Sims asserts that organizations wishing to behave ethically must do more than harbor good intentions. The guidelines require judges to consider aggravating and mitigating factors in determining sentences and fines. An individual or a company that consistently uses the test Whats the greatest good for me or the company? is not following the utilitarian test of the greatest good overall. WebFor more than 20 years, VistaPrint has helped small business owners, entrepreneurs and dreamers create custom designs and professional marketing. When individuals and organizations confront ethical problems, the core values decision model offered by Josephson generally works well (1) to clarify the gains and losses of the various stakeholders, which then raises ethical awareness on the part of the decision maker and (2) to provide a fairly reliable guide as to what the most ethical decision would be. Why is this refocusing needed? This view largely follows the idea of Milton Friedman that the duty of a manager is to maximize return on investment to the owners. Thus happiness is living according to the active (rather than passive) use of reason. js.src='https://platform.twitter.com/widgets.js'; Get access to all 14 pages and additional benefits: Course Hero is not sponsored or endorsed by any college or university. Call Number: EBOOK. Public goods require public revenues (taxes) and political support to be adequately maintained. Some of them have been around for centuries. As to the first two questions regarding virtues, a look at Michael Josephsons core values may prove helpful. Keep promiseskeep your word, honor your commitments, and pay your debts; return what you borrow. If there is no decision that satisfies the greatest number of core values, try to determine which decision delivers the greatest good to the various stakeholders. E.g., Enron. If all a company cares about is the bottom line, other values will diminish or disappear. But this redistribution would require a governing power to decide who gets what and when. Business and Government. Underestimating the costs of a certain decision to you or your company. Within the standard profit-maximizing model, corporations have long had to deal with the agency problem. Actions by top-level managersacting on behalf of the companyshould align with the shareholders, but in a culture all about winning and money, managers sometimes act in ways that are self- aggrandizing and that do not serve the interests of shareholders. Business in the Community. Article Google Scholar Okoye, A. Flexible shipping options are available. Business Ethics and Social Responsibility Business Ethics and Corporate Social Responsibility are all about bearing in mind the full weight of any corporate decision. But if everyone lied, then there would be no point to lying, since no one would believe anyone. Noting this last point, we can assume that these key people were motivated by maximizing profits and had lost sight of other goals for the organization. Underestimating the cost or harm of a certain decision to someone else or some other group of people. In a free enterprise, private-property system, a corporate executive is an employee of the owners of the business. This is the agency problem often discussed in corporate governance: how to get officers and other top management to align their own interests with those of the shareholders. Only people can have responsibilities. Such companies must implement policies that inculcate the corporate culture with ethical values. Yet another is between economic or social rights (adequate food, work, and environment) and political or civic rights (the right to vote, the right to equal protection of the laws, the right to due process). Thus other people have a duty to respect your rights and to not punch you in the nose. In brief, the utilitarian principle holds that an action is right if and only if the sum of utilities produced by that action is greater than the sum of utilities from any other possible act. Part-1: Importance of business ethics and corporate social responsibility The phrase "business ethics" is widely used to describe the study of right and wrong as they pertain to Because the directors of a corporation do not meet that often, its possible for the officers hired (top management, or the C-suite) to be selective of what the board knows about, and directors are not always ready and able to provide the oversight that the shareholders would like. Rights and duties exist not only between people and their governments but also between individuals. This view differs from that of the deontologists and that of the natural-law thinkers such as Gandhi, Jesus, or Martin Luther King Jr., who believed that rights come from God or, in less religious terms, from some transcendent moral order. That is, lying cannot be universalized, for it depends on the preexistence of honesty. To simplify, lets say that there are ethical and nonethical qualities among people in the United States. Note that in boosting sales by performing unnecessary services, Sears suffered very bad publicity. Welcome back. John Schwartz, An Enron Unit Chief Warned, and Was Rebuffed, New York Times, February 20, 2002. These ethics originate The ethics code at Enron seems to have been one of those 3-P codes that wind up sitting on shelvesPrint, Post, and Pray. Worse, the Enron board twice suspended the code in 1999 to allow outside partnerships to be led by a top Enron executive who stood to gain financially from them.