Download Business Ethics

Chapter
2
Business Ethics and
Social Responsibility
Learning Objectives
LO 2.1 Explain the concepts of
business ethics and social
responsibility.
LO 2.2 Describe the factors that
influence business ethics.
LO 2.3 Discuss how organizations
shape ethical behaviour.
LO 2.4 Describe how businesses’
social responsibility is measured, and
summarize the responsibilities of
business to the general public,
customers, and employees.
LO 2.5 Explain why investors and the
financial community are concerned
with business ethics and social
responsibility.
Concern for Ethical and
Societal Issues
Business Ethics
Business ethics: standards of conduct and moral
values regarding right and wrong actions in the
business environment
 Often shaped by the organization’s ethical
climate; social responsibility; balance between
what’s right and what’s profitable
 Often no clear-cut choices
Concern for Ethical and
Societal Issues
Sarbanes-Oxley Act and Bill 198
This U.S. act added oversight for the nation’s
major companies and a special oversight board
to regulate public accounting firms that audit the
financial records of these corporations.
The provisions of this act apply to Canadian
companies trading on U.S. stock exchanges.
Similar legislation has been enacted in Canada
known as Bill 198 of 2003, which has come to be
referred as “C-SOX” or the Canadian version of
Sarbanes-Oxley.
The Contemporary Ethical
Environment
High-profile investigations and arrests in
headlines.
Vast majority of businesses are ethical.
New corporate officers charged with deterring
wrongdoing and ensuring ethical standards.
Business Approach to Ethics and
Social Responsibility
Engage in traditional corporate philanthropy,
which involves giving to worthy causes.
Anticipate and manage risks.
Identify opportunities to create value by doing
the right thing.
See how Walmart highlights corporate
responsibility on its website.
Test Your Knowledge
A firm’s ability to behave ethically depends upon
a. the ethical values of the firm’s executives.
b. the ethical values of the firm’s employees.
c. a climate within the organization that promotes
ethical conduct.
d. all of the above
Test Your Knowledge
A firm’s ability to behave ethically depends upon
a. the ethical values of the firm’s executives.
b. the ethical values of the firm’s employees.
c. a climate within the organization that promotes
ethical conduct.
d. all of the above
Answer: D
Individuals Make a Difference
Individuals can make the difference in ethical
expectations and behaviour.
Putting own interests ahead of the organization
Lying to other employees
Misrepresenting hours
Safety violations
Internet abuse
Technology is expanding the range and impact of
unethical behaviour.
Development of Individual Ethics
An individual’s stage in moral and ethical
development is determined by many factors.
Experiences
Family
Education
Culture
Religion
Company environment
Individuals have different styles for deciding moral
dilemmas.
On-the-Job Ethical Dilemmas
Situation in which a
business decision
may be influenced
by personal gain.
Employee’s
disclosure of
illegal, immoral,
or unethical
practices in the
organization.
Telling the truth and
adhering to deeply
felt ethical principles
in business
decisions.
Businesspeople
expect employees
to be loyal, but
ethical conflicts
may arise if the
truth about a
company is not
favourable.
How Organizations Shape Ethical
Conduct
Ethical Awareness
Code of Conduct:
Formal statement that
defines how the
organization expects and
requires employees to
resolve ethical questions.
Johnson & Johnson credo
Air Canada code of
conduct
Ethical Education
Codes of conduct
cannot detail a solution
for every ethical
situation, so
corporations provide
training in ethical
reasoning.
Ethical Action
Helping employees
recognize and reason
through ethical
problems and turning
them into ethical
actions.
TI Ethics Quick Test
Ethical Leadership
Executives must
demonstrate ethical
behaviour in their actions.
use clear, explicit language
rather than euphemisms for
corrupt behaviour
encourage behaviour that
generates and fosters ethical
values
practise moral absolutism,
insisting on doing right even if
it proves financially costly
Acting Responsibly to
Satisfy Society
Social Responsibility
Management’s consideration of profit, consumer
satisfaction, and societal well-being of equal value in
evaluating the firm’s performance.
Contributions to the overall economy, job opportunities,
and charitable contributions and service.
Organizations measure through social audits.
Starbucks reduces
environmental impact
Business’s Social
Responsibilities
Responsibilities to the General
Public
Public Health Issues. What to do about inherently
dangerous products such as alcohol, tobacco, vaccines,
and steroids.
Protecting the Environment. Using resources efficiently,
minimizing pollution.
Green marketing
Sustainability
Developing the Quality of the Workforce. Enhancing
quality of the overall workforce through education and
diversity initiatives.
Corporate Philanthropy. Cash contributions, donations
of equipment and products, and supporting the volunteer
efforts of company employees.
Test Your Knowledge
What is green marketing?
a. A marketing strategy that promotes
environmentally safe products and production
methods
b. A colour-coded market strategy designed to
improve employee morale
c. A marketing strategy that promotes
environmentally questionable products and
production methods
d. None of the above
Test Your Knowledge
What is green marketing?
a. A marketing strategy that promotes
environmentally safe products and production
methods
b. A colour-coded market strategy designed to
improve employee morale
c. A marketing strategy that promotes
environmentally questionable products and
production methods
d. None of the above
Answer: A
Responsibilities to Customers
Ability of
consumers to
express legitimate
complaints to the
appropriate parties.
Ability of
consumers to
choose the
products and
services they
want.
Safe operation of
products, avoiding
product liability.
Avoiding false or
misleading
advertising and
providing effective
customer service.
Responsibilities to Employees
Workplace Safety. Managed mostly at the provincial level by
organizations such as the Workplace Safety & Insurance
Board in Ontario and the Workers’ Compensation Board of
Alberta.
Quality-of-Life Issues. Balancing work and family through
flexible work schedules, subsidized child care. Canada's Top
Family Friendly Employers
Ensuring Equal Opportunity on the Job. Providing equal
opportunities to all employees without discrimination regarding
age, sexual orientation, physical disabilities, etc.; regulated by
the Canadian Human Rights Commission.
Sexual Harassment and Sexism. Avoiding unwelcome
actions of a sexual nature; equal pay for equal work without
regard to gender.
Responsibilities to Investors
Obligation to make profits for
shareholders.
Expectation of ethical and moral
behaviour.
Protection of investors by provincial
regulators such as the Ontario Securities
Commission and the Alberta Securities
Commission.