Topic 8: Business Ethics and

Social Responsibility

Current
Issues in
Management

Vortran Calimlim
Zola Dela Calzada
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 Business Ethics and Social
Responsibility
• Business Ethics:
– The principles and standards that define
acceptable conduct in business
• Social Responsibility:
– A business’s obligation to maximize its
positive impact and minimize its negative
impact on society

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 Recognizing an Ethical Issue
• An ethical issue is an identifiable problem,
situation, or opportunity that requires a
person to choose from among several
actions that may be evaluated as right or
wrong, ethical or unethical.

Did You Know?

The most common types of observed misconduct
are lying, withholding information, and abusive/
intimidating behavior.

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 Reasons For Not Reporting
Observed Misconduct
1. Didn’t believe corrective action would be
taken
2. Feared retribution or retaliation from
supervisor or management
3. Feared they wouldn’t remain anonymous
4. Thought someone else would report the
misconduct
5. Didn’t know who to contact
Source: 2005 Ethics Resource Center- National Business Ethics Survey Report, p. 29.

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Misconduct Observed in the
Workplace

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 Ethical Issue Categories
• Conflict of interest
• Fairness and
honesty
• Communications
• Business
relationships

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 Conflict of Interest
• Occurs when a person must choose
whether to advance their own
personal interest or those of others

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 Fairness and Honesty
• The heart of business
ethics
– General values of
decision makers

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 Communications
• False and misleading
advertising and deceptive
personal-selling tactics
anger customers and may
cause a business to fail.

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 Business Relationships
• Businesspeople must be ethical toward
their customers, suppliers, and others in
their workplace.

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Questions to Consider in Determining
Whether an Action is Ethical
• Are there any potential legal restrictions or
violations that could result from the action?
– Question: If I do this will it break any laws?

• Does your company have a specific code of

ethics or a policy on the action?
– Question: If I do this will I go against the
employee handbook?

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Questions to Consider in Determining
Whether an Action is Ethical
• Is this activity customary in your industry?
• Are there any industry trade groups that
provide guidelines or codes of conduct
that address this issue?
– Question: If I do this will I violate any trade
practices?

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Questions to Consider in Determining
Whether an Action is Ethical
• Would this activity be accepted by your
coworkers?
• Will your decision or action withstand open
discussion with coworkers and managers
and survive untarnished?
– Question: Will my action cause peer
acceptance or rejection, or any peer
pressure?

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Questions to Consider in Determining
Whether an Action is Ethical
• How does this activity fit with your own
beliefs and values?
– Question: Will my action violate any of my
personal ethics, religious beliefs, or social
values?

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 Three Factors that Influence
Business Ethics

Individual Managers’ Opportunity: Ethical/Unethical

Standards and Codes and Choices
and Coworkers’ Compliance in Business
Values Influence Requirements

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 Codes of Ethics
• Formalized rules and standards that
describe what a company expects of its
employees

Did You Know?

Written ethics standards are more often found in
larger companies than smaller ones.

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 Whistleblowing
• The act of an employee exposing the
employer’s wrongdoing to outsiders
– The media
– Government regulatory agencies

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 Facts on Business Ethics
• Of employees surveyed:
– 86% reported that their organizations have
written standards of conduct
– 69% reported that their organizations offer
mandatory ethics training
– 65% reported that their organizations have a
place where they can seek ethics advice

Source: 2005 Ethics Resource Center- National Business Ethics Survey: How
Employees Perceive Ethics at Work.p.12-14.
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 The Nature of Social
Responsibility
• Four Dimensions:
– Economic – earn profits
– Legal – comply with the law
– Ethical
• Not just “for profit” only
– Voluntary & Philanthropic
• Promote human welfare and goodwill

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 The Pyramid of Social
Responsibility
Voluntary
Responsibilities
being a
“good corporate citizen;”
contributing to the
community and quality of life

Ethical Responsibilities
being ethical; doing what is right, just,
and fair; avoiding harm

Legal Responsibilities
obeying the law (society’s codification
of right and wrong)

