Understanding Business Ethics and Social Responsibility

Ethics

Society's definition of norms, board guidelines used to create laws.

Business ethics

The principles and standards that determine acceptable conduct in business organizations.

Personal ethics

An individual's values, principles, and standards of conduct.

Social responsibility

A business's obligation to maximize its positive impact and minimize its negative impact on society.

Legal responsibility

One of the four categories of social responsibility.

Ethical responsibility

One of the four categories of social responsibility.

Philanthropic responsibility

One of the four categories of social responsibility.

Economic responsibility

One of the four categories of social responsibility.

Conflict of interest

When an individual must choose whether to advance the individual's own personal interests or those of others.

Insider trading

The illegal practice of trading on the stock exchange to one's own advantage through having access to confidential information.

Bribery

Offering something of value to influence the actions of an official or other person in charge.

Dishonesty

The act of being untruthful or deceptive.

Plagiarism

Taking someone else's work and presenting it as your own without mentioning the source.

Professional codes of ethics

Formalized rules and standards that describe what the company expects of its employees.

Business Law

Guidelines, rules, and regulations that govern the conduct of business.

Federal Trade Commission (FTC)

Most influences business activities related to questionable practices that create disputes between businesses and their customers.

Federal Drug Administration (FDA)

Enforces regulations prohibiting the sale and distribution of adulterated, misbranded, or hazardous food and drug products.

Environmental Protection Agency (EPA)

Keeps environmental safety and researches pollution.

Consumer Product Safety Commission (CPSC)

Recalls about 300 products a year.

Sherman Antitrust Act

Prevents businesses from restraining trade and monopolizing markets.

Clayton Act

Prohibits price discrimination, tying and exclusive agreements, and the acquisition of stock in another corporation where the effect may be to substantially lessen competition or tend to create a monopoly.

Children's Online Privacy Protection Act (COPPA)

Can't seek info from kids that are under 13 without parental consent.

Sarbanes-Oxley Act

Criminalizes securities fraud and strengthens penalties for corporate fraud.

Dodd-Frank Wall Street Reform and Consumer Protection Act

Transparency, accountability, and consumer protection in the stock industry.

Corporate citizenship

A firm's strategic focus on the social responsibilities expected of it by its stakeholders.

Consumerism

The activities that independent individuals, groups, and organizations undertake to protect their rights as consumers.

Sustainability

Conducting activities in such a way as to provide for the long-term well-being of the natural environment.

Greenwashing

Creating a positive association with environmental issues for an unsuitable product, service, or practice.

Four basic rights of consumers

The right to choose, the right to be heard, the right to be informed, the right to safety.

Ethical issue

An identifiable problem, situation, or opportunity that requires a person to choose from among several actions that may be evaluated as right or wrong, ethical or unethical.

Ethical decisions

Decisions that involve gray areas that create dilemmas.

Misuse of company resources

Using company resources for personal use, such as driving a company vehicle for personal use or stealing office supplies.

Abusive or intimidating behavior

The most common ethical problem for employees, including physical threats, false accusations, and insults.

Time theft

Estimated to cost hundreds of billions of dollars annually, involving activities like late arrivals and excessive socializing.