Business Ethics

&
Social Responsibility

Adriana Abreu

Everyone believes in something, and everyone follows a moral code and ethic
system. Whether you choose to believe in nothing or follow a code and system that is

not normal or “approved” by society, it still counts. Although personal ethics and

responsibility slightly differs from business ethics and social responsibility they all mean

the same thing, the fact of knowing between right and wrong and the point of doing one

of the two. Ethics and Social Responsibility is kind of like taking your grandmother to a

doctor’s appointment early on your day off, you hold little to no desire to do so but you

do it anyways because you feel you should. In today’s global America it is difficult to

differentiate between a person who actually possesses correct ethics and social

responsibility or if they are they just trying to get ahead.

The Business ethics of an individual and the organization as a whole reflects the

customs and morals of that organization. When the ethics of an organization is put into

question the consequences affects the stakeholders of the organization, the stakeholders

include the owners, suppliers, employees and consumers. In some cases an individual’s

personal ethics come into play when dealing with a situation in the work place. An

employee might discover that his/her colleague and also friend is stealing from the

company, should the individual alert management or not. The individual is aware that

there would be dire consequences for his/her friend, but the person also knows that

alerting management is the right thing to do. A conflict of interest occurs in many ethic

and social responsibility cases, if the individual chooses to alert someone of authority

then this is known as whistle blowing.

Roger Bradburn expresses his views on Utilitarianism and ethical egoism in

Understanding Business Ethics (pg. 5). Bradburn states that when a person acts in such a
way that maximizes the good of the greatest amount of people is known as

utilitarianism. In business ethics there such thing as ethical egoism and that provokes

the question and suggests if the person really supported the ethical code or did they just

comply to maximize their long term interests.

Ethics were first contemplated many years ago, even someone who has been

dead for more than 2,400 years still managed to conceive a practical perspective of

business ethics, ancient Greece’s very own Aristotle. Of course in the time of Aristotle

there was no such thing as global America or corporation but from what he saw, heard

and taught, Aristotle managed to come up with this ethical thought. In Nicomachean

Ethics Aristotle expresses that “…the leader is to create an environment in which all

members of an organization have the opportunity to realize their own potential” and

that “the ethical role of the leader is not to enhance their own power but to create the

conditions in which followers can achieve their potential”. I believe that based on these

thoughts on Business ethics it is very important to maintain a “clean” fair and ordered

organization.

Social responsibility is overridden by the simple goal of the organization,

maximizing profit. Today the future is everything and global corporation is the

foundation of colonizing. In The debate over corporate social responsibility it is says “By

scanning the entire planet for opportunities, by shifting its resources from industry to

industry, country to country and by keeping its overriding goal simple-worldwide profit

maximization- it has become an institution of unique power.” (p. 17)

Case Study: The Jeffery Verde Account

On December 5, 1997 newbie Sarah Robertson was looking over a client file she

was temporary managing. Earlier that day she had received a phone call from the client

Jeffery Verde, he had called to enter into six long March Standard and poor's 500 (S&P

500) index future contracts. Sarah noticed that Verde had a history of exceeding his

trade limit and once she entered the new contracts he had asked for he once again wan

going to go over the limit. At first Robertson didn't think anything of it, Jeffery Verde was

the client of David Simpson, a respected and experienced college of hers. Sarah was

temporary looking over the account while Simpson was on sick leave. Sarah Robertson

knew that Verde and Simpson had a strong broker- client relationship that had last for

almost 20 years. Verde had been very successful with trading, the profits in his accounts

has exceeded the annual income he had declared on the entry form. Fresh out of

completing the Futures licensing course , Sarah was well aware of procedure and

regulations. By reviewing Verdes accounts she could immediately tell that procedure was

not being followed and the regulations were being broken. After looking over Verdes

transaction history she realized he was exceeding his trade limit on a daily basis and

trading more then what he had in his accounts. Sarah was almost positive that her

colleague, the account broker David Simpson was aware of these findings, it was all on

paper it could not have been accidentally overlooked. Sarah was faced with the decision

of overlooking her findings and proceed to enter the new contracts verde had called in

or to inform her supervisor. She knew that if she overlooked her findings and the

situation it was had been ethically wrong but if she did inform her supervisor then her
relationship with the company would have been tainted. And Simpson's reputation and

judgment would have been destroyed and put into question.

Social responsibility states that organizations should not only focus on the

financial aspect but also contribute to the welfare of their community and society. Two

type of responsibly exists, there is the negative where an organization is blamed and

liable for any wrongdoing and there is the beneficial or proactive where the organization

contributes to the welfare of their surroundings. According to the text book

Management: Challenges for tomorrow’s leaders there are four perspectives of Social

Responsibility:

Where the social expectation is required

economic by society on question of profit and
investments.

The social expectation is also required;

Legal society expects the organization to obey
all rules and regulations.

Society expects the organization to do

Ethical what is right, just and fair.

Society expects and desires organizations

Philanthropic to fulfill their expectations as a model
corporate citizen and contribute to the
wellbeing of society.
AWC Inc: The ventilation Dilemma

In July of 1991, Alex Macdonald, president and owner of AWC Inc. was faced with

a dilemma that consumed his thoughts. Alex discovered that the company’s health

status was not up to par with Toronto’s environmental regulations. Solving the dilemma

correctly would mean aping $240,000 to $400,000 in installing a ventilation system to

reduce air pollution in the company’s welding room. At the time the investment was so

great that Alex knew doing the “right” thing would cause the company to lose a lot of

money and maybe even cause the company to shut down. AWC Inc. was a small

company with hundred people employed; shutting down the company would mean

putting hundred people out of jobs. After consulting with his father Jim MacDonald, the

previous owner and founder of AWC Inc. he realized that his father held a different way

of looking at the situation. Jim explained to Alex that the company was a well based and

a staple to the community, he figured that since they were relatively small and a well

oiled company no .ne was going to come knocking at their door. Alex thought that his

father had a very valid point, he did run the company for forty years without any

problems, but Alex he just didn’t feel right about it.

Alex had a tough decision to make, he could had turned the other cheek and

ignore the health risks involved in not have a ventilation system and wait for the

company to be slapped with a summons for violating government regulations or he

could have installed the costly filtration system knowing that the company would be on

the line. AWC Inc.’s social responsibility was put into play, it was either or.