Business Ethics and CSR Slides

Business Ethics and Corporate Social
Responsiblity
1. Define corporate social responsibility and summarize

the arguments for and against it.
2. Discuss what management can do to improve
business ethics.
Social Responsibility: Definition
and Perspectives
• Corporate Social Responsibility
• The idea that business has social obligations above
and beyond making a profit.
• Business has an obligation to constituent groups in
society other than stockholders and beyond that
prescribed by law.
Social Responsibility: Definition
and Perspectives (cont’d)
• What Does Social Responsibility Involve?
• Voluntary action
• Action before lawsuits or other actions that are
taken to force a firm to take action on a matter.
• An emphasis on means, not ends
• How the decision to act was reached, not the
decision itself.
Arguments for Social Responsibility
1. Business is unavoidably involved in

social issues. For example, the creation
and provision of employment is a great
social issue.
2. Business has the resources to tackle
today’s complex societal problems e.g.
inadequate schools, provision of clean
drinking water.
Arguments For SR
3. A better society means a better

environment for doing business, e.g.
getting rid of crime, corruption would lead
to a better Zambia
4. Corporate social action will prevent

government intervention i.e. It is
voluntary.
Arguments Against
1. Profit maximization ensures the efficient

use of society’s resources.
 This implies that social expenditure
amounts to theft of stockholders equity.
2. As an economic institution, business
lacks the ability to pursue social goals.
 Implies that inefficiency would arise out
of pursuing non-economic goals.
Arguments Against SR
3. Business already has enough power.

If responsibility of social goals is placed
on business, they would have too much
power.
4. Because business managers are not
elected, they are not directly accountable
to the people.
Who Benefits from Corporate
Social Responsibility
• Research Findings
• There is a positive correlation between
industry leadership on a socially
responsible issue (pollution control) and
profitability.
• Corporate social responsibility is a
competitive advantage.
Benefits of Social Responsibility to the
Organization.
1) Social responsibility has an advertising effect.

2) Social responsibility generates tax-free
incentives
3) It improves the retention of talented
employees.
4) It assists in recruiting talented persons
Benefits continued…
5). It can be used to sway public opinion against

government intervention
6). Social Responsibility can improve community
living standards for employees.
7). It attracts socially conscious investors.
.
Ethics and Business
Why study ethics?

Organisations typically produce a wide range of
external costs for example water and air pollution.
Maslow’s Hierarchy of needs- individuals are
motivated by their lowest level of needs. Once
basic needs are fulfilled, higher level needs
become motivators which can influence their
buying decisions.
People are not just buying your product, they are
saving the planet.
.
Maslow’s Hierarchy of Needs Theory
7-12
Ethics and Business
• Ethics
The study of moral obligation involving the
distinction between right and wrong.
• Business Ethics
•The study of the complex business practices
and behaviors that give rise to ethical issues in
organizations.
Examples: Church, Family and School Experience
Ethical Issues in Organizations
• Substance Abuse
• Employee theft
• Abuse of expense Accounts
• Environmental Pollution
• Altering Books and records
• Bribery
• Kickbacks
Ethical Issues in Organizations
Example:
Nestle`- promotes breast milk substitutes when they
are aware of evidence that breast milk is better for
baby and also free.
No two people have precisely the same opinion.
Difficulty lies in trying to agree about what is right
and what is wrong.
Culture is also important in defining what is
considered unethical to one may be perfectly
acceptable in another culture.
Society and Ethical Issues in
Organizations
Society is becoming increasingly concerned

about ethical issues relating to business
organisations.
Due to expanding media availability, it is easier
to expose examples of unethical business
practices
Example: Clothing Manufacturers in Bangladesh
Ethical Strategies
Identify segments of the market that are

prepared to pay a premium price.
Examples:
-Sustainable Fish.
-Meat products
Training of staff
Not just in business ethics but also so that they
develop enough skills which can empower them
in a way that can avoid unethical behaviour.
How to improve Business Ethics
Ethics Training
Use of Ethical Advocates
Use of Code of Ethics
Whistle blowing
1. Ethics Training
How can businesses encourage ethical conduct?
Characteristics of effective ethics programs:
1) Top management support.
2) Open discussion of realistic ethical cases e.g
buying/ contract department.
3) A clear focus on ethical issues.
4) Integration of ethics into the organization.
5) A mechanism for anonymously reporting ethical
violations.
6) Reward ethical conduct.
2. Ethical Advocates
Ethical Advocates- these are ethics

specialists who play a role in top-
management’s decision-making.
The advocates role is to critically examine
questions, recommendations and decisions.
3. Code of Ethics
An organizational code of ethics is a published

statement of moral expectations for employee
conduct. The code of ethics must satisfy two
conditions:
1.The code must refer to specific conducts such
as payoff, receiving gifts, kickbacks etc.
2.Must be firmly supported by top management
and should be equitably enforced. Selective
enforcement is the quickest way to kill the
effectiveness of the code.
Whistleblowing
Whistle-Blowing
Is defined as the reporting of perceived unethical
practice/ conduct to outsiders such as the press,
government agencies or public interest groups
Puts your job on the line

Loyalty
Snowden
.
Challenge to management
1. Encourage free expression of controversial

and dissenting views
2. Streamline the organization’s grievance
procedures so that problems receive a prompt
and fair hearing.
3. Find out employee’s opinion of the
organizations SR policies
4. Recognise that harsh treatment of whistle-
blower will lead to adverse public opinion.
A MANAGEMENT DILEMMA
• Management’s major ethical dilemma centres on the
potential conflict between economic and social
performance.
• Can the good of society be served and management still
operate a profit?
• The firm’s obligations to employees, customers,
stockholders and the general public are part of the social
performance.
• In certain instances improved economic performance,
such as increased sales, can occur only if one or more
groups suffer a loss.

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Business Ethics and Corporate Social

1. Define corporate social responsibility and summarize

1. Business is unavoidably involved in

3. A better society means a better

4. Corporate social action will prevent

1. Profit maximization ensures the efficient

3. Business already has enough power.

1) Social responsibility has an advertising effect.

5). It can be used to sway public opinion against

Why study ethics?

Society is becoming increasingly concerned

Identify segments of the market that are

Ethical Advocates- these are ethics

An organizational code of ethics is a published

Puts your job on the line

1. Encourage free expression of controversial

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