Business Essentials

9e
Ebert/Griffin
Chapter 2

Business Ethics
and
Social
Responsibility
After reading this chapter, you should be able to:
1. Explain how individuals develop their personal
codes of ethics and why ethics are important in
the workplace.
2. Distinguish social responsibility from ethics,
identify organizational stakeholders, and
characterize social consciousness today.
3. Show how the concept of social responsibility
applies both to environmental issues and to a
firms relationships with customers, employees,
and investors.
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After reading this chapter, you should be able to:
4. Identify four general approaches to social
responsibility and describe the four steps
that a firm must take to implement a social
responsibility program.
5. Explain how issues of social responsibility
and ethics affect small business.
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Ethics in the Workplace
___Ethics______
beliefs about what is right and wrong or good and
bad in actions that affect others
Business ethics
refers to ethical or unethical behaviors by
employees in the context of their jobs
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Ethics in the Workplace
Ethical behavior
behavior that
conforms to individual
beliefs and social
norms about whats
right and good
Unethical behavior
behavior that
conforms to individual
beliefs and social
norms about what is
defined as wrong and
bad
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Assessing Ethical Behavior
Steps for making ethical decisions about
ethically subjective and ambiguous business
situations:
1. Gather the relevant factual information
2. Analyze the facts to determine the most
appropriate moral values
3. Make an ethical judgment based on the
rightness or wrongness of the proposed
activity or policy
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Model of Ethical Judgment Making
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Company Practices and Business Ethics
Two of the most _____common____
approaches to formalizing top management
commitment to ethical business practices:
Adopting written codes
Instituting ethics programs
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Social Responsibility
Social responsibility
refers to the overall way in which a business
attempts to balance its commitments to relevant
groups and individuals in its social environment
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Social Responsibility
Organizational ____stakeholders________
those groups, individuals, and organizations that
are directly affected by the practices of an
organization and who therefore have a stake in its
performance
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Major Corporate Stakeholders
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The Stakeholder Model of
Responsibility
Most companies that strive to be responsible to
their ____stakeholders________ concentrate
first and foremost on five main groups:
Customers
Employees
Investors
Suppliers
Local communities where they do business
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The Stakeholder Model of
Responsibility
Customers
Treat customers fairly and honestly
Employees
Treat employees fairly and respect their dignity
and basic human needs
Investors
Follow proper accounting procedures; provide
information to shareholders about financial
performance

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The Stakeholder Model of
Responsibility
Suppliers
Create mutually beneficial partnership
arrangements with suppliers
Local and International Communities
Involvement in programs and charities
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Areas of Social Responsibility
Environment
Customers
Employees
Investors
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Responsibility toward the Environment
Air pollution
Water pollution
Land pollution
Toxic waste disposal
Recycling
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Responsibility toward Customers
Consumer rights
____Consumerism_______ social activism
dedicated to protecting the rights of consumers in
their dealings with businesses
Unfair pricing
Collusion two or more firms collaborate on such
wrongful acts as price fixing
Price gouging
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Responsibility toward Employees
A company that provides its employees with
equal opportunities without regard to race,
sex, or other irrelevant factors is meeting both
its legal and its social responsibilities

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Responsibility toward Employees
Provide opportunities to balance work and life
pressures and preferences
Help employees maintain job skills
Treat terminated or laid-off employees with
respect and compassion
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Responsibility toward Investors
Insider trading
using confidential information to gain from the
purchase or sale of stocks.
Misrepresentation of finances
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Approaches to Social Responsibility
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Approaches to Social Responsibility
Obstructions Stance
involves doing as little
as possible and may
involve attempts to
deny or cover up
violations
______Defensive____
___ Stance
company meets only
minimum legal
requirements in its
commitments to
groups and individuals
its social environment
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Approaches to Social Responsibility
_______Accommodat
ive________ Stance
a company, if
specifically asked to do
so, exceeds legal
minimums in its
commitments to
groups
______Proactive____
__ Stance
a company actively
seeks opportunities to
contribute to the well-
being of groups and
individuals in its social
environment
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Managing Social Responsibility
Programs
1. Social responsibility must start at the top and be
considered a factor in strategic planning
2. A committee of top managers must develop a
plan detailing the level of management support
3. One executive must be put in charge of the
firms agenda
4. The organization must conduct occasional social
audits
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