1. Social Responsibility
CHAPTER 2
Business Ethics
and
Social Responsibility
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2. “The business of business is serving society, not just making money.”
Quotes of the Day
“The one and only social responsibility of business is to increase its profits.”
Milton Friedman (b. 1912),
Nobel laureate in economics
“The business of business is serving society, not just making money.”
Dayton Hudson corporate constitution

3. Ethics Ethics is the study of how people ought to act.
Law and ethics may not always agree...
Sometimes it is ethical to commit an illegal act...
And some legal acts are unethical!

4. Why Bother With Ethics?
There is little evidence that ethical behavior increases profits or that unethical behavior decreases profits… so why bother?
Society as a whole benefits by encouraging economic competition; no one wants to compete with unfair competitors.
People feel better when they behave ethically.
Unethical behavior can be costly, if there is public outrage leading to a boycott.

5. What is Ethical Behavior?
Questions to Ensure Ethical Behavior
What are the facts?
What are the critical issues?
Who are the stakeholders?
What are the alternatives?
What are the implications of each choice?
Are the alternatives legal?
Do they “look bad?”
What are the consequences of this choice?
Does this action violate important values?
Is more than one alternative right?

6. Responsibility To Society
Businesses must take a stand on sexual and racial exploitation in advertising.
Alternatives in advertisement ethics
Ignore ethics and try to create ads that sell the most product, no matter the underlying message.
Try generally to minimize exploitation.
Include a systematic, focused review of underlying messages as part of the development process.
Refuse to create any ads that are even potentially offensive.

7. Other Responsibilities
To customers
Is a business responsible if its decisions create a financial hardship for someone else? What if a decision leaves someone homeless?
To employees
Should employers be required to treat all employees the same in regard to benefits?
To shareholders
Questions are often raised about uses of a company’s profits -- distributed to shareholders, raising executives’ salaries, improving business?
Should a company be allowed to intentionally lower profits to improve in other areas?

8. Other Responsibilities (cont’d)
To -- and in -- foreign countries
Companies with operations in foreign countries are often criticized for deplorable working conditions and low wages.
Response to these criticisms is often that even low-wage jobs are better than destitution and that these jobs are the beginnings of economic growth.
Employees’ responsibility to company
Should employees report unethical behavior among co-workers? Should promotion decisions be made based on friendships?
These questions show the difficult choices that have to be made every day in the work place.

9. The Best Insurance
Even employees who are ethical in their personal lives may find it difficult to uphold their standard at work if those around them behave differently.
The surest way to infuse ethics throughout an organization is for top executives to behave ethically themselves.
Click here to view an online discussion of ethical issues.

10. “Ethical behavior offers significant advantages: society as a whole benefits; executives who behave ethically have happier, more fulfilled lives; and unethical behavior can destroy a company.”

11. Link to the Internet
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Internet Applications
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