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Chapter 3
Ethics and Social Responsibility
This chapter begins with the learning outcome summaries followed by a set of lesson plans for
instructors to use to deliver the content.
Lecture (for large sections) on page 4
Company Clips (video) on page 5
Group Work (for smaller sections) on page 7
Review and Assignments begin on page 8
Review questions
Application questions
Application exercise
Ethics exercise
Video assignment
Case assignment
Great Ideas for Teaching Marketing from faculty around the country begin on page 18
Learning Outcomes
3-1 Explain the determinants of a civil society
Social control defined as any means used to maintain behavioral norms and regulate conflict.
Ethics are the moral principles or values that generally govern the conduct of an individual or a
group. Laws come into being when ethical rules and guidelines are codified into law. Formal and
informal groups have codes of conduct that prescribe acceptable and desired behaviors of their
members. Self-regulation involves the voluntary acceptance of standards established by
nongovernmental entities. The media play a key role in informing the public about the actions of
individuals and organizations—both good and bad. An informed and engaged society can help
mold individual and corporate behavior.
3-2 Explain the concept of ethical behavior
Ethics are the standards of behavior by which conduct is judged. Standards that are legal may not
always be ethical, and vice versa. No laws are broken, but the notions of fairness and justice are
offended by one individual putting himself or herself above others and taking advantage of
others’ time and position. Ethics basically constitute the unwritten rules developed to guide
interactions. Many ethical questions arise from balancing a business’s need to produce profit for
shareholders against its desire to operate honestly and with concern for environmental and social
issues.
Several ethical theories apply to marketing. The deontological theory states that people should
adhere to their obligations and duties when analyzing an ethical dilemma. The utilitarian ethical
theory says that the choice that yields the greatest benefit to the most people is the choice that is
ethically correct. The casuist ethical theory compares a current ethical dilemma with examples of
similar ethical dilemmas and their outcomes. Moral relativists believe in time-and-place ethics;
that is, ethical truths depend on the individuals and groups holding them. Virtue ethics suggests
that individuals become able to solve ethical dilemmas when they develop and nurture a set of
virtues.
3-3 Describe ethical behavior in business
Morals are the rules people develop as a result of cultural values and norms. Business ethics may
be viewed as a subset of major life values learned since birth. The ethical conduct of
businesspeople is shaped by societal elements, including family, education, and religious
institutions. Ethical decision making can be grouped into three basic approaches. The first
approach examines the consequences of decisions. The second approach relies on rules and laws
to guide decision making. The third approach is based on a theory of moral development that
places individuals or groups in one of three developmental stages: preconventional morality,
conventional morality, or postconventional morality.
In addition to personal influences, there are many business influences on ethical decision mak-
ing. Some of the most influential include the extent of ethical problems within the organization,
top management’s actions on ethics, potential magnitude of the consequences, social consensus,
probability of a harmful outcome, length of time between the decision and the onset of conse-
quences, and the number of people to be affected.
Many companies develop a code of ethics to help their employees make ethical decisions. A code
of ethics can help employees identify acceptable business practices, help employees avoid
confusion when determining whether decisions are ethical, and facilitate discussion about what is
right and wrong and ultimately leads to better
decisions.
Studies show that ethical beliefs vary little from culture to culture. Certain practices, however,
such as the use of illegal payments and bribes, are far more acceptable in some places than in
others, though the enforced laws are increasingly making the practice less accepted. The Foreign
Corrupt Practices Act (FCPA) has been put in place to discourage and attempt to modify the
current acceptance of such practices.
3-4 Discuss corporate social responsibility
Corporate social responsibility (CSR) is a business’s concern for society’s welfare. Stakeholder
theory says that social responsibility means paying attention to the interest of every affected
stakeholder in every aspect of a firm’s operation, including employees, management, customers,
the local community, suppliers, and owners. According to the pyramid of corporate social re-
sponsibility, CSR has four components: economic, legal, ethical, and philanthropic. These are in-
tertwined. Most businesspeople believe they should do more than pursue profits. Although a
company must consider its economic needs first, it must also operate within the law, do what is
ethical and fair, and be a good corporate citizen. Yet the most fundamental need is earning a prof-
it. If a firm does not earn a profit, the other three responsibilities are moot.
3-5 Describe the arguments for and against social responsibility
Most businesspeople believe they should do more than pursue profits. Sustainability is the con-
cept that socially responsible companies will outperform their peers by focusing on the world’s
social problems and viewing them as an opportunity to earn profits and help the world at the
same time. Social responsibility is growing. One branch of social responsibility is green market-
ing, which aids the environment and often the bottom line of a business.
