BUSINESS ETHICS

AND SOCIAL
RESPONSIBILITY

GILBERT M. FERNANDO
Teacher
 Most common ethical issues encountered
by entrepreneurs:
Favouritism/Partiality

Entrepreneurs should not be biased when it comes to hiring employees and in making decisions in other
aspects. You don’t hire a less qualified job candidate because he is related to you or because he is your
favorite. It is not only unethical but you are also hiring someone who is not best for the position.

Copyright Violation

The mistake of infringing copyrights of other businesses is an abuse of the law. It is important that you should
ask permission from the rightful owner before you use their own creations for business.

Overworking Your Staff

Entrepreneurs asking too much work from their employees without even understanding their situations is
unethical. Entrepreneurs should know their limit in assigning workloads to their employees.
 Most common ethical issues encountered
by entrepreneurs:
Tax Accounting and Dishonesty of Expenses

Dishonesty in declaration of assets and income just to get lower tax is unethical. It is important that the entrepreneur
should not mix personal and business expenses. Not doing it right mind end up in trouble with the law.

Claiming Income

Hiding income generated and not declaring it may hamper the business because it will deprive the government from
collecting from these entrepreneurs. This qualifies as unethical because there is dishonesty in this situation.

Hiding Blemishes During Fundraising

It can be very tempting to slightly exaggerate things while on the hunt for investment and it is a very slippery slope
with no real upside. You either lose credibility/trust later on or commit yourself to an unrealistic timeline that will only
frustrate those who have bought into your dream. Be optimistic but realistic with where challenges might occur.
Openness and honesty help ensure a good fit.
 Most common ethical issues encountered
by entrepreneurs:
Merging Personal and Business Accounts

Never merge personal income with business income. Entrepreneurs should be sensible with their
expenses. Proper payroll or paying quarterly taxes should be observed.

Hiring someone to write fake reviews

Hiring people to write fake reviews about the company is unethical. There also companies being paid
just create fake survey results just like TV ratings. This action is not ethical because these businessmen
are giving fake information about their company just to appear positive online.
 The four Models and Frameworks of
Social Responsibility
1. Economic Model – this model is followed by entrepreneurs on the purpose to increase the profit of
the company. This is otherwise known as the profit-based social responsibility of the business. A
business is an organization that produces goods and services. In this connection, the society and the
community benefits from it because jobs are created and wealth is collected.

2. Philanthropic Model – The entrepreneur, just like any other individuals, is free to contribute to
social causes in form of philanthropic action. Although corporations and businesses have no obligations
to contribute to social causes, it may be contributory to its good reputation. Businesses are encouraged
to do charitable works because it does not only help the community but it also helps the company to
have good public relations, tax deductions and good will.
 The four Models and Frameworks of
Social Responsibility
3. Social Web Model (Ethical) - It projects business as a citizen of the society in which it functions as
such. Just like all members of a society business must obey to the normal ethical duties that every
citizen of the community faces. It is the duty of the corporation to comply with the law of the
community.

4. Integrative Model –There is combination of social goals with economic objectives of the
organization. Most of the successful corporations have recognized that some for-profit organizations
also have social goals as a fundamental part of the organizational strategy.