BUSINESS ETHICS

• Corporate Social Responsibility


  The obligation to maximize its positive impact and minimize its negative impact on its stakeholders [customers, owners, employees, community, suppliers, and the government]
• Social Responsibility


  The obligation it assumes towards society – because to be socially responsible is to maximize positive effects and minimize negative effects on society
• The Social Responsibilities

  • Legal responsibilities
  • Economic Responsibilities
  • Ethical Responsibilities [''Spirit of the Law'']
  • Philanthropic Responsibilities
• Legal responsibilities


  Firm must take responsibility for the minimum compliance of their employees' with local state, and federal laws
• Economic Responsibilities


  Firm must produce the goods and services that society needs and wants at a price that can perpetuate the business and satisfy its obligations to investors
• Ethical Responsibilities [''Spirit of the Law'']


  The firm's behaviors or activities that society expects of it which are not codified in law
• Philanthropic Responsibilities


  The firm's behaviors, activities, and business values dictated by its desire ''to give back to society what it gets from them''
• Corporate Citizenship


  Measure of the extent to which a firm meets its legal, ethical, economic, and philanthropic responsibilities expected of them by their various stakeholders
• Corporate Citizenship


  Organizational activities and processes adopted by the firm to meet its social responsibilities
• Corporate Citizenship


  Actions and measurement of the extent to which it embraces the corporate citizenship philosophy
• Corporate Citizenship


  Commitment to Corporate Citizenship indicates a strategic focus on fulfilling the social responsibilities expected of it by its stakeholders
• The Five Groups of Laws

  • Laws Regulating Competition
  • Laws Protecting Consumers
  • Laws Protecting the Environment
  • Laws Promoting Equity and Safety [60s-70s]
  • Incentives for Compliance
• Laws Regulating Competition


  Bans practices that reduce or restrict competition such as monopolies, inequitable pricing, and others
• Precompetitive Legislation


  Laws enacted to encourage competition and prevent activities that restrict trade
• Laws Protecting Consumers


  Requires businesses to provide accurate information regarding products and services and to follow safety standards
• First Consumer Protection Law [USA]


  Enacted partly in response to the novel of Upton Sinclair [The Jungle] describing the atrocities and unsanitary conditions of the meal-packaging industry at the turn-of-the-century
• Laws Protecting the Environment


  Enacted largely in response to concerns that began during the '60s such as phasing out of leaded gasoline, outlawing plastics, and others to reduce, if not eliminate, the harmful effects on people
• Laws Promoting Equity and Safety [60s-70s]


  Passed protect the rights of older persons, minorities, women and persons with disabilities, plus other legislations to protect the safety of all workers
• Incentives for Compliance


  Encourages industries and firms to have codes of conduct and to develop identifiable schemes to knowingly or unwittingly violate the law, and for those who conscientiously develop and implement ethical compliance programs [Federal Sentencing Guidelines for Organizations]
• Ethical Dimension


  An organization's behaviors and activities expected or prohibited by its members, the community, and society even if the actions are not codified into law
• Good Corporate Citizenship


  The organization's effort to develop values and principles to form part of its culture and operations reflected in its integrity and ethics that to beyond compliance with laws and rules
• Social Responsiveness


  Responding to stakeholder's and others in society by considering more than just the firm's own wants and needs
• Value Systems of the Organization and Stakeholders

  • An understanding of the values of organization's members and stakeholders
  • An understanding of the ethical nature of their strategic choice
  • A concern about the implications of its efforts of key organizational stakeholders
• Economic Dimension


  Relates to how resources for the production of goods and services are distributed to the local system
• Economic Dimension


  Links and established socially responsible behavior and profitability
• Issues regarding the economic dimension

  • Relationship of business with stakeholders as well as the effects of the physical environment on economy
  • Relationship of business with the environment that the former can deplete, thus damage society's health and welfare by focusing only their own economic interests
  • Influence of stakeholders [consumers, employees, stockholders] on issues such as workplace diversity, equal job opportunity, job safety and health, privacy of employees, and unemployment due to business downsizing, rightsizing, etc.
  • The differences of interpretation by business and its various stakeholders in the settlement of social responsibility problems
  • Inappropriate, irrational, and abusive executive compensation
• Competition Dimension


  Unfair competition practices may result into legal and social responsibility and competition issues due to the rivalry of business for customers and profits
• Competition Dimension issues

  • Survival - Intense competition may threaten managers to see as acceptable, the unacceptable, thus, engage in questionable practices to ensure survival of his firm and himself
  • Focus on Competitive Strategies - May weaken, hurt, or destroy competition and potentially reduce welfare of consumers – such as sustained price cuts, price wars, and discriminatory pricing
  • Corporate Espionage - Maybe engaged in by firms due to intense competition giving them unfair advantages over others and may deny the originator or a product or idea the full benefits of creating it
  • Overly Aggressive Marketing Practices - That may result into competitive pressures as well as conflicts of interests when selling to vulnerable market segments
• Philanthropic Dimension


  The voluntary business contributions of business to society and/or its local community providing the following benefits: Improves quality of life, Reduces government involvement by providing help to people on their legitimate needs, Develops staff leadership skills, Builds staff morale as employees volunteers usually will feel really good about their extending assistance
• Strategic Philanthropy


  The synergistic and mutually beneficial use of organizational core competencies and resources to deal with key stakeholders in order to bring about organizational and societal benefits
• Corporate Culture


  A set of values, beliefs, goals, norms, and ways to solve problems that members of an organization share
• Formal Organizational Structure


  • Determines how employees are placed in various positions, jobs, departments, and divisions
  • Allows new employees to be aware of who are important and who are not based on it
  • Promotes the best ethical organizational conduct by combining the formal organizational structure and a values-based corporate culture
  • Determines whether responses to issues are right or wrong by using the ethical climate component of corporate culture as the character or decision process
• Significant Others


  People who influence work groups [peers, managers, co-workers, subordinates] because they help other with unfamiliar tasks, provide advice and information in formal and informal ways daily, and have greater impact on others than other factors to be considered
• Obedience to authority


  An aspect of the influence of significant others that helps others better deal with conflicts and other concerns
• Degree of Self-Self Esteem and Self-Confidence of a Person


  Impacts on a person's decision to either go along with ethical or unethical decisions, or to refuse to participate in certain decisions
• Role Stress


  Potentially create conflict and bears direct impact on ethical decisions due to the strain, conflict, or disruptive result of the lack of agreement on certain job-related activities
• Role Stress Situations


  Arises when decision-makers deal with conflicting ethical issues
• Opportunity


  Limits or allows either ethical or unethical behavior such as grant of internal or external rewards or the failure to erect barriers that will discourage unethical decisions and actions
• Opportunities for Unethical Behavior


  Arises when individuals are allowed to engage in behaviors without fear of its consequences – under conditions that fail to erect barriers unethical behaviors – or a lack of policy to punish employees for unethical actions such as accepting large gifts from clients
• Conflict


  • Arises when it is unclear which goals or values takes precedence: the individual, organization, or society
  • Occurs when individuals must choose between two equally good goals, particularly if one may result into a more positive reward than the other
  • Comes up when deciding on two alternative choices
  • Appears in the organizational, personal, or societal dimensions