Business Ethics & Social Responsibility Business Ethics – principles and standards that determine acceptable conduct in business 2-1

A Timeline of Ethical and Socially Responsible Concerns 2-2

Business Ethics & Social Responsibility Social responsibility– business’s obligation to maximize its positive impact and minimize its negative impact on society 2-3

Business Ethics & Social Responsibility Laws and regulations encourage businesses to conform to society’s standards, values, and attitudes. (E.g., in USA:Sarbanes-Oxley Act – 2002) 2-4

The Role of Ethics in Business Concern about unethical business practices continue – HealthSouth’s accounting improprieties and securities fraud 2-5

The Role of Ethics in Business Unethical and/or Illegal Accounting fraud Deceptive advertising Unfair competitive practices Internet theft 2-6

The Role of Ethics in Business Ethical Conduct Builds trust Promotes confidence Validates relationships Learn how to recognize and resolve ethical issues 2-7

Recognizing Ethical Issues in Business an identifiable problem, situation, or opportunity that requires a person to choose from among several actions that may be evaluated as right or wrong, ethical or unethical. 2-8

Recognizing Ethical Issues in Business How to judge the ethics of a situation – examine the situation from your stakeholders’ position, including customers and competitors 2-9

Types and Incidences of Observed Misconduct Many business issues may seem straightforward and easy to resolve on the surface, but are in reality very complex. 2-10

Sources of Unethical Behavior in Organizations Overly aggressive financial or business objectives Abusive & intimidating behavior Conflict of interest Fairness & honesty Communications Business relationships 2-11

Sources of Unethical Behavior Abusive and intimidating behavior “ 2-12

Sources of Unethical Behavior in Organizations Conflict of interest – the most common ethical issue identified by employees. Advance personal interests over others’ interests Benefit self at the expense of the company 2-13

Least Corrupt Countries 2-14

Business Ethics Fairness & honesty – the heart of business ethics How employees use resources No harm to customers Accurate representations Disclosure 2-15

Business Ethics Most Popular Office Supplies Employees Pilfer “More Employees Taking Supplies,” The News Journal 2-16

Personal Ethics Honesty? Have you ever cheated on exams? copied documents from Internet shoplifted cheated to win at sports 2-17

Ethical Concerns Communications False/misleading advertising Deceptive personal selling tactics Product safety and quality Unsubstantiated claims Product labeling 2-18

Ethical Concerns Business Relationships Relationships with customers Relationships with suppliers Relationships with co-workers 2-19

Ethical Concerns Plagiarism The act of taking someone else’s work and presenting it as your own without mentioning the source 2-20

Making Decisions About Ethical Issues Questions to Consider in Determining Whether an Action Is Ethical Open discussion of ethical issues does not eliminate ethical problems; it does promote trust and learning in an organization. 2-21

Improving Ethical Behavior in Business Ethical decisions in an organizations are influenced by three key factors 2-22

Improving Ethical Behavior in Business Codes of Ethics – Formalized rules and standards that describe what a company expects of its employees. 2-23

Codes of Ethics National Business Ethics Survey (NBES) According to the NBES, employees in organizations with written standards of conduct are more likely to report misconduct when they observe it. 2-24

Codes of Ethics Whistleblowing The act of an employee exposing an employer’s wrongdoing to outsiders, such as the media or government regulatory agencies. 2-25

Business Ethics – Taking Responsibility 2-26

Nature of Social Responsibility SR: A business’s obligation to maximize its positive impact and minimize its negative impact on society 4 Dimensions Economic Legal Ethical Voluntary (philanthropic) 2-27

Pyramid of Social Responsibility 2-28

Nature of Social Responsibility Corporate Citizenship The extent to which businesses meet the legal, ethical, economic, and voluntary responsibilities placed on them by their stakeholders. 2-29

Nature of Social Responsibility Best (American) Corporate Citizens Intel Corporation Eaton Corporation Nike Inc. Deere and Co. See the top 20 list on page 53 2-30

Arguments For and Against SR 2-31

Social Responsibility Issues Owners & Stockholders Primary concern with profit or ROI Financial community at large Proper accounting procedures Protecting owner’s rights and investments 2-32

Social Responsibility Issues Employee Relations Provide a safe workplace Adequate compensation Listen to grievances Fair treatment 2-33

Social Responsibility Issues Consumer Relations Consumerism – the activities that independent individuals, groups, and organizations undertake to protect their rights as consumers. 2-34

Social Responsibility Issues Environmental Issues Animal rights Pollution Going Green 2-35

Social Responsibility Issues Community Relations General community and global welfare Hardcore unemployed Charitable contributions (United Way) Avon’s Breast Cancer Awareness Crusade 2-36