BUSINESS ETHICS
BUSINESS ETHICS AND SOCIAL RESPONSIBILITY
The Concept or Corporate Social Responsibility
Corporate Social Responsibility
 It refers to a corporation’s responsibilities or
obligations toward society.
 It is a gesture of company’s concern and
commitment towards society’s sustainability and
development
 It is ethical behavior of the company towards
society
Father or Modern CSR - Howard Bowen
“SOCIAL RESPONSIBILITIES OF THE BUSINESSMAN”
“It refers to the obligations of businessmen to pursue those
policies, to make those decisions, or to follow those lines of
actions which are desirable in terms of the objectives and
value of our society”
Five Dimension of CSR - Alexander Dahlsrud
1. Environmental Dimension
 Pertains to many CSR Definitions’ direct
assertion of concern for the natural
environment.
2. Social Dimension
 Points to the aspect of CSR wherein the
business is conscious of its impact to the
communities.
3. Economic Dimension
 pertains to the emphasis on preserving the
economic viability or profitability of
the business organization.
4. Stakeholder Dimension
 emphasizes the importance of how other
stakeholders such as employees,
Suppliers and customers are fairly and justly
treated.
5. Voluntariness Dimension
 Speaks of the CSR programs as going beyond
the requirements of the law and as being
motivated by ethics and values.
Milton Friedman’s View of CSR
-Based on assumptions of private property and the free
market, the ONLY social responsibility of business is to
INCREASE its PROFITS.
Some Ethical Issues in:
a. Consumer Relation
b. Employer-Worker Relation
c. Relation to the Government
d. Relation to the Natural Environment
a. CONSUMER RELATION
Ethics of Consumer Protection
Business Ethicists consider….
FOUR APPROACHES TO CONSUMER PROTECTION
1. The Market Approach
•It assumed that the free market will ensure the protection
of the buyers from unreasonably high prices and low-quality
and hazardous products.
•Buyers and sellers are free to interact. Sellers are free to
produce the goods and services that buyers need and want.
Buyers are free to choose the products offered by various
sellers.
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Example:
•If a toy manufacturer produces toys that endanger the
children who will buy them, then the manufacturer will have
a bad reputation.
•Toy buyers will look for another toy seller that assures
quality, safety and reasonable price. This is how the market
approach works.
• Sellers would stop producing unsafe Christmas Lights if
consumers value safety so much that they would stop
buying them.
Monopoly- when a single firm produces the entire market
supply for a good or service.
Oligopoly- only a few sellers control most or all of the
market and sell similar or identical products.
2. The Contract View Approach
• This view claims that the sellers and buyers always enter
into a contractual agreement.
• The seller is duty-bound to deliver safe and value-for-
money products and services by virtue of this contractual
agreement.
FOUR IMPORTANT CONDITIONS IN CONTRACTUAL
AGREEMENT
1. The buyer and the seller have full knowledge of the
nature of the contract.
2. The buyer and the seller do not misrepresent
relevant facts.
3. The buyer and the seller are not forced to enter the
contract.
4. The buyer and the seller have adequate information
regarding the product.
THE FOUR IMPORTANT DUTIES OF BUSINESS
1. DUTY TO COMPLY -pertains to the seller’s moral
obligation to deliver what it claims to be the
product’s features.
2. DUTY TO DISCLOSE - pertains to the seller’s
moral obligation to reveal the relevant facts about
the products and the terms and conditions of the
sale.
3. DUTY NOT TO MISREPRESENT -pertains to the
seller’s deliberate attempt to deceive and mislead
the buyer just to sell the products.
4. DUTY NOT TO COERCE -pertains to the moral
obligation of the seller not to take advantage of the
buyer’s fear, emotional stress, immaturity and
ignorance that may hinder the buyer’s ability to
choose freely.
3. The Due Care Approach
The main assumption of the ethics of due care….
In the business transaction, the buyer and the seller
are not on equal footing.
The seller is always more knowledgeable about the
details of the product.
The buyer relies on the expertise of the manufacturer and
to a certain extent of the retailer
Caveat Emptor – (let the buyer beware) - The general
rule and an acceptable practice in the marketplace.
Caveat Vendor – (let the seller beware) - The duty of the
seller to assure that the product is safe and not defective
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4. Social Costs Approach b. EMPLOYER-WORKER RELATION
•According to George Brenkert, the manufacturer has full Contractualization
responsibility for all the harms that the product may cause ● Fixed-term employment
the buyer. ● a contract of employment for a definite period which
terminates by its own terms of such period.
•The social cost is part of the cost to be shouldered by the
manufacturer. Accdg. To Satur Ocampo
“Hiring workers for short-term, non-regular employment
Advertising - Techniques and practices used to bring without the benefits accorded by law to regular workers.”
products, services, opinions or causes to public notice for
the purpose of persuading the public to respond in a certain Critics of contractualization in the Philippines usually point
way. to former Senator Ernesto Herrera’s penning in 1989 OF
Republic Act 6715 as the main culprit for the widespread
Commercial Advertising coontractualization practices but they said that it was
● Organized method of communicating information about Ferdinand Marcos in his Presidential Decree 422 or PD 22,
the product or service which a company or individual wants Labor Code of the Philippines
to sell to the people.
● It is a kind of salesmanship without the actual face-to-face WHY DO EMPLOYERS WANT TO CONTRACTUALIZE?
encounter with the salesman. . It reduces business cost
2. To avoid workers to join the unions
Main Purpose of advertising
1.New products being introduced Criticisms AGAINST Contractualization
2.Alternative products that the public can choose from 1. It undermines many basic rights of the workers.
3.Uses and benefits of the products. 2. It degrades the value of work and the workers.
3. It violates the fundamental justice.
Twin Purposes of Advertising 4. It is an open invitation to more abuses of the rights of the
Informational Advertising Persuasive Advertising workers.
to inform to persuade
Just and Fair Wage
Employers
Ethical Implication of an Advertising - The main interest is to reduce the cost of his/her business.
1. Social Effects Employees
2. Effect on Desire - The main interest is to increase his or her wage because it
3. Effects on Belief is usually his or her main way of supporting his/her family.
Some Ethical Problem in Advertising The 7 Factors that must be considered in determining
- Continuous degradation of the earth’s natural resources FAIR and JUST WAGE.
- The advertisers try to manipulate the minds of the viewers.
Classical Conditioning (Ivan Pavlov) 1. Comparative Wage - A business owner must
consider the prevailing wage in the industry and in
the area.
2. Capability of the Business - A business owner
must consider the capability of his or her business.
3. Nature of the job - A business owner must
consider the nature of the job because some jobs
involve great health risks, offer less security, and
require more training and experience.
4. Cognizant of the law on minimum wage - A
business owner must obey the law in minimum
wage and must be sufficient for the needs of his or
her workers
5. Relative proportionality and similarity of the
nature of 5 the job of workers within the
organization
6. Both employer and the employee must consider
FATHER OF PUBLIC RELATION
the fairness of wage negotiations.
– Edward Louis Bernays
7. Business owner must account for 7 the living
- He became famous for instructing young women wage of the workers. - The business workers must
models (not really smokers) to light lucky strike account for the cost of living within the specific
cigarettes while marching in a parade to support the locality where his business operates.
American women’s fight for freedom and equal
Labor union
rights
- Association of employees that advances member interests
Subliminal Advertising through collective bargaining with an employer.
● Latin words “sub” meaning “below” and “limen” meaning - 1987 Philippine Constitution Article 3
threshold
THE MAIN OBJECTIVES OF A UNION
● Advertising that operates below the limits of the
1. Democratization Of Wealth
consciousness of its audience.
- It refers to the labor union’s objective of ensuring that the
● Coined by James Vicary
workers receive just wage ad safe working conditions.
Deceptive Advertising
2. Democratization Of Power
● Is the content of advertisement truthful?
- Pertains to the labor union’s objective of balancing the
● Does the advertisement have a tendency to mislead those
power between the employer and the employee
to whom it is directed?
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3. Humanizing the Working Class
-Pertains to the functions of labor union to educate workers,
the employers and the society as a whole with regard to the
value of human labor and dignity of the workers.
Fiduciary Duty of the Employee
Theory of Agency
- A consensual relationship created by contract or by law
where one party, the principal, grants authority for another
party, the agent, to act on behalf of and under the control of
the principal to deal with a third party.
Principals  employers
Agents  employees
Bribery
Fiduciary Duty - Occurs when property or personal advantage is offered,
- Refers to the obligations of the employee (agent) to without the authority of law, to a public official with the intent
always act on behalf of his or her employer (principal) of acting favorably to the offer or, at any time in execution of
- Fidere means “to trust the public official.

