Business Ethics and Social

Responsibility

Aasim siddiqui (Lecturer) Dept. of Management

studies FIT Meerut
Meaning and Definition of Ethics
 According to Mackenzie “Ethics is the
study of what is right or good in human
conduct” or the “Science of the ideal
involve in human life”.
 According to Webster “ethics is the
discipline dealing with that which is good
and bad and with moral duty an
obligations”

Aasim siddiqui (Lecturer) Dept. of Management

studies FIT Meerut
Introduction to Business Managerial
Ethics
 Managerial ethics are the standards of behavior that
guide individual managers in their work. These ethics
guide the thinking and decision making with respect to
what is good and what is bad. For example, would it be
right for a store manager to break a promise to a
customer and sell some merchandise to someone else?
If you innocently came across secret information about a
competitor, would it be permissible for you to use it for
your own advantage?
 It refers to the application of ethics to business. To be
more specific, it is the study of good and evil, right and
wrong and just and unjust actions of businessmen.

Aasim siddiqui (Lecturer) Dept. of Management

studies FIT Meerut
Examples of Business Ethics
 To give fair and equitable treatment to the
employees.
 To charge fair prices from the customers.
 To use fair weights for measurement of
commodities.
 To pay taxes to government and other
bodies honestly.
 To earn reasonable profit.
 To become a good corporate citizen.

Aasim siddiqui (Lecturer) Dept. of Management

studies FIT Meerut
Importance of Ethics in Business
 Values Create reliability with the Public: A company perceived
by the public to be ethically and socially responsive will be honored
and respected even by those who have no intimate knowledge of its
actual working.
 Values Give Management reliability with Employees:
 Values help Better Decision Making: Another point of great
importance is that an ethical attitude helps the management make
better decisions, i.e., decisions which are in the interest of the
public, their employees and the company’s
 Ethics and Profit Go Together: A company which is inspired by
ethical conduct is also profitable one.
 Law Cannot Protect Society, Ethics Can: Where law fails, ethics
can succeed. An ethical oriented management takes measures to
prevent pollution and protect workers’ health even before being
mandated by law.

Aasim siddiqui (Lecturer) Dept. of Management

studies FIT Meerut
 Tools of ethics
 Values: Values are the moral beliefs held by an individual, an
organization and a society. Values represent moral convictions
and are relatively permanent. For example, a company may
charge reasonable prices due to its value systems in spite of
its monopoly position in the industry.
 Rights and Duties: rights are correlated with duties.
Whenever someone has a right, someone else has a duty to
repeat it. A duty is an obligation to take specific steps-to-pay
taxes, e.g., and to obey the law in other respects.
 Human Relationships: Every human being is connected to
others in a web of relationships. These relationships exist
because we need one another for mutual support and to
accomplish our goals. From a small child’s relationship with
parents to a manager’s relationship with an employee,
relationships are a pervasive aspect of moral life. We
constantly decide how to maintain and take care of them.
These decisions reflect our values and our concern for ethics.

Aasim siddiqui (Lecturer) Dept. of Management

studies FIT Meerut
 Common Morality:
 Promise Keeping:
 Mutual Aid: Human communities are sustained by the
recognition that people depend on each other and
help each other. Blood donation and the United Way
are good examples. According to the principles of
mutual aid, individuals should help one another if the
cost of doing so is not great.
 Respect for Persons: Common morality also requires
us to ‘regard other people.
 Respect for Property: most people, most of the time,
should get the consent of others before using their
property. If you think of people as own their own
bodies, respect for property is a corollary of respect
for individuals.

Aasim siddiqui (Lecturer) Dept. of Management

studies FIT Meerut
 SHIFT TO ETHICS
 A survey undertaken by Prof. Monappa of 115 business
executives attending the middle and senior management
Programme of the I.I.M., Ahmedabad and belonging to
different industries, areas, educational standards,
religious affiliations and income groups, has revealed
some notable results regarding Indian managers’
attitude towards Business Ethics. The findings are
reproduced below.
 Dishonest methods used by competitors and the
unethical climate in the industry were often cited as
deterrents to the honest transaction of business.
 Managers were dis-satisfied with the idea that profits
should be the only guidelines for a businessman in
decision making.
 A majority of the managers welcomed the idea of a code
of conduct and felt it would help to improve the ethical
climate in the country.
Aasim siddiqui (Lecturer) Dept. of Management
studies FIT Meerut
 The attitudes and reactions of the older business
managers to situations demonstrated a greater ethical
awareness than those of younger ones.
 The problems that caused managers the greatest
concern were those which involved using gifts, bribes,
personal favors, etc.
 Formal education and training did not seem to have
simulated the desire to act honestly.
 Corruption and greed of government officials were
considered as a barrier to ethical business behavior.
 Most managers do take time in making a decision to
consider the ethical implications.
 The influence of supervisors, through whom the
company policy is most often transmitted, was
considered important in influencing ethical action.
 The size of the company, by and large, had no
discernible influence on ethical decision-making.

Aasim siddiqui (Lecturer) Dept. of Management

studies FIT Meerut
 SOCIAL RESPONSIBILITY OF
BUSINESS
 Social responsibility means obligation of
decision-makers to take actions which
protect and improve the welfare of society
as a whole along with their own interests.
 Social responsibility refers to the
obligations and duties of business to the
society.

Aasim siddiqui (Lecturer) Dept. of Management

studies FIT Meerut
 Responsibility of Business
towards Different Sections of
Society

Aasim siddiqui (Lecturer) Dept. of Management

studies FIT Meerut
 Employees No organization can be successful without
the whole-hearted cooperation of the employees.
Responsibility of business towards employees is in the
form of training, promotion, proper selection fair wages,
safety, health, worker’s education, comfortable working
conditions, participation management etc. The
employees should be taken into confidence while taking
decisions affecting their interests. The workers should be
offered incentives for raising their performance. Mental,
physical, economic and cultural satisfaction of employees
should be taken care of.
 Owners: Business is accountable towards owners as
well such as managing business profitably, ensuring fair
and regular return on capital employed, consolidating
financial position of business, guaranteeing capital
appreciation so as to enable the owners to withstand
any business contingencies.
Aasim siddiqui (Lecturer) Dept. of Management
studies FIT Meerut
 Consumers: Responsibility of business towards
consumer extends to:
(i) Product. Quality goods should be produced and
supplied. Distribution system should make goods easily
available to avoid artificial scarcities and after sales
service should be prompt. Buying capacity and consumer
preferences should be taken into consideration while
deciding the manufacturing policies.
(ii) Marketing. To avoid being misled by wrong claims
about products through improper advertisements or
otherwise, the consumer should be provided full
information about the products including their adverse
effects, risks.
 Government: a number of legislatives are formed from
time to time by the government for proper regulation
and control of business. Businessmen should comply
with all legal requirements, execute government
contracts, and pay taxes honestly and in time.

Aasim siddiqui (Lecturer) Dept. of Management

studies FIT Meerut
 Community: Responsibility of business towards community
and society includes spending a part of profits towards civic
and educational facilities. Every industrial undertaking should
take steps to dispose off industrial wastes in such a way that
ecological balance is maintained and environmental pollution
is prevented.
 Environment: Business should protect the environment
which has acquired great importance all over the world.
Business can discharge the responsibility of protecting
environment in following way
(i) Preservation of Natural Resources. Scarce natural
resources should be used very carefully as these are
depleting at a very fast rate. The alternative sources can also
to found out to save natural resources like to save forests
alternative to wood and pulp can be found, the use of coal can
be reduced by alternative source of energy.
(ii) Pollution Control. Appropriate steps should be taken to
prevent environmental pollution and to preserve ecological
balance.

Aasim siddiqui (Lecturer) Dept. of Management

studies FIT Meerut
ARGUMENTS AGAINST SOCIAL RESPONSIBILITY
1. Deviation from Main Objective. The main goal of
business is profit maximization. Economic efficiency of
business is a top priority and a deviation from this would
divert the business from its mission.
2. Increase in Prices. Cost of social responsibility will be
passed on the society in the form of increased prices.
When a business house is required to spend money on
performing social obligations, the money spent on social
welfare will be collected from consumer only by way of
increased prices of goods and services. So ultimately it is
the consumer only who bears the burden of social
obligation.
3. Lack of Social Skill. Businessmen who are good at
managing business may not be good at solving social
problems. A businessman devotes all his energies in
running his business efficiently and smoothly. He may not
have the required skill to solve complex social problems.

Aasim siddiqui (Lecturer) Dept. of Management

studies FIT Meerut
ARGUMENTS FOR SOCIAL RESPONSIBILITY OF BUSINESS

 Public Requirements. Business can exist only with public support

and only if business fulfills needs of society. One of main arguments
for social responsibility is that public expectations from business
have changed. Therefore if business wishes to remain in existence
in long term it must respond to society’s needs and give society
what society wants.
 Favorable for Business. Performance of social obligation by
business will not only be in the interest of society but in its own
interest also.
 Socio-cultural Norms. In country like India where social and
cultural values have long and rich heritage, a business promoting
social equalities, healthy employer-employee relations, consumer
service will enjoy better social position. A business working against
traditional values will face criticism from society.
 Government Regulations. If business does not respond positively
to the needs of society, then it may be compelled to do so through
government laws and regulations. Before government stretches its
long arms, the business should discharge its obligations to society.
It has to regulate the business in public interest.

Aasim siddiqui (Lecturer) Dept. of Management

studies FIT Meerut