Business Ethics and Corporate Social Responsibility Chapter 4

Business Ethics and Corporate Social Responsibility Chapter 4 Business in Action 6 e Bovée/Thill

Learning Objectives 1. Discuss what it means to practice good 2. 3. business ethics and highlight three factors that influence ethical decision-making Define Corporate Social Responsibility (CSR) and explain the difference between philanthropy and strategic CSR Distinguish among the four perspectives on corporate social responsibility Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 4 -2

Learning Objectives 4. Discuss the role of business in protecting the 5. 6. natural environment and define sustainable development Identify four fundamental consumer rights and the responsibility of business to respect them Explain the responsibilities businesses have toward their employees Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 4 -3

Public Perceptions of Business Ethics Copyright © 2013 Pearson Education, Inc. publishing as Prentice

What is Ethical Behavior? ª Ethics 9 The rules or standards governing the conduct of a person or group Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall ª Transparency 9 The degree to which affected parties can observe relevant aspects of transactions or decisions 4 -5

What is Ethical Behavior? (cont. ) ª Competing fairly and honestly ª Communicating truthfully ª Being transparent ª Not causing harm to others Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 4 -6

Factors Influencing Ethical Behavior Cultural differences Knowledge Copyright © 2013 Pearson Education, Inc. publishing

Organizational Behavior ª Code of Ethics 9 A written statement that sets forth the principles that guide an organization’s decisions ª Whistle-Blowing 9 The disclosure of information by a company insider that exposes illegal or unethical behavior by others within the organization Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 4 -8

AT & T Code of Ethics (excerpts) Copyright © 2013 Pearson Education, Inc. publishing

Ethical Decision Making ª Ethical Lapse 9 A situation in which an individual or a group makes a decision that is morally wrong, illegal, or unethical ª Ethical Dilemma 9 A situation in which more than one side of an issue can be supported with valid arguments Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 4 -10

Finding the Right Answer When Faced with an Ethical Dilemma ª Make sure you frame the situation accurately, taking into account all relevant issues and questions. ª Identify all parties who might be affected by your decision ª Be as objective as possible Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 4 -11

Finding the Right Answer When Faced with an Ethical Dilemma (cont. ) ª Don’t assume that other people think the way you do ª Watch out for conflicts of interest ª Conflict of interest 9 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 Copyright © 2013 Pearson Education, Inc. publishing as Prentice

Corporate Social Responsibility ª Corporate Social Responsibility (CSR) 9 The idea that business has obligations to society beyond the pursuit of profits Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 4 -14

The Relationship between Business and Society ª 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 ª Profit-seeking companies are the economic engine that powers modern society; they generate the vast majority of the money in a nation’s economy Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 4 -15

The Relationship between Business and Society (cont. ) ª Much of what we consider when assessing a society’s standard of living involves goods and services created by profit-seeking companies ª Companies cannot hope to operate profitably without the many benefits provided by a stable, functioning society Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 4 -16

Philanthropy vs. Strategic CSR ª Philanthropy 9 The donation of money, time, goods, or services to charitable, humanitarian, or educational institutions ª Strategic CSR 9 Social contributions that are directly aligned with a company’s overall business strategy Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 4 -17

Perspectives on Corporate Social Responsibility Copyright © 2013 Pearson Education, Inc. publishing as Prentice

CSR: The Natural Environment ª First, the creation, delivery, use, and disposal of products that society values virtually always generate pollution and consume natural resources ª Second, “environmental” causes are oft en as much about human health and safety as they are about forests, rivers, and wildlife. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 4 -19

CSR: The Natural Environment (cont. ) ª Third, many of these issues often require tough trade-offs, occasional sacrifice, disruptive change, and decision making in the face of uncertainty. Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 4 -20

Green and Clean? Where Our Electricity Comes From Copyright © 2013 Pearson Education, Inc.

Efforts to Conserve Resources and Reduce Pollution ª Cap and Trade 9 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 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 4 -22

Major Federal Environmental Legislation ª Clean Air Act (1963) ª Solid Waste Disposal Act (1965) ª Clean Water Act (1972) ª Toxic Substances Control Act (1976) ª Nuclear Waste Policy Act (1982) ª Oil Pollution Act (1990) Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 4 -23

The Trend Towards Sustainability ª Sustainable Development 9 Operating business in a manner that minimizes pollution and resource depletion, ensuring that future generations will have vital resources Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 4 -24

CSR: Consumers ª Consumerism 9 A movement that pressures businesses to consider consumer needs

CSR: Consumers (cont. ) ª The right to buy safe products – and to buy them safely ª The right to be informed ª The right to choose which products to buy ª The right to be heard Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 4 -26

CSR: Employees ª Discrimination 9 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 Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 4 -27

CSR: Employees (cont. ) ª Affirmative Action 9 Activities undertaken by businesses to recruit and promote members of groups whose economic progress has been hindered through either legal barriers or established practices Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 4 -28

Fatal Occupational Injuries Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 4

Applying What You’ve Learned 1. Discuss what it means to practice good 2. 3. business ethics and highlight three factors that influence ethical decision-making Define corporate social responsibility (CSR) and explain the difference between philanthropy and strategic CSR Distinguish among the four perspectives on corporate social responsibility Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 4 -30

Applying What You’ve Learned (cont. ) 4. Discuss the role of business in protecting the 5. 6. natural environment and define sustainable development Identify four fundamental consumer rights and the responsibility of business to respect them Explain the responsibilities businesses have toward their employees Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 4 -31