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6-2 Ethics & Social Responsibility [CH 6

Chapter Overview
Is it permissible to misrepresent the balance sheet or profit and loss statement in

any business when it is the goal to encourage people to invest by buying more stock?
You want to make that sale that will help your company and your boss show a higher
profit, but to do this requires you to deliberately misrepresent (lie) your corporate
resources; is this permissible? Since everybody does it, telling a small lie on your
resume, taking home the firm’s property from the workplace, bribing someone for a
favor isn’t really wrong—unless you get caught; is this appropriate behavior? These
and other acts are what the world teaches. Hollywood writes stories about these topics,
and since ethics are personal and private decisions, they do not really matter in the

world?
Let us suggest some common sense thinking on this:
 How will my decision look on the front page of my hometown paper?
 What is the intention of the decisions I make?

 Will this decision hurt or injure someone?
 Could you proudly tell your mother or boss of the decision?
 Is it morally correct to take advantage of an unsuspecting person?
 Will your decision damage or harm your reputation?
 What does the law say on this?

Of course, we are aware that not everybody is willing to make ethical decisions,
that indeed there are liars, cheats and thieves in the world. However, being honest, fair
and truthful, and having employees who model those traits are lessons that companies
such as Enron, Sunbeam, E.F. Hutton, and Sears found out the hard way is always the
best. Individuals can learn from the scandals many firms have found themselves
entangled in and that ethical behavior is the best way to represent yourself, and your
company.
Business conducts itself to produce goods and services, to meet market demand,

to meet the needs of their communities, engage in commerce in a fair and equitable
way. Business best serves its community by meeting the needs of that community and
being a member of the community. Business, in its commerce, must make a profit and
that profit is not an untoward activity, nor is profit an evil word or thing. There are
influences, and people, that expect business to be altruistic, never to be engaged in for
a profit, but this is foolishness. Nobody works for free, unless it is your mother, and
society expects business to make a profit, especially government to collect taxes on its
profit. Society also expects business to be ethical (fair and just) in its dealings, obey
the laws, and be a good citizen. A company on its own is amoral; it does not lie, cheat
A lie doesn’t become or steal; it does not go about intentionally breaking the law, paying bribes or making
truth, wrong doesn’t
become right, and evil campaign contributions to politicians who may direct government’s business in the
doesn’t become good, direction of the company. It is the people actively engaged in running that company
just because it’s who possess those qualities, of being ethical or unethical—immoral.
accepted by a majority. The concept of social responsibility has joined the lexicon of business parameters
—Rick Warren and is often encapsulated in the phrase of “giving back to the community.” Those who
like to use this phrasing fail to realize that the presence of business in a community is
meeting the needs of the community, a socially responsible act. However, those who
talk about “giving back to the community,” link the phrase to the dollar amount of

contribution that a firm gives out as charity from its profits as a measure of meeting
social responsibility, especially if that giving is toward their favored political projects.
Is it socially responsible to have a regional or national grocery chain in the inner city,
social responsibility providing grocery items—milk, bread, meat, fresh vegetables and the like—at a less
Management's expensive price to the consumer than say the pricing structure of convenience stores
consideration of the on the corner gas station in the same community? There is an economic reason for
socital and economic these price differences which are founded in the economies of scale. Both are meeting
effects of its decision a need and serving the community; one may hire more employees, and if they are local
making, today a political to the community then those employees also contribute to the community. Both must
morality concept for make a profit to continue to participate in a community or neighborhood. One business
American business.
will offer goods at a lower price than the other. Each has primary business interest that

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