Economic Responsibilities
being profitable

Source: Adapted from Archie B. Carroll, “The Pyramid of Corporate Social Responsibility: Toward the Moral 21
Management of Organizational Stakeholders.” Business Horizons 34 (July/August 1991): 42.
 Best Corporate Citizens
1. Green Mountain Coffee 11. Intel
2. Hewlett-Packard 12. Johnson and Johnson
3. Advanced Micro Devices 13. NIKE
4. Motorola 14. General Mills
5. Agilent Technologies 15. Pitney Bowes
6. Timberland 16. Wells Fargo
7. Salesforce.com 17. Starbucks
8. Cisco Systems 18. Wainright Bank & Trust
9. Dell 19. St. Paul Travelers
10. Texas Instruments 20. Ecolab

Source: Philip Johansson, “The Best 100 Corporate Citizens,” Business Ethics, March/April
2006, p. 22.
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 Arguments for Social
Responsibility
1. Business helped to create many of the social
problems that exist today, so it should play a
significant role in solving them
2. Businesses should be more responsible
because they have the financial and technical
resources to help solve social problems
3. As members of society, businesses should do
their fair share to help others

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 Arguments for Social
Responsibility
4. Socially responsible decision making by
businesses can prevent increased government
regulation
5. Social responsibility is necessary to ensure
economic survival
– Businesses must take steps to help solve the social
and environmental problems that exist today

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 Arguments Against Social
Responsibility
1. Managers are sidetracked from the primary
goal of business
– Earning profits

1. Participation in social programs gives

businesses greater power, perhaps at the
expense of particular segments of society

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 Arguments Against Social
Responsibility
3. Some people question whether business has
the expertise needed to assess and make
decisions about social problems
4. Many people believe that social problems are
the responsibility of government agencies and
officials

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 Social Responsibility Issues
• Organizational relationships with owners and
stockholders:
– Profit and ROI
• Employee relations:
– Providing a safe workplace, adequate pay,
information about the company, listening to
grievances, and treating employees fairly
• Consumer relations:
– Respecting the rights of customers and providing
them with safe and satisfying products

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Social Responsibility Issues
• Environmental issues:
– Animal rights
– Pollution
– Global warming
• Community relations:
– Responsibility to the general welfare of
the community
Did You Know?
In one year, Americans generated 230 million
tons of trash and recycled 23.5 percent of it.
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 Sustainability Reporting
Corporate Social Responsibility Report (Sustainability Reporting)
● A report published by a company or organization about the economic, environmental
and social impacts caused by its everyday activities. This report can help
organizations to measure, understand and communicate their performance on
sustainability. Sustainability – the ability for something to last for a long time, or
indefinitely – is based on performance in four key areas: economic, environmental,
social and governance.
● Sustainability reporting is a vital resource for managing change towards a sustainable
global economy – one that combines long term profitability with ethical behavior,
social justice and environmental care.

Business Ethics Corporate Social Responsibility

Principle or standard Obligation

Governs relations within the Community Relations

organzation and the business arena
Legal Legal

Key element in sustainability Key element in sustainability

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 Wanna be an Ethics Officer?
• Provide advice about ethics to employees and
management
• Distribute the company’s code of ethics
• Create and maintain an anonymous, confidential
service to answer questions about ethical issues
• Take action on ethics violations
• Review and modify the code of ethics as needed

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What is Corporate Social Responsibility?

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 Discussion Questions
1. What makes ethical decisions so difficult?
2. Many organizations are primarily concerned with earning a profit
or a return on their investment.
– Does this concern for owners and investors present an ethical
dilemma for companies when weighing business decisions that
favor employees and/or the general public?
4. Find examples of environmental issues in newspapers or business
journals.
– Do these issues influence businesses?
4. Imagine you are a salesperson. When does offering a gift, such as
basketball tickets, become a bribe rather than just a sales
practice?
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 Quiz
1. Which of the following has the greatest effect on
ethical behavior in organizations?
a. authority of an employee’s superiors
b. an employee’s perception of the ethics of coworkers and
managers
c. an employee’s personal beliefs about what is right or wrong
d. investors perceptions of ethics
2. Copying someone else’s work and presenting it as
your own is:
a. ethics
b. bribe
c. plagiarism
d. greenmail

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 Quiz
3. A code of ethics is:
a. a set of formalized rules and standards describing what the
company expects of its employees.
b. a government legislation enforced by government agencies.
c. a set of principles that describe what a person believes is
the right way to behave.
d. the impact of a business’s activities on society.

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END.