This document discusses ethics, morals, business ethics, and corporate social responsibility. It begins with defining ethics and morals, noting that ethics come from social systems while morals are more individual. It then discusses general social expectations of ethics like honesty, fairness, and legality. It also discusses specific expectations that vary by role. The document outlines frameworks for encouraging ethical behavior and addressing ethical dilemmas. It discusses arguments for why corporate social responsibility is increasingly important. Overall, the document provides an overview of key concepts and issues relating to ethics, morals, and corporate social responsibility in business.
Doing Good while Doing Well: Business Ethics and Corporate Social Responsibility
1. Ethics and
Corporate Social Responsibility
Chapter 6
Doing Good while Doing Well
PA 315
Professor Sharon Pierce
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Ethics versus Morals
Comparison Chart ETHICSMORALSWhat are they?The rules of
conduct recognized in respect to a particular class of human
actions or a particular group or culture.Principles or habits with
respect to right or wrong conduct. While morals also prescribe
dos and don'ts, morality is ultimately a personal compass of
right and wrong.Where do they come from?Social system -
ExternalIndividual - InternalWhy we do it?Because society says
it is the right thing to do.Because we believe in something being
right or wrong.The "Gray"A person strictly following Ethical
2. Principles may not have any Morals at all. Likewise, one could
violate Ethical Principles within a given system of rules in
order to maintain Moral integrity.A moral Person although
perhaps bound by a higher covenant, may choose to follow a
code of ethics as it would apply to a system. "Make it fit” -
such as a profession AcceptabilityEthics are governed by
professional and legal guidelines within a particular time and
placeMorality surpasses cultural norms
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General Social Expectations of Ethics
Expectations business environmentGuidelines of what is right
and wrong, fair and unfair, and morally correct—when they
make business decisions.The ethics of societies is quite stable,
but does evolve over time - Would you agree?SlaveryVoting
rights for womenGeneral social expectations affect all members
of society for ethical behavior.Honesty – builds trust and long-
term relationshipsFairness – equality of opportunities, mutual
respect Legality – law abiding
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Specific Social Expectations of EthicsSpecific expectations do
vary by social role (industry, profession, social function,
etc.)Example: judges versus CIA spiesExample: soldiers versus
3. nurses
So what are the social expectations of business ethics…?
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Business Ethics
The standards of conduct and moral values governing actions
and decisions in the work environment.Social
responsibility.Balance between what’s right and what’s
profitable.Often no clear-cut choices.Often shaped by the
organization’s ethical climate.This includes actions of their
employees and associationsFall back on their own moral and
religious backgrounds for guidanceCan be affected by superiors
– feel pressuredReflects the philosophy or the mission of the
businessShould include Corporate Social Responsibility –
voluntary actions to be responsible citizens in their
communities and globally
Most business people rely upon their own consciences in
making business decisions, falling back upon their own moral
and religious backgrounds for guidance. However, business
people are also affected by their superiors and immediate
colleagues when making business decisions and may feel
pressurized to behave unethically when seeking to make profits.
Over recent years many firms and industries have attempted to
develop codes of conduct which can be used to guide managers
when making decisions
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https://www.google.com/search?tbm=isch&sa=1&ei=arrEW_na
KqLl_QaK5L-gCw&
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Encouraging Ethical Behavior
Ethical Reasoning Framework
Step one: Am I comfortable publicizing this decision broadly?
Step two: What if everyone makes this type of decision?
Step three: Identify stakeholders and their interests
Direct/indirect/remote stakeholders (or primary/secondary
stakeholders)
Interest of each stakeholder involved
Step four: Identify critical issues and the competing values
involved
Major issues
Right-and-wrong (ethical or moral lapses) vs. right-and-right
(tough trade-offs of appropriate competing values)
Step five: Identify solutions and their potential impacts
Possible solutions
Moral level of each solution involved
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5. Most dilemmas are not right vs. wrong but right vs. right
dilemmas.
