Chapter 04 – Demanding Ethical and Socially Responsible Behavior
Chapter 04 – Demanding Ethical and Socially Responsible Behavior
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How to Improve America’s Business
Ethics
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How to Improve America’s Business
Ethics
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How to Prevent Unethical Behaviors
1. Before you put this slide up, you may want to ask
the students: What is management’s role in pre-
venting unethical behaviors? What can be done to
deter unethical behaviors on the part of employees?
2. Increasing the penalty and educating employees are
among the top methods for deterring unethical be-
haviors.
3. Thirty percent of the respondents in a poll suggest-
ed adding new laws to deter unethical behaviors.
Ask the students: If ethics is more than legality,
would new laws help? (Students should be able to
argue this point. Although ethics is more than le-
gality, if something is against the law, people may
refrain from such behavior. However, it should be
pointed out that ethics should be the way of life,
i.e., it needs to be ingrained in the employees
through culture and role modeling by managers
and executives.)
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How to Prevent Unethical Behaviors
Chapter 04 – Demanding Ethical and Socially Responsible Behavior
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Progress Assessment
1. Compliance-based ethics codes emphasize prevent-
ing unlawful behavior by increasing control and
penalizing wrongdoers. Integrity-based ethics codes
define the organization’s guiding values, create an
environment that supports ethically sound behavior,
and stress shared accountability.
2. The six steps many believe will improve U.S. busi-
ness ethics are: (1) Top management must adopt
and unconditionally support an explicit corporate
code of conduct; (2) Employees must understand
that expectations for ethical behavior begin at the
top and that senior management expects all em-
ployees to act accordingly; (3) Managers and others
must be trained to consider the ethical implications
of all business decisions; (4) An ethics office must
be set up with which employees can communicate
anonymously; (5) Outsiders such as suppliers, sub-
contractors, distributors, and customers must be
told about the ethics program; (6) The ethics code
must be enforced with timely action if any rules are
broken.
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Corporate Social Responsibility
Many for-profit companies have philanthropic endeavors
as a part of their mission. Communities often depend on
companies to help with social programs that make the lives
of people in the community better. It stands to reason that
businesses that strengthen their communities, as proponents
of CSR argue, will grow stronger as their communities im-
prove.
Chapter 04 – Demanding Ethical and Socially Responsible Behavior
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Corporate Philanthropy and Social
Initiatives
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Corporate Responsibility and Policy
Chapter 04 – Demanding Ethical and Socially Responsible Behavior
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Positive Impacts of Companies
An ultimate example of a company helping the communi-
ty is Xerox’s program, Social Service Leave, which allows
employees to leave for up to a year and work for a non-
profit while still earning full salary, including benefits and
job security.
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Helping Hands
1. Students will find it interesting to see on this slide
what some of their favorite celebrities have donat-
ed.
2. Oprah Winfrey earns well over $200 million per
year and donates nearly $50 million.
3. The talk-show host and entertainment mogul is the
founder of the Angel Network, a charity that raises
money for poverty-stricken children, and she has
raised money to open schools for girls in South Af-
rica.
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Generous Guys
1. Students may be surprised how much billionaires
donate and the causes they support. You could
prompt discussion by asking students why they be-
lieve billionaires give so much to education while
celebrities choose more social causes.
2. Bill Gates’s net worth is over $56 billion and he’s
donated $28 billion!
4-47
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Life after Tragedy
1. Japan was left devastated after an earthquake and
tsunami destroyed cities and ports.
2. Japanese tycoons and their companies quickly did
their part in aiding those affected by the disaster.
3. Some of their companies were even shut down.
Tadashi Yanai’s stock dip cut his worth from $6.3
billion to $1.3 billion.
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President Kennedy’s Basic Rights of
Consumers
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How Do Customers Know?
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Social Customer Contact
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Insider Trading
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Responsibility to Employees
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America’s Most Admired Companies
1. Before you put up this slide you may want to ask
the students, Are the ideals of maximization of
profit and social responsibility in conflict?
2. Corporate social responsibility is the concern busi-
nesses have for the welfare of society, not just for
their owners.
3. The vast majority of the companies listed in this
slide are not only admired but also financially suc-
cessful.