[14]. 5 Corporate Social Responsibility and Business Ethics. . While this is a critical result of unethical behavior, the concept of business ethics andin the context of this bookglobal business ethics is much broader. People at the top tend to set the target, the climate, the beliefs, and the expectations that fuel behavior. The original idea behind these guidelines was for Congress to correct the lenient treatment often given to white-collar, or corporate, criminals. Heres a listing of the articles in the series published to date. Often, the culture of a corporation is the best defense against individuals within that firm who may be tempted to break the law or commit serious ethical misdeeds. In Corporations and Corporate Governance, you will read about the Sears Auto Centers case. {{#message}}{{{message}}}{{/message}}{{^message}}Your submission failed. Hence, the management strategy of Corporate Social Responsibility (CSR) was born. Most Fortune 500 companies have ethics hotlines and processes in place to find legal and ethical problems within the company. . 5.4.3.3 Killing the Messenger Where organizations no longer function, inevitably some employees are unhappy. Shareholders elect directors, who then hire officers to manage the company. Author: Ronald R. Sims Publisher: Greenwood Publishing Group ISBN: 9780275980399 Size: 37.41 MB Format: PDF, Kindle View: 1061 Access Book Description Ethical failures are rooted in leadership failure, the lack of a corporate culture in which ethical concerns have been integrated, and unresponsiveness to key organizational stakeholders. 5.4.2.2 Stakeholder Theory Stakeholders of a corporation include its employees, suppliers, customers, and the community. Regardless of what an individual business aims to accomplish with their venture, corporate social responsibility is one issue that all firms must cope up with. Even if your criticisms are strong and insistent, you have the right (and our government has the duty to protect your right) to speak freely. Section three, "CSR and Management: Critical Reflections", explores the integration of CSR theories and justifications into business management and business management theories. Others would recommend considering ethical problems from a variety of different perspectives. Let us know whats wrong with this preview of, Published It considers all humans as equal, not in the physical, social, or economic sense, but equal before God, whether they are male, female, Pygmy, Eskimoan, Islamic, Christian, gay, straight, healthy, sick, young, or old. In management, people will often employ a form of utility reasoning by projecting costs and benefits for plan X versus plan Y. WebYou may have arrived at this page because you followed a link to one of our old platforms that cannot be redirected. The duty to act in accord with these norms is one that bears no relation to the expected consequences of the action. We cannot guarantee that every ebooks is available! The entire settlement cost Sears $30 million. There are two requirements for a rule of action to be universal: consistency and reversibility. Saying that someone or some organization is law-abiding does not mean the same as saying a person or company is ethical. Describe the various major theories about ethics in human decision making. After reading this section, you should be able to do the following: Most of those who write about ethics do not make a clear distinction between ethics and morality. Consumers, Corporate Social If there are legal prohibitions against cheating the Medicare program, it is because people (legislators or their agents) have collectively decided that cheating Medicare is wrong. Definition: Corporate social responsibility refers to a sustainable business model where the company is accountable and responsible towards the social, cultural, environmental and economic aspects of the society.The companies cannot solely function for profit generation, it also needs to contribute to society and the public. Corporate social responsibility (CSR) refers to actions that businesses take or refrain from taking based on the impact of those actions on the external environment and community. Want to create or adapt books like this? Even board members are susceptible to misalignment of interests; for example, board members might resist hostile takeover bids because they would likely lose their perks (short for perquisites) as directors, even though the tender offer would benefit stockholders. That said, it does not follow that students (or managers) would necessarily act in accord with the results of the core values decision process. Among other attempted realignments, the use of stock options was an attempt to make managers more attentive to the value of company stock, but the law of unintended consequences was in full force; managers tweaked and managed earnings in the bubble of the 1990s bull market, and managing by numbers became an epidemic in corporations organized under US corporate law. Consider reversibility: if you make a decision as though you didnt know what role or position you would have after the decision, you would more