Ethics and Social Responsibility: In Business Ethical behavior and social responsibility are very different, but are commonly confused. A standard of moral behavior, behavior that is accepted by society as right or wrong that is ethics. Social responsibility is about improving the quality of relations with key stakeholders. Novo Nordisk defines it as putting values into action in the perspective of human resources, human rights, health and safety, and our relations with society at large. Having an ethical code is very important to have in a business setting it sets the standards of your company.
Social responsibility is a continuance of ethics it involves more than just the principles of ethics in includes integrity, fairness, and respect. To create a well oiled business you need both a good ethical system and social responsibility. Ethical Behavior in the Work Place? Having ethical behavior is extremely important in the work place. Most businesses have an ethical code that they make there employees follow. There are some businesses unfortunately who do not follow there codes. Ethics is sometimes confused also with legality.
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The legal aspect should only be used when the ethical codes have been broken. For example when the scandal involving Enron came out, it was found out that the company created partnerships to hide their depts. This scandal could have been avoided if the company’s heads would have followed a standard of ethics. Since no ethics were followed the government took legal action against the heads of this company. What this shows is that companies who do not follow a code of ethics and in turn break laws should be punished.
Companies with a code of ethics generated significantly more economic added value (EVA) and market added value (MVA) in the years 1997 – 2000, than those without codes (Webley, 2003). Social Responsibility and what it means. Social responsibility is about improving the quality of relations with key stakeholders. Novo Nordisk defines it as putting values into action in the perspective of human resources, human rights, health and safety, and our relations with society at large. Practicing social responsibility in a business is important as well some believe it is not though.
Some believe that in the corporate world that having social responsibility is wrong. “There is one and only one social responsibility of business–to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud. ” said by Milton Friedman (Freidman, Mackey,& Rodgers 2005). He believed that social responsibility was to make money off the stockholders.
Recently there was a debate between Freidman, John Mackey CEO, of Whole Foods, T. J. Rodgers CEO, of Cypress Semiconductor about social responsibility and what it meant to them. This was a statement from John Mackey disagreeing with Freidman’s statement towards social responsibility. I strongly disagree. I’m a businessman and a free market libertarian, but I believe that the enlightened corporation should try to create value for all of its constituencies. From an investor’s perspective, the purpose of the business is to maximize profits.
But that’s not the purpose for other stakeholders–for customers, employees, suppliers, and the community. Each of those groups will define the purpose of the business in terms of its own needs and desires, and each perspective is valid and legitimate (Freidman, Mackey, & Rodgers 2005). The argument goes on between the three man were Freidman and Rodgers disagree with Mackey’s beliefs. Many consumers prefer to buy or work with companies who have ethical behavior and assume social responsibility. References Burns, M. (2008, June 3). 2008 world’s most ethical companies.
Retrieved October 2008, from Ethisphere: http://ethisphere. com/WME2008/ Friedman, M. , Mackey, J. , & Rodgers, T. (2005, October). Rethinking the social responsibility of business . Retrieved October 2008, from Reason online: http://www. reason. com/news/show/32239. html McClure, T. (2007). Excutive speeches, Leadership and Ethics in Today’s Climate. Retrieved October 2008, from UPS Pressroom: http://www. pressroom. ups. com/execforum/speeches/speech/text/0,1403,664,00. html? srch_pos=1&srch_phr=Corporate+Compliance+and+Ethics+ Webley, S. (2003,