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When Employees Are Upset …
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Society and the Environment
Chapter 04 – Demanding Ethical and Socially Responsible Behavior
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Responsibility to the Environment
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Sustainable or Suspect: Greenwashing
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Worthy Causes
1. Sometimes it’s difficult to imagine just how far our
donation money can go. This slide can give stu-
dents insight into what some American families are
able to give.
2. It’s not uncommon to think that donations under
$1,000 will not go far. But when students see how
much good $1,000 can do, they see smaller dona-
tions are still worth it.
3. To promote discussion, navigate through the web-
sites linked to the slide and check out what smaller
Chapter 04 – Demanding Ethical and Socially Responsible Behavior
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Social Auditing
1. Corporate social responsibility (CSR) is the con-
cern businesses have for the welfare of society, not
just for their owners. CSR defenders believe that
businesses owe their existence to the societies they
serve and cannot succeed in societies that fail. CSR
must be responsible to all stakeholders, not just in-
vestors in the company.
2. A social audit is a systematic evaluation of an or-
ganization’s progress toward implementing social-
ly responsible and responsive programs. Many feel
a social audit should measure workplace issues, the
environment, product safety, community relations,
military weapons contracting, international opera-
tions and human rights, and respect for the rights
of local people.
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1. Many U.S. businesses now demand that interna-
tional suppliers do not violate U.S. human rights
and environmental standards.
2. It’s unlikely there will be a single set of interna-
tional rules governing multinational companies be-
cause of the widespread disparity among global na-
tions as to what constitutes ethical behavior. For
example, a gift in one culture can be a bribe in an-
other. In some nations child labor is expected and
an important part of a family’s standard of living.
The fairness of adhering to U.S. standards of ethical
behavior is not as easy as you may think.
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lecture
links
“A business that makes nothing but money is a poor kind of business.”
lecture link 4-1
GIVING ONLINE WITH CAUSES
As most of the business world has embraced technology over the last decade, it’s difficult to be-
lieve there are entire industries that haven’t adapted accordingly. But of the $263 billion Americans do-
nated to charity in 2009, only 5.7% of that cash came from online coffers. In spite of vast, accessible
Founded in 2007, Causes facilitates approximately $1 million in donations a month in addition to
corporate-sponsored fundraising campaigns that attract donations from $50,000 to $300,000 apiece. Un-
like most socially conscious institutions, Causes operates as a for-profit company in order to avoid the
financing bottlenecks associated with nonprofits. Doing so has netted Causes nearly $9 million in venture
capital that will allow the company’s staff to expand beyond its initial 16-person workforce. Aside from
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lecture link 4-2
CHINA CONFRONTS ITS ETHICAL DEMONS
China recently surpassed Japan to become the world’s second largest economy, behind only the
ing its first steps toward finding sustainable ways to do business.
According to cases filed under the Foreign Corruption Practices Act (FCPA), China ranks only
behind Iran and Nigeria for most criminal corruption prosecutions. Over the years the Chinese business
practice of gift giving often devolved into outright bribery. But as the United States and other countries
gain footholds within China (and vice versa), the FCPA is used to target major bribery offenders. Under
ETHICS CODE FOR DELL COMPUTERS
Just as The Soul of Dell articulates our values and beliefs, the following Code of Conduct pro-
vides guidance to ensure we meet our higher standard and conduct business the Dell Way—the right way;
which is “Winning with Integrity.” Simply put, we want all members of our team, our shareholders, cus-
tomers, suppliers and other stakeholders to understand that they can believe what we say and trust what
Chapter 04 – Demanding Ethical and Socially Responsible Behavior
4-55
• Respect. We treat people with dignity and value their contributions. We maintain fairness
in all relationships.
CODE OF ETHICS FOR MERCK & COMPANY
1. Our business is preserving and improving human life. All of our actions must be
2. We are committed to the highest standards of ethics and integrity. We are re-
sponsible to our customers, to Merck employees and their families, to the environments we
3. We are dedicated to the highest level of scientific excellence and commit our
4. We expect profits, but only from work that satisfies customer needs and
5. We recognize that the ability to excel—to most competitively meet society’s
and customers’ needs—depends on the integrity, knowledge, imagination,
Chapter 04 – Demanding Ethical and Socially Responsible Behavior
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• To do all in our power to pack the customer’s dollar full of value, quality and satisfaction
• To test our every policy, method and act in this wise: “Does it square with what is right and
just?”
