Chapter 2

Business Ethics
and Social
Responsibility

Copyright 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Concern for Ethical and Societal Issues

Business ethicsstandards of business
conduct and moral values.
Constituencies to which businesses are
responsible:

Copyright 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

The New Ethical Environment

High profile investigations and arrests in headlines.
Yet vast majority of businesses ethical.
New corporate officers charged with deterring
wrongdoing and ensuring ethical standards.

Copyright 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

 Johnson & Johnsons Credo (Part 1)

Copyright 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

 Johnson & Johnsons Credo (Part 2)

Copyright 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

The New Ethical Environment

Individuals make a
difference
Development of
individual ethics
Stages of Moral and
Ethical Development

Copyright 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

The New Ethical Environment

Common Business
Ethical Challenges

Copyright 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

 On-the-Job Ethical Dilemmas

Conflict of Interestsituation in which a
business decision may be influenced for
personal gain.
Honesty and Integritytelling the truth
and adhering to deeply felt ethical
principles in business decisions.

Copyright 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

 On-the-Job Ethical Dilemmas

Loyalty vs. Truthbusinesspeople expect
their employees to be loyal and truthful.
But ethical conflicts may arise.
Whistleblowingemployees disclosure
to government authorities or the media of
illegal, immoral, or unethical practices in
the organization.

Copyright 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

How Organizations Shape Ethical Conduct

Structure of an Ethical Environment

Copyright 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

 Ethical Awareness
Code of Conducta formal statement
that defines how the organization expects
and requires employees to resolve ethical
questions.
Ethical Reasoning
Codes of conduct cannot detail a solution
for every ethical situation. So corporations
provide training in ethical reasoning.

Copyright 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

 Ethical Action
Helping employees recognize and reason
through ethical problems and turning them
into ethical actions.
Ethical Leadership
Executives must demonstrate ethical
behavior in their actions.

Copyright 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Acting Responsibly to Satisfy Society

Social Responsibilitymanagements
acceptance of the obligation to consider
profit, consumer satisfaction, and societal
well-being of equal value in evaluating the
firms performance.
Social Auditsformal procedures that
identify and evaluate all company activities
relate to social issues such as
conservation, employment practices,
environmental protection, and philanthropy.
Copyright 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Acting Responsibly to Satisfy Society

Responsibilities
of Business

Copyright 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

 Responsibilities to the General Public

Copyright 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

 Responsibilities to the General Public

Public Health Issues
Protecting the Environment
Recyclingreprocessing of used
materials for reuse.
Green marketingmarketing strategy
that promotes environmentally safe
products and production methods.

Copyright 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

 FTC Guidelines for Environmental Claims in

Green Marketing

Copyright 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

 Responsibilities to the General Public

Developing the Quality of the Workforce
Corporate Philanthropyact of an
organization giving something back to the
communities in which it earns profits.

Copyright 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

 Responsibilities to Customers
Consumerismpublic demand that a
business consider the wants and needs of its
customers in making decisions.

Copyright 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

 Right to Be Safe
Consumers should feel assured that what they
purchase will not harm them in normal use
Product Liability
Right to Be Informed
Consumers should have enough access to
education and product information to make
responsible buying decisions

Copyright 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

 Wacky Warning Labels

Copyright 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

 The Right to Choose

To select which goods and services they
want and need to purchase
The Right to Be Heard
Should be able to express legitimate
complaints to appropriate parties

Copyright 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

 Responsibilities to Employees
Workplace Safety.
Quality of Life Issues.
Ensuring Equal Opportunity in the Job.
Age Discrimination.
Sexual Harrassment and Sexism
inappropriate actions of a sexual nature in
the workplace.

Copyright 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

 Rates of Workplace Injuries and Illnesses

Copyright 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

 Laws Designed to Ensure Equal Opportunity

Copyright 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

 Laws Designed to Ensure Equal Opportunity

Copyright 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

 Responsibilities to Investors and the

Financial Community
Fundamental goal of any business is to
make a profit.
Investors and the financial community
demand that businesses behave ethically
as well as legally.

Copyright 2005 by South-Western, a division of Thomson Learning, Inc. All rights reserved.