nickels 6e/copyright © 2007 mcgraw-hill ryerson chapter 5 ethics and social responsibility
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Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
Chapter 5
Ethics and Social Responsibility
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Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
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.
Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
Question
Can you think of an example of business and questionable ethics?
Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
Ethics Check Questions
o Is it legal?
o Is it balanced?
o How will it make me feel about myself?
Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
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!
Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
Codes of Ethics
Compliance-Based Increase control and
penalize wrongdoers
Integrity-Based Define guiding values Support ethical
behaviour Shared accountability
Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
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
Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
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
Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
Levels of Corporate Responsibility
Responsibility to Customers Responsibility to Investors Responsibility to Employees Responsibility to Society Responsibility to the
Environment
Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
Social Auditing
Socially conscious investors
Environmentalists
Union officials
Customers
Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
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)
Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
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
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