Business Responses to Social and Ethical Issues

The social and ethical responsibility of business has become a topic of much public debate. Many corporations have responded to their critics. These responses have had three characteristic changes in the thinking of the board of directors laying more emphasis on ethics and use of social performance disclosures sometimes called social audits. Many board of directors now include outside directors such as influential academic, minority and religious leaders, who give the society’s view during decision making. Since marketing is usually the most visible activity of an organization it must assume the responsibility for development of useful products, fair pricing of products and service and promoting them in an accurate manner.
Social responsibility and profits often complement each other. Some of the most profitable companies are often named as being the most socially responsible. Business and Society Review, which specializes in social responsibility issues, gives annual awards to the most socially responsible companies. Some of the recent recipients have been Mobil Oil, IBM, Bank of America and Honeywell which are also very profitable companies.
Corporate ethics are difficult to define and discuss because they are related to individual philosophies and values. Nevertheless there must be an ethical base for making marketing decisions. The problem comes from determining which base or reference point to use. While there are a variety of theories that are relevant to marketing and consumer behaviour we can examine two basic approaches to use in deciding the morality of a particular decision or action. One approach uses relative standards also known as situation ethics or speculative philosophy) in which the correctness of an action depends on the specific circumstances involved. In this view ethics are subjective, situational, culturally determined and autonomous; they are developed by people on the basis of human experience. There are two forms of situation ethics: utilitarianism which looks at the consequences of an act to decide whether it is morally right, and intuitionism which uses an individual’s conscience to decide whether an act is ethical. The first approach strives to achieve the most good for the greatest number of people. The second to satisfy the individual’s own feelings about right and wrong. The problem with these approaches is that there may be little agreement among people as to what is the morally correct things to do. Also, decisions may appear to be arbitrary due to different situations. Moreover, there is an uncertainty about the moral correctness of the decisions because of changing values over time.
A second approach uses absolute standards (also known as moral idealism or moral revelation) in which the correctness of an action depends on permanent rigid, universal rules or moral ideas which are to be applied whatever the circumstances. The Bible provides the basis for the Judeo –Christian values by which most people in the United states resolve moral dilemmas in using absolute standards. This is the approach recommended by many moral philosophers today. It is upon such universals that a business’s marketer’s and consumer’s ethical philosophy must be built.
A growing number of US corporations are embracing in house ethics programs. The Centre for Business Ethics found that 45 per cent of the 1000 largest US companies now have ethics programs or workshops (an increase from 35 percent five years earlier). In addition, many large companies have explicitly established their ethical philosophies. They have written ethical codes to guide their employees. Some companies have even established industry standards with their well-developed codes of ethics. In addition the American Marketing association has produced a code of ethics to which members subscribe.
Source: Consumer Behaviour