Business Ethics and Corporate Social Responsibility

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What Is Ethical Behavior? (1 of 3) • Ethics
– The rules or standards governing the conduct of a person or group
• Transparency
– The degree to which affected parties can observe
relevant aspects of transactions or decisions

What Is Ethical Behavior? (2 of 3) • Insider trading
– The use of unpublicised information that an individual gains from the course of his or her job to benefit from fluctuations in the stock market

What Is Ethical Behavior? (3 of 3)
• Competing fairly and honestly • Communicating truthfully
• Being transparent
• Not causing harm to others

Factors Influencing Ethical Behavior
• Cultural differences
• Knowledge
• Organizational behavior

Organisational Behavior
• Code of ethics
– A written statement that sets forth the principles that
guide an organisation’s decisions
• Whistle-blowing
– The disclosure of information by a company insider that exposes illegal or unethical behavior by others within the organisation

Ethical Decision Making
• Ethical lapse
– A situation in which an individual or a group makes a
decision that is morally wrong, illegal, or unethical
• Ethical dilemma
– A situation in which more than one side of an issue can
be supported with valid arguments

Finding the Right Answer When Faced with an Ethical Dilemma (1 of 2)
• Make sure you frame the situation accurately, taking into account all relevant issues and questions.
• Identify all parties who might be affected by your decision. • Be as objective as possible.

Finding the Right Answer When Faced with an Ethical Dilemma (2 of 2)
• Don’t assume that other people think the way you do.
• Watch out for conflicts of interest.
• Conflict of interest
– A situation in which competing loyalties can lead to ethical lapses, such as when a business decision may be influenced by the potential for personal gain

Approach
Justice Utilitarianism
Individual rights
Individual responsibilities The common good
Virtue
Summary
Treat people equally or at least fairly in a way that makes rational and moral sense.
Choose the option that delivers the most good for the most people (or protects the most people from a negative outcome).
To the greatest possible extent, respect the rights of all individuals, particularly their right to control their own destinies.
Focus on the ethical duties of the individuals involved in the situation.
Emphasise qualities and conditions that benefit the community as a whole, such as peace and public safety.
Emphasise desirable character traits such as integrity and compassion.

Corporate Social Responsibility
• Corporate social responsibility (CSR)
– The idea that business has obligations to society
beyond the pursuit of profits

The Relationship between Business and Society (1 of 2)
• Consumers in contemporary societies enjoy and expect a wide range of benefits, from education and healthcare to credit and products that are safe to use.
• Profit-seeking companies are the economic engine that powers modern society; they generate the vast majority of the money in a nation’s economy.

The Relationship between Business and Society (2 of 2)
• Much of what we consider when assessing a society’s standard of living involves goods and services created by profit-seeking companies.
• Companies cannot hope to operate profitably without the many benefits provided by a stable, functioning society.

Philanthropy vs. Strategic CSR
• Philanthropy
– The donation of money, time, goods, or services to
charitable, humanitarian, or educational institutions
• Strategic CSR
– Social contributions that are directly aligned with a
company’s overall business strategy

Defensive CSR
• Nongovernmental organisations (NGOs)
– Nonprofit groups that provide charitable services or
promote social and environmental causes

CSR: The Natural Environment (1 of 2)
• First, the creation, delivery, use, and disposal of products that society values virtually always generate pollution and consume natural resources.
• Second, “environmental” causes are often as much about human health and safety as they are about forests, rivers, and wildlife.

CSR: The Natural Environment (2 of 2)
• Third, many of these issues often require tough trade-offs, occasional sacrifice, disruptive change, and decision making in the face of uncertainty.

Efforts to Conserve Resources and Reduce Pollution
• Cap and trade
– A type of environmental policy that gives companies some freedom in addressing the environmental impact of specified pollutants, by either reducing emissions to meet a designated cap or buying allowances to offset excess emissions

Major Federal Environmental Legislation (1 of 2)
• Clean Air Act (1963)
• Solid Waste Disposal Act (1965)
• National Environmental Policy Act (1969) • Resource Recovery Act (1970)
• Clean Water Act (1972)
• Noise Control Act (1972)
• Endangered Species Act (1973)

Major Federal Environmental Legislation (2 of 2)
• Safe Drinking Water Act (1974)
• Toxic Substances Control Act (1976)
• Nuclear Waste Policy Act (1982)
• Marine Protection, Research, and Sanctuaries Act (1988) • Oil Pollution Act (1990)
• Energy Independence and Security Act (2007)

The Trend Towards Sustainability
• Sustainable development
– Operating business in a manner that minimizes pollution and resource depletion, ensuring that future generations will have vital resources

CSR: Consumers (1 of 2) • Consumerism
– A movement that pressures businesses to consider consumer needs and interests
• Identity theft
– A crime in which thieves steal personal information and
use it to take out loans and commit other types of fraud

CSR: Consumers (2 of 2)
• The right to buy safe products – and to buy them safely • The right to be informed
• The right to choose which products to buy
• The right to be heard

CSR: Employees (1 of 2) • Discrimination
– In a social and economic sense, denial of opportunities to individuals on the basis of some characteristic that has no bearing on their ability to perform in a job

CSR: Employees (2 of 2) • Affirmative action
– Activities undertaken by businesses to recruit and promote members of groups whose economic progress has been hindered through either legal barriers or established practices.

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