3-6 Explain cause-related marketing
Cause-related marketing is the cooperative effort between a for-profit firm and a nonprofit
organization for mutual benefit. It is different from philanthropy, which is a specific,
tax-deductible donation. The huge growth of cause-related marketing can lead to consumer cause
fatigue. Researchers have found that businesses need to guard themselves
against being perceived as exploiting a cause simply to sell more of a
product.
Key Terms
Behavioral norms Ethics Social control
Casuist ethical theory Foreign Corrupt Practices Act (FCPA) Stakeholder
theory
Cause-related marketing Green marketing Sustainability
Code of ethics Moral relativism Utilitarian
ethical theory
Corporate social responsibility
(CSR) Morals Virtue
Deontological theory Pyramid of corporate social
responsibility
Lesson Plan for Lecture
Suggested Homework
This instructor manual contains assignments on the Zappos video and the transglutaminase
case.
This chapter’s online study tools include flashcards, visual summaries, practice quizzes, and
other resources that can be assigned or used as the basis for longer investigations into
marketing.
Lesson Plans for Video
Company Clips
Segment Summary: Zappos
Zappos, the world’s largest online shoe retailer, discusses its commitment to social responsibility
and to ethical behavior. Developing employee activities and long-term relationships with
charitable organizations allows Zappos to ingrain the importance of helping into its
organizational culture. Zappos’s culture also guides its employees to make ethical decisions.
These teaching notes combine activities that you can assign students to prepare before class, that
you can do in class before or while watching the video, and that you can assign students to
complete on their own after watching the video.
During the viewing portion of the teaching notes, stop the video periodically when appropriate to
ask students the questions or perform the activities listed on the grid. You may even want to give
the students the questions before starting the video and have them think about the answer while
viewing the segment. That way, students will be engaged in active rather than passive viewing.
Pre-class Prep for You Pre-class Prep for Your Students
Preview the Company Clips video
segment for Chapter 3. This exercise
reviews concepts for LO1, LO2, and
LO3.
Review your lesson plan.
Stream the video HERE.
Have students familiarize themselves
with the following terms and concepts:
corporate social responsibility and
sustainability.
Review Zappos blog with those terms in
mind: http://blogs.zappos.com/.
Video Review Exercise
Activity Teaching Method
Warm-up
Begin by asking students, “What is corporate social responsibility
(CSR)?” and “What do businesses that want to be socially
responsible need to consider?”
In-class Preview
Segue into a discussion of corporate social responsibility.
Review how ethical decision making and the economic/legal
aspects of the pyramid of corporate social responsibility can
affect a business focused on social responsibility.
Viewing
(solutions below)
1. Does Zappos have a societal marketing orientation, or is it just
a company that has a large amount of corporate giving?
Explain.
2. How is Zappos practicing CSR?
Follow-up
Send students back to the Zappos blog. Have students write a
brief paragraph about how Zappos uses its website to
demonstrate its CSR.
Have students go to zappos.com. Have students look around
and write a brief paragraph discussing how customers would
know that Zappos is a socially responsible company by
shopping at zappos.com. Ask students to explain why they
think Zappos pursued the strategy they did on their main
consumer site. Ask students to be prepared to share their
research at the next class meeting.
Solutions for Viewing Activities
1. Does Zappos have a societal marketing orientation, or is it just a company that has a
large amount of corporate giving? Explain.
Students’ answers will vary. They may consider that Zappos’s major goal of “delivering
happiness” encourages its employees to play an active role in their community and with the
relationships Zappos develops with its charitable organizations.
2. How is Zappos practicing CSR?
Zappos engages in CSR by partnering with charitable organizations for a wide variety of
causes, such as sustainability (nature), pets, poverty, and more. Zappos then encourages its
employees to take part in events with those charities and also sponsors events for them.
Lesson Plan for Group Work
Class Activity: Corporate Social Responsibility
The work done by volunteers has long been an integral part of the social fabric of a community.
In today’s social environment, the majority of families have two wage earners or is headed by a
single wage earner. This phenomenon has reduced the number of persons who have time apart
from work and family responsibilities to do volunteer work.
Habitat for Humanity is an example of an organization that relies on the donations of materials
and labor by various business organizations.
Have your students contact one of the organizations in your community that draws upon
volunteers to accomplish their goals. Find out what businesses encourage their employees to do
volunteer work with this organization. Are the corporate volunteers paid for their efforts, perhaps
through designated volunteer days or hours? What do the companies receive for their efforts to
be good community citizens? How does the ability to perform volunteer work on company time
affect employee perception of the company?
