Business Ethics and Social Responsibility

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Business ethics can be defined as an ethical or disciplined behavior observed by business organizations. It helps us to understand the right and wrong path. It is profitable for a company to be ethical, in order to keep its talented employees, loyal customers and huge investors with itself. Being ethical simply means to be honest, obey laws and regulations, compete fairly and do no harm to the company's stakeholders. (p.41)

How to recognize an ethical organization? 

An ethical organization merely follows the ethical behavior observed by business organizations. It will always treat its stakeholders fairly and have a fair competition with its competitors. The company will engrave the core values in every member and hold every individual responsible for his/her deeds. If the company fails to observe these ethics, it might simply get out of the race for experimenting an unethical behavior. (p.42)

Ethical Dilemma and Ethical Decisions

Ethical dilemma is a situation where the management has to take decision between two non-ideal choices. The appropriate decision can be chosen by following these steps- identify the problem, recognize the practical options, consider the effect of each option on stakeholders, establish criteria for determining the most appropriate action, choose the best option. Ethical dilemma can be solved with the help of ethical decisions. It involves the management to ask whether the action is illegal, is it unfair to some parties, will I feel bad about the decision taken, will I be ashamed and whether it can embarrass me. 

Ethical Issues

Ethical issues in an organization are categorized as- bribes, conflict of interests, conflict of loyalty, issues of honesty and integrity and whistleblowing. Bribe is often mistaken to be a gift, so it is necessary to understand the difference between the two to avoid justification for unethical behavior. Conflict of interests occur when an individual's personal interest conflicts with the professional interest. e.g. A board member is trying to give away business of a company to someone of acquaintance with him. Conflict of loyalty can be defined as a situation where you either have to be loyal to your employer or your friend. The answer to this should always be employer. Issues of Honesty and integrity requires an employee to be honest to himself as well as the company and uphold integrity. Whistleblowing helps in identifying the illegal and unethical behavior in an organization. However, there are rationalizations for unethical behavior such as, ?The act is not illegal, it is in favor of the company, no one will discover it and the company will bear the entire responsibility.'

 How can ethical behavior be created and sustained?

The top executives of a company play a role model for their sub-ordinates in terms of ethical behavior. The managers and owners should promote an atmosphere of discipline and encourage their employees to maintain an ethical demeanor within the organization. The employees should inform the management about any unethical behavior observed in the company without being afraid. If an unethical behavior is noticed, the manager must hold that sub-ordinate responsible for it and take a suitable action. The managers can introduce a code of conduct for the employees for them to understand the company policies of ethical behavior. If these actions of disciplined and fair behavior are executed by managers, a strong ethical organization will be created and sustained. (p.61-63)

Corporate Social Responsibility

A Corporate Social Responsibility can be defined as an organization approach towards its stakeholders and the society in which it exists and functions. The organization is responsible to its stakeholders like owners, employees, suppliers and communities. The owners invest their capital in the company and hence it is the management's responsibility to run the company efficiently. It is also liable for protecting and increasing the company's assets. The employees are an important asset of the company and must be provided with a safe working environment, fair and proper compensation and equal treatment free from discrimination. The company has a huge responsibility towards the community in which it exists, as it allows the organization to function and earn profits. The company should behave responsibly and respect the consumer rights. It should actively participate in community programs and volunteering activities to help the society nurture. (Exforsys, Corporate Social Responsibility towards Stakeholders, Dec 2015)

Threats to Natural Environment

Pollution of land, air and water is a dangerous threat to the natural environment. However, these threats have been caused due to carelessness of business industries. Land has been polluted by dumping waste into landfills, practicing deforestation and destroying wildlife habitat, mining and extinguishing the wetlands. Toxic gases released from vehicles, factories and power plants have polluted air and increased global warming. Effluents released in the water from factories is destroying the marine habitat. These threats are a warning bell to the industries and measures to protect the environment have to be taken. Sustainability is being implemented by several companies to support the triple bottom line of profit, people and planet. Initiatives are taken by different agencies to conserve water. Companies are protecting the environment by disposing the waste in an efficient manner. These steps will lead to develop a sustainable business. (p.76-78)


Sustainability can be defined as a principle of working and earning profits for the business without harming or exploiting the natural environment. The companies have identified the threat of exploiting the natural resources for their own benefits and hence have embraced sustainability. Bureo is an example of sustainable business. The fishing nets accumulated near Chile's coast was destroying the marine habitat. Three friends who now own Bureo took an initiative of converting these nets into skateboards and surfboards and thus, laid an example of a sustainable business. This project towards sustainability has saved the marine habitat from polluting. (Kathryn C. Horning, Performance with Purpose, Nov 2016)

Corporate Responsibility

There are 5 stages of corporate responsibility- defensive, compliant, managerial, strategic and civil. Defensive- The company rejects all allegations and refuse to take responsibility for its criticism over a problem. Compliant- The company adopts certain policies to protect its reputation. Managerial- It takes responsibility for the problem and tries to find a solution. Strategic- It uses various strategies which help them achieve a competitive edge. Civil- The company recognizes that other companies too should follow their objectives for the well-being of the society. (p.83-84)

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Business Ethics And Social Responsibility. (2020, Mar 23). Retrieved February 23, 2024 , from

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