BUS 101- LECTURE 3

D EMONSTRATING ETHICAL AND SOCIAL

RESPONSIBILITY

ETHICS

Standards of moral behavior, that is, behavior which is

accepted by society as right versus wrong.

ETHICS AND LEGALITY

A society gets in trouble when it considers ethics and legality to be
the same.
Ethics and legality are two very different things.
Following the law is an important first step, ethical behavior requires
more than that.
Ethics reflects peoples proper relations with one another. How
should people treat others? What responsibility should they feel for
others?
Legality is more narrow: it refers to laws we have written to protect
ourselves from fraud, theft , and violence.
Many immoral and unethical acts fall well within our laws.

ETHICS BEGINS WITH EACH ONE OF US

It is always healthy when discussing moral and ethical issues to
remember that ethical behavior begins with you and me.
We cannot expect society to become more moral and ethical unless
we as individuals commit to becoming more moral and ethical
ourselves.
Sometimes the obvious solution from an ethical point of view has
drawbacks from a personal or professional point of view.
It can be very difficult to maintain a balance between ethics and
other goals such as pleasing stakeholders or advancing in your
career.
It is important to ask the following questions when faced with an
ethical dilemma:

MAKING ETHICAL DECISIONS

IS IT LEGAL?

IS IT BALANCED?

Am I violating any law or

comapny policy?
It is important to think
about legal implications of
your actions.
This is the most basic but
important aspect of
business.

Am I acting fairly?
Would I want to be
treated this way?
Will I win everything at
the expense of another
party?
Win-lose situations often
end up as lose-lose
situations.

M AKING
ETHICAL
DECISIONS

HOW WILL IT MAKE ME

FEEL ABOUT MYSELF?

Would I feel proud if my family or

friends learned of my decision?
Would I be able to discuss the
proposed situation or action with
my immediate supervisor?
How would I feel if my decision
were announced in the evening
news?
Decisions that go against our sense
of right or wrong make us feel bad.
It can destroy our self-esteem.
That is why ethical businessperson
does what is proper as well as what
is profitable.

MANAGING BUSINESSES ETHICALLY

AND RESPONSIBLY
A business should be managed ethically for many
reasons:
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

OVERVIEW OF JOHNSON & JOHNSONS

CODE OF ETHICS
Our Customers- We have a responsibility to provide highquality products they can trust, offered at a fair price.
Our Employees- We have a responsibility to treat them with
respect and dignity, pay them fairly and help them develop
and thrive personally and professionally.
Our Communities- We have a responsibility to be good
corporate citizens, support good works, encourage better
health and protect the environment.
Our stockholders- We have a responsibility to provide a fair
return on their investment.

COMPLIANCE-BASED ETHICS CODES

Ethical standards that emphasize preventing unlawful

behavior by increasing control and by penalizing
wrongdoers.

INTEGRITY-BASED ETHICS CODES

Ethical standards that define the organizations guiding
values, create an environment that supports ethically
sound behavior, and stress a shared accountability among
employees.

6 STEP PROCESS TO IMPROVE

BUSINESS ETHICS
1. Top management must adopt and support an explicit
corporate code of conduct.
2. Employees must understand that epectations for
ethical behavior begin at the top and that senior
management expects all employees to act accordingly.
3. Managers and others must be trained to consider the
ethical implications of all business decisions.
4. An ethics office must be set up. Employees should be
able to discuss matters annonymously.

6 STEPS CONTINUED
5. Outsiders such as suppliers, subcontractors,
distributors, and customers must be told about the
ethics program. Pressure to put aside ethical
considerations often comes from the outside, and it
helps employees resist such pressure when everyone
knows what the ethical standards are.
6. The ethics code must be enforced. It is important to
back any ethics program with timely action if any rules
are broken. That is the best way to communicate to all
employees that the code is serious.

CORPORATE SOCIAL RESPONSIBILITY

(CSR)
CSR is the concern businesses have for the welfare of
society.
It is based on a companys concern for the welfare of all
its stakeholders, not just the owners.
CSR goes well beyond merely being ethical.
It is based on a commitment to such basic principles as
integrity, fairness, and respect.

