Question

Differentiate between ethics and ethical behavior. Why are ethical practices and corporate social responsibility critical issues for contemporary managers? Provide an example of how stakeholder’s decisions could lead to a company’s image and how customers view that picture, either positively and negatively.

Answer 1

Ethics include the moral principles and values that constitute right or wrong behavior in a society. But ethical behavior involves acting in consistent with the personal values and the commonly held values of the organization and the society. Ethical practices and corporate social responsibility are very important for contemporary managers because it helps to improve the performance and the market value of the firm. People are much aware of the CSR activities and ethical conduct in organizations now and the company reputation is greatly affected by these. The reputation of the firm also improves which helps to increase the customer base. Ethical practices and CSR activities also helps to attract new talents to the firm and the firm can choose from qualified talent pool to have a better workforce.

Consider a situation where a customer tries to buy a faulty product without noticing the defect. The salesman finds the same, informs the customer and gives him another good piece of product. The salesman is involved in ethical behavior which would make the customer satisfied and the company would receive a positive image in front of the customer. The customer would feel a sense of commitment and loyalty towards the organization and there are more chances of buying from the same company. But at the same time if the salesman acts unethically hiding the defect, once the customer finds the fault he would feel cheated and the company gets a negative image. The customer would never try to buy any product from that company again.