Chapter 10 Ethics and Social Responsibility of Business PowerPoint Slides to accompany The Legal Environment of Business and Online Commerce 5E, by Henry R. Cheeseman Chapter 10 Ethics and Social Responsibility of Business Prentice Hall © 2007

Ethics and the Law Law Ethics Prentice Hall © 2007

Theories of Ethics Ethical fundamentalism Utilitarianism People look to an outside source or central figure for ethical guidelines. Utilitarianism People choose the alternative that would provide the greatest good to society. Kantian or duty ethics A set of universal rules based on reasoning that establishes ethical duties. Prentice Hall © 2007

Theories of Ethics Rawls’s social justice theory Ethical relativism Moral duties are based on an implied social contract. Ethical relativism Individuals decide what is ethical based on their own feelings about right and wrong. Prentice Hall © 2007

Social Responsibility of Business Social responsibility of business is a duty owed by businesses to act socially responsible in producing and selling goods and services. Prentice Hall © 2007

Theories of Social Responsibility Maximize profits To maximize profits for stockholders Moral minimum To avoid causing harm and to compensate for harm caused Prentice Hall © 2007

Theories of Social Responsibility Stakeholder interest To consider the interests of all stakeholders, including stockholders, employees, customers, suppliers, creditors, and local community Corporate citizenship To do good and solve social problems Prentice Hall © 2007

Sarbanes-Oxley Act Enacted by Congress in response to corporate frauds discovered in the late 1990’s and early 2000’s Public companies are required to disclose whether they have adopted a code of ethics for senior financial officers. Prentice Hall © 2007