BUSINESS ETHICS

& SOCIAL
RESPONSIBILITY
Presented By :

Neha Sharma
0821001616
 ETHICS

Ethics are principles that explain what is

good and right and what is bad and wrong
and that prescribe a code of behaviour
based on these definations.
 BUSINESS ETHICS:

Business ethics provide standards or

guidelines for the conduct and decision
making of employees and mangers.
WHY BEHAVE ETHICALLY:
 Managers should behave ethically to avoid
harming others
a) Managers are responsible for protecting
and nurturing resources in their charge.
 Unethical managers run the risk for loss of
reputation.
a) This is a valuable asset to any manager.
b) Reputation is critical to long term
management success.
c) All stakeholders are judged by
reputation.
It is difficult to know when a decision
Is ethical. Here is a good test:
 MANAGERIAL ETHICS: If a manager
makes a decision falling wthin usual
standards, is willing to personally
communicate the decision to stakeholders,
and believes friends would approve, then it
is likely an ethical decision.
ETHICS AND STAKEHOLDERS
Stakeholders: People or groups that have
an interest in the organisation.
 Stakeholders include employees,
customers,shareholders,suppliers and
others.
 Stakeholders often want different outcomes
and mangers must work to statisfy as many
as possible.
 ETHICS: A set of beliefs about right and
wrong.
 Ethics guide people in dealing with
stakeholders and others, to determine
appropriate actions.
 Managers often must choose between the
conflicting interest of stakeholders.
ETHICAL ORIGINS
 Societal Ethics: These are the standars that
members of society use when dealing with
each other.
a) Based on values and standards found in
society’s legal rules, norms and mores.
b) Codified in the form of law and society
customs.
 c) Norms dictate how people should behave.
 Societal ethics vary based on a given
society
a) Strong beliefs in one country mat differ
elsewhere.
b) Example: Bribes are an acceptable
practice in some countries.
 Professional Ethics: These are the values
and standards used by the mangers in the
workplace.
a) Applied when decisions are not clear-cut
ethically.
b) Emaple: Physicians and laywers have
professional asociation that enforce these.
 Individual Ethics: These are the values of
the individual resulting from their family and
upbringing.
a) If a behaviour is not illegal, people will
often disagree on if it is ethical.
b) Ethics of top managers set the tone for
firms.
ORGANISATION’S
STAKEHOLDERS
CORPORATE SOCIAL
RESPONSIBILITY
Corporate Social Responsibility is
the continuing commitment by business
to behave ethically and contribute to
economic development while improving
the quality of life of the workforce and
their families as well as of the local
community and society at large"
It can also be defined as:
CSR is about capacity building for
sustainable livelihoods. It respects
cultural differences and finds the
business opportunities in building the
skills of employees, the community and
the government.
"CSR is about business giving back to
society"
SOCIAL RESPONSIBILITY
 The Manager’s duty to nurture, protect and
enhance the welfare of stakeholders. There
are many ways managers respond to this
duty and they are:
 Obstructionist response: Managers chose
not to be socially responsible.
a) Managers behave illegally and
unethically.
b) They hide and cover- up problems.
 Defensive Response: Managers stay within
the law but make no attempt to exercise the
additional social responsibility.
a) put shareholders interest above all the
other stakeholders.
b) managers say society make laws if
change is needed.
 Accommodative Response: Here managers
realize the need for social responsibility.

a) Try to balance the inetrests of all

stakeholders.
 Proactive Response: Managers actively
embrace social responsibility.

