Demanding Ethical and Socially Responsible Behavior

Chapter 4 - Demanding Ethical and Socially Responsible Behavior

1. Provide a definition of Ethics and an example of ethical behavior. Then explain the difference between Ethics and the Law: Are they different, the same, is one controlled by the other? Where do we initially learn ethics?

Answer: Ethics standards of moral behavior, that is, behavior accepted by society as right versus wrong. An ethical behavior would be for example government giving first time home buyers money to purchase a home. An unethical behavior would be the government charging 20% interest rate on their loans. Ethics are moral codes in general, laws are written, approved, and then enforced by the level of government where they were written. We learn ethics from our parents while growing up, they teach us what's right and wrong.

2. How can we tell if our business decisions are ethical?

Answer: You can tell if business decisions are ethical, an ethical decision would be something that will not affect your employees, and it makes them happy instead. For example throwing a party to keep staff happy is ethical, you can tell if your decision is not ethical when your employees are sad, and complaining on major pay cuts you decided without first taking an alternative route.

3. What is Management's role in setting ethical standards?

Answer: Managers often set formal ethical standards, but more important are the messages they send through their actions. Management's tolerance or intolerance of ethical misconduct influences employees more than any written ethics codes.

4. What is the difference between compliance-based and integrity-based ethics codes?

Answer: Compliance based ethic codes emphasize preventing unlawful behavior by increasing control and penalizing wrongdoers, Integrity based ethic codes define the organization's guiding values, create an environment that supports ethically sound behavior, and stress shared accountability.

5. What is Corporate Social Responsibility (CSR)? Provide three examples of CSR in action. What did Milton Friedman have to say about CSR and what is the current general reaction to what he said?

Answer: CSR: concern businesses have for the welfare of society, not just for their owners. Examples would be Mc Donald's offering scholarships to students, Wal-Mart helping save polar bears from going extinct, and Best Buy offering discounts if you recycle used cell phones and batteries to save the environment. Milton Friedman made a statement that the only social responsibility of business is to make money for stockholders, Current reaction is that businesses owe their existence to the societies they serve and cannot succeed in societies that fail but they still argue that CSR makes more money for investors in the long run.

6. How