Ethical Behavior and Social Responsibility of Organizations

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Ethical Behavior and the Social Responsibility of Organizations

Table of Contents:

Introduction ………………………………………………………………………..4

Defining Ethics ……………………………………………………………………..5

Defining Social Responsibility ……………………………………………………..6

Social Responsibility of Organizations to Internal Beneficiaries

Social Responsibility to Employees ………………………………………………7

Social Irresponsibility to Employees: Wal-mart …………………………………...8

Social Responsibility to Shareholders ……………………………………………..11

Social Irresponsibility to Shareholders: Enron …………………………………….13

Social Responsibility to the Supply Chain …………………………………………14

Social Irresponsibility to the Supply Chain: Monsanto ……………………………15

Social Responsibility to Customers ………………………………………………..17

Social Irresponsibility to Customers: Aqua del Tunari …………………………….18

Social Responsibility of Corporations to External Beneficiaries

Social Responsibility to Local Governments ………………………………………20

Social Irresponsibility to Local Governments: Long-term Capital Management….21

Social Responsibility to the Environment and Future Generations……………….23

Social Irresponsibility to the Environment and Future Generations:

Tokyo Electric Power Company.………………………………………………….24

Conclusion…………………………………………………………………………27

Works Cited….……………………………………………………………………28

Ethical Behavior and the Social Responsibility of Organizations

Introduction

Proper ethical behavior is a significant part of conducting business. Organizations must therefore find ways to incorporate ethical considerations into their strategic plan. Firms need to practice self governance and obey existing laws if they are to ensure their survival and the well-being of the society in which they exist. The decisions made by an organization affect society as a whole. This paper will examine the social responsibilities of organizations to each of their stakeholders. These include: customers, employees, shareholders, suppliers, the local government and the environment. Each section of this report is supplemented with a case study illustrating the consequences of unethical behavior in business.

Defining Ethics

Ethics is a ubiquitous term that is subject to personal interpretation.  Individuals and groups are guided by moral principles or values. Their beliefs help them to set standards for deciphering right from wrong (Little, 2011). Ethical values are dynamic and are therefore subject to renegotiation and change. These changes are often influenced by periodic and contextual circumstances.

As ethical beliefs differ from person to person, it may not be entirely possible to instill a universal set of values. Also, many individuals have different points of reference when determining what is right and what is wrong (Little, 2011). Domestically, ethical values tend to be closely aligned. Individuals who have been socialized in a particular region are more likely to have similar values, laws, religion, knowledge and culture.

With the emergence of free-trade agreements, many firms have the opportunity to conduct international business. Although these organizations are usually successful in aligning their economic interests, many have failed to recognize or understand the cultural norms, laws and ethical practices of the country they are conducting business with.

Defining Social Responsibility

An organization’s approach to social responsibility can impact its image and reputation. Depending on how an organization addresses this aspect of business, ethics can either be a strength or a weakness. Social responsibility can be divided into three categories: obligatory, reactive or responsive behavior (Duening & Ivancevisch, 2008).  An organization that acts out of social obligation tends to direct its behavior to the legal pursuit of...
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