Business in Action: Thriving in the Digital
Enterprise
Ninth Edition, Global Edition
Chapter 4
Business Ethics and
Corporate Social
Responsibility
Copyright © 2020 Pearson Education Ltd. All Rights Reserved.
Learning Objectives (1 of 2)
4.1 Discuss what it means to practice good business
ethics, and highlight the forces that can influence ethical
decision- making.
4.2 Define corporate social responsibility (CSR), and
explain the difference between philanthropy and strategic
CSR.
4.3 Distinguish among the four perspectives on corporate
social responsibility.
4.4 Discuss the role of business in protecting the natural
environment, and define sustainable development.
Copyright © 2020 Pearson Education Ltd. All Rights Reserved.
Learning Objectives (2 of 2)
4.5 Identify five fundamental consumer rights and the
responsibility of business to respect them.
4.6 Explain the responsibilities businesses have toward their
employees.
4.7 Identify two categories of ethical concerns with artificial
intelligence.
Copyright © 2020 Pearson Education Ltd. All Rights Reserved.
Introduction
As a future business leader, you will face some of the
challenges discussed in this chapter, and your choices won’t
always be easy. You may struggle to find ethical clarity in
some situations or even to understand what your choices are
and how each option might affect your company’s various
stakeholders.
Copyright © 2020 Pearson Education Ltd. All Rights Reserved.
Ethics in Contemporary Business
• Ethics
– The rules or standards governing the conduct of a
person or group
Copyright © 2020 Pearson Education Ltd. All Rights Reserved.
Exhibit 4.1 Public Perceptions of
Business Ethics
Source: Data from Megan Brenan, “Nurses Keep Healthy Leads as Most Honest, Ethical
Profession,” Gallup, 26 December 2017, [Link].
Copyright © 2020 Pearson Education Ltd. All Rights Reserved.
Defining Ethical Behavior (1 of 2)
• Insider trading
– The use of unpublicized information that an individual
gains from the course of his or her job to benefit from
fluctuations in the stock market
Copyright © 2020 Pearson Education Ltd. All Rights Reserved.
Defining Ethical Behavior (2 of 2)
• Competing fairly and honestly
– Businesses are expected to compete fairly
• Communicating truthfully
– Communicating truthfully is a simple enough concept:
Tell the truth, the whole truth, and nothing but the truth
• Not causing harm to others
– All businesses have the capacity to cause harm to
employees, customers, other companies, their
communities, and investors
Copyright © 2020 Pearson Education Ltd. All Rights Reserved.
Strategies for Supporting Ethical
Behavior
• Code of ethics
– A written statement that sets forth the principles that
guide an organization’s decisions
• Transparency
– The degree to which affected parties can observe
relevant aspects of transactions or decisions
• Whistle-blowing
– The disclosure by a company insider of information that
exposes illegal or unethical behavior by others within
the organization
Copyright © 2020 Pearson Education Ltd. All Rights Reserved.
Exhibit 4.2 Stakeholders’ Rights: A
Difficult Balancing Act (1 of 2)
Copyright © 2020 Pearson Education Ltd. All Rights Reserved.
Exhibit 4.2 Stakeholders’ Rights: A
Difficult Balancing Act (2 of 2)
Copyright © 2020 Pearson Education Ltd. All Rights Reserved.
Guidelines for Making Ethical Decisions
• Ethical dilemma
– A situation in which more than one side of an issue can
be supported with valid ethical arguments
• Conflicts of interest
– Situations in which competing loyalties can lead to
ethical lapses, such as when a business decision may
be influenced by the potential for personal gain.
Copyright © 2020 Pearson Education Ltd. All Rights Reserved.
Finding the Right Answer When Faced
with an Ethical Dilemma
• Make sure you frame the situation accurately, taking into
account all relevant issues and questions.
• Identify all parties who might be affected by your decision.
• Be as objective as possible.
Copyright © 2020 Pearson Education Ltd. All Rights Reserved.
Corruption Perception Index 2020
[Link]
Copyright © 2020 Pearson Education Ltd. All Rights Reserved.
Corporate Social Responsibility
• Corporate social responsibility (CSR)
– The idea that business has obligations to society
beyond the pursuit of profits
Copyright © 2020 Pearson Education Ltd. All Rights Reserved.
The Relationship Between Business
and Society (1 of 2)
• Consumers in contemporary societies enjoy and expect a
wide range of benefits, from education and healthcare to
credit and products that are safe to use.
• Profit-seeking companies are the economic engine that
powers modern society; they generate the vast majority of
the money in a nation’s economy.
Copyright © 2020 Pearson Education Ltd. All Rights Reserved.
The Relationship Between Business
and Society (2 of 2)
• Much of what we consider when assessing a society’s
standard of living involves goods and services created by
profit-seeking companies.
• Companies cannot hope to operate profitably without the
many benefits provided by a stable, functioning society.
Copyright © 2020 Pearson Education Ltd. All Rights Reserved.
Philanthropy versus Strategic CSR
• Philanthropy
– The donation of money, time, goods, or services to
charitable, humanitarian, or educational institutions
• Strategic CSR
– Social contributions that are directly aligned with a
company’s overall business strategy
Copyright © 2020 Pearson Education Ltd. All Rights Reserved.
Exhibit 4.4 Perspectives on Corporate
Social Responsibility
Copyright © 2020 Pearson Education Ltd. All Rights Reserved.
Defensive CSR
• Nongovernmental organizations (NGOs)
– Nonprofit groups that provide charitable services or
promote social and environmental causes
Copyright © 2020 Pearson Education Ltd. All Rights Reserved.
The Proactive Stance: Moving Beyond
CSR
• Purpose-driven business
– A company that aspires to accomplish more than just
making money for owners and investors
Copyright © 2020 Pearson Education Ltd. All Rights Reserved.
The Trend Toward Sustainability
• Sustainable development
– Operating business in a manner that minimizes
pollution and resource depletion, ensuring that future
generations will have vital resources
Copyright © 2020 Pearson Education Ltd. All Rights Reserved.
CSR: Consumers (1 of 2)
• Consumerism
– A movement that pressures businesses to consider
consumer needs and interests.
Copyright © 2020 Pearson Education Ltd. All Rights Reserved.
CSR: Consumers (2 of 2)
• The right to buy safe products—and to buy them safely
• The right to be informed
• The right to choose which products to buy
• The right to be heard
Copyright © 2020 Pearson Education Ltd. All Rights Reserved.
The World’s Most Reputable Companies
For Corporate Responsibility 2019
Copyright © 2020 Pearson Education Ltd. All Rights Reserved.
[Link]
CSR: Employees
• Discrimination
– In a social and economic sense, denial of
opportunities to individuals on the basis of some
characteristic that has no bearing on their ability to
perform in a job
Copyright © 2020 Pearson Education Ltd. All Rights Reserved.
Applying What You’ve Learned (1 of 2)
1. Discuss what it means to practice good business
ethics, and highlight three factors that influence ethical
decision making.
2. Define corporate social responsibility (CSR), and
explain the difference between philanthropy and
strategic CSR.
3. Distinguish among the four perspectives on corporate
social responsibility.
4. Discuss the role of business in protecting the natural
environment, and define sustainable development.
Copyright © 2020 Pearson Education Ltd. All Rights Reserved.
Applying What You’ve Learned (2 of 2)
5. Identify five fundamental consumer rights and the
responsibility of business to respect them.
6. Explain the responsibilities businesses have toward their
employees.
7. Identify two categories of ethical concerns with artificial
intelligence.
Copyright © 2020 Pearson Education Ltd. All Rights Reserved.
