1. Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
Chapter 5
Ethics and Social Responsibility
Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson

2. Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
Learning Goals
Explain why legality is only the first step in behaving ethically and ask the three questions one should answer when faced with a potentially unethical action.
Describe management’s role in setting ethical standards and distinguish between compliance-based and integrity-based ethics codes.
Define corporate social responsibility and examine corporate responsibility to various stakeholders.
Discuss the responsibility that business has to customers, investors, employees, society and the environment.
Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson

3. Question
Can you think of an example of business and questionable ethics?
Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson

4. Ethics Check Questions
Is it legal?
Is it balanced?
How will it make me feel about myself?
Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson

5. Why Should Businesses be Managed Ethically?
To maintain a good reputation
To keep existing customers
To attract new customers
To avoid lawsuits
To reduce employee turnover
To avoid government intervention
To please customers, employees and society
TO DO THE RIGHT THING!
Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson

6. Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
Codes of Ethics
Compliance-Based
Increase control and penalize wrongdoers
Integrity-Based
Define guiding values
Support ethical behaviour
Shared accountability
Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson

7. Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
Question
What Code of Ethics do you believe works the best?
Compliance
Integrity
Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson

8. Six Steps to Improve Ethics
Top management support
Expectations begin at the top
Ethics imbedded in training
Ethics office set up
External stakeholders informed
There must be enforcement
Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson

9. Responsibility Defined
Corporate Social Responsibility (CSR) The concern businesses have for the welfare of society.
Corporate Philanthropy – charitable donations to non-profit groups.
Corporate Social Initiatives - enhanced forms of corporate philanthropy. i.e., Johnson & Johnson sends medical supplies to disaster areas.
Corporate Responsibility – acting responsibly within society
Corporate Policy – position on social and political issues
Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson

10. Levels of Corporate Responsibility
Responsibility to Customers
Responsibility to Investors
Responsibility to Employees
Responsibility to Society
Responsibility to the Environment
Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson

11. Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
Social Auditing
Socially conscious investors
Environmentalists
Union officials
Customers
Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson

12. International Ethics and Social Responsibility
Federal Accountability Act (Canada)
Kyoto Protocol (International)
Socially responsible expectations of international partners, suppliers
Inter-American Convention Against Corruption
International Standards Organization (ISO)
Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson

13. Conundrums of Doing Business Globally
What do you do when:
You are forbidden to trade – US to Cuba
Ethical norms of the host country violate the laws of the home country
Social responsibility has whole new meaning
Environmental practices differ from the home company
Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson