1
Introduction to Business
Chapter 2: Making Ethical Decisions and Managing a Socially
Responsible Business
2.1 Understanding Business Ethics
Ethics is a set of moral standards for judging whether something is right or wrong. A
utilitarianism approach to setting personal ethical standards focuses on the consequences of an
action taken by a person or organization. According to this approach, people should act so as to
generate the greatest good for the greatest number. Every human is entitled to certain rights
such as freedom and the pursuit of happiness. Another approach to ethical decision-making is
justice, or what is fair according to accepted standards.
2.1 Review Questions
1. Define the following terms:
a. Ethics
b. Justice
c. Utilitarianism
d. Deontology
2. What is an ethical issue?
3. Why is it important for businesses to identify ethical issues?
4. List 3-5 categories of unethical business activities.
5. How does our own ethical philosophy influence our decision making of unethical
business activities?
6. What are problems associated with Utilitarianism?
7. Why might a person uphold the philosophy of deontology?
8. What are some of our human and legal rights?
2.2 How Organizations Influence Ethical Conduct
Top management must shape the ethical culture of the organization. They should lead by
example, offer ethics-training programs, and establish a formal code of ethics.
2.2 Review Questions
1. How do people choose between right and wrong?
a. What influences them?
2. What role do leaders and managers play in establishing ethical conduct?
3. What type of ethics training programs seem to be the most effective and why?
For more free, peer-reviewed, openly licensed resources visit OpenStax.org.
, 2
4. What is the purpose of a code of ethics?
a. Are they effective?
5. How can you make the right ethical decision?
a. Why does it matter how the decision makes you feel?
b. Why should you care if your decision is posted on the front page of a newspaper
or on social media?
2.3 Managing a Socially Responsible Business
Corporate social responsibility is the concern of businesses for the welfare of society as a
whole. It consists of obligations beyond just making a profit and goes beyond what is required
by law or union contract. Companies may engage in illegal and irresponsible behavior,
irresponsible but legal behavior, or legal and responsible behavior. The vast majority of
organizations act legally and try to be socially responsible.
2.3 Review Questions
1. Define corporate social responsibility.
2. What two important points about CSR do you need to remember?
3. What are the two basic dimensions of social responsibility, and how do they differ?
4. What is the benefit of a company being both legal and responsible?
2.4 Responsibilities to Stakeholders
Stakeholders are individuals or groups to whom business has a responsibility. Businesses are
responsible to employees. They should provide a clean, safe working environment.
Organizations can build employees’ self-worth through empowerment programs. Businesses
also have a responsibility to customers to provide good, safe products and services.
Organizations are responsible to the general public to be good corporate citizens. Firms must
help protect the environment and provide a good place to work. Companies also engage in
corporate philanthropy, which includes contributing cash, donating goods and services, and
supporting volunteer efforts of employees. Finally, companies are responsible to investors.
They should earn a reasonable profit for company owners.
2.4 Review Questions
1. Define the following terms
a. Stakeholders
b. Corporate philanthropy
c. Social investing
2. Who are considered stakeholders of a business?
3. What is a business's fundamental responsibility to employees?
For more free, peer-reviewed, openly licensed resources visit OpenStax.org.
Introduction to Business
Chapter 2: Making Ethical Decisions and Managing a Socially
Responsible Business
2.1 Understanding Business Ethics
Ethics is a set of moral standards for judging whether something is right or wrong. A
utilitarianism approach to setting personal ethical standards focuses on the consequences of an
action taken by a person or organization. According to this approach, people should act so as to
generate the greatest good for the greatest number. Every human is entitled to certain rights
such as freedom and the pursuit of happiness. Another approach to ethical decision-making is
justice, or what is fair according to accepted standards.
2.1 Review Questions
1. Define the following terms:
a. Ethics
b. Justice
c. Utilitarianism
d. Deontology
2. What is an ethical issue?
3. Why is it important for businesses to identify ethical issues?
4. List 3-5 categories of unethical business activities.
5. How does our own ethical philosophy influence our decision making of unethical
business activities?
6. What are problems associated with Utilitarianism?
7. Why might a person uphold the philosophy of deontology?
8. What are some of our human and legal rights?
2.2 How Organizations Influence Ethical Conduct
Top management must shape the ethical culture of the organization. They should lead by
example, offer ethics-training programs, and establish a formal code of ethics.
2.2 Review Questions
1. How do people choose between right and wrong?
a. What influences them?
2. What role do leaders and managers play in establishing ethical conduct?
3. What type of ethics training programs seem to be the most effective and why?
For more free, peer-reviewed, openly licensed resources visit OpenStax.org.
, 2
4. What is the purpose of a code of ethics?
a. Are they effective?
5. How can you make the right ethical decision?
a. Why does it matter how the decision makes you feel?
b. Why should you care if your decision is posted on the front page of a newspaper
or on social media?
2.3 Managing a Socially Responsible Business
Corporate social responsibility is the concern of businesses for the welfare of society as a
whole. It consists of obligations beyond just making a profit and goes beyond what is required
by law or union contract. Companies may engage in illegal and irresponsible behavior,
irresponsible but legal behavior, or legal and responsible behavior. The vast majority of
organizations act legally and try to be socially responsible.
2.3 Review Questions
1. Define corporate social responsibility.
2. What two important points about CSR do you need to remember?
3. What are the two basic dimensions of social responsibility, and how do they differ?
4. What is the benefit of a company being both legal and responsible?
2.4 Responsibilities to Stakeholders
Stakeholders are individuals or groups to whom business has a responsibility. Businesses are
responsible to employees. They should provide a clean, safe working environment.
Organizations can build employees’ self-worth through empowerment programs. Businesses
also have a responsibility to customers to provide good, safe products and services.
Organizations are responsible to the general public to be good corporate citizens. Firms must
help protect the environment and provide a good place to work. Companies also engage in
corporate philanthropy, which includes contributing cash, donating goods and services, and
supporting volunteer efforts of employees. Finally, companies are responsible to investors.
They should earn a reasonable profit for company owners.
2.4 Review Questions
1. Define the following terms
a. Stakeholders
b. Corporate philanthropy
c. Social investing
2. Who are considered stakeholders of a business?
3. What is a business's fundamental responsibility to employees?
For more free, peer-reviewed, openly licensed resources visit OpenStax.org.
