One of the most important components of an ethics program is a means through which employees can report observed misconduct anonymously. Although the risk of retaliation is still a major factor in whether an employee will report illegal conduct, the National Business Ethics Survey found that whistleblowing has increased in the past few years. Whistleblowing occurs when an employee exposes an employer’s wrongdoing to outsiders, such as the media or government regulatory agencies. However, more companies are establishing programs to encourage employees to report illegal or unethical practices internally so that they can take steps to remedy problems before they result in legal action or generate negative publicity. In 2010, Congress passed the Dodd-Frank Act, which includes a “whistleblower bounty program.” The Securities and Exchange Commission can now award whistleblowers between 10 and 30 percent of monetary sanctions over $1 million. 18
The four dimensions of social responsibility are illustrated using Table 2.7 in your text and here on this slide. Earning profits is the economic foundation, and complying with the law is the next step. However, a business whose sole objective is to maximize profits is not likely to consider its social responsibility, although its activities will probably be legal. Finally, voluntary responsibilities are additional activities that may not be required but which promote human welfare or goodwill. Legal and economic concerns have long been acknowledged in business, but voluntary and ethical issues are more recent concerns. 19
We define corporate citizenship as the extent to which businesses meet the legal, ethical, economic, and voluntary responsibilities placed on them by their stakeholders. A commitment to corporate citizenship by a firm indicates a strategic focus on fulfilling the social responsibilities expected of it by its stakeholders. Corporate citizenship indicates a strategic focus on fulfilling the social responsibilities expected of it by its stakeholders. 20
Although the concept of social responsibility is receiving more and more attention, it is still not universally accepted. This slide lists some of the arguments for social responsibility (see the next slide for arguments against social responsibility.) The main argument for social responsibility is that business helped create many of the social problems, so it should play a significant role in solving them, especially in the areas of pollution reduction and cleanup. 21
The main argument against social responsibility is that these programs distract from the primary goal of business – earning profits. 22
Businesses must first be responsible to their owners, who are primarily concerned with earning a profit or a return on their investment in a company.
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