Chapter 2 - Ethics and Social Responsibility

Brief Overview

BUSINESS ETHICS DEFINED. Ethics is the study of right and wrong and of the morality of choices individuals make. Business ethics is the application of moral standards to business situations.

ETHICAL ISSUES. Business people face ethical issues every day, and some of these issues can be difficult to assess. These issues arise out of a business’s relationship with investors, customers, employees, creditors, and competitors.

Fairness and Honesty. Fairness and honesty in business are important ethical concerns. Businesspeople must obey all laws and regulations as well as refrain from knowingly deceiving, misrepresenting, or intimidating others.

Organizational Relationships. It may be tempting to place personal welfare above the welfare of others or of the organization. Relationships with customers and co-workers often create ethical problems such as taking credit for others’ ideas or work, not meeting one’s commitments, and pressuring others to behave unethically.

Plagiarism involves knowingly taking someone else’s words, ideas, or other original material without acknowledging the source.

Conflict of Interest. Conflict of interest results when a businessperson takes advantage of a situation for his or her own personal interest rather than for the employer’s interest.

Communications. Business communications, especially advertising, can present ethical questions. Advertisers must take precautions to guard against deception.

FACTORS AFFECTING ETHICAL BEHAVIOR. The factors that affect the level of ethical behavior in organizations are individual, social, and opportunity.

Individual Factors Affecting Ethics:

Individual Knowledge of an Issue. A decision maker with a greater amount of knowledge regarding a situation may take steps to avoid ethical problems, whereas a less-informed person may take action unknowingly that leads to an ethical quagmire.
Personal Values. An individual’s moral values and central, value-related attitudes also clearly influence his or her business behavior.
Personal Goals. The types of personal goals an individual aspires to and the manner in which these goals are pursued have a significant impact on that individual’s behavior in an organization.
Social Factors Affecting Ethics:
Cultural Norms. A person’s behavior in the workplace, to some degree, is determined by cultural norms, and these social factors vary from one culture to another.
Co-workers. The actions and decisions of co-workers constitute another social factor believed to shape a person’s sense of business ethics.
Significant Others. The moral values and attitudes of “significant others”—spouses, friends, and relatives—can also affect an employee’s perception of what is ethical and unethical behavior in the workplace.
Use of the Internet. Even the Internet presents new challenges for firms whose employees enjoy easy access to sites through convenient high-speed connections at work. An employee’s behavior online can be viewed as offensive to co-workers and possibly lead to lawsuits against the firm if employees engage in unethical behavior on controversial websites not related to their job.