Ethics and Social Responsibility

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Ethics is more than legality


•Standards of moral behavior; behavior that is accepted by society as right versus wrong.

Ethics begins wit each of us

•It is helpful to ask yourself the following questions when facing an ethical dilemma. oIt is legal?
oIt is balanced? Am I acting fairly? Would I want to be treated this way? oHow will it make me feel about myself? Would I feel proud if my family learned of my decision? My friends?

Managing Businesses Ethically and Responsibly

•People learn their standards and values from observing what others do, not from hearing what they say. •A business should be managed ethically for many reasons:
oto maintain a good reputation
oto keep existing customers
oto attract new customers
oto avoid lawsuits
oto reduce employee turnover
oto avoid government intervention
oto please customers, employees, and society
osimply to do the right thing

•Ethic of justice is based on principles like justice, fairness, equality, or authority. •Ethic of care is based on a sense of responsibility to reduce actual harm or suffering.

Setting Corporate Ethical Standards

Compliance-based ethic codes

•Ethical standards that emphasize preventing unlawful behavior by increasing control and by penalizing wrongdoers.

Integrity-based ethic codes

•Ethical standards that define the organization's guiding values, create an environment that supports ethically sound behavior, and stress a shared accountability among employees.


•People who report illegal or unethical behavior.

•The following six-step process can help to improve business ethics: oTop management must adopt and support an explicit corporate code of conduct oEmployees must understand that ethical behavior begins at the top, and that they are expected to act accordingly oManagers and others must be trained to consider ethical implications of all business decisions oEthics office must be set up (also telephone lines), so that whistleblower can stay anonymous. oOutsiders of the company must be told about the ethic programs and values of the company. Clear statement of ethical standards. oThe ethic code must be enforced  best way to communicate with employees who take the code serious.

Strategies for Ethics Management

•Integrity-based ethics codes move beyond legal compliance to create a "do-it-right" climate that emphasizes core values such as honesty, fair play, good service to customers, a commitment to diversity, and involvement in the community. These values are ethically desirable, but not necessarily legally mandatory.

Corporate Social Responsibility

Corporate Social Responsibility

•A business's concern for the welfare of society
•The social performance of a company has several dimensions

Corporate Philanthropy

•Dimension of social responsibility that includes charitable donations. •Strategic philanthropy involves companies making long-term commitments to the society.

Corporate Responsibility

•Dimension of social responsibility that includes everything from hiring minority workers to making safe products.

Corporate Policy

•Dimension of social responsibility that refers to the position a firm takes on social and political issues.

Responsibility to Customers

•three out of five businesses fail – perhaps because their owners failed to please their customers

Responsibility to Investors

•Some people believe that before you can do good you must do well; others believe that by doing good, you can also do well •Some people have chosen the unethical way to improve their financial health: Insider Trading

Insider Trading

•An unethical activity in which insiders use private company information to further their own fortunes or those of their family and friends.

Responsibility to employees

Responsibility to Society and Environment

Social Auditing

Social Audit

•A systematic...
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