- It is right to protect forests,
it is right to provide jobs for loggers
- It is right to uphold confidentiality,
it is right to protect the welfare of others
How Good People Make Tough Choices
Rushworth M. Kidder, 1995
Right versus Right by Rushworth KidderIndividual vs.
community Individual – seeks own interestCommunity – needs
of the majority outweigh the individual Short term vs. long term
Short term – satisfaction of current needsLong term – concerned
with future needsJustice vs. mercyTruth – stick to the
principlesMercy – case by case Truth vs. loyaltyTruth –
conformity with facts and realityLoyalty – allegiance to a
person, body of people, set of ideas
QuestionErin embraces (and believes) that promotion is based
on fairness, which in turn is based on technical merit. Now she
must promote one of three individuals in the unit under her
direction to the position of supervisor. Barbara is good and
Erin’s friend. Janelle is very good but independent minded, and
sometimes doesn’t agree with Erin. Erin picks Barbara as the
6. supervisor. In this case, which best describes her situation in
stricter terms?
Erin is not ethical.
Erin is generally ethical but leaves room open for questioning
her morality.
Erin is highly ethical and moral.
B – we go back to that gray area
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The Gray AreaEthics can be complicated and hard to
defineRight and wrong is not always clearEthics depends on an
individual’s idea of businessIndividual moralityMoral—one
complies with society’s system of beliefsAmoral—one does not
always comply, acting in a fashion that is neither good or
badImmoral—one does not, acting in violation of proper
behavior
Business Ethics and
Corporate Social Responsibility
Business Ethics
Corporate Social Responsibility Guidelines for the conduct of
business based on notions of what is right, wrong, and fair.A
business philosophy which stresses the need for firms to behave
as good corporate citizens, not just obeying the law but
conducting their production and marketing activities in a
manner which avoids unnecessary environmental stressors.CSR
– the idea that businesses should self regulate and provide a
benefit to their communities
CSR is part of ethical business practices…
8. company ratings from respondents in 15 countries Tracks social
responsibility reputations by zeroing in on consumer’s
perceptions of company governance, positive influence on
society and treatment of employees
Question – Name your top 3 companies…
https://www.forbes.com/sites/karstenstrauss/2018/02/08/the-
companies-with-the-best-csr-reputations-in-
2017/#405824913873
The top 2017 CSR Company
Reach every child in every country…Make a global difference
on product safety and quality…Through UNICEF, strengthen
child protection governance by implementing the Children’s
Rights and Business PrinciplesIn collaboration with World
Wildlife Fund, create solutions for reducing supply chain
carbon emissionsSearch for sustainable alternatives to current
oil-based raw materials and packagingLive up to the highest
standards for business conduct with respect for international
labor and human rightsEmployees are extremely important
Reach local communities with family activities
Lego – Our Aspirations
Corporate Social Responsibility CSR is related to business
ethics.Accounting scandalsEnron – Jeffery Skilling and staff of
9. executives hid billions in debt through unethical accounting
practices. Chief Financial Officer Andrew Fastow mislead
Enron’s Board of Directors. $591 million in losses/$628
million in debt- Sarbanes Oxley Act 2002 direct result of
Enron.Mortgage and insurance scandalsAmerican International
Group (AIG) an insurance company, bailed out for $85 billion –
Recently removed from the US Financial Stability Oversight
Council as no longer a risk. Scams of financial mogulsBernie
Madoff – Former Chairman of the NASDAQ, stock exchange
operated a Ponzi scheme (fraudulent investments). In 2009,
pleaded quality to 11 felonies and admitted to defrauding
thousands of investors of billions of dollars.BP oil spillThe
Deepwater Horizon oil spill – considered the largest offshore
spill in the Gulf of Mexico that resulted from the April 20, 2010
Deepwater Horizon drilling rig explosion. Recent study came
out that the dispersant they used harmed human health (Pittman,
2017)
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Corporate Social ResponsibilityAt the organizational levelA
corporation is progressively more socially responsible to the
degree that it:Meets basic economic needs through diligence and
innovationExceeds legal requirements by fulfilling the lawFinds
ways to enhance the community and planet with mutually
beneficial actionsProvides outright acts of charity
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10. Social Responsibility Arguments Increasingly ImportantSocial
responsibility is increasingly an interest and concern of public,
investors, and employeesSocial responsibility can provide win-
win scenarios, e.g., the environment can be protected (WIN) and
costs can be cut(WIN)Poor social responsibility gets more
attention from organizations providing bad pressThe moral
argument is that all companies must abide by society’s
minimum standards, and that wealth and success bring social
obligations to be more responsible
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Thank you.