THREE MAIN PRINCIPLE OF FIDUACIRY DUTY d. SOME ETHICAL ISSUES IN RELATION TO THE
NATURAL ENVIRONMENT
1. Candor - To be truthful and honest to his or her
principal Anthropocentric Approach to Environmental Ethics
2. Care - To take good care of all the assets entrusted
Anthropocentrism
to him or her by the owner of the business.
- The view that human beings are the central fact on earth.
3. Loyalty - To act in the interest of the beneficiary and
to avoid taking any personal advantage of the Bio centric and Eco centric Approaches to Environmental
relationship. Ethics
Conflict of Interest Biocentrism
- It is an actual or potential violation of a fiduciary duty of - Centrality of Life
loyalty to the business owner. - All life deserves equal moral consideration or has equal
- It is the independence and impartiality of decision-makers moral standing.
is compromised due to competing interests influencing the
outcome of a decision, for personal benefit in particular. Ecocentrism
- "Oikos” means house - “Kentron” means center
Nepotism
- Favoring one’s relatives and friends. - The natural environment is a house for everybody and
everything
Whistleblowing
-It is an attempt by a member or former member of an
organization to disclose wrongdoing in or by the
organization.
c. RELATION TO THE GOVERNMENT
Taxation
- Means by which governments finance their expenditure
by imposing charges on citizens and corporate entities.
Types of Taxation:

1. Individual Taxation
- individual citizens who gain income who consume
goods and services
2. Business Taxation
-Income accumulated by the different forms of
business establishments
TWO COMMON WAYS OF ESCAPING THE TAXATION:

1. Tax Evasion - Failure to make disclosure to the

government.
2. Tax Avoidance - -Use of lawful tax planning
techniques.