Business Ethics
Corporate Social Responsibility & Ethical Decision Making
In This Lesson
Ethics Theories
What is Business Ethics?
The study of proper business policies and practices regarding potentially controversial subjects including corporate governance, insider trading, bribery, discrimination, and social responsibility.
Utilitarianism
Actions are right if they promote the greatest happiness for the greatest number.
Focus: Consequences and outcomes
Example: A company may lay off 10 workers to save 100 jobs.
Deontology (Kant's Ethics)
Actions are right based on duties and rules, regardless of consequences.
Focus: Duties, rules, and obligations
Example: Never lie, even if lying could produce better outcomes.
Virtue Ethics
Focuses on the character of the moral agent rather than specific actions.
Key Virtues: Honesty, integrity, fairness, courage, compassion
Question: "What would a virtuous person do?"
Rights-Based Ethics
Actions are ethical if they respect the rights of individuals.
Focus: Individual rights and freedoms
Example: Right to privacy, fair wages, safe working conditions
Corporate Social Responsibility (CSR)
Definition
A business model where companies integrate social and environmental concerns into their operations and interactions with stakeholders.
Carroll's CSR Pyramid
Philanthropic
Be a good corporate citizen (donate, volunteer)
Ethical
Be ethical (do what is right, fair)
Legal
Obey the law (follow regulations)
Economic
Be profitable (foundation of business)
Benefits of CSR
- Enhanced brand reputation
- Customer loyalty
- Employee engagement
- Risk management
- Competitive advantage
CSR Activities
- Environmental sustainability
- Community development
- Employee welfare programs
- Ethical sourcing
- Charitable donations
Common Ethical Issues in Business
Workplace Ethics
- Discrimination & harassment
- Privacy violations
- Unfair labor practices
- Unsafe working conditions
Financial Ethics
- Fraud and embezzlement
- Insider trading
- False financial reporting
- Tax evasion
Marketing Ethics
- False advertising
- Deceptive pricing
- Targeting vulnerable groups
- Greenwashing
Environmental Ethics
- Pollution and waste disposal
- Resource depletion
- Climate change impact
- Sustainable practices
Ethical Decision-Making Process
- Identify the ethical issue
- Gather relevant facts
- Identify affected stakeholders
- Consider alternative actions
- Make a decision and test it
- Implement and reflect
Stakeholder Management
What are Stakeholders?
Any individual or group that can affect or is affected by the organization's actions, decisions, policies, practices, or goals.
Internal Stakeholders
- Owners/Shareholders: Profit, growth
- Employees: Fair wages, job security
- Managers: Authority, resources
External Stakeholders
- Customers: Quality, value, service
- Suppliers: Fair payment, contracts
- Community: Jobs, environment
- Government: Taxes, compliance
Balancing Stakeholder Interests
Different stakeholders often have conflicting interests. Effective management requires:
- Identifying all stakeholders
- Understanding their needs and expectations
- Prioritizing based on power and interest
- Communicating openly and transparently
- Finding win-win solutions when possible