PA 315
GOVERNMENT BUSINESS RELATIONS
CHAPTER 5
California State University San Bernardino
College of Business & Public Administration
Professor Sharon Pierce
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11. REGULATION - WHAT DOES IT MEAN?Regulation - The act
of governing, directing according to rule, or bringing under the
control of law or constituted authority.A federal regulatory
agency -Has decision-making authorityEstablishes
standardsOperates principally on domestic business Has
members appointed by the President subject to Senate
confirmationHas its legal procedures governed by the
Administrative Procedures Act – governs they way an agency
may propose and establish regulations
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Checks and balances in place.
The Administrative Procedure Act (APA) enacted June 11,
1946, is the United States federal statute that governs the way
in which administrative agencies of the federal government of
the United States may propose and establish regulations.
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MAJOR U.S. FEDERAL REGULATORY AGENCIESConsumer
Product Safety Commission (CPSC): enforces federal safety
standards
Environmental Protection Agency (EPA): establishes and
enforces pollution standards
Equal Employment Opportunity Commission (EEOC):
administers and enforces Title VIII (8) or the Civil Rights Act
of 1964 (fair employment)
12. Federal Aviation Administration (FAA): regulates and promotes
air transportation safety, including airports and pilot licensing
Federal Communications Commission (FCC): regulates
interstate/foreign communication by radio, telephone, telegraph,
and television
Federal Deposit Insurance Corporation (FDIC): insures bank
deposits, approves mergers, and audits banking practices
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Federal Reserve System (the FED): regulates banking; manages
the money supply
Federal Trade Commission (FTC): ensures free and fair
competition and protects consumers from unfair or deceptive
practices
Food and Drug Administration (FDA): administers federal food
purity laws, drug testing and safety, and cosmetics
Interstate Commerce Commission (ICC): enforces federal laws
concerning transportation that crosses state lines
National Labor Relations Board (NLRB): prevents or corrects
unfair labor practices by either employers or unions
Occupational Safety and Health Administration (OSHA):
develops and enforces federal standards and regulations
ensuring working conditions
Securities and Exchange Commission (SEC): administers
federal laws concerning the buying and selling of securities
BUSINESS, GOVERNMENT, AND REGULATIONThe
government tends to become involved in business after serious
problems arise, and there has been no shortage of problems.
Women and children working long hours - Massachusetts passed
13. the nation’s first law to limit work days to 10 hours for women
and children in 1874Railroad prices were out of control -
regulation of railroad rates in 1887 (Interstate Commerce
Commission)Crash of 1929 - regulation of stock market in 1934
(US Securities and Exchange Commission)Industrial revolution
brought workforce issues 1930’s and upAirline industry in the
1980’s Financial crisis late 2000’sManmade environmental
disasters such as Deepwater Horizon oil spill in
2010Government needed to step in
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GOVERNMENT’S
REGULATORY INFLUENCE ON BUSINESS
*Government Regulation can be controversial in the business-
government relationship as it affects every aspect of business.
Some regulation necessary - consumers and employees are
treated fairlyconsumers and employees are not exposed to
hazardsto protect the environment Would you agree?
Regulations can be too extensive in scope, too costly, and
burdensome in terms of red tape.
ISSUES RELATED TO REGULATION -
Innovation may be affected – When corporate budgets must
focus on “defensive research” certain types of innovation are
less likely to take place.
New investments in plant and equipment may be affected –To
the extent that corporate funds must be used for regulatory
compliance, they are diverted from more productive uses.
Small business may be adversely affected –Federal regulations
can have a disproportionately adverse effect on small firms
because of the cannot compete with larger firms
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THE ROLES OF
GOVERNMENT AND BUSINESSWhat should be the role of
government when it comes to regulating business? If the role of
business were simply production and distribution of goods and
services, business would need little regulation.What is their
bottom line?Important factors to consider – business does not
automatically factor into the business decision making
process.safe working environmentequal employment
opportunitiesfair payclean airsafe products
As a result, it falls to government to ensure those goals are
achieved.
