Business Ethics and Social Responsibility

Meaning
The Social responsibility of business refers to the

obligation of business to follow those lines of action which are desirable in terms of the objectives and are valuable to the society. In real sense, the assumption of social responsibilities implies recognition and understanding the aspirations of society and the determinations to contribute to its achievement.

Different Ethical Views on Social Responsibilities

Communist View
Advocates the imposition of social responsibilities

through the instrumentality of the state.

Communists hold that free industrial civilization is

not good because its values are of the wrong order, and the Business is concerned only with material gain.

Capitalist View
Business has an unrestrained and uncontrolled right

to make money free from all sorts of social responsibilities. With profit objective, the business gratifies its personal desires and at the same time satisfies the needs of the society. Therefore, business should not have any responsibilities beyond obeying certain legal codes in achieving its goals

Pragmatic View
Acknowledges the importance of profit but

simultaneously stress the need for social responsibility. An organizations first responsibility is to keep the business solvent. A sick company can not contribute toward society. Hence the business must voluntarily assume the responsibilities towards the society.

Trusteeship View
Advocated the retention for personal use so much as

is necessary & the utilization of the rest for the welfare of the society.
The slogan is Enjoy the wealth by renouncing it,

says earn by all means but understand that your wealth is not yours, it belongs to people.

Obligation Towards Different Groups

Responsibility towards shareholders/ Owners

Reasonable Dividend

Sound Financial Position

Communication of Information Protection of assets

Responsibilities toward workers

Fair wages

Good Working conditions

Adequate service benefits Like Insurance, medical facilities etc.

Coopertaion For the smooth running of the business

Opportunities for growth Providing training, education etc

Responsibilities towards customers

Need satisfaction

Regular flow of goods Right : Quality, people, time, place

Grievance Handling To be prompt and courteous Right information Specially advertisements and promotions Fair practices Should avoid unethical practices

Responsibilities towards suppliers

To create win-win position

Fair transactions and healthy relations

Responsibilities towards Creditors

To provide accurate information regarding the

financial position of the org. Make prompt payments Fairness in transactions

Responsibilities towards Government

To abide by the laws of the nation

To pay taxes honestly

To avoid corrupting government employees To encourage fair trade practices

Responsibilities towards Society/ Community

Socio economic objectives The society expects that the business uses the scarce factors of production efficiently and effectively for the satisfaction of the needs of the society Improvement of local environment

Employment opportunities
Welfare activities Business ethics Fair trade practices Not to indulge in black marketing Not to issue misleading advertisements

Arguments for Social Responsibility

Changed Public Expectations of Business 2. Better environment for business

1.

A better society produces environmental conditions more favorable for business Labor recruiting will be easier and the labor quality will be higher with less turnover and absenteeism.

3. Public image More customers, better employees and more benefits in the financial market

4.

Balance of responsibility with power

Business do affect the economy and the society and hence this power should be balanced with social responsibility

5.

Moral Responsibility
Because the org posses a big portion of the resources in the economy, they should devote some of it for the betterment of society.

6.

Citizenship argument
Corporations are institutional members of the society, and members do have an obligation to improve the society.

7.

Prevention is better than cure

If business delays to deal with the social problems now, it may find itself constantly occupied with putting out social fires that it has no time to accomplish its routine objective.

Arguments against Social Responsibility

1.

Profit maximization
The business is most socially responsible when it attends to its interests and leaves other activities to other institution

2. Society has to pay the cost The cost may be passed on the society Can the society bear the additional costs? 3. Lack of social skill Managers are best at managing the things and they are hired for that. They may lack social responsibilities.

4. Business has enough power already Therefore it should not be given any more power by entering into social issues

4.

Social overhead costs

It is the cost on social responsibility which will not benefit the business immediately Why to spend money on an object the benefits of which only to be realized in future?

5.

Lack of accountability

It is impractical to give responsibility where there is no accountability Unless there is some mechanism developed which can provide accountability, business must stand clear of social activities and pursue its goal of profit where it is directly accountable

6.

Lack of broad support

The concept lacks support from all groups in society, which may create friction is the business gets involved There is lack of agreement among general public, intellectuals, in the government and even in the businessmen.

