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Ethics and Corporate Social

Responsibility
Chapter 2

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©2007 Prentice Hall
Chapter 2 Objectives
After studying this chapter, you will be able to:
• Discuss what it means to practice good business
and explain the three factors that influence ethical
behavior
• Identify three steps that businesses are taking to
encourage ethical behavior
• List four questions you might ask yourself when
trying to make an ethical decision
• Explain the difference between an ethical dilemma
and ethical lapse
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Chapter 2 Objectives, cont.
• Explain the controversy surrounding corporate
social responsibility
• Discuss how a business can become more
socially responsible
• Define sustainable development and explain the
strategic advantages of managing with
sustainability as a priority

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Two Sets of Ideals

Ethics
Social Responsibility

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What is Ethical Behavior?

• Definition
• Competing Fairly and
Honestly
• Communicating
Truthfully
• Not Causing Harm to
Others

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Competing Fairly and Honestly

• Trade Secrets

• Industrial Espionage

• Pretexting

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Communicating Truthfully
• Tell the Truth, Whole Truth and
Nothing but the Truth

• Transparency

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Not Causing Harm to Others

• Insider Trading

• Conflict of Interest

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Corporate Fraud

Adelphia

WorldCom

Ford and
Firestone
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Corporate Fraud

Enron

Tyco

Arthur Andersen

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Ethical Business Behavior

Organizational
Behavior

Influential Factors
Factors Knowledge
Influential

Cultural
Differences

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Be an Ethical Leader
• Lead by example
• Don’t tolerate
unethical behavior
• Inspire concretely
• Acknowledge reality
• Communicate
• Be honest
• Hire good people

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The Four Questions

• Is the decision legal?

• Is it balanced?

• Can you live with it?

• Is it feasible?

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Ethical Situations

Ethical Dilemma

Ethical Lapse

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Business and Society
• Consumers expect benefits that require money.
• Business generates a majority of money in a
free-market economy.
• Standard of living is generally derived from
profit-seeking companies.
• Businesses cannot hope to operate profitably
without the many benefits provided by a safe
and relatively predictable business environment.

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Corporate Social Responsibility
Perspectives
• Minimalist

• Defensive

• Cynical

• Conscientious

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Efforts to Increase Social
Responsibility

Social Philanthropy
Audit

Cause-Related
Marketing

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Reduce Pollution

Industrial Discharges

Vehicle Emissions

Chemical Spills

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Responsibility Toward
Consumers
• Consumerism:
 The right to safe products

 The right to be informed

 The right to choose

 The right to be heard


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Responsibility Toward Investors

Fair Profit Social Ethical


Distribution Responsibility Behavior

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Responsibility Toward
Employees

• Equal Opportunity

 Civil Rights Act

 EEOC

• Affirmative Action

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Responsibility Toward
Employees

• People with disabilities


 ADA

• OSHA

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Global Responsibilities

• Bribery

• Environmental Abuse

• Unscrupulous
Business Practices

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