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EXAMPLES OF GOVERNMENT REGULATION IN OUR
LIVES…Going to school – local, state, and federal government
regulate and funds schools we have an educated workforceTake
a shower – water that flows from your showerhead has been
analyzed by your local water department to ensure safety
Brushing your teeth – a government agency assured that the
ingredients in your toothpaste are safe and it was packaged
15. safely
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Driving – traffic laws that allowed you to get to school safety
have been created and enforced by local government and police
departments. Listening to the radio – you can enjoy music
because a government agency assigns a separate frequency to
each competing station.Going to work – government agencies
assure that your workplace is safe and protect you from
discrimination.
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GOVERNMENT AS A PROTECTIVE REGULATORRegulations
falls into two categoriesEconomic regulations – sets prices or
conditions on entry of firms into an industryFederal
Communications Commission (FCC)Civil Aeronautics Board
(CAB)Social regulations – involves the correction of
externalities and in largely protective in natureEnvironmental
Protection Agency (EPA)Occupational Safety and Health
Administration (OSHA)Concerned with the qualities of the
goods and services produced, the conditions under which
production occurs, and impact of production on society
COMPARISON OF
ECONOMIC AND SOCIAL REGULATION
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TYPES OF REGULATION (1 OF 2)
FTC - main goals are to protect consumers and to ensure a
strong competitive market by enforcing a variety of consumer
protection and antitrust laws. These laws guard against harmful
business practices and protect the market from anti-competitive
practices such as large mergers and price-fixing conspiracies.
FCC - regulates interstate and international communications by
radio, television, wire, satellite and cable -
Federal Communications Commission (FCC) – The
FCC regulates interstate and international communications by
radio, television, wire, satellite and cable in all 50 states, the
District of Columbia and U.S. territories. The FCC is an
independent government agency overseen by Congress. The
FCC is primary authority for communications law, regulation
and technological innovation.
NET NEUTRALITY -
While the removal of net neutrality restrictions on internet
service providers will allow ISPs to charge more or less for
user-access to individual websites,
the Federal Trade Commission will monitor ISP activities to
provide against monopoly formation and unfair trade practices.
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17. FEDERAL TRADE COMMISSION
Mission: To prevent business practices that are anticompetitive,
deceptive, or unfair to consumers
Consumer Protection:The Federal Trade Commission Act
provides that “unfair or deceptive acts or practices in or
affecting commerce…are…declared unlawful.”
(15 U.S.C. Sec. 45(a)(1))
Competition:The FTC Act also prohibits “unfair methods of
competition.”
(15 U.S.C. Sec. 45(a))Including any conduct that violates the
Sherman Antitrust Act or the Clayton Act
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ANTITRUST LAWS
SHERMAN ACTPassed by Congress in 1890.Regarded as a way
to reduce concerns that large business interests dominated
industry.Private parties may sue.The major sections of the Act
are so broad that one could find almost any business activity to
be illegal.
No restraint of trade
Cannot monopolize or attempt to monopolize
CLAYTON ACTEnacted in 1914Wanted government to have the
ability to attack a business practice early in its use to prevent a
firm from becoming a monopoly.Practices are illegal that
“substantially lessen competition or tend to create a
monopoly.”Private parties may sue
Clayton Act exempts some activities of nonprofit and certain
18. agricultural, fishing and some other cooperatives.
WHAT DOES THE FTC DO...Challenges deceptive advertising
and marketingConsumers should get what they pay for. The
FTC works to ensure that national advertisers can back up the
claims they make for their products, especially health and safety
claims. (Sketchers) Protects consumer in the tech
industryApplies antitrust/consumer protection principles to
technology markets, focusing on the facts as they develop in
real time to asses when to best protect consumers and how to
encourage competition. (Apple – $32.5m settlement for in-app
purchases)Safeguards childrenThe Children’s Online Privacy
Protection Act (COPPA) and the FTC’s COPPA Rule protect
children’s privacy when they’re online by putting their parents
in charge of who gets to collect personal information about their
preteen kids. The FTC enforces COPPA by ensuring that parents
have the tools they need to protect their children’s
privacy.Protects consumers in economyTakes effective actions
to ensure that consumers are protected from abusive credit
practices and get the information they need to make informed
financial choices.www.ftc.gov
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WHAT DOES THE FTC DO...Protects consumer privacyMakes
sure companies keep their privacy promises to consumers, and
ensure that consumers have confidence to take advantage of the
benefits that a dynamic marketplace offers.Accuracy and
transparency in Credit ReportingEnsure consumers have tools to
keep credit information accurate.Stopping FraudLaw
enforcement to prevent consumer fraud continues as a high
priority for the agency.Health IndustryThe FTC is engaged in
ongoing efforts to stop (1) bogus claims that unproven remedies
19. can be used to prevent and treat serious diseases and (2)
misleading claims for products promoting easy weight loss and
slimmer bodies. Finally, the FTC is committed to ensuring that
firms who collect that data use reasonable and appropriate
security measures to prevent it from falling into the hands of
identity thieves and other unauthorized users.Wellness Support
Network - $2.2 m phony claims regarding diabetesEnergy and
Environmental ProductsDevotes significant resources to ensure
that competition to produce these items remains robust and that
consumers are protected.
