Ethics and Social Responsibility

     Ethics is the study of right and wrong and of the morality of choices. Business ethics is the application of moral standards to business situations. Because ethical issues arise in business situations every day, the business person should make an effort to be fair, to consider the welfare of customers and others within a firm, to avoid conflicts of interest, and to communicate honestly.

     Investors, customers, employees, creditors, and competitors each exert specific pressures on a firm. Business people should not compromise their ethics to either satisfy or mislead any group. Because no international business code of ethics exists and payoffs are sometimes part of international business practices, U.S. firms may directly or indirectly face ethical dilemmas when engaged in foreign business operations.

     Any ethical action should be able to withstand open scrutiny. A person's individual values and experiences, the absence of an employer's code of ethics, and coworkers' values and behaviors all influence a person's ethical decision making. The government, trade associations, and individual firms can help establish a more ethical business environment An ethical employee working in an unethical environment may resort to whistle blowing to bring a particular situation to light.

     In a socially responsible business, management realizes that its activities have an impact on society and that impact is considered in the decision&-making process. Before the 1930s, workers, consumers, and government had very little influence on business activities; as a result, business gave little thought to its social responsibility. All this changed with the Great Depression. Government regulation, employee demands, and consumer awareness combined to create a demand that businesses act in a socially responsible manner.

     According to the economic model of social responsibility, society benefits most when business is left alone to produce profitable goods and services. According to the socioeconomic model, business has as much responsibility to society as it has to its owners. Most managers adopt a viewpoint somewhere between these two extremes.

     Three major areas of social concern to business and society are consumerism, employment practices, and the environment. The consumer movement has generally demanded&-and received&-attention from business in the areas of product safety, product information, product choices through competition, and the resolution of complaints about products and business practices.

     Legislation and public demand have prompted some businesses to correct past abuses in employment practices&-mainly with regard to minority groups. Affirmative action and training of the hard&-core unemployed are two types of programs that have been used successfully.

     Industry has contributed to the pollution of our land and water through the dumping of wastes, and to air pollution through vehicle and smokestack emissions. This contamination can be cleaned up and controlled, but the big question is who will pay for it. Present cleanup efforts are funded partly by government tax revenues, partly by business, and, in the long run, by consumers.

     A program to implement social responsibility in a business begins with total commitment by top management. The program should be carefully planned, and a capable director should be appointed to implement it. Social audits should be prepared periodically as a means of evaluating and revising the program.

Programs may be funded through federal incentives or through price increases.