CODE OF ETHICS FOR BUSINESSWEEK MAGAZINE
1. Our integrity is of the highest caliber.
2. We base our unique brand of journalism on accurate information, gathered honestly and
presented fairly.
3. Our professional conduct is unassailable.
4. Our personal conduct, as it reflects on BusinessWeek, is beyond reproach.ii
lecture link 4-4
APPROACHES TO SOCIAL RESPONSIBILITY
Corporations can take several approaches toward social responsibility:
lecture link 4-5
CORPORATE RESPONSIBILITY IN THE CLASSROOM
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For many companies, getting involved in social concerns can be more than just a reputation
booster. Fair business practices like environmental sustainability can increase a company’s bottom line as
schools hope that students will impart these skills to whatever company they end up working for. Some
companies, such as Campbell, are going so far as to train new hires in social concerns with the goal that
such knowledge will someday be required in recruiting.iii
lecture link 4-6
PHARMACEUTICAL OR FOOD?
As organic and local food movements gain steam, some food companies are responding by
providing the consumer public with “healthier” options, even in snack foods. Traditional prepackaged
snacks have never been a favorite with nutritionists. Most are high in sugar and fat and provide little nu-
tritional value to the average human. But instead of just cutting down on the fatty stuff that make snack
foods so unhealthy, some companies are injecting snacks with supposedly beneficial substances. The re-
sult is a line of snacks marketed more as medicine than food. For example, a yogurt-like beverage called
ProBugs touts itself as a healthy snack packed with stomach-healing probiotics that help fight antibiotic-
associated diarrhea in children.
masquerading as snacks have become big business for food companies, pulling in more than $160 billion
worldwide annually. For now the FDA can’t do anything to stop these dubious claims due to another law
that exempts foods from pharmaceutical-style regulation. In the meantime, consumers are once again
warned not to believe everything they read on a product’s packaging. Many businesses fail because they
fail to please customers. If these products don’t live up to promises, do you think they will thrive or dis-
appear?iv
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lecture link 4-7
MERCK AND ETHICS (PART I)
In the early 1970s researchers at the pharmaceutical company Merck were looking for drugs to
treat a host of resistant worm parasites in livestock. The researchers imported bacteria from around the
world, more than 100,000 species. Fermented in broths, the organisms produced new compounds. These
were tried, one by one, in worm-infested mice. In 1975, they hit the jackpot with a soil bacterium from
Japan. The new drug, ivermectin, not only killed all the worms inside the animal, but it also killed biting
insects on the skin of the animals after a single dose.
Ivermectin became a financial success with sales greater than those of any other animal health
product in the world. It is used against animal parasites in most domestic animals—including cattle, hors-
es, pigs, and dogs.
Faced with the fact that it had a drug that could potentially eradicate the disease, Merck an-
nounced in 1987 that it would provide ivermectin without charge to as many people as needed it for as
long as river blindness remained a threat. “Merck is demonstrating the kind of social responsibility that I
hope will spread in the pharmaceutical community,” said Merck researcher Dr. William Foege.
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(See Bonus Case 4-2 on page 4.75 of this manual for the second part of the Merck story.)
lecture link 4-8
APP-GATE AT UNIVERSITY OF MISSOURI
By their nature, colleges are meant to foster thought and instill in students applicable knowledge
that will serve them well outside the university halls. Also hard at work within academic institutions are
scholars and researchers who, similar to their pupils, push past the current limits of human understanding
in order to better serve the world at large. Some would say that the only distinction between scholar and
student is that one is paid to gather information while the other pays for the privilege.
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critical thinking exercise 4-1
EXPLORING COMMUNITY SERVICE
1. Go to one of these volunteer websites. Use the site’s search tools to see what types of volunteer
options are available in your area. If your area is not yet included in the site’s database, choose a
nearby zip code so that you have an idea of what types of agencies you can contact to offer your
services. Write down several volunteer opportunities and the skills required.
2. A new trend in community service is virtual volunteering. Click on the virtual link and search for
volunteer opportunities you can do from your computer. Are virtual volunteer opportunities more
or less attractive to you than actual hands-on activities? Why?
3. The best way to learn about volunteering is by volunteering, so put your community service plan
into action by offering your services to one of the agencies in your area.