Business

Ethics and
Corporate
Social
Responsibility
Chapter 4

Business
in Action
6e
Bove/T
hill

Learning Objectives
1. Discuss what it means to practice good
2.
3.

business ethics and highlight three factors

that influence ethical decision-making
Define Corporate Social Responsibility
(CSR) and explain the difference between
philanthropy and strategic CSR
Distinguish among the four perspectives on
corporate social responsibility

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4-2

Learning Objectives
4. Discuss the role of business in protecting
5.
6.

the natural environment and define

sustainable development
Identify four fundamental consumer rights
and the responsibility of business to respect
them
Explain the responsibilities businesses have
toward their employees

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Prentice Hall

4-3

Public Perceptions of Business

Ethics

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What is Ethical Behavior?

Ethics
The rules or
standards
governing the
conduct of a person
or group

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Transparency
The degree to
which affected
parties can observe
relevant aspects of
transactions or
decisions

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What is Ethical Behavior?

(cont.)
Competing fairly and honestly
Communicating truthfully
Being transparent
Not causing harm to others

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Factors Influencing Ethical

Behavior

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Organizational Behavior
Code of Ethics
A written statement that sets forth the
principles that guide an organizations
decisions

Whistle-Blowing
The disclosure of information by a company
insider that exposes illegal or unethical
behavior by others within the organization
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AT & T Code of Ethics

(excerpts)

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Ethical Decision Making

Ethical Lapse
A situation in which an individual or a group
makes a decision that is morally wrong,
illegal, or unethical

Ethical Dilemma
A situation in which more than one side of an
issue can be supported with valid arguments

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Finding the Right Answer When

Faced with an Ethical Dilemma
Make sure you frame the situation
accurately, taking into account all relevant
issues and questions.
Identify all parties who might be affected
by your decision
Be as objective as possible

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Finding the Right Answer When

Faced with an Ethical Dilemma
(cont.)
Dont assume that other people think the
way you do
Watch out for conflicts of interest

Conflict of interest
A situation in which competing loyalties can lead
to ethical lapses, such as when a business
decision may be influenced by the potential for
personal gain
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Approaches to Resolving
Ethical Dilemmas

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Corporate Social
Responsibility
Corporate Social Responsibility (CSR)
The idea that business has obligations to
society beyond the pursuit of profits

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The Relationship between

Business and Society
Consumers in contemporary societies enjoy
and expect a wide range of benefits, from
education and health care to credit and
products that are safe to use

Profit-seeking companies are the economic

engine that powers modern society; they
generate the vast majority of the money in a
nations economy
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The Relationship between

Business and Society (cont.)
Much of what we consider when assessing a
societys standard of living involves goods
and services created by profit-seeking
companies
Companies cannot hope to operate
profitably without the many benefits provided
by a stable, functioning society

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Philanthropy vs. Strategic

CSR
Philanthropy
The donation of money, time, goods, or
services to charitable, humanitarian, or
educational institutions

Strategic CSR
Social contributions that are directly aligned
with a companys overall business strategy
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Perspectives on Corporate
Social Responsibility

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CSR: The Natural

Environment
First, the creation, delivery, use, and
disposal of products that society values
virtually always generate pollution and
consume natural resources

Second, environmental causes are oft en

as much about human health and safety as
they are about forests, rivers, and wildlife.
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CSR: The Natural Environment

(cont.)

Third, many of these issues often require

tough trade-offs, occasional sacrifice,
disruptive change, and decision making in
the face of uncertainty.

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Green and Clean? Where Our

Electricity Comes From

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Efforts to Conserve Resources

and Reduce Pollution
Cap and Trade
A type of environmental policy that gives
companies some freedom in addressing the
environmental impact of specified pollutants,
by either reducing emissions to meet a
designated cap or buying allowances to offset
excess emissions

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Major Federal Environmental

Legislation
Clean Air Act (1963)
Solid Waste Disposal Act (1965)
Clean Water Act (1972)
Toxic Substances Control Act (1976)
Nuclear Waste Policy Act (1982)
Oil Pollution Act (1990)

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The Trend Towards

Sustainability
Sustainable Development
Operating business in a manner that
minimizes pollution and resource depletion,
ensuring that future generations will have vital
resources

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CSR: Consumers
Consumerism
A movement that pressures businesses to
consider consumer needs and interests

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CSR: Consumers (cont.)

The right to buy safe products and to
buy them safely
The right to be informed
The right to choose which products to buy
The right to be heard

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CSR: Employees
Discrimination
In a social and economic sense, denial of
opportunities to individuals on the basis of
some characteristic that has no bearing on
their ability to perform in a job

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CSR: Employees (cont.)

Affirmative Action
Activities undertaken by businesses to recruit
and promote members of groups whose
economic progress has been hindered
through either legal barriers or established
practices

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Fatal Occupational Injuries

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Applying What Youve

Learned
1. Discuss what it means to practice good
2.
3.

business ethics and highlight three factors

that influence ethical decision-making
Define corporate social responsibility (CSR)
and explain the difference between
philanthropy and strategic CSR
Distinguish among the four perspectives on
corporate social responsibility

Copyright 2013 Pearson Education, Inc. publishing as

Prentice Hall

4-30

Applying What Youve Learned

(cont.)
4. Discuss the role of business in protecting
5.
6.

the natural environment and define

sustainable development
Identify four fundamental consumer rights
and the responsibility of business to respect
them
Explain the responsibilities businesses have
toward their employees

Copyright 2013 Pearson Education, Inc. publishing as

Prentice Hall

4-31

Copyright 2013 Pearson Education, Inc. publishing as

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