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Course Coordinator: Dr. Zahid Riaz

❖ Discuss the relationship between business and ethics

❖ Discuss what it means to be socially responsible and what factors influence that decision

❖ Discuss the factors that lead to ethical and unethical behavior

❖ Describe management’s role in encouraging ethical behavior

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Broadly defined, social relationships refer to the connections that exist between people who have recurring interactions that are perceived by the participants to have personal meaning.

Is the business a social relationship?

Is the business a manifestation of social relationship(s)?

Ethics as a sort of supplement to business.

Are they separate orders?

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Business ethics and the failure of state and other institutions of capitalistic way of living (Habermas, 1971).

Weakening of the capacities of the nation state.

Ethics should return to where it is most needed—within business itself (Beck, 2000).

While incorporating ethics in business; it is required by businesses to understand their obligations and responsibilities.

What is social obligation?

Social Obligation - the obligation of a business to meet its economic and legal responsibilities and nothing more.

Expending the firm’s resources on doing “social good” unjustifiably increases costs - Economist and Nobel laureate Milton Friedman.

He argued that managers’ primary responsibility is to operate the business in the best interests of the stockholders, whose primary concerns are financial.

Is there any link between social obligation and classical view?

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What is social responsiveness?

Social Responsiveness - when a firm engages in social actions in response to some popular social need.

What is social responsibility?

Social Responsibility - a business’s intention, beyond its legal and economic obligations, to do the right things and act in ways that are good for society.

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Social Screening – applying social criteria (screens) to investment decisions.

• SRI funds usually will not invest in companies involved in liquor, gambling, tobacco, nuclear power weapons, price fixing, fraud, or in companies that have poor product safety, employee relations, and environmental track records.

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As organizations become “greener,” they are reporting their commitment to being green in several ways.

In doing so, these organizations fulfill guidelines issued by the Global Reporting Initiative (GRI); meet ISO 14001 standards; and appearing on the list of the 100 Most Sustainable Corporations in the World.

CSR ISO – 26000.

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Stage of moral development interact with:

Individual characteristics

The organization’s structural design

The organization’s culture

The intensity of the ethical issue

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1. Hire individuals with high ethical standards.

2. Establish codes of ethics and decision rules.

3. Lead by example.

4. Set realistic job goals and include ethics in performance appraisals.

5. Provide ethics training.

6. Conduct independent social audits.

7. Provide support for individuals facing ethical dilemmas.

Code of Ethics - a formal statement of an organization’s primary values and the ethical rules it expects its employees to follow.

Research shows that 97 percent of organizations with more than 10,000 employees have a written code of ethics.

Even in smaller organizations, nearly 93 percent have one. Research by the Institute for Global Ethics says that shared

values such as honesty, fairness, respect, responsibility, and caring are pretty much universally embraced.

In addition, a survey of businesses in 22 countries found that 78 percent have formally stated ethics standards and codes of ethics; and more than 85 percent of Fortune Global 200 companies have a business code of ethics.

A survey of companies’ codes of ethics found their content tended to fall into three categories.

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Can it make a difference in ethical behaviors?

It can actually increases employee awareness of ethical issues in business decisions.

Clarifies and reinforces the organization’s standards of conduct

Helps employees become more confident that they will have the organization’s support when taking unpopular but ethically correct stances

What is triple bottom line?

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Social obligation

Classical view

Socioeconomic view

Social responsiveness

Social responsibility

Social screening

Green management

Ethics

Values

Ego strength

Locus of control

Code of ethics