likely make an impartial oneyou would more likely choose a course of action that would be most fair to all concerned, not just you. This figure, though somewhat oversimplified, shows the basic legal structure of a corporation under Delaware law and the laws of most other states in the United States. If the CEO is firm about acting ethically, others in the organization will take their cues from him or her. by Cengage Learning. For example, a CEO might trade insider information to the detriment of the companys shareholders. Entrepreneurship. See Robert Jackall, Moral Mazes: The World of Corporate Managers (New York: Oxford University Press, 1988). Consider which stakeholders gain or lose with each decision. of action to be universal: consistency and reversibility. Others see morality as the subject of a field of study, that field being ethics. By practicing corporate social Interested students may wish to explore the work of Amitai Etzioni. James OToole and Don Mayer, eds., Good Business: Exercising Effective and Ethical Leadership (London: Routledge, 2010). Warren Bennis, A Corporate Fear of Too Much Truth, New York Times, February 17, 2002. Notice also that these six core values share something in common with other ethical values that are less universally agreed upon. 5. But do they have explicit social responsibilities? For Kantian thinkers, this basic principle of equality means that we should be able to universalize any particular law or action to determine whether it is ethical. But if I said that he is always in control or always at the top of his game, you would probably not make inferences or assumptions about his character or ethics. The loss of goodwill toward Sears Auto Centers was real, even though the total amount of money lost cannot be clearly accounted for. What does it mean to say that the corporate executive has a social responsibility in his capacity as businessman? Business Ethics and Corporate Social Responsibility, Issues in Business Ethics and Corporate Social Responsibility, Ethics and Corporate Social Responsibility, Business Ethics and Corporate Sustainability, Brinkley American History Connecting With The Past Updated Ap Edition 2017 15e Student Edition, Traditional Witchcraft for the Woods and Forests, Secret Thoughts of an Unlikely Convert An English Professor s Journey into Christian Faith, : International Conference Business Ethics and Corporate Social Responsibility,International Conference Business Ethics and Corporate Social Responsibility. Several authors have provided Finally, we should note that the well-known Golden Rule, Do unto others as you would have them do unto you, emphasizes the easier of the two universalizing requirements: practicing reversibility (How would I like it if someone did this to me?). Business ethics can thus be defined as the social responsibility of a company to their customers and retailers. This is because of the increased regulatory pressures, scandals in the press, and the new challenges that are being thrown up by new technologies. The Business and Society (BAS) 360 book series is an annual publication targeting cutting-edge developments in the broad business and society field, such as stakeholder management, This is a right granted by the state, a right granted for good and practical reasons for encouraging capital and innovation. Understanding the varied moral perspectives and values in public policy debates is a clarifying benefit in following or participating in these important discussions. An unparalleled range of case studies, including chapter cases and longer premium cases supplied by HBR, Ivey and ECCH, combine with a full set of online supporting resources to make this the complete introduction to business ethics in a rapidly evolving world. There are several well-respected ways of looking at ethical issues. It is only because honesty works well for society as a whole and is generally practiced that lying even becomes possible! In nine out of ten cases, step 5 in the decision process is not needed. Of course, the corporate executive is also a person in his own right. That is, they are commonly seen as moral or ethical qualities, unlike the qualities on the first list. The essays in this volume examine the emergence of the concept of corporate social responsibility, and the uses that have been made of the language of corporate responsibility to explore the business/society relationship. Understand the principal philosophies of ethics, including utilitarianism, duty-based ethics, and virtue ethics. What is ethical behavior? Ethics codes have been put in placepartly in response to federal sentencing guidelines and partly to encourage feedback loops to top management. For example, Eliot Spitzer and Bill Clinton are more readily remembered by people for their last, worst acts than for any good they accomplished as public servants. Then, assuming you have all the needed information, the decision process is as follows: It is often helpful to identify who (or what group) is the most important stakeholder, and why. Consider whether they strike you as true or whether you would need to know more in order to make a judgment. But as owners, shareholders have the ultimate power to replace nonperforming or underperforming directors, which usually results in changes at the C-suite level as