Lecture 09 - Business Ethics and Social Responsibilities

Business Fundamentals (BUS3702) Lecture 9
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LECTURE 9
Lecture Title: Business Ethics and Social Responsibilities
Lecture Intended Learning Outcomes
On completion of the lecture, students are expected to be able to:

 understand the meaning of business ethics
 state the ethical principles in making decisions in the workplace
 explain what social responsibility is and the different view on society
responsibility
 identify the responsibilities of business to various stakeholders
 suggest the methods of encouraging environmental concern
Lecture Content
A. Business ethics
Ethics may be defined as the study of what is good and bad or right and
wrong. Ethics constitute a moral code of conduct governing individuals
and societies.
To provide guidelines for conducting business, many organizations have

developed codes of ethics for its staff. By referring to it, staff can know
what should be done and what should not be done in a particular situation.
B. Ethical Principles in the workplace
Society expects organizations to maintain ethical behavior both internally

and in relationships with other organizations externally. Ethical behavior is
expected in relationship with customers, the environment, and society.
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These expectations may be informal, or they may come in the form of

legal requirements.
A number of legal principles are shared widely among members of our

society. The following list may be helpful when you try to make decisions
in the presence of personal ethical conflicts.
1. The principle of honesty (Do not cheat)

We should not deceive other people. It is important because people
normally expect to be treated honestly.
2. The principle of harm (Do not harm others)

We should avoid doing things that harm other people or damage their
projects, efforts, or property.
3. The principle of fidelity (Keep promises and act faithfully)

We should fulfill our commitments and act faithfully. Fidelity is an
essential value for all human relationships and it lies at the core of
trust and cooperation.
4. The principle of autonomy (Permit and encourage others to act

rationally)
We have a duty to allow and enable other people to act in rational
ways.
5. The principle of confidentiality (Keep confidential information in

proper circles)
Some information should not be released to people outside certain
circles.
6. The principle of lawfulness (Do not violate the law)

We have the duty to obey the laws, to cooperate with those who act
lawfully in implementing and enforcing them.
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C. Social Responsibility (also called corporate social responsibility

CSR)
1. Two views on Social Responsibility
a. Arguments Against Increased Social Responsibility
 To maximize shareholder value is the ultimate goal of

business.
 Profit maximization and economic efficiency should be the
sole mission of business.
 It is the responsibility of government rather than individual
business to solve social problems.
b. Arguments for Increased Social Responsibility
 Business enterprises are sub systems of the larger society.

Therefore, it cannot neglect social issues.
 Business is resourceful so it is in a better position to solve
complex social problems.
 By fulfilling social responsibilities, business can create a
more stable environment that is conducive to their long-term
development.
2. Responsibilities to various parties
Business is socially responsible for different groups of stakeholders.
a. Customers
The responsibilities of modern business are mainly centered to

the following rights of consumers:
 Right to have safety products.

 Right to be informed about all relevant aspects of a product.
 Right to be heard – a channel for consumers to raise their
complaints and concerns.
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 Right to choose what they buy – a variety of choices

provided by different companies.
b. Employees
Business responsibilities towards employees may include:

 Ensuring health and safety at work.
 Fair treatment to all employees.
 Providing employment and promotion opportunities.
 Compliance with employment ordinance.
c. Shareholders
In making business decisions, a responsible company should

protect the interests of all shareholders.
d. Creditors
Company should provide creditors with accurate financial

information when asking for credit. When loans and credits are
due, companies should make payments to their creditors
promptly.
e. Government
Company should comply with laws and regulations when

conducting business. It also has an obligation to pay tax
promptly and honestly.
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f. Community
The responsibilities of business to the community include:

 Providing employment opportunities
 Enhancing the well-being of the community and
 Protecting the environment
D. Social responsibility to environment
There are different types of pollution which affect our environment such as
air pollution, water pollution and noise pollution.
It has been found that the following are the reasons for the deterioration of
the environment:
1. high population density

2. rapid development of technology
3. inadequate environmental legislation
4. poor enforcement of legislation concerning pollution
5. disregard of environmental issues in the past
6. selfishness of people
7. lack of cooperation between countries
E. Methods of encouraging environmental concern
1. Government intervention
a. formulating legislation.
b. providing facilities and services for the collection, treatment and
disposal of wastes.
c. raising public awareness on environmental issues.
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2. External pressure
External groups such as Greenpeace should exert considerable

amount of pressure on the environmental issues.
3. Self-regulation of companies
Companies should:
a. using recyclable materials for production.
b. choosing environmentally-friendly materials during the product
design stages.
c. promoting the environmental-friendly nature of their products.
d. supporting different types of environmental activities e.g.
sponsorship.
References
1. Cheng C.N., (2000), Introduction to Business Studies, Hong Kong

Educational Publishing Co.
2. Pride W.M., Hughes R.J., Kapoor J.R. (2005), Business, 8th edition,
Houghton Mifflin
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Business Fundamentals (BUS3702) Lecture 9

Lecture Title: Business Ethics and Social Responsibilities

Lecture Intended Learning Outcomes

On completion of the lecture, students are expected to be able to:

To provide guidelines for conducting business, many organizations have

B. Ethical Principles in the workplace

Society expects organizations to maintain ethical behavior both internally

These expectations may be informal, or they may come in the form of

A number of legal principles are shared widely among members of our

1. The principle of honesty (Do not cheat)

2. The principle of harm (Do not harm others)

3. The principle of fidelity (Keep promises and act faithfully)

4. The principle of autonomy (Permit and encourage others to act

5. The principle of confidentiality (Keep confidential information in

6. The principle of lawfulness (Do not violate the law)

C. Social Responsibility (also called corporate social responsibility

1. Two views on Social Responsibility

a. Arguments Against Increased Social Responsibility

 To maximize shareholder value is the ultimate goal of

b. Arguments for Increased Social Responsibility

 Business enterprises are sub systems of the larger society.

2. Responsibilities to various parties

Business is socially responsible for different groups of stakeholders.

The responsibilities of modern business are mainly centered to

 Right to have safety products.

 Right to choose what they buy – a variety of choices

Business responsibilities towards employees may include:

In making business decisions, a responsible company should

Company should provide creditors with accurate financial

Company should comply with laws and regulations when

The responsibilities of business to the community include:

D. Social responsibility to environment

1. high population density

E. Methods of encouraging environmental concern

External groups such as Greenpeace should exert considerable

1. Cheng C.N., (2000), Introduction to Business Studies, Hong Kong

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