Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson Chapter 5 Ethics and Social Responsibility.

Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson

Chapter 5

Ethics and Social Responsibility

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Learning Goals

1. Explain why legality is only the first step in behaving ethically and ask the three questions one should answer when faced with a potentially unethical action.

2. Describe management’s role in setting ethical standards and distinguish between compliance-based and integrity-based ethics codes.

3. List the six steps in setting up a corporate ethics code.

4. Define corporate social responsibility and examine corporate responsibility to various stakeholders.

5. Discuss the responsibility that business has to customers, investors, employees, society and the environment.


Question

Can you think of an example of business and questionable ethics?


Ethics Check Questions

o Is it legal?

o Is it balanced?

o How will it make me feel about myself?


Why Should Businesses be Managed Ethically?

o To maintain a good reputation

o To keep existing customers

o To attract new customers

o To avoid lawsuits

o To reduce employee turnover

o To avoid government intervention

o To please customers, employees and society

o TO DO THE RIGHT THING!


Codes of Ethics

Compliance-Based Increase control and

penalize wrongdoers

Integrity-Based Define guiding values Support ethical

behaviour Shared accountability


Six Steps to Improve Ethics

1. Top management support2. Expectations begin at the top3. Ethics imbedded in training4. Ethics office set up5. External stakeholders informed6. There must be enforcement


Responsibility Defined

Corporate Social Responsibility (CSR) The concern businesses have for the welfare of society.• Corporate Philanthropy – charitable

donations to non-profit groups.• Corporate Social Initiatives - enhanced

forms of corporate philanthropy. i.e., Johnson & Johnson sends medical supplies to disaster areas.

• Corporate Responsibility – acting responsibly within society

• Corporate Policy – position on social and political issues


Levels of Corporate Responsibility

Responsibility to Customers Responsibility to Investors Responsibility to Employees Responsibility to Society Responsibility to the

Environment


Social Auditing

Socially conscious investors

Environmentalists

Union officials

Customers


International Ethics and Social Responsibility

Federal Accountability Act (Canada) Kyoto Protocol (International) Socially responsible expectations of

international partners, suppliers Inter-American Convention Against

Corruption International Standards

Organization (ISO)


Conundrums of Doing Business Globally

What do you do when: You are forbidden to trade – US to Cuba Ethical norms of the host country

violate the laws of the home country Social responsibility has whole new

meaning Environmental practices differ from the

home company

Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson Chapter 5 Ethics and Social Responsibility.

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