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Introduction to Business

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Chapter 2 MAKING ETHICAL DECISIONS AND �MANAGING A SOCIALLY RESPONSIBLE BUSINESS

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Learning Outcomes

  1. What philosophies and concepts shape personal ethical standards?
  2. How can organizations encourage ethical business behavior?
  3. What is corporate social responsibility?
  4. How do businesses meet their social responsibilities to various stakeholders?
  5. What are the trends in ethics and corporate social responsibility?

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  1. What philosophies and concepts shape personal ethical standards?
  • Ethics is a set of moral standards for judging whether something is right or wrong.
  • The first step in understanding business ethics is learning to recognize an ethical issue. An ethical issue is a situation where someone must choose between a set of actions that may be ethical or unethical.
    1. Legal and unethical
      1. Martin Shkreli “pharma bro” 7 year prison sentence.
    2. No legal and ethical

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What philosophies and concepts shape personal ethical standards?

  1. Justice—The Question of Fairness
    1. What is fair according to society
  2. Utilitarianism—Seeking the Best for the Majority
    • focuses on the consequences of an action taken by a person or organization.
    • Following Our Obligations and Duties (deontology)
    • “always on time to meeting” may require speeding?
  3. Individual Rights
    • Many laws protect individual rights in US

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2. How can organizations encourage ethical business behavior?

  • Examples: WF, Enron, etc.
  • Lead by example
    1. Tony Hsieh, Zappos CEO, offers new employees $4k to quit
  • Ethics training programs
    • Law enforcement question
  • Establishing a formal code of ethics
    • Shows that firm has expectations

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2. How can organizations encourage ethical business behavior?

  • Making the Right Decision
    1. “Are there any legal restrictions or violations that will result from the action?”
    2. “Does it violate my company’s code of ethics?”
    3. “Does this meet the guidelines of my own ethical philosophy?”
      1. If the answer is “yes,” then your decision must still pass two important tests.
  • The Feelings Test
    • How does the decision really make you feel?
  • The Newspaper or Social Media Test
    • Front page news?

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Managing a socially responsible business

  1. Corporate social responsibility (CSR)
    1. the voluntary concern of businesses for the welfare of society as a whole.
    2. “do well and do good”
      • Starbucks has donated more than one million meals to local communities via its FoodShare program and alliance with Feeding America, giving 100 percent of leftover food from their seven thousand U.S. company-owned stores.
      • Employees who work for Deloitte, a global audit, consulting, and financial services organization, can get paid for up to 48 hours of volunteer work each year. In a recent year, more than 27,000 Deloitte professionals contributed more than 353,000 volunteer hours to their communities around the world.

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Exhibit 2.4 The Pyramid of Corporate Social Responsibility

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Peter Drucker

Milton Friedman

We should look first at what an organization does to Society and second what it can do for society.

--P.70

“The Social Responsibility of Business is to Increase its Profits”

--NY Times, 1970

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How do businesses meet their social �responsibilities to various Stakeholders?

Stakeholders are the individuals or groups to whom a business has a responsibility to:

  1. Employees
    1. Responsibility: job security, clean safe without discrimination. Best companies empower.
  2. Customers
    • Satisfy customers, be honest. Millennials support businesses that are ethical & CSR.
  3. Society
    • Benefit society, provide community w jobs & services
      • Ex: B-corps – Warby Parker

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How do businesses meet their social �responsibilities to various Stakeholders?

  1. Environmental Protection
    1. Deforestation, extinction, waste
      • Ex: Toyota
  2. Investors (stockholders)
    1. Increase in social investing: limiting investments that coincide with social responsibility and ethics
      1. https://tobaccofreefunds.org/funds

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