14th edition

1. Chapter 2
Business Ethics and
Social Responsibility

2. Learning Goals
1 Explain the concepts of business ethics 4 Describe how businesses’ social
and social responsibility responsibility is measured and
summarize the responsibilities of
2 Describe the factors that influence business to the general public,
business ethics. customers, and employees.
3 List the stages in the development of 5 Explain why investors and the
ethical standards and discuss how financial community are concerned
organizations shape ethical behavior. with business ethics and social
responsibility.

3. Concern for Ethical and
Societal Issues
Business Ethics
s The standards of conduct and moral values
governing actions and decisions in the work
environment.
s Social responsibility
s Balance between what’s right and what’s profitable
s Often no clear-cut choices
s Often shaped by the organization’s ethical climate
Sarbanes-Oxley Act
s A 2002 law that added oversight for the nation’s
major companies and a special oversight board to
regulate public accounting firms that audit the
financial records of these corporations.

4. The Contemporary Ethical Environment
s High-profile investigations and arrests in
headlines.
s Vast majority of businesses are ethical.
s New corporate officers charged with deterring
wrongdoing and ensuring ethical standards.

5. Business Approach to Ethics and
Social Responsibility
s Engage in traditional corporate philanthropy,
which involves giving to worthy causes.
s Anticipate and manage risks.
s Identify opportunities to create value by doing
the right thing.
s See how Walmart highlights corporate
responsibility on its website.

6. Individuals Make a Difference
s Individuals can make the
difference in ethical
expectations and behavior.
s Putting own interest
ahead of the
organization
s Lying to employee
s Misrepresenting hours
s Safety violations
s Internet abuse
s Technology is expanding
unethical behavior.

7. Development of Individual Ethics

8. On-the-Job Ethical Dilemmas
Situation in which a
Telling the truth and
business decision may
adhering to deeply felt
be influenced for
ethical principles in
personal gain.
business decisions.
Employee’s Businesspeople
disclosure of illegal, expect employees to
immoral, or unethical be loyal and truthful,
practices in the but ethical conflicts
organization. may arise.

9. How Organizations Shape Ethical
Conduct

10. Ethical Awareness
Code of Conduct: Formal
statement that defines how
the organization expects
and requires employees to
resolve ethical questions.

11. Ethical Education
Codes of conduct cannot
detail a solution for every
ethical situation, so
corporations provide training
in ethical reasoning.

12. Ethical Action
Helping employees
recognize and reason
through ethical problems
and turning them into ethical
actions.
TI Ethics Quick Test

13. Ethical Leadership
Executives must demonstrate
ethical behavior in their
actions.
s
use clear, explicit language rather
than euphemisms for corrupt
behavior
s
encourage behavior that generates
and fosters ethical values

14. Acting Responsibly to Satisfy Society
Social Responsibility
s
Management’s consideration of profit, consumer
satisfaction, and societal well-being of equal value in
evaluating the firm’s performance.
s
Contributions to the overall economy, job
opportunities, and charitable contributions and
service.

15. Areas of Responsibility

16. Responsibilities to the General Public
s Public Health Issues. What to do about inherently
dangerous products such as alcohol, tobacco, vaccines,
and steroids.
s Protecting the Environment. Using resources
efficiently, minimizing pollution.
s Green marketing
s Sustainability
s Developing the Quality of the Workforce. Enhancing
quality of the overall workforce through education and
diversity initiatives.
s Corporate Philanthropy. Cash contributions, donations
of equipment and products, and supporting the volunteer
efforts of company employees.

17. Responsibilities to Customers
CONSUMERISM
s The Right to Be Safe. Safe operation of products,
avoiding product liability.
s The Right to Be Informed. Avoiding false or misleading
advertising and providing effective customer service.
s The Right to Choose. Ability of consumers to choose the
products and services they want.
s The Right to Be Heard. Ability of consumers to
express legitimate complaints to the appropriate parties.

18. Responsibilities to Employees
s Workplace Safety. Monitored by
Occupational Safety and Health Administration.
s Quality-of-Life Issues. Balancing work and family through
flexible work schedules, subsidized child care, and regulation
such as the Family and Medical Leave Act of 1993.
s Ensuring Equal Opportunity on the Job. Providing equal
opportunities to all employees without discrimination; many
aspects regulated by the
Equal Employment Opportunity Commission.
s Age Discrimination.
Age Discrimination in Employment Act of 1968 protects
workers age 40 or older.
s Sexual Harassment and Sexism. Avoiding unwelcome
actions of a sexual nature; equal pay for equal work without
regard to gender.

19. Responsibilities to Investors
s Obligation to make profits for
shareholders.
s Expectation of ethical and moral
behavior.
s Protection of investors by the
Securities and Exchange Commission
and state regulations.