TYPES OF REGULATION
EEOC – responsible for enforcing federal laws regarding
discrimination against a job applicant or an employee in the
United States of America.
OSHA – responsibility of ensuring safety at work and a
healthful work environment.
EPA - the purpose of protecting human health and the
environment by writing and enforcing regulations based on laws
passed by Congress.
CONSUMER PROTECTION
Refers to the regulatory framework designed to ensure right of
consumers, as well as fair competition and accurate information
in the marketplace.
Consumers have the freedom of choice – free to accept or reject
a productProducers have to effectively respond to the needs of
consumer in order to pursue a profitIn the past, the relationship
with buyer and seller was “buyer beware” – both parties were
20. responsible for knowing their productToo many products in the
marketplaceIncreased demand for protecting the rights of
consumers came into play
The first industrial revolution was the result of the war of 1812
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CONSUMER PROTECTION
Prevention of fraud and misrepresentation of food, drugs, and
cosmetics.
Protect consumers from –
ContaminationMisbrandingMislabeling
FDA – Food and Drug Administration –
The Food and Drug Administration is responsible for protecting
the public health by ensuring the safety, efficacy, and security
of human and veterinary drugs, biological products,
and medical devices; and by ensuring the safety of our nation's
food supply, cosmetics, and products that emit radiation.
https://www.fda.gov/
EMPLOYEE PROTECTION
Employee protection refers to the legal framework that protects
the welfare of employees, including wages, working hours,
health, safety, and working conditions, as well as the right for
equal employment opportunities.
EMPLOYEE PROTECTION Factory Act – 1833 - to improve
conditions for
21. children working in factories. no child workers under nine
years of ageemployers must have an age certificate for their
child workerschildren of 9-13 years to work no more than nine
hours a daychildren of 13-18 years to work no more than 12
hours a daychildren are not to work at nighttwo hours schooling
each day for childrenfour factory inspectors appointed to
enforce the law
However, the passing of this act did not mean that the
mistreatment of children stopped overnight.
In 1833 the Government passed a Factory Act
Young children were working very long hours in workplaces
where conditions were often terrible.
The basic act was as follows:
no child workers under nine years of age
employers must have an age certificate for their child workers
children of 9-13 years to work no more than nine hours a day
children of 13-18 years to work no more than 12 hours a day
children are not to work at night
two hours schooling each day for children
four factory inspectors appointed to enforce the law
However, the passing of this act did not mean that the
mistreatment of children stopped overnight. Using these
sources, investigate how the far the act had solved the problems
of child labour.
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EMPLOYEE PROTECTION Industrial revolution – 1874
Massachusetts passed the nation’s first law to limit the working
hours of women and children employed in factoriesFair Labor
22. Standards – 1938 – introduced a maximum 44 hour, seven day
work week and established a minimum wageOccupational
Health and Safety – 1970 Occupational Safety and Health Act to
ensure employers provided their employees with a working
environment free from recognized hazards such as toxic
chemicals, unsanitary conditions, mechanical dangers, etc.
OSHA was established in the US Department of Labor – April
28, 1971.Family Medical Leave Act – 1993 – balance the
demands of the workplace with the needs of family.
