Download Chapter 2 Ethics and Social Responsibility

Chapter 2
Ethics and Social
Responsibility
Learning Objectives
 What are ethics? What are business
ethics? What is the relationship between
ethics and law?
 How do duty-based ethics differ from
outcome-based ethics?
 What is corporate social responsibility?
 What is the difference between
maximum profits and optimum profits?
Business Ethics
Ethics: the philosophy of morality.
Morality is based on universal rules or
guidelines.
Business Ethics: focuses on
application of morality to business.
Conflicting Duties to various
stakeholders.
Business Ethics
Relationship between ethics and law.
Historically a law was always ethical (or
morally correct).
Today, obeying law does not mean an
action is ethical.
An action may be legal but unethical or
immoral.
Sources of Ethical Standards
Duty-Based Ethics: Derived from
revealed truths.
Religion: moral precepts are basis for
ethics
Kantian: the “categorical imperative”
Rights: a duty cannot exist without a
right. Duties must comply with
natural (or fundamental) rights.
Sources of Ethical Standards
Outcome-Based Ethics
Utilitarianism (Bentham and Mill).
• An action is ethical when it provides best
outcome to the greatest number of people.
• Requires an economic “Cost-Benefit”
analysis
• Critics argue that it tends to focus on society
instead of individuals.
Business Decisions and Ethics
Is the Contemplated Action Legal?
Legal compliance is “Moral Minimum.”
Laws Regulating Business
Owners must keep up with changes in law
Ignorance of the law is no excuse
“Gray Areas” in the Law
Technological Developments
Business Decisions and Ethics
Is the Contemplated Action Ethical?
Even though an action is legal, is it
ethical?
Ethical Codes
Corporate Compliance Programs
In house ethical compliance officers.
What is the Role of Public Opinion?
Corporate Social Responsibility
 CSR means a corporation should act
ethically and be accountable to society for
their actions.
 Different Views on CSR
 Profit Maximization
 Stakeholder Approach
 Corporate Citizenship
 Maximum vs. Optimum Profits
Ethics in the Global Context
Global company is faced with a variety of
cultures, traditions and religions in the
different nations it serves.
Foreign Corrupt Practices Act (1977)
Monitoring Foreign Employment Practices
Law and the Ethical Manager: How to
Create an Ethical Workplace?