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Business Ethics and Social Responsibility
OBJECTIVES
After reading this chapter, you will be able to: • Define business ethics and social responsibility and examine their importance. • Detect some of the ethical issues that may arise in business. • Specify how businesses can promote ethical behavior. • Explain the four dimensions of social responsibility. • Debate an organization’s social responsibilities to owners, employees, consumers, the environment, and the community. • Evaluate the ethics of a business’s decision.

CHAPTER OUTLINE
Introduction Business Ethics and Social Responsibility The Role of Ethics in Business Recognizing Ethical Issues in Business Making Decisions about Ethical Issues Improving Ethical Behavior in Business

The Nature of Social Responsibility
Social Responsibility Issues

Ethisphere Links Ethics to Profits
Ethisphere magazine (www.ethisphere.com) is published by the Ethisphere Institute to illuminate the correlation between ethics and profits. Their mission is to “help corporate executives guide their enterprises toward gaining market share and creating sustainable competitive advantage through better business practices and corporate citizenship.” Business has found that good ethics doesn’t happen automatically. Employees need a shared vision that results in all employees abiding by the company’s code of ethics and policies on business conduct. The editors and writers for the magazine attempt to determine absolute behaviors that can be utilized to differentiate one organization from another. For example, Ethisphere has developed a methodology to examine companies’ codes of ethics and provide a grade for how the business compares with others. Issues relate to how the code itself is written, what it contains, what it omits, and how it is communicated. All play instrumental underlying roles in whether the code has the power to influence not only perceptions, but actions as well. For example, Centex Corp. received an A because of a terrific layout and thoughtful learning guide that speaks directly to employee conduct. An employee reporting mechanism called the “Speak Up” line was made very visible so that employees could easily discuss issues of concern. Other companies highly ranked in the study included Alcoa, Eaton Corporation, Kiplingers, GE, Kellogg’s, and John Deere. A recent ranking of government contractors found that Verizon Wireless had the best code of business ethics and the best overall ethics program. Other companies that were found to have high-ranking codes of ethics included General Electric, Procter & Gamble, Lockheed Martin, and

ENTER THE WORLD OF BUSINESS

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PART 1 Business in a Changing use benchmarking, Honeywell. Companies World

that is, comparing themselves with others in their industry, to gain insights about how to improve their code of ethics programs. Providing the criteria for evaluating codes of ethics also assists companies in developing and revising their codes. Organizations are expected to establish ethical standards and provide compliance systems to maintain appropriate conduct within all levels of the organization. Many companies are starting to recognize that providing jobs and profits are not sufficient criteria to be a responsible member of society. It is important to be socially responsible—that is, to work with stakeholders such as employees, customers, communities, and governments to make sure that the company does its part to minimize negative impacts on society and maximize contributions to important issues that are being addressed worldwide. Global warming, recycling, and sustainability are social responsibility issues; employee misconduct in performing business activities is a significant concern of business ethics. Both business ethics and social responsibility are essential parts of being a good corporate citizen.1

Introduction
As the opening vignette illustrates, the Ethisphere Institute has taken on the...
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