Question

Explain the distinctions of business ethics and business social responsibility

Answer 1

Ethics is derived from the old greek word, ethos, meaning 'moral nature'. And business ethics examines the moral principles and fairness in the problems of business.

It refers to organisational standards, principles, values and norms that govern the actions of an business organisation as a whole. There are many ethical conundrums that exist in business viz. whether to price something highly for some necessity like water or be generous and suffer losses.

Whatever the decision, there are consequences. In the example above, they could choose to price it lower, but then give very few returns to people who invested in the organisation or even losses, that is unethical. They could price it high and make something, a basic necessity, unavailable to many people, that's unethical too. So, business ethics, are what help orgainsations make these decisions. Business ethics, is about striking the right balance between things, anything extreme is generally in the area of unethical.

These business ethic norms could be from a law, or an organisation's vision and mission or social accepatbility, standards etc. However most of these norms, if originating from a law, and regularised, would become more of a obligation.

Business Social Responsibility is the idea that originates from the above ethical conundrums. It is the idea that businesses should change their business attitude to balance profit-making with social benefit, as discussed above in the drinking water example. It ensures businesses maintain a positive relationship with the societies they operate in, no matter how large or small.

ISO, the international organisation for standardisation says "business social responsibility is critical factor in the ability of a business to continue operate effectively."

Social responsibility is acting in the best interests of the society. It stems from the idea that, businesses are making profits off of society, and hence should act in it's best interests. It doesn't mean that businesses should not operate profitably, but responsibly. Now-a-days, business social responsibility (also Corporate Social Responsibility) is being regularised to ensure business organisations are spending a portion of their earnings for the benefits of society and it's employees through amendments in the laws that govern them.

Distinctions:

So, in effect, Business Ethics is a broad concept which encompasses business social responsibility, but not the other way around. Business Social responsibility is the narrower concept that only discusses the responsibility or obligations of a business to it's society.

Business ethics is more subjective than business social responsibility.

Business ethics is directed at everything and everyone the business organisation is involved with, wheras business social responsibility is directed at society as a whole.

Business ethics concerns directly with the organisation's business decisions, whereas business social responsibility concerns with society which doesn't have direct involvment in the business of the orgainisation.