Ethics are the moral principles and values that govern the actions and decisions of an individual or group. Laws are society's values and standards that are enforceable in the courts. Operating according to the law does not necessarily mean that a practice is ethical.
Ethical behavior of businesspeople has come under severe criticism by the public. There are three possible reasons for this criticism: (a) increased pressure on businesspeople to make decisions in a society characterized by diverse value systems, (b) a growing tendency to have business decisions judged publicly by groups with different values and interests, and (c) a possible decline in business ethics.
Numerous external factors influence ethical behavior of businesspeople. These include the following: (a) societal culture and norms, (b) business culture and industry practices, and (c) corporate culture and expectations. Each factor influences the opportunity to engage in ethical or unethical behavior.
Ultimately, ethical choices are based on the personal moral philosophy of the decision maker. Two moral philosophies are most prominent: (a) moral idealism and (b) utilitarianism.
Social responsibility means that organizations are part of a larger society and are accountable to that society for their actions.
There are three concepts of social responsibility: (a) profit responsibility, (b) stakeholder responsibility, and (c) societal responsibility.
Growing interest in societal responsibility has resulted in systematic efforts to assess a firm's objectives, strategies, and performance in the domain of social responsibility. This practice is called a social audit.
Consumer ethics and social responsibility are as important as business ethics and social responsibility.
