FACULTY OF BUSINESS AND MANAGEMENT

OUMM 3203
PROFESSIONAL ETHICS

SEMESTER MAY 2011

Introduction of Ethics and Social Responsibility

Ethics is a moral philosophy to tell people what they should do and the ideals they should strive
to attain. It also can be defined as the moral principles acceptable and to be conduct by individual
such as good and bad, right and wrong. Individual ethics can be varying person to person due to
combination factors: family and peer influence, life experience, personal values and morals and
situational factors.
Social responsibility is an ethical ideology for an entity or organization to have obligation to act
the benefit to society. It can also define as the interaction between business and the social
environment in a responsible manner that acceptable by the society. This responsibility can be
passive, by avoid acting harmful to the society or active by conduct activities that benefit to the
social environment.
Arguments on the important of Ethics and Social Responsibility
In the past, companies only thought that ethical issues in business are only a term used to define
administrative rules and regulations that everyone must adhere or a standard that must be
followed. However today, organization and small business owners have now realized that it is
more than that. Big and small companies are now slowly realizing the importance of ethics in
business that is crucial for them to succeed. A successful company must learn that confidence
and respect of its customers are vital to its business. Within the business context, businesses are
expected to have good ethical values and act socially responsible. The problem is that the ethics
of a business is a mixture of individual sets of ethics. This is why it is important to have good
individuals as employees. Ethics is not just talking about the right thing. It is doing what is right
in every decision that is made.

Why are ethical principles important for any profession? They are the basis for the rules of the
profession. Without an ethical yardstick, it is impossible to set standards that regulate the
exercise of a profession. That is why liberal professions have professional bodies and standards.
Example doctors, accountant, dentists, lawyer and etc, a set of ethical principles and
the professional standards must be following with. Professional standards provide boundaries of
actions, beyond which a person may go only by risking external sanctions, such as incarceration
or loss of a professional license. However, they are people still willing to risk losing their job
rather than do anything unethical. This may also happen to some organizations, in the situation to
gain more benefit to the company and allow unethical business practices.
Social responsibility can be an example of ethical behavior. The organizations actions must not
harm the society and it is benefit to society in general. There are some arguments that social
responsibility is shown when companies go beyond what is optional and really intend to do as
benefit for others besides the company. Some companies may not benefit from forms of social
responsibility. The business should focus on their business doing and generate more profit to the
owner.
There are some arguments for and against social responsibility often used.
1. The purpose of business is to generate profit for the owner.
Business are owned by the shareholder, therefore money spend on social responsibility by
manager is not rightful; the money is property of the shareholder.
-

May be at the starting point business is spend money which rightfully belongs to
other people. The money spend can build good relationship with customers, retaining
talented staff and assuring reputation. For instance, Coca-cola has gained good
reputation from social responsibility. Its market capitalization has exceeded its
property value by 96%.

2. Company is too busy, surviving hard times to do this. Reason giving they have to focus
on core business. The most effective business leader will not wasting their time with
social responsibility.
- There are many leading companies involved in social responsibility has success in
their business. The survey has done and given the top company such as IBM and
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Motorola who have been strongly associated with social responsibility. Same as
Coca-cola achieved its place partially because of its profile in social responsibility.
3. Business lack of expertise to manage social programmes. However in an organization
have the financial resources, technical experts, and managerial talent to provide support
to public and charitable projects that need assistance.
-

In long run, socially responsible will enhance company public image to gain more
customers. Business can also create a favorable public image by pursuing social
goals.

4. Additional cost incurred for the company. Some argument said the company may not
absorb the cost and will switch the cost to consumers. End up consumer has to pay for
higher price. Hence it will also make the products or service less competitive in the
market.
-

The company has to access the stock market will become less risky and open o public
attack due to activity involved in the socially responsible. Therefore, it will award its
stock a higher price earnings ratio.

Below provides some examples (Figure 1, extract from websites info) of socially irresponsible
behavior that have occurred in the last two decades. We are learned and experience from these

incidents from irresponsible behaviors by organizations.

Approaches to sustain high level of Organizations ethic and social responsibility

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Government plays an important role to sustain high level of organizations ethic and social
responsibility. There are few methods used by government to influence organizations. For the
benefit of the organization, there are many different ways used by organization to influence
government for more social responsibility.

The government influences businesses through:

Environment protection legislation

Consumer protection legislation
Employee protection legislation
Securities legislation
Tax codes

The
Government

Business
Organisation

Business influences the government through:

Personal contacts and network

Lobbying
Political Action Committee
Favours and other influence tactics

Figure 2: How organizations and government influences each other (extracted from text book
Professional Ethics)
Government has form direct and indirect regulation to ensure all organization to sustain
organization ethic and social responsibility.
1. Direct regulation. Government can establish laws and rules to indicate what organization
can and cannot under certain circumstances or situation. To implement legislation,
government has created agencies to monitor and control organization activities.
2. Indirect regulation. Tax incentives will be provided for organization co-operate or support
to government campaign. For example, provide job training for hard-core unemployed.
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Tax exemption may also give for corporate donation or sponsorships to certain approved
event or activities.
To an organization, there are 3 approaches formally used to manage social responsibility. There
are legal compliance, ethical compliance and philanthropic giving. Organization will appoint or
assigned functional managers to manage legal compliance and to ensure all member to follow
basic ethical.
Summary
Many would argue the nature and extent of the obligations business has to society. However, at
what point do the efforts of the organization come at the expense of profitability? Does being
socially responsible mean that the corporation's actions must not harm society, or does it mean
that the corporation's actions should benefit society? How does one determine harm and benefit?
These issues are at the heart of the controversy over corporate social responsibility. An
organization has obligation to social responsibility and must ensure that its effort is to the society
benefit.

References:
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1. Dongbei University Press (2010). Chapter 3 Social Responsibility and Ethics. 5/7/2011.
http://210.46.97.180/zonghe/book/112-%E7%8E%B0%E4%BB%A3%E7%AE
%A1%E7%90%86%E5%AD%A6-%E4%B8%96%E7%95%8C%E8%B4%A2%E7%BB
%8F%E4%B8%8E%E7%AE%A1%E7%90%86%E6%95%99%E6%9D
%90%E5%A4%A7%E7%B3%BB%20%20%E4%B8%9C%E5%8C
%97%E8%B4%A2%E7%BB%8F%E5%A4%A7%E5%AD%A6%E5%87%BA
%E7%89%88%E7%A4%BE-Pamela%20S.%20Lewis%20Stephen%20H.%20Goodman
%20%20Particia%20M.%20Fandt/3.htm

2. Peter MacFarlane (2002). The Importance of the ethics and the application of ethical
principles to the legal profession. 5/7/2011.
http://www.paclii.org/journals/fJSPL/vol06/8.shtml

3. David B. Resnik, J.D., Ph.D (2010). What is Ethics in Research & Why is It Important?
6/7/2011.

http://www.niehs.nih.gov/research/resources/bioethics/whatis.cfm

4.

Prof Madya Dr Mohamad Diah Jurini (2010). Professional Ethics. Meteor Doc. Sdn Bhd.

Note: 1,219 words excluding references.