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What is the Connection Between Business Ethics and Social Responsibility?

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  • Written By: Osmand Vitez
  • Edited By: Kristen Osborne
  • Last Modified Date: 22 September 2016
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Business ethics and social responsibility are two concepts many individuals believe go hand in hand for companies in the business environment. Business ethics are the moral principles a company uses to ensure all employees act in an acceptable manner when completing business functions. Social responsibility is typically an ideological theory that governments and the general public hold, believing that businesses should not conduct themselves in a manner counter to cultural or societal norms. The marriage of these concepts occurs when companies institute a written code of ethics to prove that the company only acts in its best interest so long as it does not damage the company’s social responsibility.

Ethics can mean many things to different individuals and businesses. What one business deems as acceptable behavior, another may see as unethical or inappropriate. While many different types of ethics exist, the common good approach most closely connects business ethics and social responsibility. Common good ethics is a Greek philosophy that says that all individuals should follow or use the ethical traits that do the most to advance the common good of society. While this ethical approach can apply to different regions or nations, a basic set of ethical traits include honesty, integrity, transparency, and accountability. These traits ensure that owners, managers, and employees do not act in their own self interest, but uphold societal values as the guiding force for the company’s operations.

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Large organizations and publicly held companies often use corporate governance to promote business ethics and social responsibility. This governance creates the framework of policies, procedures, and guidelines for all individuals financially invested in a company. Outside stakeholders who do not have an investment can also benefit from corporate governance. Large organizations and publicly held companies typically face more scrutiny pertaining to business ethics since they command large portions of a region or nation’s economic resources. These companies must try to provide benefits to local communities and increase the living standards of as many people as possible, and they must be careful not pollute the surrounding environment.

While business ethics certainly play an important role in the business environment, it is possible for governments and individuals to demand too much social responsibility from companies. While companies should not abuse or misuse natural and economic resources, companies cannot pay for all the needs or wants of individuals. Some governments, individuals, or special interest groups can try to force companies into paying more money to improve society than the company can afford. This can result in lower business profits and the inability to pay for future, more reasonable and responsible social items.

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Comparables
Post 3

@ GlassAxe- You have just described the tragedy of the commons. Although it may not be the intent of every individual company to destroy the earths systems while using the planet's resources, this is what is happening. When the impact of each individual is taken into account, all of these companies acting in their own self-interest will ultimately destroy every resource they exploit. You have illustrated this great dilemma perfectly.

GlassAxe
Post 2

@ GenevaMech- While you are free to your opinion, I have to disagree with most of what you have said. While there are cases of exploitation of people and resources, most companies do not outsource with the intent to destroy natural capital as you call it. What is business without competition? This is an example of the free market at work.

I would also like to point out that if we all paid full price for our goods, the computer you were typing on would cost three or four times what you paid. Resources are there to be used. Every animal uses resources, so why should we be forced to quit using them. I can see that some resources are being used too quickly, but businesses are starting to catch on and find new ways to become more ecologically friendly. Once again, the markets at work.

GenevaMech
Post 1

While the last portion of the article about companies being pressured to pay more money to improve society is valid, so is the counter argument that businesses should not have free rein to damage natural capital that belongs to everyone in society. While some business owners see things like pollution cleanup and the likes to be society asking for a handout, the other side sees the fact that businesses are not held responsible for their externalized costs.

An example of a weak link in the connection between business ethics and social responsibility is the off shoring of manufacturing operations to countries that do not have strict anti-pollution laws. The majority of businesses practice this to gain a short-term

competitive edge without thinking about the long-term effects of their actions on future generations. Standards for global ethics should be established because as long as there is a country that can be exploited, the multinational corporation will have separate corporate social responsibilities for every country. It is sad, but more often than not, social responsibility takes a back seat to profits.

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