well. The following are some frequent mistakes that people make in applying what they think are utilitarian principles in justifying their chosen course of action: In contrast to the utilitarian perspective, the deontological view presented in the writings of Immanuel Kant purports that having a moral intent and following the right rules is a better path to ethical conduct than achieving the right results. Andrew Carnegie. Articles in the final section of the volume apply the concept of corporate social responsibility, and the theoretical frameworks and analytical tools to which it has given rise, to the examination and resolution of specific social issues arising out of the economic activities of corporations. Ethics in Contemporary Business Ethics are the principles and standards of moral behavior that are accepted by society as right Kant therefore uses universalizing as a form of rational thought that assumes the inherent equality of all human beings. Shareholder view (1970): the social responsibility of business is to increase its profit, Stakeholder view (stakeholder theory 1983) Business & ethics have to got together. Begin considering how the major theories about ethics apply to difficult choices in life and business. Coupled with a broad introduction by Dr. David Weitzner, a professor of management at York University, this book provides students with the essential information they need to assess business practices through the lens of ethical decision-making and corporate social responsibility. In working as a group, we often form an us versus them mentality. (2) How useful is a list of agreed-upon virtues anyway? Consider James Alexander at Enron Corporation, who was deliberately shut out after bringing problems to CEO Ken Lays attention. He may feel impelled by these responsibilities to devote part of his income to causes he regards as worthy, to refuse to work for particular corporations, even to leave his job. What follows is a series of observations about corporations, ethics, and corporate culture. Many companies will claim that it is one bad apple that has caused the problem; the guidelines invite these companies to show that they are in fact tending their orchard well. Assuming that all values can be reduced to money. But with this right comes a related duty, not clearly stated at law, but assumed when a charter is granted by the state: that the corporate form of doing business is legal because the government feels that it socially useful to do so. Utilitarianism[1] is a prominent perspective on ethics, one that is well aligned with economics and the free-market outlook that has come to dominate much current thinking about business, management, and economics. It is designed to maximize profits but is focused more on its higher purpose and does not fixate solely on the bottom line. Fun to be with? The African philosophy of Ubuntu is typically characterised as a communitarian philosophy that emphasises virtues such as compassion, tolerance and harmony. Download Business Ethics And Corporate Social Responsibility full books in PDF, epub, and Kindle. 5.4.3.6 Managing by the Numbers If you manage by the numbers, there is a temptation to lie about those numbers, based on the need to get stock price ever higher. BUSINESS ETHICS AND CORPORATE SOCIAL RESPONSIBILITY Shareholder view vs Stakeholder view Shareholder view (1970): the social responsibility of business is to increase its profit Stakeholder view (stakeholder theory 1983) Business & ethics have to got together. Business Ethics & Corporate Social Responsibility PDF Download. The short-term gains were easy to measure; long-term consequences seldom are. Second, the best way to maximize profit might be to adopt a more stakeholder-centric view of business! The qualities on the second list have something in commonthey are distinctively ethical characteristics. Web3.4 Corporate Social Responsibility (CSR) Key Terms; Summary; 4 Three Special Stakeholders: Society, the Environment, and Government. This facilitates a business environment built around the practical regulations and transparency necessary to ensure ethical and responsible business practice. WebThe modern era of CSR, or social responsibility as it was often called, is most appropriately marked by the publication by Howard R. Bowen of his landmark book Social Responsibilities of the Businessman in 1953. After reading this chapter, you should be able to do the following: Few subjects are more contentious or important as the role of business in society, particularly, whether corporations have social responsibilities that are distinct from maximizing shareholder value. Tony and I served on the Boise City Ethics Commission from its formation in 2005 until 2010. geoffmbaker. This authoritative book includes cutting-edge insights from leading European and North American scholars who reflect upon business ethics. Another common failing is to see only one or two options that seem reasonable. Originally intended as a guide for legislators charged with seeking the greatest good for society, the utilitarian outlook may also be practiced individually and by corporations. An action (or set of actions) is generally deemed good or right if it maximizes happiness or pleasure throughout society. But as owners, shareholders have the ultimate power to replace nonperforming or underperforming directors, which usually results in changes at the C-suite level as well. We will venture a definition of ethics, but for our purposes, ethics and morality will be used as equivalent terms. 