Social Responsibility and Ethics BUS 222 CLASS. DEFINATIONS Social Responsibility of business refers...

Social Responsibility and Ethics

BUS 222 CLASS

DEFINATIONS

Social Responsibility of business refers to what the business does, over and above statutory requirement, for the benefit of the society.

Corporate Social Responsibility (CSR) refers to the moral responsibility of the business to the society by the virtue of being a part of the society.

TRADITIONAL VIEW OF CSR

The prime purpose of the business was profit maximization- Milton Friedman “ the business of business is business.”Friedman argues that the profit earned by business belongs exclusively to the shareholders of the business and these profit cannot be diverted to any other social purpose.- social obligation

CONT.

He argued that when management decide to spend the organization’s resources for ‘social good’, they add to the costs if doing business, which have to be passed on to the consumers through higher prices or absorbed by stockholders through smaller dividend.

MORDERN VIEW OF CSR

‘Moral behavior pays…..at least in the long run.’According to this view business is a social and economic institution which can not live in isolation.The establishment and development of business depends upon the contribution made by the society.This socioeconomic view says that managers'’ social responsibility go beyond making profit to include protecting g and improving society’s welfare .

CONT.

Social responsiveness means that a company engages in social actions in response to some popular social need.Social responsibility means a business’s intention, beyond its legal and economic obligation, to for the right things and act in ways that are good for society

The Social Responsibility Debate

What does social responsibility mean?

Does it mean the corporation’s

actions must not harm society?

Does it mean a corporation’s actions should benefit society?

– or –

Arguments for CSR

Public expectationsLong-run profitsEthical obligationPublic imageBetter environmentHarmonious and healthy relations with the society

CONT.

Discouragement of further governmental regulationBalance of responsibility and powerStockholders interestsPossession of resourcesSuperiority of prevention over cure

AGAINST CSR

Violation of profit maximizationDilution of purposeCostsToo much powerSocial actions can not be measuredLack of skillsLack of accountabilityIncrease in the prices of the products or services.

Ten Commandments of Social Responsibility

Commandment IThou shall take corrective action before it is required.

Commandment IIThou shall work with affected constituents to resolve mutual problems.

Commandment IIIThou shall work to establish industry-wide standards and self-regulation.

Ten Commandments of Social Responsibility

Commandment IVThou shall publicly admit your mistakes.

Commandment VThou shall get involved in appropriatable social programs.

Commandment VIThou shall help correct environmental problems.

Commandment VIIThou shall monitor the changing social environment.

Ten Commandments of Social Responsibility

Commandment VIIIThou shall establish and enforce a corporate code of ethics.

Commandment IXThou shall take needed public stands on social issues.

Commandment XThou shall strive to make profits on an ongoing basis.

Ethical Dilemmas Faced by Managers

Should I conductpersonal businesson company time?

Ethical Dilemmas Faced by Managers

Should we spend moreon pollution control?

Is it O.K. to give a friend a special rate?

Ethical Dilemmas Faced by Managers

If I find out that myboss took a bribe,

should I tell someone?

Ethical Dilemmas Faced by Managers

Managerial Guidelinesfor Ethical Dilemmas

Utility ApproachA situation in which decisions are based on an evaluation of the overall amount of good that will result.

Human Rights ApproachA situation in which decisions are made in light of the moral entitlements of human beings.

Managerial Guidelinesfor Ethical Dilemmas

Justice ApproachA situation in which decisions are based on an equitable, fair, and impartial distribution of benefits and costs among individuals and groups.

Fostering Business Ethics

Code of EthicsDescribes the general value system, ethical principles, and specific ethical rules that a company tries to apply.

Ethics Training ProgramsTraining designed to help managers clarify their ethical framework and practice self-discipline when making decisions in difficult circumstances.

Fostering Business Ethics

WhistleblowingA whistleblower is someone who exposes organizational misconduct or wrongdoing to the public.

Implications for Leaders: Social Responsibility and Ethics

Explore ways in which the organization can be more socially responsive.

Recognize the effect of the organization’s actions on its stakeholders.

Create an environment in which employees commit to behaving in socially responsive and ethical ways.

Make sure that a code of ethics is put in place and followed.

Implications for Leaders:

Social Responsibility and Ethics

Ensure that whistle blowing and ethical concerns procedures are established for internal problem solving.Involve line and staff employees in the identification of ethical issues to help them gain understanding and resolve issues.Determine the link between departments and issues affecting the company and make them known to employees in the departments

Implications for Leaders: Social Responsibility and Ethics

Integrate ethical decision making into the performance appraisal process.

Publicize, in employee communications and elsewhere, executive priorities and efforts related to ethical issues.