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ENVIRONMENTAL PROTECTIONIn the 1900’s, President
Theodore Roosevelt established the National Park System –
preserve land and sites of historical or scientific value.Post
WWII, environment became a larger part of the public discourse
– viewed as a public goodIn 1969, the Cuyahoga River near
Cleveland, Ohio caught fire from a spark from a rail car,
igniting flammable materials floating on the river. As a result,
in 1969 Congress passed the National Environmental Protection
Act (NEPA) – which mandates that negative environmental
impacts of potential federal agency actions needed to listed on
environmental impact statements (EIS).
FORMATION OF THE EPA
ENVIRONMENTAL PROTECTION AGENCY Born in the wake
of elevated concern about environmental pollution, EPA was
23. established on December 2, 1970.To protect from significant
risks to human health and the environment where they live,
learn, and workNational efforts to reduce environmental risk
Protect natural resources, human health, economic growth,
energy, transportation, agriculture, industry, and international
trade
ENVIRONMENTAL PROTECTION Reasons why – Climate
change Wealthy countries consume and are responsible for more
than their share of pollutionEnsure the air we breath is free of
contaminantsClean waterCreate a healthy environment
GOVERNMENT AS A REGULATOR OF BUSINESSRegulation
is a type of government intervention in economic activity
through commands and controls enforced with coercive
power.Deregulation is the reduction or removal of government
intervention in a particular industry – usually enacted to create
competition.
DEREGULATION
Deregulation has been a priority for President Trump –
Shortly after being elected president, Donald Trump signed
an executive order directing all federal agencies to find two
regulations to cut for every new one issued.
24. Agencies also were asked to pay for new regulatory costs by
eliminating existing rules.
Regulations that have been eliminated – 22 for every 1 that has
been put into place.
Neomi Rao, the administrator of the Office of Information and
Regulatory Affairs, said the administration had completed 67
deregulatory actions and taken three regulatory actions through
the end of September that would result in a cost savings of $570
million a year.
Those deregulatory actions include a wide range of actions,
including the withdrawal of guidance documents and reductions
in paperwork burdens, and a dozen regulations killed by
Congress, Rao said.
More than 1,500 regulations other rules and regulations have
been withdrawn, delayed, or are under reconsideration, officials
said.
Administration believes By amending and eliminating
regulations that are ineffective, duplicative, and obsolete, the
Administration can promote economic growth and innovation
and protect individual liberty.
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CURRENT STATE OF DEREGULATIONDeregulation has been
a priority for President Trump Shortly after being elected
president, Donald Trump signed an executive order directing all
federal agencies to find two regulations to cut for every new
one issued. Agencies also were asked to pay for new regulatory
costs by eliminating existing rules.Regulations that have been
25. eliminated – 22 for every 1 that has been put into place.
Administration believes by amending and eliminating
regulations that are ineffective, duplicative, and obsolete, the
Administration can promote economic growth and innovation
and protect individual liberty.
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AIRLINE INDUSTRY
https://www.youtube.com/watch?v=91Pza6w2anE
DEREGULATION OF THE AIRLINE INDUSTRY Economy
was poor: high prices, high unemployment Airlines: regulated
since the 1930’s No new competitionCivil Aeronautics Board
(CAB) regulated aviation services, included scheduled airline
services, fare pricing, discounting, controlled market entry,
Freddy Laker: Cheaper alternativePanAm couldn’t compete with
his prices Alfred Kahn, former chair of the CAB: Assigned to
investigate effectiveness of CAB by President Jimmy
CarterCAB closedCompetition in industry went UPPrices of air
travel went DOWNDemand went UP
Airline Deregulation Act of 1978 – deregulated the airline
industry removing US federal government control over fares,
routes, and market entry of new airlines – free market in the
commercial airline industry
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26. QUESTIONSProvide an argument for or against social
regulation? Be specific – consumer, employee, and/or
environment.
Provide an argument for or against regulation or deregulation of
business.
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HOPE YOU ALL HAVE A GREAT WEEKEND!
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Which industry did not experience substantial re-regulation in
the Era of Rightsizing Government?
California power
Financial sector
Airlines
All of the above
None of the above
Airlines
QUESTIONSAccording to the reading, the three models of
analysis of business-government relations—the shareholder,
strategic, and stakeholder perspectives—all have their strengths
and weaknesses in varying situations, and the quality of
implementation is often as important as the selection of any
given model. TrueFalse
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