Ch. 24: Social and Ethical Responsibility
Social Responsibility What is Social Responsibility? More than running your enterprise responsibility every day Companies should contribute to the welfare of society and not be devoted solely to profits Contract with Society Make safe products, treat customers and employees well, & Run Honestly
Social Responsibility What is Social Responsibility? More than just Philanthropy Making charitable donations to improve human welfare Responsibility to Customers No Misleading (Quality, Performance, Safety) Free Market Protects Consumers Truth in Lending Act - Inform The Fair Credit Billing Act – Complaints Customer Service = Competitive Advantage
Social Responsibility What is Social Responsibility? Responsibility to the Environment Demonstrate to customers that they are environmentally responsible Environmental Protection Agency (EPA ) Independent Federal Agency – Coordinate programs and enforce regulations aimed at reducing pollution and protecting the environment Business and the Environment May mean higher costs, but the company can also charge higher prices
Contributing to the Community What is Social Responsibility? Employer– Happy Employees = Productive Offer Flex Time Health Care Assistance to Physically Challenged Employees Honest Trustworthy Integrity
What Does it Mean to be Ethical Ethics Guidelines for human behavior The Moral code by which people live and conduct business Help people determine how to act where moral issues are involved Understanding your Values 6 Basic Values Trustworthiness, Respect, Responsibility, Fairness, Caring, and Citizen
What Does it Mean to be Ethical Business Ethics Study of Behavior and Morals in Business Situations Begin at the Top Bosses/Owners who act unethically cannot expect employees to act ethically Difference in Ethics Not everyone has high ethical standards Develop Clear Policies for what IS and what IS NOT Accepted
Developing Code of Ethics Code of Ethics Ethical Behavioral Guidelines that govern day to day activities or a profession or organization Helps to defend the company against criminal action Company does not condone actions of employees Written or Unwritten Typically grow from unwritten to written As # of employees grow, so to does misunderstandings - YUMATSU
Developing Code of Ethics Code of Ethics – 4 Steps 1. Brainstorm Ethical Dilemmas Problems the company might face due to the type of business 2. Discuss Potential Solutions Suggestions on how to handle situations Understand different cultures and values 3. Write Set of General Guidelines Range of Acceptable ways to deal with situations 4. Improve Your Code
Special Problems for Entrepreneurs Conflict of Interest Clash between a person’s private interest and his/her responsibilities in a position of trust Desperate Measures Live by one’s code of ethics no matter how difficult that might be Cultural Differences Understand the ethical expectations of the country’s culture What is permitted by Law
Special Problems for Entrepreneurs Bribes Payments to secure special services – ILLEGAL in US Patent or Copyright Infringement Long Term Vs Short Term Acting unethically may create short term profits but long term problems Integrity and Reputation will keep customers coming back