Chapter 2 Review
Ethics & Corporate Social Responsibility
Ethics vs. Corporate Social Responsibility
Ethics: The principles and standards of moral behavior that are accepted by society as right versus wrong. This is partially defined by our societal norms.
Business Ethics: Application of ethical standards to business situations.
Corporate Social Responsibility: The idea that business has certain obligations to society beyond the pursuit of profits.
Society's view on the role of business has changed over the years:
- 19th and early 20th centuries, idea of Caveat Emptor ("May the Buyer Beware") was the accepted notion
- Mid-20th century (Friedman) the idea that business' only responsibilities to society were to create jobs and to pay taxes became the accepted norm.
- Now there is a much broader view. The idea that not only does a company have a responsibility to society far beyond profits, but that doing so will actually end up increasing profits is the current standard.
How then is Corporate Social Responsibility related to Business Ethics?
How Can We Behave Ethically In Business? ( At the Minimum)
- Compete Fairly and Honestly
- Being Truthful (Timing and Content)
- Avoid Causing Harm to Others (Avoid insider trading and conflicts of interest)
There are MANY, MANY Factors that Influence Ethical Behaviors. Here are the Top 3:
- Cultural Differences (Globalization)
- Knowledge (the more you know, the better your capacity for making the best choices)
- Corporate Behavior ***
Ways to Encourage Ethical Business Culture:
- Establish a Code of Ethics/ Code of Conduct
- Provide Ethics Training
- Enforce Established Codes of Conduct
- Make sure there is some reporting system in place (Whistle Blowing)
Facing Ethical Dilemmas:
- Is It Ethical (Legal/Fair/Acceptable/Feasible)
- Stakeholder Issues (Outsiders, Superiors, Other Employees)
- Philosophical (Utilitarianism/Rights/Justice)
A situation in which one must choose between two conflicting but arguably valid sides.
An individual makes a decision that is clearly wrong. (Behaving unethically)
The norms, values and traditional behaviors of the business that impact it's strategic direction and business decisions entity-wide.
Society- Philanthropy & Sustanablility
- Philanthropy- Social Audits (how are we doing now?), cause-related marketing, other philanthropic activities.
- Sustainability- Decrease pollution (ecology), Environmental Protection Agency (EPA)
Consumers- Consumers' Bill of Rights (President Kennedy)
- Driven by Consumerism- movement that put pressure on businesses to consider consumer needs and interests.
- Consumer Product Safety Commission
- Product Safety
- Accurate Information
- Freedom of Choice
- Right to be Heard
Investors- Profits, Risk Management, Ethical Behavior
Employees- Equity, Safety and Health
Affirmative action programs began being developed in the 1960's to address the serious lack of diversity in the workplace.
Americans with Disabilities Act (ADA) which helps disabled Americans. Requires employers to provide reasonable accommodations
- Health & Safety