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must be attributed to OpenStax, Rice University and any changes must be noted.
CHAPTER TWO
Making Ethical Decisions and Managing a Socially Responsible
Business
CHAPTER OVERVIEW
Ethics is a set of moral standards for judging whether something is right or wrong. A
discussion of ethics begins with recognizing unethical business activities, followed by
what do you once you realize an action is unethical. Ethical issues arise when is a
situation where someone must choose between a set of actions that may be ethical or
unethical. Organizations reduce the potential for unethical conduct through several
methods. Once of the most common ways companies raise employee ethical awareness
is through establishing a code of ethics.
Social responsibility, on the other hand, is the concern of businesses for the welfare of
society. Businesses meet their social responsibilities to various stakeholders – the
public, consumers, employees, and stockholders – in various ways.
Today, among the global and domestic trends in ethics and social responsibility,
corporate philanthropy is shifting away from simply giving to any needy group and is
focused instead on strategic giving; which is based on a firm’s mission and goals.
Another trend is toward a new social contract between employer and employee. As the
world increasingly becomes a global community, multinational corporations are
expected to assume a global set of ethics and social responsibility.
LEARNING OUTCOMES
1. What philosophies and concepts shape personal ethical standards?
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 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. How can organizations encourage ethical business behavior?
, 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.
3. What is corporate social responsibility?
Corporate social responsibility is the concern of businesses for the welfare of
society. It consists of obligations beyond just making a profit. Social
responsibility also 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 clear majority of
organizations act legally and try to be socially responsible.
4. How do businesses meet their social responsibilities to various 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
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.
5. What are the trends in ethics and social responsibility?
Today, corporate philanthropy is shifting away from simply giving to any needy
group and is focusing instead on strategic giving, in which the philanthropy
relates more closely to the corporate mission or goals and targets donations to
areas where the firm operates. Corporate philanthropy is coming under
increasing attacks from special-interest groups, however.
A second trend is toward a new social contract between employer and
employee. Instead of the employer having the sole responsibility for maintaining
jobs, now the employee must assume part of the burden and find ways to add
value to the organization.
As the world increasingly becomes a global community, multinational
corporations are now expected to assume a global set of ethics and
responsibility. Global companies must understand local customs. They should
September 4, 2018 2
must be attributed to OpenStax, Rice University and any changes must be noted.
CHAPTER TWO
Making Ethical Decisions and Managing a Socially Responsible
Business
CHAPTER OVERVIEW
Ethics is a set of moral standards for judging whether something is right or wrong. A
discussion of ethics begins with recognizing unethical business activities, followed by
what do you once you realize an action is unethical. Ethical issues arise when is a
situation where someone must choose between a set of actions that may be ethical or
unethical. Organizations reduce the potential for unethical conduct through several
methods. Once of the most common ways companies raise employee ethical awareness
is through establishing a code of ethics.
Social responsibility, on the other hand, is the concern of businesses for the welfare of
society. Businesses meet their social responsibilities to various stakeholders – the
public, consumers, employees, and stockholders – in various ways.
Today, among the global and domestic trends in ethics and social responsibility,
corporate philanthropy is shifting away from simply giving to any needy group and is
focused instead on strategic giving; which is based on a firm’s mission and goals.
Another trend is toward a new social contract between employer and employee. As the
world increasingly becomes a global community, multinational corporations are
expected to assume a global set of ethics and social responsibility.
LEARNING OUTCOMES
1. What philosophies and concepts shape personal ethical standards?
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 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. How can organizations encourage ethical business behavior?
, 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.
3. What is corporate social responsibility?
Corporate social responsibility is the concern of businesses for the welfare of
society. It consists of obligations beyond just making a profit. Social
responsibility also 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 clear majority of
organizations act legally and try to be socially responsible.
4. How do businesses meet their social responsibilities to various 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
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.
5. What are the trends in ethics and social responsibility?
Today, corporate philanthropy is shifting away from simply giving to any needy
group and is focusing instead on strategic giving, in which the philanthropy
relates more closely to the corporate mission or goals and targets donations to
areas where the firm operates. Corporate philanthropy is coming under
increasing attacks from special-interest groups, however.
A second trend is toward a new social contract between employer and
employee. Instead of the employer having the sole responsibility for maintaining
jobs, now the employee must assume part of the burden and find ways to add
value to the organization.
As the world increasingly becomes a global community, multinational
corporations are now expected to assume a global set of ethics and
responsibility. Global companies must understand local customs. They should
September 4, 2018 2