5.4.2.1 Maximizing Profits: Milton Friedman Economist Milton Friedman is often quoted as having said that the only moral duty a corporation has is to make the most possible money, or to maximize profits, for its stockholders. As the international magazine The Economist noted in 2008, CSR has arrived (19 January 2008, p. 24). The journal covers topics in the areas of corporate governance, human resource management, marketing, organizational behavior, organization theory, strategy, technology management, and related areas. Sims offers practical solutions for mitigating damage and preventing such problems from happening in the first place. Ethics would be morality as applied to any number of subjects, including journalistic ethics, business ethics, or the ethics of professionals such as doctors, attorneys, and accountants. As a person, he may have other responsibilities that he recognizes or assumes voluntarilyto his family, his conscience, his feeling of charity, his church, his clubs, his city, his country. There is no universally accepted way for developing an organization where employees feel valued, respected, and free to openly disagree; where the actions of top management are crystal clear; and where all the employees feel loyal and accountable to one another. Start by marking Business Ethics & Corporate Social Responsibility as Want to Read: Error rating book. You can, in short, have a number of admirable qualities (brilliance, power, wealth) that are not per se virtuous. Philanthropic emerged as charitable and individual actions based on ethical and religious beliefs, whereas CSR is conducted by enterprise and guided by both ethical and strategic, Social responsibilities of the Businessman, Sustainable Development (main root of CSR), 1987: Our Common Future Brundtland Report, 2000: Millennium Summit of the United Nations (MDGs), 2015: UN Sustainable Development Summit (SDGs), Development that meets the needs of the present without compromising the ability of future generations to, meet their own needs (Brundtland report, 1987), It seeks to reconcile economic development with the, To promote gender equality and empower women, To combat HIV/AIDS, malaria, and other diseases, To develop a global partnership for development, Access to our library of course-specific study resources, Up to 40 questions to ask our expert tutors, Unlimited access to our textbook solutions and explanations. Your right to be free from physical assault is protected by the law in most states, and when someone walks up to you and punches you in the nose, your rightsas set forth in the positive law of your statehave been violated. And since a human is a reasoning animal, happiness must be associated with reason. It is found in such diverse places as cost-benefit analysis in administrative and regulatory rules and calculations, environmental impact studies, the majority vote, product comparisons for consumer information, marketing studies, tax laws, and strategic planning. The CEO told one group of business ethicists that the uproar had taken them by surprise; they thought they had done everything right, but it seemed there was a ghost in the machine. That ghost was consumers, NGOs, and the media, all of whom objected to the companys seeming lack of moral sensitivity. And, over time, it has clouded judgments about what is acceptable corporate behavior. File Type PDF Chapter 4 Business Ethics And Social Responsibility A substantial portion of the book is devoted to corporate ethics and explores issues that encompass corporate responsibility in the context of compliance, corporate social responsibility, corporate citizenship, and creating shared value. How- ever, business organizations ignore the ethical and social expectations of consumers, employees, the media, nongovernment organizations (NGOs), government officials, and socially responsible investors at their peril. A deontologist like Kant is likely to believe that ethical action arises from doing ones duty and that duties are defined by rational thought. Business Ethics and Social Responsibility Business Ethics and Corporate Social Responsibility are all about bearing in mind the full weight of any corporate decision. Athletic? Utilitarianism emphasizes not rules but results. Citizenship: Play by the rules, obey laws; do your share, respect authority, stay in- formed, vote, protect your neighbors, pay your taxes; be charitable, help your community; protect the environment, conserve resources. Often, the culture of a corporation is the best defense against individuals within that firm who may be tempted to break the law or commit serious ethical misdeeds. Nobody likes to visit a business that they feel does not appreciate them, and nobody likes to work for a company that does not value employees. Learn more about our environmental and social responsibility program. Corporate social responsibility, often abbreviated "CSR," is a corporation's initiatives to assess and take responsibility for the company's effects on environmental and social wellbeing. 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