Business Ethics

Ethics
The word is derived from the Greek word ethos

which refers to character, guiding beliefs, standards. Ethics is that branch of philosophy concerned with moral human character and conduct, it defines the mass moral principles that define what ought to be. Ethics is

A set of standards, or code, or value system Worked out from human reason and experience By which free human actions are determined as ultimately right or wrong, good or evil

Shift to Ethics

Shift to Ethics
Unlike in the earlier times, business have been

observed practicing unethical behaviour. We are Probably living in the time of Ethics crisis Business ethics has been declined for more than last 2 decades. And the blame for unethical behaviour may shift to the line manager or the competitive markets. As a result, the public confidence declined.

Shift to Ethics
The present need is to shift to ethics and reposition

it. HOW????

Shift to Ethics
Factors to raise ethical standards 1. Public disclosure and publicity 2. The increased concern of a well informed public These factors should be followed by government

education and by customer education Provisions must be made for the enforcement Effective ethical code enforcement requires demonstration of consistent ethical behaviour support from top management

Tools of Ethics
Values

Rights and Duties

Moral rules Human relationships

Common morality
Morality of care

Values
Values are set of emotional rules people follow to help

make right decisions in life Values in a sense of integrity, honesty and diligence in people. Values are used in everyday decision making at work & at home. Without values people would become corrupt, dishonest and undependable as an individual Values are related to norms of a culture but they are more general than norms

Flying national flag on 15th August is a norm but it reflects the values of patriotism Corporations also have values, such as size, profitability, or making a quality product

Rights and Duties

Right is a concept that describes an action which any

individual is entitled to take without any prior consent. Right grants a moral sanction to an individual to take a specific action should they choose to do so. Duties can be defined as an act of course of action that is required of one by position, social custom, law or religion Rights are correlated with duties. Whenever someone has right, he has duty to respect it. A duty is an obligation to take specific steps- to pay taxes, for example, and to obey the law in other respects.

Moral Rules
Moral rules are behaviour often become internalized

as values. Morales are often part of a religion Sometimes moral codes give way to legal codes which couple corrective actions with particular practices. Do not lie, Do not cheat your friends

Human relationships
Based on love, like, business or social interactions.

These relationships involve some level of

interdependence. The individual constantly consciously decides how to maintain the relationships. These actions reflect values, ethics and morals. Management is all about relationships which has large ethical component.

Common Morality
Common morality is the body of moral rules

governing ordinary ethical problems. BASIC PRINCIPLES OF COMMON MORALITY Promise Keeping

Most people want to have some assurance that other people will do what they say. Without simple convention of promise keeping, business would be impossible. Every moral theory thus asserts that the human beings should keep their promises most of the time.

Common Morality
No malevolence Rights and duties provide ways of preventing violent conflict. If we constantly would have to worry about physical safety, we would much less willing to trust other people and engage complex dealings that may involve conflicts. Hence the moral theories require that most of the people most of the time should refrain from harming other human beings

Common Morality
Mutual aid According to the mutual aid, individuals should help one another if the cost of doing so is not so great. E.g. Blood Donations Respect for persons Taking other people seriously and not as a means to our needs. Accepting their interests as legitimate and regarding their desires as important.

Common Morality
Respect for property Most of the people, most of the time should get the consent of others before using their property.

Morality of Care
There are two factors of the theory. Justice Perspective
Common among men Emphasizes separateness from others and autonomous life. They want to protect their right that preserve separation.

Care perspective
Common among women It is characterized by sense of connection to others, a life of love and caring. Views that moral problems arise from conflicting responsibilities, which often require delicate and conscious interpretation of relationship.

Justice

Care

Orientation

Separation, Autonomy

Attachment, Interdependence

Mode of thinking Idea of morality

Formal; Abstract

Contextual, Narrative

Fairness, rights, equality, primacy of individual Formal logic of fairness Balancing rights

Care, responsibility, primacy of individual psychological logic of relationships Communication, protecting relationship Network or web

Conflict resolution Metaphor of relationship

Hierarchy or balance