a) Go out their way to learn about and help

stakeholders.
WHY BE RESPONSIBLE:
 Managers accrue benefits by being
responsible
a) Workers and society benefits.
b) Quality of life in society will improve.
c) It is a right thing to do.
 Whistleblowers: A whistleblower is an
employee or officer who believes either that
he/she has been ordered to perform sone
act or he/she has obatined knowledge that
the institution is engaged in activities which
are believed to cause harm to third Party or
are in violation of human rights.
a)Whistlebolwers are now protected by law
in cases.
 Social Audit: Here managers specifically
take ethics and business into account when
making decisions.
 To Fulfil Long Self-Interest: A business
organisation that is most sensitive to
community needs would, in its own self-
interest, like to have a better community in
which to conduct its business. To achieve
that, it would implement special progrmms
for social welfare.
 To Establish a Better Public Image: Each
business organisation must enhance its
public image to secure more customers.
Better employees and higher profit. The
public image concept may be extended to
the accomplishment of various types of
social goals.
 To Avoid Government Regulation or
Control: Regulation and control are costly
to business, both in terms of enegy and
money and restrict its flexibility of deision-
making. Failure of businessmen to assume
social responsibilities invites government to
intervene and regulate or control their
activities.
 The Iron Law of Responsibility: If business
intends to retain its existing social role and
social power, it must respond to society’s
needs constructively. This is called the Iron
of resposibility which is that in the long run,
those who do not use power in a manner
that society considers responsible, will tend
to lose it.
 To Avoid Misuse of National Resources
and Economic Power: Businessmen
command considerable power over the
productive resources of a community.They
are obliged to use those resources for thr
common goal of society.
 To Minimise Enviornmental Damage: The
effluence of many business damages the
surrounding enviornment. They are duty
bound to repair the damage by recognising
their ecologficl responsibility towards
society.
Advantages Of Corporate Social
Reporting are:
 Pursuit of social reponsibility as a goal may
ultimately lead to survival of the
organisation.
 Narrow focus on producing goods and
services for profit may impair company
performance in long run.
 Corporate responsibility is related to higher
financial performance and the ability to
recruit better quality job applicants.
 Its aids the attraction and retention of staff.
 Its attracts green and ethical investment.
 Its attracts ethically conscious customers.
 It can lead to reduction in costs through re-
cycling.
 It differentiates the firm from its competitor
and can be a source of competitive
advantage.
 It can lead to increased profitability in long
run.
 It improves firm’s public image.
 Improved social enviornment will be
beneficial to the firm.
 It helps to correct social and enviornmental
problems caused by the business.
Disadvantages of Corporate Social
Responsibilty:
 Socially responsible firms are likely to be
less efficient and may be driven out of
business by more efficient competitiors
willing to single- mindedly pursue profits.
 Corporate social responsibility is
disadvantage because the only
responsibility of the business is to create
shareholders wealth.
 Firms that give profits are more likely to fail
and become a detriment to society because
jobs and stakeholder’s investment are lost.
 The efficient use of resources will be
reduced if business are restricted in how
they can conduct their affairs.
 The pursuit of social goals dilutes
business’s primary purpose i.e earning
profits.
 Costs will be passed on to the customers.
 It will reduce the economic efficiency and
profits.
 Directors have a legal obligation to manage
the company in the interest of the
shareholders – and not for other
stakeholders.
 Corporate Social responsibility imposes
additional costs which reduce
competitiveness.
 Corporate Social responsibility places
unwelcome responsibilities on business
rather than on the government or
individuals.
CORPORATE SOCIAL REPORTING
Corporate Social Reporting is the
information with repect to discharge of
social responsibilities of corporate entity.
How the business discharges its social
responsibilities is disclosed through Social
Report. More specifically it is addressed to
the public at large, although it can be
squarely used by other groups.
The content of Corporate social report is
essentially based on the social objectives.
In the view of the social objectives, the
importance of earning objective is not
understated, rather attainment of social
abjectives is dependent on earning
objective.
Major Heads of Corporate Social
Reporting:
 Employment Opportunities: Creation of
employment opportunities in India and
abroad. In India, employment may be
created either by expansion/diversification
in backward or other areas. However
employment protection by absorption of
sick units may also be treated as
employment opportunities.
 Foreign Exchange Transactions: Foreign
Exchange inflows occur by exports or
foreign projects.It is desirable to report
inflows and outflows for each currency
separately and a summary statement in
Indian currency.Any tax advantage/export
subsidy received should be disclosed
 Energy Conservation: Energy
purchased/generated and energy
consumed per unit of standard product are
to be reported along with consumption
norm of the industry.Positive negtive
variation in energy consumption should be
reported along with reasons thereof.
 Research and Development: Recurring/
non-recurring cost incurred for research
and development is to be reported along
with results.Any tax advantage/subsidy
received is to reported as a social cost
incurred.
 Contribution to Government Exchequer:
Contribution to government exchequer by
the way of sales tax, income tax, excise
customs and other duties needs to be
reported as item of social benefits.
 Social Projects: It may be classified into
direct involvement of corporate enterprise
and donations to different organisations.
Social projects like construction of road,
establishment of school, college, institute,
hospital etc may be earmarked.
 Enviornmental Control: Negative social
effect by the corporate enterprise may be
quantified stating use of irreplaceable
resources and nature of polluition caused.
Action taken and cost involved for pollution
control should be reported.
 Consumerism: Failurs in terms of
complaints received against improper
quality, poor services etc. may be reported
under social costs. Action taken and cost
involved for pollution control should be
reported as an item of social benefit.
THANK YOU