MB - Businesses Role in Society [LESSON]

Businesses Role in Society

Business Ethics

Business ethics can be thought of as written and unwritten codes of principles and values that govern decisions and actions within a company. In the business world, the organization's culture sets standards for determining the difference between good and bad decision-making and behavior. In the most basic terms, a definition for business ethics boils down to knowing the difference between right and wrong and choosing to do what is right. The phrase 'business ethics' can be used to describe the actions of individuals within an organization or the organization as a whole.

The Benefits of Ethics Practices

Why ethics in business? Ethical guidelines tend to maximize profits while minimizing the conflict and disruptions that slow business growth. Ethical practices also protect against legal trouble, sustain good health and keep away the kinds of financial predators that can scar an individual and destroy a business. When one is acting from an ethical base, it is easy to recognize and experience contrast when dealing with those acting unethically. Learning to recognize (and thereby avoid) dishonest and predatory business people is one of the advantages of ethical behavior.

A business activity can be reputable, disreputable or shady. Some actions are predatory, while others are outright criminal. Some activities that seem unethical, such as a grocer selling low-quality vegetables while creating high-quality expectations, are customarily acceptable practices. This brings to light the fact that there are standards of the industry in all business categories that mitigate the ethicality of a sales tactic. Part of the ethical evaluation of an action might be whether it is a "professional" or "unprofessional" one.

The Core Values

Studies from the Josephson Institute of Ethics in Marina del Rey, California, have identified six core values. Values that are generally recognized as positive ethical characteristics of an individual or a business organization. People may have strong views about other kinds of ethical values, but core values are more widely accepted in our society, values that almost everyone agrees are important to them.

When asked what values people hold dear, what values they wish to be known by, and what values they wish others would exhibit in their actions, six values consistently turn up: (1) trustworthiness, (2) respect, (3) responsibility, (4) fairness, (5) caring, and (6) citizenship.

Here are the core values and their subcomponents as developed by the Josephson Institute of Ethics.

Corporate Social Responsibility

Corporate social responsibility (CSR) is a form of corporate self-regulation integrated into a business model. It is a self-regulating mechanism whereby a business monitors and ensures its active compliance with the spirit of the law, ethical standards, and international norms.

In some models, a firm's CSR program goes beyond and engages in "actions that appear to further some social good, beyond the interests of the firm and that which is required by law." CSR is a process with the aim to embrace responsibility for the company's actions and encourage a positive impact through its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere.

There are four main areas that make up corporate social responsibility.

Work: This includes obeying government regulations, protecting the customer, accurate and honest bookkeeping and reporting.
Marketplace: Being profitable, creating jobs for the community and being a productive business in society.
Community: This includes giving back to the community in the form of foundations, scholarships, internships or programs to help those in need.
Environment: This includes, managing waste, recycling and consumption. Basically putting into place practices that help sustain the environment for future generations.

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