Chapter 3: The Ethical and Social Responsibilities concern would be to encourage his people to adapt

good ethical behavior.

1. Define Ethics
2. Know the factors influencing ethical behavior Ways to encourage ethical behavior
3. Know how ethical behavior is encouraged
1. Adaptation of code of ethics;
4. Know the Ethical issues
2. Institution of rewards and punishment
ETHICS concerning ethical behavior;
3. Adaptation of internal program for resolving
 It is the study of moral obligations involving conflicts;
the distinction between right and wrong. 4. Creation of ethics review committees;
 The study of ethics paved the way for the 5. Provision of training ethics for employees;
adaption of the general rules of conduct in 6. Top management support.
society.
*Code of Ethics
Business Ethics
 It is a formal document indicating the
 It is the rules about how entrepreneurs ought entrepreneurship’s adapted principles of
to behave. appropriate behavior.
Adherence to ethical standards contributes to  It is very useful to the firm espousing ethical
the smooth flow of business exchanges. It behavior.
establishes trust between buyers and sellers and  It serves as a basic reference for employees
between lenders and borrowers. who make big or small decisions.
 A code of ethics can be made effective if the
FACTORS INFLUENCING ETHICAL following requirements are met:
BEHAVIOR o It should refer to specific unethical
Ethical behavior, whether by a person or practices like receiving gifts,
business entity, is influenced by any or a avoiding warranty claims, bid-
combination of the following: rigging, making fictitious claims and
among others
1. Situation o It must be supported by top
 For an instance, a firm that behaves management.
ethically during prosperous times  Support might come in
may act unethically in times of various forms such as
financial hardship. providing sufficient funds for
2. Reward system its implementation and
 The expectation of high rewards for assigning specific employees
committing unethical behavior to handle infractions of other
motivates a person to do it. employees and the like.
3. Individual differences
 People are different from one *Rewards and punishments concerning ethical
another and that includes differences behavior
in reacting to specific situations  A code of ethics is sufficient for some
 For instance, a trader may think people if ethical behavior is required.
selling food products which had  For many people, however, this may not be
already expired is not bad, others enough to motivate them to act ethically.
might think otherwise. o Rewards
4. Other factors.  May be given in the form of
 When a person is in competition with cash gifts, promotions. Or
others, and he wants to be sure of citations.
winning, he is more inclined to adapt o Punishments
unethical behavior.  Could take form of dismissal,
Circumstances vary, and the reactions of demotion, suspension, or
firms or individual also vary. reprimand.

HOW ETHICAL BEHAVIOR IS *Internal Programs for Resolving Conflicts

ENCOURAGED  Conflict arise, even when ethical conduct of
If the entrepreneur believes that business personnel is concerned.
success requires good ethical behavior, his next

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  It is important for entrepreneurs to adapt a **Relations with Customers
program of resolving conflicts.
 When ethical abuses are committed, the
*Ethics Review Committees most probable victims are customers.
 This is expected because of the high
 To encourage ethical behavior, the
frequency of transactions between the
entrepreneurship may create an ethics
company and the customers.
review committee.
 Entrepreneurs are expected by society to
 Ethics Committee
treat their customers fairly and not to act in
o Is usually composed of company
ways that will be harmful to them.
employees as well as some who are  Entrepreneur should provide support for
not employed by the company. consumer rights are as follows:
o These persons have undergone 1. The right to be safe;
special training in ethics. 2. The right to be informed;
o It provides advice to the entrepreneur 3. The right to choose;
and his staff concerning sensitive 4. The right to be heard.
ethical issues.
**The Right to Be Safe
*Provision of Training in Ethics for employees
 Consumers expect that the products and
 Company personnel who are exposed to services that they buy will do them no
activities that are ethically charged must be harm,.
provided with sufficient training ethics.  They are expected to be free from bodily
 Such training should make them sufficiently harm when they are inside the
prepared to deal with various ethical issues entrepreneur’s business premises.
they would encounter in their respective  For example, Manufactured Drugs should be
works. approved by the DFA to guarantee safety.
 Ethics training is more appropriate for the
persons occupying sensitive positions: **The Right to Be Informed
o Purchasing  Consumers make purchasing decisions
o Waste disposal often. The quality of their decisions,
o Personnel however, will depend on whether or not they
o Research and development are properly informed.
o Sales  Advertisements and information printed on
o Manufacturing labels are some of the ways of providing
information to consumers about products
*Top Management Support and services.
 It is very difficult for any program or o Example: Expiry date labels, and
activity to succeed without sufficient other information.
support from top management.
**The Right to Choose
 For instance, when unethical conduct is
committed and no sanction is imposed by  Firms that intends to adhere to business
top management, it can be expected that ethics should strive to protect consumers’
more violations of good ethics will be made. right to choose, what products and services
they need and intend to purchase.
ETHICAL ISSUES FACING
o Example: right of the consumer to
ENTREPRENEURSHIP
choose between generic and branded
Entrepreneurship face ethical questions on a drugs.
daily basis. These spring from the following
**The Right to Be Heard
relationship:
 Customer have the right to communicate
1. Between the company and customers;
their concerns to entrepreneurship they
2. Between the company and its personnel and
patronize.
employees;
 This right may be used to express
3. Between the company and its business
appreciation about what the company is
associates
doing, or to provide information about
4. Between the company and the investors and
defects in the products the customers
financial community.
bought.

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 o Some company install a system of  Everyone has the right to work in a place
receiving and processing complaints. where discrimination is not practice.
o Like the costumer care number.  Factors like age, sex, race, religion, political
beliefs and the like must not be allowed to
***Relations with Personnel and Employees affect any person’s chance of getting
 There is always the possibility that business employed or promoted.
firms, including entrepreneurships will ***Preventing Sexual Harassment
commit unethical acts toward their
employees.  Sexual Harassment --- refers to unwelcome
 Since entrepreneurs and their staff make sexual advances, request for sexual favors,
decisions on various business activities like and other verbal; or physical contact of a
hiring, promotion, transfer, compensation, sexual nature.
and dismissal.  Entrepreneurs have the moral responsibility
 It is not uncommon for ethical lapses to of keeping the workplace free from sexual
happen every now and then. harassment and where everybody is treated
o Example; giving priority in hiring fairly.
officers and higher officials relatives.  In preventing sexual harassment, the
entrepreneur needs to do the following:
Good ethical conduct requires entrepreneurs 1. Issue a specific policy statement
to be aware of their responsibilities to employees. prohibiting sexual harassments;
These are the following: 2. Develop a complaint procedure for
1. Workplace safety; employees to follow;
2. Quality of life issues; 3. Create a work environment that
3. Avoiding discrimination; encourages sexually harassed
4. Preventing sexual harassment. employees to report their experiences.
4. Establish a committee to investigate
***Workplace Safety sexual harassment claims;
 The ethical entrepreneur is one who makes 5. Take disciplinary actions against
sure that he workplace is safe for employees. harassers.
 He sees to it that adequate measure are Relations with Business Associates
adapted to prevent accidents from happening
in the factory and in the office.  Entrepreneurship operate in conjunction
o Example, sufficient ventilation must with efforts of suppliers, agents and various
be maintained types of middlemen.
o Fire exist must be provided  In the course of business transactions
between the players mentioned and the
o Machines and chemicals must be
firms, some ethical questions may come into
handled by properly trained
force.
personnel
o A supplier who badly needs a
***Quality of Life Issues contract, for instance, may attempt to
bribe the company’s purchasing
 Many employees are burned by problems
officers.
about maintaining a good balance between
work and family. Caring for children and Relation with investors and the Financial
elderly are two of the most common Community
responsibilities that make life difficult for
 The country’s financial system survives
any employees
partly because investors and other player
o Some progressive companies provide
have placed a certain degree of trust in firms
day-care facilities for the children of
they deal with.
employees.
 The degree of trust is maintained at a high
o Housing is provided near the work
level if the investors and the financial
sites. If measures like those are not
community feel that business firms practice
feasible, entrepreneurship can still
good business ethics, especially if they think
provide assistance in locating or
that their investment are well protected.
facilitating arrangement.
 Trust and confidence, however, are eroded
***Avoiding Discriminations by wrongdoings of some firms

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o Investment scams perpetrated by
some scheming persons
o Misrepresentation concerning the
financial health of the firms. Land
swindles, embezzlement and
misleading reports about non-
existent asset are some of the
unethical and illegal practices that
undermine our country’s financial
stability.