Management of Business

Module 1- #4
Business Ethics and Corporate Social
Responsibility

Objectives
Define

the terms, Business ethics, Corporate

Responsibility, Ethical Code, Socially Responsible

Explain

arguments for and against Social

Responsibility

Identify

ways in which businesses can practice

positive social responsibility

Identify

Examples of positive social responsibility

practiced by businesses.

Identify

pressure groups in the Caribbean

Social Responsibility

Social

responsibilityis an
ethical framework and suggests
that an entity, be it an
organization or individual, has an
obligation to act for the benefit of
society at large

Forms of Social Responsibility

and Ethical Practices
Care for the environment (proper
waste disposal, noise control)

Adherence to laws (paying

taxes)

Contributions and sponsorship of

activities

Forms of Social Responsibility

and Ethical Practices
Advertising
Protection

positive values

of animals

Fairness

in pricing

Fairness

in employment practices

Promote

safety and health of

employees

Corporate Responsibility
Should business activity be
solely concerned with meeting
the objectives of shareholders
and investors- by working for
maximum profit? Or should
business decisions also be
influenced by the needs of other
stakeholders??

Corporate Responsibility

When a firm accepts their legal

and moral obligations to
stakeholders other than investors
it is said to be accepting
corporate responsibility

Ethical Code
The growing acceptance of
corporate responsibility has led to
businesses adopting an ethical
code to influence the way in
which decisions are taken.

Ethics are the moral guidelines

that determine decision making.

Ethical Code
An ethical code is a formal
business document that lays
down the rules that managers
and other employees should
adopt when faced with a dilemma
or decision.

Examples:
Should a toy company advertise
its products so that they pester
their parents into buying them?

Should a bank invest in a

company that manufactures
weapons or tests new chemicals
on animals?

What is Business Ethics?

Business

ethics can be seen as a set of

principles which guide business decisions.

For

example, concern about animals will

cause a business to refuse to sell products
made from turtle shells

When

such a decision is made the

business is displaying social responsibility.

Business

Ethics

influence

Social Responsibility

Protect and improves

Welfare of Society

Corporate Social Responsibility

(CSR)
Corporate social responsibility,
often abbreviated "CSR," is a
corporation'sinitiatives to assess
and take responsibility for the
company's effects on
environmental and social wellbeing

Arguments FOR adopting

business strategies which are
socially responsible, e.g.
environmentally sound policies.
Businesses that reduce pollution
by using the latest green
equipment or use recycled
material rather than scarce
natural resources can have a real
marketing and promotional
advantage

For Continued
Low polluting production
methods and responsible waste
disposal will reduce the chances
of businesses breaking laws
designed to protect the
environment.

Improvement in quality of
applications of potential
employees

Arguments against adopting

business strategies which are
socially responsible.
Marketing advantage- Society
may benefit from cheaper goods
from damaged environment

More profits to expand and grow

Against continued
Lack of strict laws and penalties
within some countries

Economic Development is more

important in some countries

Environmental and ethical issues

(Pressure Groups)
Pressure Groups are
organizations created by people
with a common interest or aim
who put pressure on businesses
and governments to change
policies so that the objective is
reached.

Examples of Pressure
Groups
Greenpeace

environmental
protection by both businesses adopting
green strategies and governments
passing tighter anti-pollution laws.

Worldwide

Fund for Nature- aims to

improve animal welfare, especially
protecting and conserving the habit of
wild animals

Environmental Audits
Environment

audits are an
independent check on the
environmental impact of business
activities- factors which are difficult to
measure in monetary terms and which
do not legally have to be included in
published accounts.

It

concerns checking pollution levels,

wastage levels, recycling rates of the
business

Environmental Audits
Firms that publish results of
environmental audits can gain:
Favourable customer reactions,
increased sales
Positive media coverage
Better qualified applications

For further reading

Research on Corporate
Governance in Trinidad and
Tobago