This document discusses business ethics and social responsibility. It defines ethics as beliefs about right and wrong, and ethical behavior as conforming to social norms. Unethical behavior goes against these norms. Sources of ethics include childhood experiences and peer/work influences. The document also presents models for assessing ethical situations and outlines common ethical norms. It defines business ethics, factors that influence ethical decisions, and methods companies use to encourage ethics like codes of conduct and training. Finally, it discusses social responsibility and stakeholder theory, and gives examples of socially responsible practices and implementation approaches.

1. BUSINESS ETHICS &
SOCIAL RESPONSIBILITY

2. Ethics
• Ethics
Beliefs about what’s right and wrong
• Ethical Behavior
Behavior conforming to individual beliefs and
social norms about what’s right and good
• Unethical Behavior
Behavior conforming to individual beliefs and social
norms about what is defined as wrong and bad

3. Ethics, Contd.
 Sources of individual ethics:
 Childhood responses to adult behavior
 Influence of peers
 Experiences in adulthood
 Managerial ethics
 Behavior toward employees
 Behavior toward the organization
 Behavior toward other economic agents—
customers, competitors, stockholders, and
environment

4. Assessing Ethical Behavior
 Three-step model for applying ethical
judgments to situations:
 gather relevant factual information
 determine the most appropriate moral
values
 make an ethical judgment based on the
rightness or wrongness of the proposed
activity or policy

5. Four Ethical Norms
 Utility—does a particular act optimize what is
best for those who are affected by it?
 Rights—does it respect the rights of the
individual involved?
 Justice—is it consistent with what we regard
as fair?
 Caring—is it consistent with people’s
responsibilities to each other?

6. Business Ethics
 Business Ethics refer to the application of
moral standards of right and wrong to business
situations.

7. Factors Affecting Ethical Business
Behavior
 Employees
 Personal values & ethics
 Social Factors
 Cultural
norms
 Coworkers – peer pressure
 Opportunity
 Whether a business rejects or condones unethical
behavior (look the other way).

8. Methods Companies Use to
Encourage Ethical Conduct
 Top level management involvement
 Establish a written code of ethics
 Conduct ethics training programs
 Hire ethical people
 Whistle-blower hotline

9. Code of Ethics
 A Code of Ethics is a written guide to
acceptable and ethical behavior. Outlining
uniform policies, standards, and punishments
for violations.

10. Social Responsibility
 Social responsibility is an obligation for
businesses to consider society in its decision
making and actions.

11. Stakeholder Model of Social
Responsibility
 Business is responsible to ALL stakeholders
(employees, communities, environment, etc.)–
not just stockholders.
 Business is part of society and can’t ignore
social issues
 Business can create a more stable
environment for long-term profitability by
resolving social issues.
 Prevents government intervention, which could
force businesses to do what they fail to do
voluntarily
 Can be profitable and have public relations

12. Spending for Social
Responsibility
AGAINST
 Companies are only responsible to
stockholders, who want return on investment
 Corporate time, money, and talent should be
used to maximize profits, not solve society’s
problems
 Business should not be expected to solve
social problems
 Social issues are responsibility of elected
officials and the government

13. Methods companies use to develop
a program of social responsibility
includes:
 Commitment of top executives, policy
 Part of strategic planning
 Appointment of a director
 Social Audit

14. Areas of Social Responsibility
 Environment green -- house gases, water,
packaging, sustainability, product modification
 EX: disposal of toxic waster, recycling; control of
air, land & water pollution, Green Marketing
 Customers -- advertising, labeling, pricing
 EX: for consumers -- quality products at fair
prices
 Employees – fair recruiting, hiring, training,
promoting, compensation, termination, whistle
blowers
 Investors – no abuse of resources,
misrepresenting finances, excessive salaries,

15. Implementing Social Responsibility
Programs
 Approaches to Social Responsibility

16. Social Responsibility and the Small
Business
 Large Business versus Small Business
 Differences are primarily differences of scale
 More issues are questions of individual ethics
 Ethics and social responsibility are decisions
faced by all managers in all organizations,
regardless of rank or size