ETHICS AND

SOCIAL
RESPONSIBILIT Y
BUSINESS ETHICS

Ethics – the study of morals and moral choices of human

beings. It includes the behaviors individuals and groups,
which are governed by standards, rules, and codes of
conduct.
Business Ethics – moral principles defining right and
wrong behavior of businesspersons and their agents.
 Ethics and the Lawmaking Process

PUBLIC OPINION

Issues on Business Ethics

Some issues considered by Some issues are left to the

Congress Businessperson to consider

Few issues Some issues Few issues Some issues

are passed are are are
into law disregarded considered disregarded
LAW EXAMPLES

Truth in lending Act – requires financial institutions “to take some ethical actions to protect
citizens from a lack of awareness of the true cost of credit to the user by assuring full disclosure
of such cost with a view of preventing the uninformed use of credit to the detriment of the
national economy.”

Anti - Trust Law – prohibits businesses from merging to effectively monopolize a certain
industry.
AREAS OF CONCERN FOR BUSINESS
ETHICS
• Business ethics covers all areas encompassed by business
transactions. The ethics conduct of businesspersons may be
measured against how the following are adhered to:

1. Laws and regulations promulgated by the government; and

2. Specific ethical required but not yet passed into law.
AREAS OF CONCERN FOR BUSINESS
ETHICS
• The following concerns relating to laws and regulations requiring ethical
behavior:
1. Product and safety quality;
2. Fair employment practices:
3. Fair marketing and selling practices;
4. The use of confidential information for personal gain;
5. Community involvement;
6. Bribery; and
7. Illegal payments to foreign governments to obtain business.
CURRENT ISSUES IN ETHICS

1. Owners of food stalls serving spoiled food to customers;

2. Business owners making fictitious insurance claims;
3. Schools awarding diplomas to undeserving persons;
4. A contributor bribing a government official to manipulate the
bidding of contracts;
5. A drug manufacturer making false claims regarding the efficacy of
his product; and
6. A television station copying format of a rival station’s show.
COVERAGE OF COMPANY SPONSORED ETHICS PROGRAM
• A very important listing of problem areas, which may be used as a basis for formulating company policies on
ethical conduct are as follows:
1. Drug and alcohol abuse;
2. Employee theft;
3. Conflicts of interests;
4. Quality control;
5. Misuse of proprietary information;
6. Abuse of expense accounts
7. Plant closings and layoffs:
8. Misuse of company assets;
9. Environmental pollution;
10. Methods of gathering competitors information;
11. Inaccuracy of books of records;
12. Receiving excessive gifts and entertainment; and
13. False or misleading advertising.
THE IMPROVEMENT OF ETHICAL
PERFORMANCE
1. Ethics Training – acquisition of knowledge in ethics, precedes effective
implementation by learning it into two forms:
- through formal classroom instruction and
- through actual hands-on experience and observation

2. Ethical Advocates – person who is knowledgeable about business ethics,

employed by the company, and acts as the company’s conscience. He sits at
the board of directors and sees to it that every policy adapted conforms to
ethical standards.
 THE IMPROVEMENT OF ETHICAL PERFORMANCE
3. Ethical Codes – codes of ethics are documents that specify practices that are unethical and
which the company expressly forbids.
Examples on unethical practices:
kickbacks
payoffs
receiving gifts
falsification of records
False claims about the product

4. Whistle-Blowing – when almost everybody from the top to lower management acts outside of
ethical norms, the employee who feels he must do something resorts to reporting the perceived
unethical practice to outsiders such as press, government agencies like the Ombudsman and the
Presidential Anti-Graft Commission, or public interest groups.
WHAT IS SOCIAL RESPONSIBILITY?

Social Responsibility – refers to the concern of business for the welfare of the society.
INTEREST GROUPS
OWNERS
THE
COMMUNITY CONSUMERS
AT LARGE

DIFFERENTLY
ABLED BUSINESS EMPLOYEES

SENIOR IDIGENOUS
CITIZEN GROUPS

WOMEN
1. OWNERS – ( the sole proprietor, the partners or stockholders) are expected to be of the
highest priority
2. CONSUMERS – consumers like any other groups have rights. The basic rights of the
consumers includes those concerning representation, information, a healthy environment,
safety, basic goods and services, choice, consumer education and redress.
3. EMPLOYEES – business firms should regard employees as among its greatest concerns.
Employee welfare is of utmost importance. Among these specific points of interests in caring
about the employees are:
a. Health and safety
b.Appropriate salaries and benefits
c.The right to speak out
d.The right to privacy
e.The right to job security
4. IINDIGENOUS GROUPS – communities that has a traditional way of living base on the tribe
they belong.
5. WOMEN – They constitute a potential force to make business progressive. In spite of findings
that women are no less ambitious than men, no less motivated to do a good job and no less
qualified.

6. SENIOR CITIZEN – recognize as a group which regarded with privileges like discounts in
many business establishments.

7. DIFFERENLTY ABLED – these persons may contribute positively to the firms objectives, they
must not be discriminated against in any activity like hiring and promotion.

8. THE COMMUNITY AT LARGE – people living in the communities have problems in common.
Some of these are related to pollution, traffic, substandard products, unfair business practices and
so on.
BENEFITS AND COSTS OF SOCIAL ACTIONS
• Benefits
1. Improved Employee Satisfaction and Motivation
2. Becoming More Aware of Changing Consumer Tastes and Preferences
3. Greater Demand for the Company’s Products and Services
4. Preference for Socially Responsible Companies by Investors.
5. Elimination of Legislative controls on Business Activity.

• Costs
1. Money Spent in Support of Social Projects
2. Reduction of Competitive Power
3. Government Regulations May Also be Imposed
SOCIAL RESPONSIBILITY STRATEGIES
1. Reaction Strategy – the company allows a condition or potential problem to go unresolved
until the public finds about it.
2. Defense Strategy
3. Accommodation Strategy
4. Proactive Strategy
SOCIAL AUDIT
Social Audit refers to the systematic examination of all activities comprising a firm’s social
programs.
A social audit may be done through the preparation of the following:
1. A summary of program areas such as consumer affairs, as well the reasons for undertaking
certain social activities and not others.
2. A report of specific progress and the priorities for each set of activities.
3. A listing of objectives for each priority activity and a description of how the organization is
striving to reach these objectives.
4. A summary report of the costs of each program area and activity to the company.
5. A summary using quantitative measures of the extent of achievement of each social
objective wherever possible.