THE SOCIAL

FUNCTION OF
BUSINESS
 WHY SHOULD BUSINESS BE
ETHICALLY SENSITIVE ???
No one ever said leading was easy, much
less leading with ethics. But the latter is
very important. It is the difference between
a good executive, in the full sense of the
expression, and one who only knows how
to achieve technical perfection, and how to
do things right, but does not know how to
do what needs to be done in each case, with
long-term vision and a sense of
➢ The decisions are complex; there is
no time for reflection, vital
information is missing, etc.
➢ The competition is intense,
sometimes brutal.
➢ We are enslaved by results: You are
what you achieve, and there are
perverse incentives, which lead
people to do things that should not
be done because people get paid to
do things they should not be doing.
! Ethics is not considered a part of the
company’s decision making. Decisions are
made by experts, who only consider their
limited field, and overlook the implications
of their decisions on others: a salesperson
decides what needs to be done to make sales,
regardless of whether this affects
manufacturing, harms the environment or
creates comparative injustices for other
departments. In other words, a partial, limited
approach is an invitation to not act ethically.
 BUSINESS ROLE IN POVERTY
ALLEVIATION
! Poverty due to hunger and malnutrition weakens business’
primary resource—our people. Thus, quite the opposite, it
is very much in our interest to eliminate poverty.


! How exactly does business address poverty? Let me

present three kinds of intervention: corporate social
responsibility (CSR), bottom of the pyramid (BOP)
businesses, and business simply being business.





! In the Philippines, CSR has a long tradition.
However, it has gone beyond just setting up
foundations, giving scholarships, or planting
trees. Most of the problems we seek to
address will persist unless the structural
roots of these problems are attacked.
Realizing this, moving beyond projects and
programs, business now uses its position and
clout to influence and shape the country’s
macro environment.



!The second form of business
intervention is discussed by CK
Pralahad in his book “Fortunes
at the Bottom of the Pyramid.”
According to Pralahad, servicing
the poor, not as a cause or an act
of charity, is an often-successful
business strategy
!AND is an effective solution to
poverty. It is about profit driving
the provision of services to the
poor, and it is about these services
being provided sustainably
because their provision is
profitable.



This discussion on profit
brings us to the third
business intervention.
How should business
mainly contribute to
reducing poverty? By
simply being business.
!According to Milton Friedman, the
business of business is business: The
business sector fulfills its role in society
when it establishes enterprises, creates jobs,
makes available good products, and
generally provides goods and services that
respond to market demand, all in the
pursuit of profit and the enhancement of
shareholder value.



! Beyond job creation, profit and business
competition also stimulate innovation and
accessibility. Increased competition in the
telecommunications, banking, and airline
industries reduced prices, improved
quality and service, and increased access.
Privatization led to expanded access to
clean water, more reliable sources of
electricity, and better toll roads.

CONTINUING EXTREME POVERTY in
the MIDST of ECONOMIC GROWTH
!The UNDP said that extreme
poverty has been cut by half in two
decades. More specifically, only 21%
of the global population was living
on less than $1.25 a day in 2010,
down from the 1990 figure of 43%.

!Even in the midst of prosperity, for
some people, stark inequalities
remain. Economic growth alone has
not reached sufficient numbers of the
poor. Many of those who have escaped
poverty remain vulnerable to quickly
slipping back when faced with a major
setback to their health, assets or
employment prospects,”
 BUSINESS ROLE in OVERCOMING the
POVERTY TRAP
! Poverty goes beyond social inequalities and it
is concerned with the failure of the
underserved, due to their social condition and
to asset deprivation, to acquire and maintain a
minimum set of basic capabilities - such as
nutrition, instruction, clothing, housing needs,
basic healthcare - which prevent the poor from
fully participating in labor and credit markets
- hence the importance of microfinance.
!Microfinance, a grass-roots
movement to provide credit to the
neediest, can greatly help to
dismantle at least some of these
poverty traps, and thousands of
mostly small institutions are
competing in a market where
demand from the poorest for
financial services is potentially
unlimited – while supply is not.
!The concept of poverty
includes different
dimensions of deprivation.
In general, it is the
inability of people to meet
economic, social and other
standards of well-being.
 AREAS OF BUSINESS MOST NEED IN
ETHICAL ATTENTION
!Paying attention to business ethics is
an important part of any business
owner or manager's job. The human
resources function deals with a
variety of ethical challenges; being
the department that deals directly
with people employed by a company,
!HR includes numerous ethical
pitfalls that can damage a
company's reputation or financial
sustainability if not handled
properly. Understanding the
importance of ethics in human
resources is crucial for any business
owner, whether in a local startup or
a multinational powerhouse
 Company Reputation
! In the business world, legal
trouble can introduce additional
challenges to employers, as
news outlets and ethics
watchdog organizations spread
the word about companies'
misdeeds.
! Gaining a reputation as an
ethical employer can help to
attract the top talent in your
industry from a wider area,
as employees seek to find the
most beneficial employment
relationships they can..
!The opposite holds true, as
well; if job applicants see your
company as an unethical
employer, the most skilled,
experienced, creative and
productive applicants are likely
to put their resumes in
elsewhere
 Employee Loyalty
!Treating employees ethically
can garner long-term employee
trust and loyalty, which conveys
a range of distinct benefits to
employers. Loyal employees
gain more experience working
with their employers,
!allowing them to master
production processes and more
fully understand the inner
workings of the firm. This can
increase employees'
productivity and efficiency over
time in addition to keeping
recruiting and training costs
under control
 Promoting Ethics
!A solid reputation as an ethical
employer does not happen on its own.
Ethics-conscious business owners put
comprehensive ethics programs in
place to display a firm commitment to
ethics in every area of business,
including human resources. Put HR
ethics policies in place regarding
! discrimination, sexual harassment and
the treatment of employees, and put
each of your managers and supervisors
through ethics training programs to
make sure they are fully aware of your
expectations. Most importantly, lead by
example in your organization to create
a culture of mutual respect and dignity,
where ethical decision-making is
valued and rewarded.
 THE SOCIAL RESPONSIBILITIESOF
CAPITALIST BUSINESS PRACTICES
! The lesson provides an introduction to
Conscious Capitalism, which argues that
success in today’s business environmental
is correlated highly with ethical,
responsible, and inspiring behavior. Many
large companies have recently created or
installed models to practice Conscious
Capitalism as a business strategy.
!Even today, “conscious” and
“capitalism” remain unlikely
bedfellows. Both are freighted words
that have come to stand for
fundamentally different worldviews.
Capitalism is associated with
individualism, personal ambition, the
accumulation of wealth and power,
and an identity grounded in external
accomplishment..
!The word conscious, or more
specifically consciousness, is
associated with self-
awareness, personal
development, the greater
good, and a worldview that
eschews competition,
hierarchy, and materialism
!At the most basic level, consciousness
simply means being conscious of
more. That begins with self-awareness
— the willingness to look inside, to
acknowledge our limitations,
uncertainties and fears, and to take
responsibility for our actions
!

Social responsibility means that
individuals and companies have a duty
to act in the best interests of their
environments and society as a whole.
Social responsibility, as it applies to
business, is known as corporate social
responsibilities(CSR). Many companies,
such as those with "green" policies, have
made social responsibility an integral
part of their business models.