bia_c4_notes (2)

Business in Business in Action 6e Action 6e Bovée/ThillBovée/Thill

Business Ethics Business Ethics and Corporateand Corporate

Social Social ResponsibilityResponsibility

Chapter 4Chapter 4

Learning Objectives

1. Discuss what it means to practice good business ethics and highlight three factors that influence ethical decision-making

2. Define Corporate Social Responsibility (CSR) and explain the difference between philanthropy and strategic CSR

3. Distinguish among the four perspectives on corporate social responsibility

Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall4-2

Learning Objectives

4. Discuss the role of business in protecting the natural environment and define sustainable development

5. Identify four fundamental consumer rights and the responsibility of business to respect them

6. Explain the responsibilities businesses have toward their employees


Public Perceptions of Business Ethics


What is Ethical Behavior?

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? (cont.)

Competing fairly and honestlyCommunicating truthfullyBeing transparentNot causing harm to others


Factors Influencing Ethical Behavior


Organizational Behavior

Code of Ethics A written statement that sets forth the

principles that guide an organization’s decisions

Whistle-Blowing The disclosure of information by a company

insider that exposes illegal or unethical behavior by others within the organization


AT & T Code of Ethics (excerpts)


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

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 (cont.)

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

Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 4-12

Approaches to Resolving Ethical Dilemmas


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

Consumers in contemporary societies enjoy and expect a wide range of benefits, from education and health care 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 (cont.)

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


Perspectives on Corporate Social Responsibility


CSR: The Natural Environment

First, the creation, delivery, use, and disposal of products that society values virtually always generate pollution and consume natural resources

Second, “environmental” causes are oft en as much about human health and safety as they are about forests, rivers, and wildlife.


CSR: The Natural Environment (cont.)

Third, many of these issues often require tough trade-offs, occasional sacrifice, disruptive change, and decision making in the face of uncertainty.


Green and Clean? Where Our Electricity Comes From


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

Clean Air Act (1963)Solid Waste Disposal Act (1965)Clean Water Act (1972)Toxic Substances Control Act (1976)Nuclear Waste Policy Act (1982)Oil Pollution Act (1990)


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

Consumerism A movement that pressures businesses to

consider consumer needs and interests


CSR: Consumers (cont.)

The right to buy safe products – and to buy them safely

The right to be informedThe right to choose which products to buyThe right to be heard


CSR: Employees

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 (cont.)

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


Fatal Occupational Injuries


Applying What You’ve Learned

1. Discuss what it means to practice good business ethics and highlight three factors that influence ethical decision-making

2. Define corporate social responsibility (CSR) and explain the difference between philanthropy and strategic CSR

3. Distinguish among the four perspectives on corporate social responsibility


Applying What You’ve Learned (cont.)

4. Discuss the role of business in protecting the natural environment and define sustainable development

5. Identify four fundamental consumer rights and the responsibility of business to respect them

6. Explain the responsibilities businesses have toward their employees


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