SOCIAL PERFORMANCE HAS SEVERAL

DIMENSIONS

Corporate Philanthropy
Corporate Social Initiatives
Corporate Responsibility
Corporate Policy

CORPORATE PHILANTHROPY
Corporate philanthropy is a dimension of social
responsibility that includes charitable donations.
80% of the business leaders surveyed in a recent study say
that their companies participate in philanthropic activities.
Strategic philanthropy involves companies making long-term
commitments to one cause.
Examples- McDonalds founded Ronald McDonald
Houses, they provide houses for critically ill children
requiring treatment away from home. Microsoft s Bill
&Melinda Gates Foundation is Americas largest
philanthropic foundation. Many small businesses are also
involved in generous giving.

CORPORATE SOCIAL INITIATIVES

Includes enhance forms of corporate philanthropy.
Corporate social initiatives differ from traditional
philanthropy in that they are more directly related to the
companys competencies.
Example: After the 2004 tsunami disaster, UPS and
FedEx shipped emergency relief suppliesfor free from
around the world. Johnson and Johnson sent medical
supplies.

CORPORATE RESPONSIBILITY
Includes everything from hiring minority workers to
making safe products, minimizing pollution, using energy
wisely, and providing a safe work environment.
Therefore, everything that has to do with acting
responsibly within a society.

CORPORATE POLICY
Dimension of social responsibility that refers to the
position a firm takes on social and political issues.

RESPONSIBILITY TO CUSTOMERS
One responsibility of business is to satisfy customers by
offering them goods and services of real value.
Companies should always be entirely honest with their
customers.
Consumer behavior studies show that, all else being
equal, a socially conscious company is likely to be
viewed more favorably than less socially responsible
companies.
Customers do not want to do business with companies
they do not trust.

RESPONSIBILITY TO INVESTORS
Ethical behavior is good for shareholder wealth.
It doesnt subtract from the bottom line, it adds to it.
In contrast, unethical behavior does cause financial
damage.
Many people believe that it makes financial as well as
moral sense to invest in companies that are planning
ahead to create a better environment.
By choosing to put their money into companies whose
goods and services benefit the community and the
environment, investors can improve their own financial
health while improving societys health.

RESPONSIBILITY TO EMPLOYEES
Businesses have a responsibility to create jobs if they want to grow.
Once a company creates jobs, it has an obligation to see that the
hard work and talent are fairly rewarded.
Employees need to see that their hard work, goodwill, and talent will
pay off.
If a company treats their employees with respect, they usually will
respect the company as well.
One way a company can demonstrate commitment and caring is to
give employees salaries and benefits that help them reach their
personal goals.

RESPONSIBILITY TO SOCIETY AND

ENVIRONMENT
One of businesses major responsibilities to society is to create new
wealth.
As stock prices of businesses increase, more funds are available to
benefit society.
Many companies believe that business has a role in building a community
that goes well beyond giving back.
Their social contributions include cleaning up the environment, building
community toilets, providing computer lessons, caring for the elderly, and
suupporting children from low income families.
Many businesses are taking responsibility for helping to make their own
environment a better place.
Environmrntal efforts may increase the companys costs, but they also
may allow the company to charge higher prices or to increase market
share or both.

SOCIAL AUDITING
A systematic evaluation of an organizations progress
toward implementing programs that are socially
responsible and responsive.
Many social audit measure such things as workplace
issues, the en

INTERNATIONAL ETHICS AND SOCIAL

RESPONSIBILITY
Ethical problems and issues of social responsibility exists
all over the world.
Government leaders are now being held to higher
standards.
Many businesses are demanding socially responsible
behavior from their international suppliers by making
sure their suppliers do not violate human rights and
environmental standards.
Many comapnies have been criticized for exploiting
workers in less developed countries.

QUESTIONS TO THINK ABOUT..

Is it always ethical for companies to demand compliance
with the standards of their own countries?
What about countries where child labor is an accepted
part of the society and families depend on their
childrens salaries for survival?
What about foreign companies doing business in
Bangladesh?
Should they expect Bangladeshi companies to comply
with their ethical standards?