business
Treated as partners in the joint venture and not

as inferior lot;

Able to acquire and develop new abilities and


skills in the process of employment

Derive job-satisfaction


To develop commitment to their work and in turn


to the organization in which they are working.
 Objectives And Social
Responsibilities of Business
 Get adequate return, on the capital
invested and the risk the form of profit
or dividend.
 Adequately compensated through fair
wages or Salaries,
 Allowances, Bonus, and Welfare
facilities in the form housing, medical,
healthcare, Education of children,
 Recreational facilities, Retirement
benefits, etc.
 Objectives And Social Responsibilities of
Business
Business earns profit by satisfying the needs of
the customers.
Earning of sufficient profits is necessary not only
to provide adequate rewards to the owners and
the employees, but the employees, but also to
provide for innovation and growth and
diversification.
Better products at lower rates and
Increase in employment opportunities.
 Objectives And Social Responsibilities of
Business
 Importance of courtesy, accommodation,
 Understanding and fairness in dealings with the
customers.
 The temptation of profiteering through
adulteration, hoarding, cornering of stocks, etc.
Organizational Objectives :
 Business strives for
(a) Acquire strength to grow and survive in the
face of competition; and
(b) Attaining an optimum size of operations so
that it could avail of the economies of the scale.
 Objectives And Social Responsibilities of
Business
Social Objectives:
•These objectives of business can be
put in two categories:

•(i) Micro level (i.e.,) immediate

environmental objectives)

•(ii) Macro level (i.e., national objectives

); Micro level social objectives.
 Objectives And Social
Responsibilities of Business
• Under this category, this category, the
business is expected help in the spread of
literacy, Education
• Training, Medical care and Public health
• Control of air and water pollution
• Development of backward classes and
regions
• Helping cultural, religious and charitable
institutions
 arguments offered in favor of business assuming social
responsibilities

• Supporting Arguments:
(i) Response to Social Demand :

• To fulfill the needs of the

members of the society /
community
 arguments offered in favor of business
assuming social responsibilities

•(ii) Long-term self-Interest of Business :

To fulfill the demands and the aspirations of the society.



The ability of a corporation to protect and enhance the


stockholders equally depends crucially upon the
prosperity, goodwill and confidence of the larger
community.
Acceptance of a large measure of responsibility towards

the community is, therefore, good business as well as
good citizenship.”
 arguments offered in favor of business
assuming social responsibilities
• (iii) Government Intervention : The Government
will step in and make them assume such
responsibilities through legislation.
• Voluntarily undertake to fulfill the social
responsibilities.
(iv) Public Image : Seek to maintain a proper
image of their business in the public mind by
assuming social responsibilities.
 arguments offered in favor of business assuming social
responsibilities

• (v) Socio-Cultural Norms : A business

operates within a set-up of socio-cultural
norms and restraints.

(vi) Consciousness Among Consumers :

Accept higher quality products at reasonable
rates from the business.
arguments offered in favor of business assuming social
responsibilities

• (vii) Strong Trade Unions :

The government has also enacted
social security measures due to
which it has become difficult for the
business houses to ignore the
interests of the work force.
 Objecting Arguments

These arguments are as follows:

Violation of Rule of Profit Maximization :

Less Efficient Use of Resources :

To use resources efficiently and a loss of the greater

productivity of the present economic mechanism.
 Objecting Arguments
Burden on Consumers

If the market price of a product does not truly reflect

the relative costs of producing it, but includes costs for
social actions, the a locative mechanism of the market
place will be distorted.

Lack of Social Skills

 Lack of Self-Interest
 What is Business Ethics?

 Wallace and Pekel explain that

“ attention to business ethics is critical during times of
fundamental change -- times much like those faced
now by businesses, both nonprofit or for-profit. “

Ethics in the workplaces helps ensure that when

leaders and managers are struggling in times of
crises and confusion, they retain a strong moral
compass.
 What is Business Ethics?

• Many people react that business

ethics, with its continuing
attention to "doing the right
thing," only asserts the obvious
("be good," "don't lie," etc.),
 Managing Ethics in the Workplace

• Establishing an ethics management

program
• Brian Schrag,
• “ Typically, ethics programs convey
corporate values, often using codes and
policies to guide decisions and behavior,
and can include extensive training and
evaluating, depending on the organization”
 Developing Codes of Ethics
• According to Wallace, "A credo
generally describes the highest
values to which the company aspires
to operate. It contains the `thou
shalts.' A code of ethics specifies the
ethical rules of operation. It's the
`thou shalt nots." In the latter 1980s,
 Developing Codes of
Conduct
•
Codes of ethics and codes of conduct
may be the same in some
organizations, depending on the
organization's culture and operations
and on the ultimate level of
specificity in the code(s).
 Making Ethical Decisions
Doug Wallace, Consultant, explains that
“ one knows when they have a significant ethical conflict
when there is presence of
•a) Significant value conflicts among differing interests
•b) Real alternatives that are equality justifiable

•c) Significant consequences on "stakeholders" in the

situation. An ethical dilemma exists when one is faced
with having to make a choice among these alternatives.
 Assessing and Cultivating Ethical Culture

 Culture is comprised of the

values, norms, folkways and
behaviors of an organization.

 Ethics is about moral values, or

values regarding right and wrong.
 Ethics Training

• All staff must be aware of and

act in full accordance with
policies and procedures (this is
true, whether policies and
procedures are for ethics
programs or personnel
management).
 Business is helping to protect the
Environment
• Putting environmental issues front and centre.
• Encouraging their Global Supply Chain to do the same.
• Setting ambitious targets to cut their Carbon omissions.
• Building Greener Homes.
• Helping Schools, Hospitals and Public Building to reduce
Carbon.
• Meetings the things we buy more environmentally friendly
and cheaper.
• Saving trees by panting rainforests and reducing paper
waste.
• Innovating to provide low Carbon Solution.