Business Ethics and Social

Responsibility
Course Objective
• The course aims to develop an understanding of the underlying concepts of business
ethics and corporate social responsibility, which are relevant to make decisions in the
contemporary business environment. The course further aims to develop a students’
ability to critically analyze ethical issues and relevancy of social responsibility in
business. This course reviews different regulatory processes essential to the
understanding of the ethical standards and corporate social responsibility in Nepal.

Course Description
• This course contains introduction, ethical issues and dilemmas, ethical theories,
application of ethical standards, strategic context of CSR, business ethics and CSR in
Nepal.
Introduction To
Business Ethics
UNIT ONE:
Learning objectives:
• Concept of business ethics, importance of ethics in business,
• myths about business ethics,
• morale reasoning, the morality of profit motive,
• ethics and philosophy, ethics and morality,
• benefits of business ethics, code of conducts;
• meaning and importance of social responsibility,
• the evolution of CSR, a morale argument of CSR,
• increasing relevancy of CSR, social responsibility and ethics, CSR
domains.
Concept of Business Ethics:
• Business ethics refers to the principles and values that guide the
behavior and conduct of individuals and organizations in the
business world.
• It involves making morally right decisions and actions in the
context of business practices, considering the impact on
stakeholders, society, and the environment.
• According to Crane, "Business ethics is the study of business
situations, activities, and decisions where issues of right and wrong
are addressed."
Importance of Ethics in Business:
• Encouraging long-term success
• Avoiding legal and regulatory problems
• Maintaining a positive reputation
• Building trust with customers
• Attracting and retaining a strong customer base
• Maintaining a talented workforce
• Earning brand loyalty
Characteristics/ Principles:
• Corporate social responsibility (CSR): Companies are trying to maximize their positive
impact on society and to minimize the bad one.
• Integrity: Being honest, trustworthy, and consistent in one's actions.
• Transparency: Ensuring that information is accurately disclosed to stakeholders.
• Stakeholder balance: A company's managers are ethically obligated to pursue jointly or to
balance the interests of its stakeholders.
• Personal responsibility: Employees should demonstrate personal responsibility for their
actions, regardless of position.
• Good employee relationship: Business ethics creates a good relationship between the
company's employees and management.
• Interest of society: A business is supported by its stakeholders, employees, customers,
business partners, etc.
TYPES OF BUSINESS ETHICS:
Corporate Responsibility: The organization works as a separate legal entity with certain moral
and ethical obligations. Such ethics safeguard the interest of all the internal and external
parties associated with the firm. This includes the employees, customers, and shareholders

Social Responsibility: Making profits should not be at the cost of society. Therefore, corporate
social responsibilities (CSR) have been a common practice where businesses work towards
environmental protection, social causes, and spreading awareness.

Personal Responsibility: Employees are expected to act responsibly with honesty, diligence,
punctuality, and willingness to perform excepted duties. Individuals should settle dues in time
and avoid criminal acts.
Technology Ethics: In the 21st century, companies have adopted e-commerce
practices. Technology ethics includes customer-privacy, personal information, and
intellectual property fair practices.

Fairness: Favoritism is highly unethical. Every individual possesses certain personal

bias. But at the workplace, personal beliefs and biases should not affect decision-
making. The firm has to ensure fair chances of growth and promotion for all.

Trustworthiness and Transparency: Businesses should maintain transparency in

business practices and financial reports.
Myths about Business Ethics:
• Some common myths about business ethics are that
ethical behavior is a hindrance to profitability, that
it is subjective and varies from person to person, or
that unethical behavior is necessary for survival in a
competitive market.
 The
• Profit is the Sole Purpose of Business
• Ethical Practices are Always Costly:
• Ethical Business is Always Inefficient
most •
•
Compliance Equals Ethics:
Ethical Business Can't Be Competitive:

common •
•
Business Ethics and Personal Ethics are Separate
Ethical Dilemmas Have Clear Solutions:

Myths
• Small Businesses are Exempt from Ethical
Obligations:
• Ethical Behavior Guarantees Success:

are: • Ethical Lapses are Rare:

Morale Reasoning:
• Moral reasoning involves using ethical principles and values to make decisions
and justify actions. It is the process of determining what is right or wrong based
on moral standards and beliefs.

The Morality of Profit Motive:

• The profit motive, which drives businesses to pursue financial gains, can be
viewed from an ethical perspective.
• Some argue that solely focusing on profits may lead to unethical practices, such as
exploitation of employees or environmental harm. However, others contend that
pursuing profits ethically can be justified as long as it is done within the bounds of
legal and moral principles.
Ethics and Philosophy:

• Ethics is a branch of philosophy that deals with moral principles and values. It explores questions about
what is right or wrong, good or bad, and how individuals and societies should behave.

Here’s how ethics & philosophy are important in different areas

• Professional Ethics:
• Social and Political Thought:
• Technology and Artificial Intelligence:
• Environmental Ethics:
• Personal Development:
 Ethics and philosophy are profound and sophisticated disciplines
that explore the deepest questions about human existence, morality,
reality, and knowledge. They offer a space for critical thinking,
intellectual exploration, and the development of ethical reasoning
Ethics and Morality:
• Ethics and morality are often used interchangeably, but they have subtle differences.
• Ethics refers to the study and application of moral principles and values, whereas
morality refers to the actual principles and values themselves that guide human
behavior.
• Ethics are more objective and universal, while morality is more subjective and culture-
specific.
• Ethics are a branch of philosophy that involves a system of values that are "moral" as
determined by a community. Morals are a person or society's idea of what is right or
wrong, based on their own principles or gut instinct.
Code of Conducts - Meaning and Importance:
• A code of conduct is a set of guidelines and rules that outline
expected behaviors and ethical standards within an organization.
• It serves as a framework to ensure employees' actions align with
the company's values and ethical principles.
• A well-defined code of conduct is crucial for maintaining a positive
corporate culture, promoting ethical decision-making, and
preventing misconduct or unethical behavior.
Social Responsibility:
• Social responsibility refers to the ethical obligation of
businesses to consider the impact of their actions on
society, the environment, and stakeholders beyond
profit-making.
• It involves voluntarily taking actions that benefit society
and contribute positively to sustainable development.
 The Evolution of CSR:
• Corporate Social Responsibility (CSR) has evolved over time. Initially,
businesses were primarily focused on profit maximization without
considering social or environmental consequences.
• In recent decades, CSR has gained prominence as societal
expectations and awareness of environmental issues have
increased. Today, many companies integrate social and
environmental concerns into their core business strategies.
The evolution of CSR/Stages:
• Philanthropy Stage (Early 20th Century): The earliest form of CSR was rooted
in philanthropy, where businesses engaged in charitable activities to support
local communities.
• Regulation and Compliance Stage (Mid-20th Century): As businesses
expanded and their impact on society became more apparent, governments
began to introduce regulations to address environmental and social issues.
• Stakeholder Engagement Stage (Late 20th Century): This stage emphasized
building positive relationships and addressing the concerns of these groups.
The Triple Bottom Line (TBL) concept, introduced by John Elkington in 1994,
expanded the focus of businesses beyond just financial performance to also
consider social and environmental impacts.
Sustainability and Strategic Integration Stage (Late 20th to Early 21st Century): In this
stage, CSR evolved into a more strategic and integrated approach. Companies began to see
the potential for aligning social and environmental initiatives with their core business
strategies.
Shared Value and Global Challenges (Current Era): The modern evolution of CSR focuses
on the concept of shared value, as popularized by Michael Porter and Mark Kramer. Shared
value suggests that businesses can create economic value while simultaneously addressing
social and environmental challenges.
Digital Age and Transparency (Ongoing): With the advent of the digital age, information
dissemination has become instantaneous and widespread. This has made transparency a
key element of modern CSR.
A Moral Argument of CSR:
• The moral argument for CSR suggests that businesses, as
influential and powerful entities in society, have a
responsibility to contribute positively to society's well-being.
• It suggests that companies should go beyond their profit
motive and actively engage in activities that address social
and environmental issues.
Increasing Relevancy of CSR:
• CSR has become increasingly relevant due to several factors.
Consumers are now more conscious about the ethical practices
of the companies they support, and investors often consider a
company's CSR efforts when making investment decisions.
• Moreover, regulatory bodies and international standards have
placed more emphasis on corporate responsibility and
sustainability.
Social Responsibility and Ethics:
• Social responsibility is closely related to ethics, as both
concepts revolve around doing what is morally right
and socially beneficial.
• Embracing social responsibility involves incorporating
ethical values into business practices, leading to
positive impacts on society and stakeholders.
CSR Domains:
• Corporate Social Responsibility (CSR) encompasses a wide
range of domains that companies and organizations consider
when addressing their social and environmental impact.
• These domains reflect areas in which businesses can
contribute positively to society and the environment.
 CSR initiatives can encompass various domains, such as:
• Environmental: Initiatives to reduce carbon footprint, conserve
resources, and promote sustainable practices.
• Philanthropy: Contributions to charitable causes and community
development projects.
• Employee Welfare: Focusing on employee well-being, fair wages, and a
safe work environment.
• Ethical Sourcing: Ensuring that the supply chain adheres to ethical
labor practices and environmental standards.
Diversity and Inclusion: Promoting a diverse and inclusive
workforce and ensuring equal opportunities for all employees.

Stakeholder Engagement: Actively involving stakeholders in

decision-making and addressing their concerns.

Transparency and Accountability: Being transparent about

business practices and being accountable for actions and impacts.
Understanding and implementing
business ethics and corporate
social responsibility can lead to a
more sustainable, responsible, and
successful business that positively
impacts society and the
environment.
Chapter ends …
Article: