Business Ethics

SOCIAL RESPONSIBILITY OF ENTREPRENEURS for the following corporate social

▪ The responsibility is to collect money responsibility (CSR) initiatives:
▪ The accountability; she must explain for
the lost of money because she is ▫ Energy consumption. Google
accountable to safekeep the money has cut its energy consumption
entrusted to her. (most probably, she by 15%.
will pay for the lost money) ▫ Water consumption. Employees
RESPONSIBILITY AND ACCOUNTABILITY reduced 30% of potable water
RESPONSIBILITY – refers to the duty or consumption from 2013 to
obligation to satisfactorily perform or complete 2015.
a task (assigned by someone) that one must
fulfill, and which has a consequent penalty for ▫ Waste reduction and recycling.
failure. It has reduced its waste to 86%
in 2016.
ACCOUNTABILITY – refers to the obligation of ▫ Carbon emission. Google has
an individual or organization to account for its zero carbon emission since
activities, accept responsibility for them, and to 2007.
disclose the results in a transparent manner. It
includes the responsibility for money or other 2. Microsoft is a multinational company
entrusted property. that develops and licenses software
products and services through
Responsibility hardware devices. These are Microsoft’s
▪ Can be shared CSR programs:
▪ In ethics and governance, it refer to
▫ Microsoft’s data centers rely
being in charge, being the owner of a
heavily on hydroelectric power
task or event
and solar energy.
▪ It does not necessarily owe an
explanation ▫ Employees are encouraged to
Involves having authority over one’s actions be creative and develop new
Accountability products and services.
▪ Cannot be shared
▪ Being accountable not only means ▫ It propagates confidentiality to
being responsible for something but customer’s personal data and
also ultimately being answerable for their right to privacy.
your actions. ▫ Suppliers are protected by the
▪ It is something you hold a person to Supplier Code of Conduct which
only after a task is done or not done defines business ethics
▪ In ethics and governance, it is practices.
answerability, blameworthiness,
liability, and the expectation of account- ▫ Microsoft is committed to
giving. donate 1 billion dollar in cloud
▪ It owes an explanation computing for nonprofit
▪ You are liable or answerable for one’s organizations worldwide in a
action span of three years. Cloud
▪ In order to be responsible, you must be computing uses an online
accountable and vice versa. If you are network to store and process
responsible for something, you are also data rather than a physical
accountable (Paul Gillard & Rachel server.
Radwinsky).
▪ Being accountable means that you have
responsibility for the results (Sam 3. The Walt Disney Company is a
Harrop). diversified international company that
offers media and family entertainment
in the form of parks and resorts, studio
FYI - Top three socially-responsible companies entertainment, media networks, and
consumer products. Walt Disney has
1. Google is a multinational company
the following CSR initiatives:
which has the most popular search
engine in the Web. It was recognized

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 Business Ethics

▫ Walt Disney has given to 5. Right to Representation – consumers

charitable endeavors especially have the right to participate in the
to victims of natural disasters. formulation and execution of policies
and guidelines on consumer welfare
▫ Motion pictures usually deal and protection.
with taking care of the
environment. Thus, it 6. Right to Redress – consumers have the
encourages environmental right to be compensated or reimbursed
education to the public. on any purchase or availment of goods
and services which do not meet the
▫ Part of the earnings of Disney expected standards of quality.
movies go to worthy causes
such as planting of three million 7. Right to Education – consumers have
trees in Brazil and protection of the right to acquire the skills needed to
the coral reef in the Bahamas. always be an informed customer.
▫ The Disney Worldwide 8. Right to a Healthy Environment –
Conservation Fund supports the consumers have the right to safe and
protection and conservation of conducive place to live and work free
wildlife and ecosystems around from any form of danger.
the world.
RESPONSIBILITIES AND ACCOUNTABILITIES TO
RESPONSIBILITIES AND ACCOUNTABILITIES OF THE CUSTOMERS
ENTREPRENEURS TO STAKEHOLDERS
▪ Ensure quality products and services
MORAL OBLIGATION OF THE ENTREPRENEUR
TO THE STAKEHOLDERS ▪ Ensure customer’s health and safety

Entrepreneurs have a moral obligation to ▪ Provide easy-to-use products

reconcile and balance the rights and obligation ▪ Provide free training
of their stakeholders such as customers,
employees, suppliers, and other stakeholders. ▪ Be fair in prices

SOCIAL RESPONSIBILITY TO CUSTOMERS ▪ Be honest in advertising and marketing

Eight Basic Rights that Customers are entitled: ▪ Be honest in dealings

Customer is one of the most critical ▪ Attend to complaints

stakeholders. ▪ Service even after sales – provide
1. Right to Basic Needs – customers must maintenance of goods during the period
not be deprived of the basic needs for of warranty
survival. These basic needs include ▪ Respect customers’ time – do not
food, clothing, shelter, education, and decide the time and venue as per your
healthcare. They should be made availability and comfort. Do not arrive
available at affordable prices. too early nor too late. Do not keep your
2. Right to Safety – consumers should be customers waiting. Your loss is
safeguarded against goods and services someone else’s gain.
that are hazardous to human health. ▪ Treat customers well
3. Right to Information – consumers have ▪ Ensure regular supply
the right to be properly informed and
not be misled by dishonest ▪ Research and develop to increase
advertisements, labels, or packaging. customer’s satisfaction – for
They are entitled honest and truthful improvement of the quality and reduce
information so they can select the best cost
products and services.
▪ Avoid monopolistic competition
4. Right to Choose – consumers are free
Deceptive practices – can be defined as illegal
to select from an array of quality
acts that mislead a person or group of persons
products and services available in the
to believe what is untrue or disbelieve what is
market.
true.

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 Business Ethics

Example of deceptive practices: 5. Create and maintain a favorable

working environment – in Mitsubishi
▪ Company representatives give false electric endeavors to develop
information about the feature of a workplace conditions that allow
product or service with the aim of employee to both excel in their careers
enticing (tempting) consumers to buy. and meet the duties of raising families.
▪ Use of defective weighing scales to 6. Respect human rights – enforce code of
tamper with the weight of goods ethics (sexual harassment)
▪ Overcharging 7. Support career development – create
▪ Selling low-quality products opportunities for employee to develop
and grow. Pay attention to the
SOCIAL RESPONSIBILITY TO EMPLOYEES permanent education and improvement
Basic Rights of Employees of employees in all employment levels.

Employees are the most important asset in an 8. Train and educate employee – attend
organization. business schools, specialization,
professional conferences, seminars, and
1. Pay salary or wages trainings
2. Create and maintain a safe workplace 9. Manage performance – performance
evaluation, whatever the target, it must
 Working Condition – refers to
be achieved or exceeded
the physical environment
particularly the physical setup 10. Give rewards and benefits
of the work area, as well as the
procedures and practices that SOCIAL RESPONSIBILITY TO CREDITORS
are relevant in performing a Responsibilities and Accountabilities to
task. the Creditors
 Workloads should not be 1. Give correct information – owners
beyond what the employees should be provided with correct
can undertake. Workers should information about the company to
be protected when undertaking enable them to decide about further
jobs that will expose them to investment
danger
2. Provide fair return on investment (ROI)
2. Create and maintain a safe workplace
(CONT.) 3. Strengthen share prices – let them
know the growth, innovation, and
• Equal employment opportunity is an diversification to protect their own
employment practice wherein interest
employers do not discriminate against
an applicant or employee on the basis 4. Honor fiduciary duties – when a
of age, color, race, religion, civil status, corporation becomes insolvent – the
or gender and also prohibits corporation cannot pay its debts as they
discrimination against people with become due
disabilities. They should have the right SOCIAL RESPONSIBILITY TO
to be promoted to higher position if GOVERNMENT
they are qualified.
Responsibilities and Accountabilities to
• Due Process – NO EMPLOYEES CAN BE the Government
DISMISSED FROM WORK WITHOUT
DUE PROCESS. Due Process – is the 1. Observe laws, rules, and regulations
employee’s right to be heard before a
decision for termination is made. 2. Pay taxes
3. Follow environmental regulations
3. Facilitate workers’ compensation
insurance 4. Abide by labor law
4. Enforce anti-discrimination

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5. Avoid restrictive trade practices – not to have pay back good value, quality, and
develop monopolies within a particular reliability
sector
▪ Maintain confidentiality – no
6. Disclose financial statements unnecessary disclosure of information
shared by the company and its activities
7. Avoid corruption
▪ Pay on time
8. Assist in implementing socio-
implementing policies – the ▪ Select suppliers with discernment–
government expects cooperation and three fundamental requirements every
help from the business sector to help company must need from their
them implementing programs and suppliers: legal compliance, quality
policies relating to social and economic control, and environmental
development conservation
9. Help earn foreign exchange – the Common unethical practice that suppliers
government expects from a business commit
organization that it will earn foreign
currency by exporting goods in the Bribery is the most common form of unethical
foreign market. The government practice.
requires this foreign currency for ▪ It is defined as the giving of gifts or
importing valuable and important favors to influence a person’s or a
products. company’s decision. Both the person
10. Advise the government – the business who bribes and the one who accepts
offers services of its leaders to the the bribe commit on unethical action.
government to work on different ▪ One of the consequences of bribery is
committees. the awarding of contracts to suppliers
11. Complete promptly government of inferior products or services, wherein
contracts – tie-up project between the quality is compromised that leads to
business and government to complete poor product quality and eventually
the project through a contract. It is affects customer’s patronage. Once
responsibility of the business to discovered, bribery negatively affects
complete the work in time and maintain employee morale.
a high level of quality of the work. ▪ Ethical practices to address bribery
12. Contribute to government treasury – include having clear rules on
the commercial organization must acceptance of gifts and how to set
contribute funds to the government aside personal interests and uphold the
during emergencies and natural company’s welfare.
calamities. SOCIAL RESPONSIBILITY TO THE GENERAL
13. Contribute to political stability – stable PUBLIC
government often brings more return Responsibilities and Accountabilities to the
and peace in a democratic country. General Public
SOCIAL RESPONSIBILITY TO THE To maintain a positive public image and attract
SUPPLIERS new clients
Responsibilities and Accountabilities to ▪ Be monetary responsible – do not use
the Suppliers the money of the company for your
Suppliers should be treated as the company’s own interest such as raiding corporate
partners account or gave themselves loan using
company’s money without control.
▪ Practice fair pricing and licensing
▪ Consider public input – a company
▪ Avoid coercion and litigation should reach out to its customers and
benefit from the insight of what
▪ Maintain stability – established long- customers are looking for product
term stability relationship enable to improvement.

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 Business Ethics

To maintain a positive public image and attract ▫ Separate garbage dumps and
new clients avoid using disposable plates,
especially Styrofoam.
▪ Take care of the community –
responsibility of business towards ▫ Implement energy savings
community and society includes system such as a LED lighting
spending a part of profits towards civic and turn off lights and
and educational facilities. equipment when not in use,
Ex: Rehabilitating the population displaced by ▫ encourage the use of bicycles
business units or housing colonies for workers. and car-pooling
Responsibilities and Accountabilities to the ▫ invite to perform activities such
Environment as tree planting and others.
1. Comply with environmental legislation:
▫ Regarding emissions of air
▫ Store waste safely and securely
(hospital waste) SOCIAL RESPONSIBILITY OF ENTREPRENEURS
▫ Manage business waste for Intellectual Property – is defined by the World
recycling by separating papers, Intellectual Property Organization (WIPO), the
card, plastic, metals, and glass officiating body for all participating countries, as
prior to collection the “knowledge, creative ideas, or expressions
▫ Ensure you do not cause a of human mind that have commercial value
statutory nuisance (noise, and are protectable under copyright, patent,
smoke, odors, dust)
service mark or trademark, or trade secret
▫ Get permission from water laws from imitation, infringement, and
company before you allow
trade affluent such as waste dilution.”
chemicals, detergents
 Intellectual property includes brand
▫ Make sure that you comply names, discoveries, inventions,
with restrictions in the storage knowledge, registered designs,
of hazardous substances software, and work of artistic, literary,
(chemicals, oil, pesticides) or musical nature.

2. Dispose waste properly Two main reason to protect

intellectual property
3. Recycle
1. It is an expression and protection of
4. Conserve and protect biodiversity – the moral and economic rights of
biodiversity refers to all species of creator and authors in their pieces of
plants and animals work.
5. Prevent and remedy damages to 2. This can promote creativity, as well
environment as support economic and social
development.
6. Report an incident – such as damage or
danger to the natural environment, Two Categories of intellectual property:
pollution to water or land, incidents ate
waste sites, unusual drops in river flow 1. Industrial property – includes
trademarks or service marks, layout
7. Use scarce natural resources sparingly designs of integrated circuits,
– such as: commercial names and designations, as
▫ start by recycling paper, well as geographical indications, and
protection against unfair competition.
▫ making the most of digital way
and reusing the recording  The protection comes from the
sheets. prohibition in using these signs
to mislead or misinform

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 Business Ethics

consumers and cautioning  Fair use means you can use copyrighted
companies from misleading material without a license only for
practice. certain purposes. These include:
2. Copyright – refers to all “artistic  Commentary
creations like poems, novels, music,
paintings, and cinematographic works.”  Criticism
Only the author who can make copies  Reporting
of a literary or artistic work such as a
book, a painting, a sculpture, a  Research
photograph, or a motion picture.  Teaching
 The author’s rights include the  Guidelines for Fair Use
prevention of reproduction of
such literary or artistic work  A majority of the content you
except when there is an create must be your own.
authorization obtained from
 Give credit to the copyright
him or her.
holder.
REPUBLIC ACT 8293 INTELLECTUAL PROPERTY
 Don't make money-off of the
CODE OF THE PHILIPPINES
copyrighted work.
COPYRIGHT VALIDITY PERIOD Creative Commons

SOUND 50 years from year recording  is an American non-profit organization

RECORDING took place devoted to expanding the range of
creative works available for others to
BROADCAST 20 years from date of
build upon legally and to share.
RECORDING broadcast  The organization has released several
copyright-licenses known as Creative
TRADEMARK Valid for 10 years and may Commons licenses free of charge to the
be renewed for a periods of public.
10 years

INVENTION Valid for 20 years from filing

PATENT date application

COPYRIGHT VALIDITY PERIOD

LITERARY WORKS During the lifetime

of the author plus 50
years after death

ART 25 years from the

date of creation  Attribution: You must credit the
creator.
PHOTOGRAPHIC WORK 50 years from  Non-Commercial: You can't make a
publication profit.

AUDIO- VISUAL WORK 50 years from  No Derivative Works: You can't change
publication the content.
 Share Alike: You can change the
 COPYRIGHT: content, but you have to let other
FAIR USE people use your new work with the
same license as the original.

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 Business Ethics

TYPES OF INTELLECTUAL PROPERTY UNDER distinguishing the goods or

INDUSTRIAL PROPERTY services of one enterprise from
those of other enterprises
PATENT
 A trademark is used in the
 is a right given to an inventor to exclude marketing of goods.
anyone from using or benefitting from
the invention for a period of 20 years.  The sign may be seen in the
container, wrapper, or
 Within this period, the inventor is given packaging of the goods. A
benefits like the exclusivity of use of his sound, three dimensional (3D)
or her invention, provided that there is signs, or olfactory signs (such as
full disclosure of the said invention for scents of perfume) are
public consumption so that others can considered trademarks in some
benefit and at the same time be given countries.
the chance to further develop the said
invention.  In some parts of the world, only
visual signs are allowed. The
 INDUSTRIAL DESIGN – refers to the period of protection varies from
aesthetic aspect of a material. one country to another, but
Aesthetics refers to the shape, pattern, trademark can be renewed for
or color of the object or material. an indefinite period.
 Under intellectual rights it  TRADEMARK
refers to the right granted to
protect the nonfunctional  A trademark is used in the
features of a product which marketing of goods.
constitute its visual appeal that
can attract or induce consumers  The sign may be seen in the
to purchase the said product. container, wrapper, or
packaging of the goods. A
 The creators of the industrial sound, three dimensional (3D)
design are given the exclusive signs, or olfactory signs (such as
right to “make, import, sell, hire scents of perfume) are
or offer for sale articles to considered trademarks in some
which the design is applied or in countries.
which the design is embodied.”
The maximum holding period  In some parts of the world, only
for the said grant is from 10 to visual signs are allowed. The
25 years. period of protection varies from
one country to another but
 INTEGRATED CIRCUITS trademark can be renewed for
an indefinite period.
 Refer to the designs or
schematics used in the  TRADE NAME
manufacture of electrical
equipment such as radio,  Identifies a company or an
computer, washing machine, organization. The protection
and other appliances. These given under intellectual
electrical circuits involve high- property is that the name
capital investment because of cannot be used by another
the expensive parts used in the organization.
design. It is very easy to copy  Trade names may be registered
the design so protection is in a government like
needed to avoid any unwanted Department of Trade and
copying. Industry and Securities and
 TRADEMARK Exchange Commission in the
Philippines.
 a sign or a combination of signs
in the form of words, numerals,  GEOGRAPHIC INDICATION or
pictures, shapes, and colors; Indications and Appellations of Origin

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 Is a sign used for goods which have results in getting personal gain, while
specific geographical origins and have adversely affecting the company.
certain characteristics of their particular
places of origin. • Can be prevented by establishing
formal ethical standards and policies
6. GEOGRAPHIC INDICATION on unethical behavior. Violations
should be dealt with accordingly.
 Example: there are Florida oranges and
Washington apples name after the Fundamental or essential ethical issues
American states. that businesses must practice
 The Philippines used to have Manila • Integrity and trust – a basic
hemp which is a fiber named after the understanding of integrity includes the
abaca plant, which is cultivated and idea of conducting your business affairs
processed in the Philippines. Other with honesty and a commitment to
goods were also taken from the famous treat every customer fairly
abaca plant such as Manila envelopes
and Manila paper. Manila hemp was Ethical issues in payment of taxes
not given much protection so the Taxation – is an orderly and compulsory
demand for the product declined. Other manner of raising money to finance government
countries like Ecuador have been projects for better delivery of services to the
producing fiber similar to Manila Hemp. people.
Industrial Property of WIPO, member countries • Most popular among the various taxes
are required to protect industrial property is income tax, which is imposed by the
against unfair competition. government on the income of
The following acts are considered dishonest businesses and individuals.
practices: Taxation
 All acts of such nature as to create • Sole Proprietorship and
confusion with the establishment, the partnerships are not taxed
goods or the industrial or commercial separately as a business – the
activities of a competitor; income derived from the
The following acts are considered dishonest business is included in the
practices: owner’s and partners’ individual
income.
 False allegations in the course of trade
of such nature as to discredit the • Corporations are business
establishment, the goods or the entities separate and distinct
industrial or commercial activities of a from their owners – therefore,
competitor; they are taxed as a business.

 Indications or allegations, the use of • Tax evasion – is the deliberate failure to

which in the course of trade are liable pay taxes due to a business. This is
to mislead the public as to the intentional and is therefore illegal
characteristics of certain goods. because this deprives the general public
of the projects which could have been
SOCIAL RESPONSIBILITY OF ENTREPRENEURS realized if payment were made.
ETHICAL ISSUE • Tax avoidance – is a tactic of
deliberately finding a way to avoid
• is a problem or situation that requires a payment of taxes or pay lower taxes by
person or organization to choose using methods.
between alternatives that must be
evaluated as right (ethical) or wrong MAJOR ETHICAL ISSUES IN
(unethical) ENTREPRENEURSHIP
CONFLICT OF INTEREST A. BASIC FAIRNESS
• Is defined as an intentional and • Ethical decision-making processes
deliberate action or decision that should center on protecting employees
and customers’ rights, making sure all

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business operations are fair and just, business decisions, this is a conflict-
protecting the common good and of-interest and an ethical concern
making sure individual values and Recommendation for unethical practices about
beliefs of workers are protected. personnel relations
• B. PERSONNEL RELATIONS A code of ethics must be created within the
organization because code of ethics sets out the
1. Mistreating employees
company’s values, ethics, objective, and
Example: responsibilities that:

• sexual harassment  defines the acceptable behavior of

employees within the workplace
• threatening or firing whistle
blowers • considered as legal agreement between
the company and the employee that he
• below minimum wage for or she will observe ethical workplace
undocumented/without conduct at all times
bachelor’s degree workers
C. DISTRIBUTIONS DILEMMAS
2. Discrimination and harassment in the
workplace 1. Pricing strategy ethics – price collusion
can be a major source of ethical
Example: pressure and artificial price-fixing is
• supervisor discriminated illegal.
against an employee based on Example: setting different price points for
gender, religion or ethnicity different consumers for the same goods
when making recommendations
for a promotion 2. Product placement ethics

• In this ethical issue, legal action Examples:

can be sought.
• point-of-sale displays, and demo kiosk
3. Employee’s behavior which is positioning techniques which
Example: can be arguably unethical way
(emotional manipulation – making
1. the ethical and legal challenges display of goods that is attractive to
surrounding the use of social children to gain more sales);
media (FB, IG, twitter, etc) and
its consequences in the • hired influential celebrities to be a
workplace affects the business brand ambassador
industry as a whole.
3. Ethics and promotions
4. Employee working conditions
• Example: the “bait and switch” tactic;
- employer must be aware of the safety considered as unethical business
of their working environment and practice

- not to practice unethical working • “bait” advertising a product of service

conditions such as requiring an at a bargained low price in attempt to
employee to work without pay. attract the customer to the teaser rate.

5. Side deals and sub-standard works • “switch”, once the customer comes into
the store to inquire about the
Example: advertised bargain price for the product
• accepting deals aside from or service, the advertiser will tell the
employment contract. customer that the product is no longer
available and attempt to sell the
• low quality of work offered to customer a more expensive product
customer
Recommendations for unethical practices
6. Family-run business – when about distribution dilemmas
personal family issues interfere with
• The entrepreneur shall not mislead
buyers, instead, they should openly

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share your fixed prices and focus on espionage, bribery, or outright theft to
providing a transparent value obtain economically advantageous
proposition to justify these prices. information in the possession of
another
• Thorough market research can prevent
most ethical issues in marketing. 4. Trade libel – it is the spreading of false
information about the quality or
D. FRAUD characteristics of a competitor’s
• -it is a business takes up so many forms products.
and sizes. It can be in the form of 5. Tortious (intentional) interference – it
financial misconduct or occurs when one competitor convinces
misrepresentation. a party having a relationship with
Example of financial misconduct: another competitor to breach a
contract with, or duty to the other
• Tax evasion competitor.
• Tax fraud 6. Anti-competitive practices – it prevent
• “cooking the books” to make the or reduce competition in a market
company look more profitable that it is 7. Dumping – a company sells a product in
• Paying unjustifiable salaries and a competitive market at a loss because
bonuses to top officials the company hopes to force other
competitors out of the market after
• Chasing short-term profit by placing which the company would be free to
investor’s money in questionable raise prices for a greater profit.
investments
8. Exclusive dealing – a retailer or
Example of misrepresentation: wholesaler is obliged by contract to
only purchase from the contracted
• Salesman who lies about the company’s
supplier
products or false/misleading advertising
9. Price fixing – companies collude to set
• Cover-up of illegal workplace conditions
prices, effectively dismantling the free
or transactions
market
• Falsified data in a shareholder report
10. Refusal to deal – two companies agree
• Lying to a union about corporate profits not to deal/use a certain vendor

E. UNFAIR COMPETITION 11. Dividing territories – an agreement by

two companies to stay out each other’s
1. Antitrust Law or Competition Law – way and reduce competition in the
antitrust violations constituting unfair agreed-upon territories
competition occur when one
competitor attempts to force others 12. Limit pricing – the price is set by a
out of the market or prevent others monopolist at a level intended to
from entering the market, through discourage entry into a market
tactics such as predatory pricing or
13. Tying – products that aren’t naturally
obtaining exclusive purchase rights to
related is being purchased together
raw materials needed to make a
competing product 14. Resale price maintenance – resellers are
not allowed to set prices independently
2. Trademark infringement – trademark
infringement and passing off occurs 15. Religious/minority group doctrine –
when the maker of a product uses a businesses must apply tribute to a
name, logo, or other identifying significant – normally religious – part of
characteristics to deceive consumers the community in order to engage in
into thinking that they are buying the trade with that community. A business
product of a competitor (CLASS A that does not comply will be 50% worse
imitated products) off than the competitor; if they do not
comply with the tribute demanded by
3. Misappropriation of trade secrets –
20% of the community
occurs when one competitor uses

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 Business Ethics

16. Absorption of a competitor or SOCIAL RESPONSIBILITY OF

competing technology – the powerful ENTREPRENEURS
company effectively co-opts or
swallows its competitor rather than see CORPORATE SOCIAL RESPONSIBILITY (CSR)
it either compete directly or be • is defined as a concerted initiative to
absorbed by another firm contribute to sustainable development
17. Subsidies from government – allow a through efforts that are economically,
firm to function without being socially, and environmentally beneficial
profitable, giving them an advantage to stakeholders.
over competition or effectively barring SUSTAINABLE DEVELOPMENT
competition
• defined as an effort to strike a balance
18. Regulations – place costly restrictions between maintaining the needs of the
on business that less wealthy company present and the ability of future
cannot afford to implement generations to meet their needs
19. Protectionism, tariffs, and quotas – through the preservation of the
which give firms insulation from environment
competitive forces. ASPECTS OF CORPORATE SOCIAL
20. Patent misuse and copyright misuse – RESPONSIBILITY
such as fraudulently obtaining a patent, 1. ECONOMIC RESPONSIBILITY
copyright, or other forms of intellectual
property; or using such legal devices to • it is the primary responsibility of a
gain an advantage in an unrelated company to help develop the economy
market and achieve a status of development on
a par (same level) with other countries;
21. Digital rights management – prevents generate employment; and distribute
owners from selling used media, a goods and services for public use and
would normally be allowed by the first consumption.
sale doctrine
Examples:
22. Enhancing the addictiveness –
chemically enhancing the addictiveness • Maximizing earnings
of cigarettes, becoming the leading per share
edge of the tobacco scandals of the • Generating a high &
1990s. consistent level of
F. NON-RESPECT OF AGREEMENTS profitability

• is a breach of contracts. • Establishing and

maintaining a strong
• It is a legal cause of action in which a competitive position
binding agreement or bargained for
exchange is not honored by one or • Operating the business
more of the parties to the contract by at a high efficiency level
non-performance or interference with 2. LEGAL RESPONSIBILITY
the other party’s performance.
• company operations should be within
• G. ENVIRONMENTAL DEGRADATION the bounds of law. The company should
• is the deterioration of the environment follow rules and restrictions dictated by
through depletion of resources such as law and comply with legal
air, water, and soil; the destruction of requirements.
ecosystems and the extinction of Example:
wildlife.
• Obligation to pay taxes
• It is defined as any change or
disturbance to the environment • Get necessary permits
perceived to be deleterious or in the operation of the
undesirable. business

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• Company’s duty to pay • (be ethical)

its employees promptly
• LEGAL ( obedience to the law)
3. ETHICAL RESPONSIBILITY
• ECONOMIC (make profit)
• companies are expected to be ethical in
their dealings with stakeholders, 2. THE INTERSECTING CIRCLES MODEL
especially the general public. A • in this model, the four aspects of social
company operates ethically when it responsibility overlap each other,
does not cause harm or threaten the showing their interrelationships.
life of anyone in the course of
operations. • The interrelationships allow for
flexibility because managers are
• They should avoid free to use the company’s
emitting/producing toxic wastes resources not solely on one
or causing pollution in the aspect but undertake
course of their operations endeavors that address several
• Companies must have ethical aspects.
responsibility to their THE INTERSECTING CIRCLES MODEL
employees
3. THE CONCENTRIC CIRCLES MODEL
• Protective gear should be used
when workers are handling • this model is similar to the Pyramid
harmful chemicals model where the economic social
responsibility is the core aspects. It is
• PHILANTHROPIC RESPONSIBILITY also similar to the Intersecting Circles
• it is an obligation of a company to help model in terms of the interrelationships
the community in worthwhile projects of the four aspects.
which are beneficial to the people in • Although, the economic social
the community. This is a way of giving responsibility is more
back to the community where the pronounced and emphasized
company operates. Philanthropy is (this means that the company
voluntary in nature. should be profitable for the
Three models of CSR which represent the good of the general public).
different aspects of CSR and their • The concentric circles of legal,
relationship: ethical, and philanthropic
1. THE PYRAMID MODEL social responsibilities embrace
economic social responsibility
• this model emphasizes the levels of (this means that all economic
expectations of the people comprising responsibilities should have
the four social responsibilities starting legal, ethical, and philanthropic
from the economic to the philanthropic. aspects).
• The hierarchy of social • PHILANTHROPIC
responsibility shows the order
of decreasing importance • ETHICAL
starting from the baseline • ECONOMIC
which is economic
responsibility. The next layer is • LEGAL
legal responsibility while the
third is ethical responsibility
and the last is philanthropic PRINCIPLES OF ENVIRONMENTAL
responsibility. MANAGEMENT
THE PYRAMID MODEL Environmental principles are classified
according to development phases such as:
• PHILANTHROPIC (be a good corporate
citizen)
• ETHICAL LIGHT GREEN

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 Business Ethics

• This environmental principle states that employees on environmental

a company becomes successful if it issues
sustains competitive advantage but at
the same time complies with the law. • policies on the proper disposal
of wastes and eco-friendly
• Some companies have strict packaging that will benefit the
environmental standards to community.
complement their strategies, expertise,
and technology. DARK GREEN

• Thus, they issue environmental policies • Not many companies adopt the dark
which fit their competitive advantage. green principle.

• Those who advocate light green • This propagates leadership in the

principles prioritize the protection of industry through a high level of
the environment as a personal choice. commitment to preserve the
environment.
• For these individuals, they believe it is a
responsibility and a part of their • For many, this is very idealistic because
lifestyle. it is difficult to lead in a very
competitive world by fully prioritizing
the environment.
MARKET GREEN • Others may just attempt to adopt dark
green principles, but these are mostly
• This principle promotes the creation of superficial by means of creating value
products and services that cater to the for all species in the environment.
environmental preferences of
consumers. • Nevertheless, companies which used
the dark green principle have been
• Many consumers now prefer to buy successful in reconciling their strategies
environment-friendly goods and with the preservation of the
services. environment.
• Refrigerators and air conditioners with • SHADES OF GREEN
environment-friendly features have
been very saleable. • Companies can develop and create their
own shades of green depending on how
• The internet has been an effective they interpret the shades to suit their
channel for consumers to detect any commitment and aspiration to take care
irregularity or if an aspect of a product of the environment.
poses potential harm to the
environment. • They can define each shade in their own
ways depending on how they interpret
• Customers then decide of they will the corresponding environmental
make a purchase. values for each shade.
STAKEHOLDER GREEN BUSINESS BEYOND PROFIT
• This principle focuses on the preference MOTIVATION
of stakeholders. SOCIAL RESPONSIBILITY
• Stakeholder green has a darker shade • is the obligation of an organization’s
than market green because it focuses management to make decision and take
on a bigger group – the stakeholders actions that enhance the welfare and
the customers, suppliers, community, interest of society as a whole.
employees, shareholders, and others.
REASONS TO DO BUSINESS BEYOND PROFIT
• There are many environmental
activities that support stakeholders 1. Profit is an output, not a purpose
such as:
• A business must have reason to
• requiring suppliers to meet exist beyond that of making
environmental standards in money and maximizing
their processes or orienting shareholder value.

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 Business Ethics

• Profit cannot be the goal, • Excellence – implies standards

vision, or the purpose of an and purports the beliefs that
organization. excellent performance in our
role in life represents the
• If the business main purpose is supreme good
to make a profit, this will both
lead to a lack of strategic • Altruism – is a purpose built in
direction and reduced staff serving its customers in a way
motivation. For employees, they that is beyond standard
make money for the owner of obligation (Example: Body
the business. Shop)
2. Companies with a purpose beyond • Heroism – demonstrates
profit tend to make more money achievement, often with a
charismatic and visionary leader
• One of the paradoxes of (Example: Ford & Microsoft)
business is that the most
profitable companies are not 5. Profit doesn’t motivate the
those that are most profit- salaried staff to make success
focused. happen
1. This may come as a shock, but
• Purpose defines as an
most employees do not leap
inspirational reason for being
out of bed in the morning
which inspires and provides a
excited by the prospect of
call to action for an organization
making more profit for their
and its partners and
organization that day.
stakeholders and provides
benefit to local and global 2. Profit may motivate senior
society. executives, but it rarely does so
for the front-line unless they
3. Business need purpose than profit to
are shareholders too.
make it through
3. Connecting people to a
• Many corporate and business
purpose is an important way of
strategies now include
helping them feel good about
sustainability. In addition to the
your company. Because there is
traditional environmental
very high correlation between
“green” sustainability concerns,
the way your employees feel
business ethics practices have
about the company and the
expanded to include social
way your customers do.
sustainability.
6. Businesses with a strong sense of
• Social sustainability focuses on
purpose are more successful
issues related to human capital
in the business supply chain, 1. Stand for something beyond
such as worker’s rights, working simply increasing profits. A true
conditions, child labor, and vision for a business rests on
human trafficking. foundations of both purpose
and values. The people within
4. What is the purpose of doing business
the business have to be
if it is not being profitable?
passionate about what they do
The starting point of great companies is and why they do it. The
Purpose. business goals must then align
with this foundation. Without a
• Four main types of purposes according clear foundation, a business will
to Nikos Mourkogiannis, the author of never be truly strategic.
Purpose: The Starting Point of Great
Companies. 7. Other reasons for the business to look
beyond profit
• Discovery – is rooted in
intuition that life is a kind of
adventure

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 Business Ethics

1. Purpose and values motivate objectives and broaden their impact on their
and unify management and beneficiaries:
staff
1. MOTIVATED BY A CAUSE
2. Purpose and values give a
company a solid foundation • a social enterprise does not aim to
from which to make decisions maximize profit but rather solve or
overcome certain issues on health,
3. Purpose and values provide a education, technology access,
navigational compass to all environment, or poverty.
elements of the business
2. FINANCIAL AND ECONOMIC
4. Customers will have more to SUSTAINABILITY IN THE LONG TERM
buy into and engage with
• since the purpose is to solve a certain
5. Purpose and values encourage problem, the enterprise must ensure
loyalty of both staff and that it can attain financial stability in the
customers long term.
6. Purpose and values encourage a • It should be financially stable to sustain
strong culture and ethics within its worthwhile projects.
a business
3. NO DIVIDEND FOR INVESTORS
BUSINESS BEYOND PROFIT MOTIVATION
• since a social enterprise does not seek
The Notion of Social Enterprise to maximize profit, investors expect a
return only on the actual amount they
SOCIAL ENTERPRISE have put in.
• is defined as a business model with the 4.PROFITS GENERATED REMAIN
objective of solving social issues and
problems while providing goods and • when investments are returned to the
services. investors, whatever profits generated
remain in the company for expansion or
• It is driven by a cause or purpose as well improvement of operations.
as the need to address an issue or
problem. 5.SENSITIVE TO GENDER AND
ENVIRONMENTAL ISSUES
• One common thing about social
enterprises is that profit is not the first • the social enterprise operates ethically
priority by ensuring no gender discrimination
and providing eco-friendly products
EXAMPLE OF SOCIAL ENTERPRISE and services.
• HAPINOY – conceptualized by Senator 6. EMPLOYEES ARE TREATED FAIRLY
Bam Aquino and Mark Ruiz to provide
assistance to sari-sari- store owners • the workforce is well-taken care of
through fair wages and benefits and
• RAGS2RICHES – assisted the women of better working conditions.
Payatas by teaching them to weave
rugs, bags, wallets, and other products 7. JOY IN EVERY TASK
out of scraps of cloth
• a social enterprise that strives to work
• Other examples: for a cause does it with pleasure.
• microfinance institutions, SOCIAL BUSINESS MODELS
• banking services, and • A social business model is a framework
that a social enterprise follows to fulfill
• educational programs in poor its mission and maintain its financial
communities. stability.
PRINCIPLES OF SOCIAL ENTERPRISE • Kim Alter defined nine types of
Seven principles of social enterprise guide business models which social
social entrepreneurs in achieving their entrepreneurs can use in order to
achieve their goals and objectives.

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 Business Ethics

disabled, homeless, ex-

convicts, and others
who have difficulty
finding employment.
• They get their revenue from the
products and services they offer.
Example: Tahanang Walang Hagdan for disabled
that doing wheelchair and others for sell; NGO
hiring ex-convicts for employment; teenage
pregnancy
1. ENTREPRENEUR SUPPORT MODEL
4. FEE-FOR-SERVICE MODEL
• the social enterprise provides support
services to entrepreneurs who would • this is the most common business
like to embark on their own endeavors. model used by social enterprises.
Support services like consulting,
training and other technical services • They charge clients with a certain fee
are provided to help clients grow their for services rendered like hospitals,
business. schools and museums.

• Example of this model is the 5. LOW-INCOME CLIENT MODEL

MICROFINANCE, wherein the income is • in this particular model, social
generated from the payment of clients enterprises charge fees but they
for support services that the enterprise concentrate on low-income customers.
provides. Since the revenue comes from sales,
2. MARKET INTERMEDIARY MODEL the business has to keep operating
costs low to be financially sustainable.
• the social enterprise using this model
generally guides those struggling to gain • Examples are hospitals
markets to sell their products. It buys that cater low-income
the products of the clients and sells earners.
them in other market at a mark-up. 6. COOPERATIVE MODEL
The revenue on the mark-up supports
the operations of the social enterprise. • this is also a very popular social
business model.
Example: the assistance provided to small
farmers in selling their agricultural products. • The cooperative charges a membership
fee and provide a number of services to
3. EMPLOYMENT MODEL members, who also run its operations.
• social enterprises that adopt this model • The members combine their resources,
help clients look for jobs and provide including revenue, to purchase goods
them with training for these jobs. and services, provide credit (loan), and
• Other services include transitional others.
housing services and mental health 7. MARKET LINKAGE MODEL
services.
• this model connect their clients to
• Transitional housing markets where they can sell their
services are products.
opportunities given to
those who need a safe • The social enterprise acts as a broker to
and supportive help a small producer access a big
environment and who market.
would like to start
• Thus, the social enterprise facilitates
anew because of
the producer-customer relationship.
trauma, or those who
are considered social 8. SERVICE SUBSIDIZATION MODEL
outcasts. The target
recipients are the • social enterprises using this model sell
products and services and use the

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 Business Ethics

proceeds to subsidize their social members newsletters with job listings

enterprises. and industry reports.

• Example: a law firm may provide • TANGIBLE ASSETS – social enterprises

free law services out of the revenue can generate income by renting or
generated from its regular law leasing their idle offices or vehicles to
practice. other nonprofit organizations.
9. ORGANIZATIONAL SUPPORT
• INTANGIBLE ASSETS – income is
MODEL – in this model, a social generated by leveraging intangible
enterprise sells products and services assets like reputation, relationships or
and the revenue generated is used to brand. One example is a well-known
fund an organization which runs the university that obtains funding for
program that the social enterprise science and technology research from
supports. information technology companies
• Example: foundation put-up by a big
corporation wherein the portion of • INVESTMENT – income can be taken
the revenue used to finance the from interests on savings deposits,
foundation or CSR. bonds, etc.
9 types of social enterprises categorized
METHODS OF INCOME GENERATION according to their mission or purpose,
ownership, accountability, and management
• The main goal of social entrepreneurs is setup.
to implement widespread
improvements in society. However, a 1. COMMUNITY ENTERPRISES – serve
social entrepreneur must still be particular communities. Usually, there
financially capable to succeed in his or are community representatives who
her cause. comprise the board of directors of the
social enterprise. (example: ARDCI MFI)
• A social enterprise can achieve its goals
through different methods in income 2. SOCIAL FIRMS – help people renew
generation such as: their support networks and assist them
in finding jobs, particularly those who
• FEE-FOR-SERVICE – social enterprises are disabled and have experienced
charge fees to clients for services trauma and mental health problems.
rendered such as museums, rural
clinics, and microfinance services. 3. COOPERATIVES – are formed,
organized, and controlled by the
• PRODUCTS – social enterprises sell members themselves who contribute or
products and earn income through invest capital for the benefit of the
mark up or commission from reselling members.
of products.
4. CREDIT UNIONS – are financial
institutions that assist by providing
• SERVICES – skills or expertise can be savings and loan facilities to the
offered by social enterprises in residents of the community.
exchange for a fee. 5. COMMUNITY DEVELOPMENT
Examples: are mental health clinics which give FINANCIAL INSTITUTIONS – provide
counseling services and preschools that offer loans and other investment facilities to
daycare services for a fee. small business and start-up social
enterprises.
• MEMBERSHIP DUES – social enterprises
which operate through membership 6. DEVELOPMENT TRUSTS – seek to build
collect fees in exchange for newsletters, a community through the management
discounts, insurance, and subsidized of property like housing.
trainings, among other services. 7. PUBLIC SECTOR SPIN-OUTS – deliver
Example: are trade associations which basic services previously provided by
provide customer linkages to their the public sector organizations (CatAg
members. Cooperatives may provide its to ARDCI).

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 Business Ethics

8. TRADING ARMS OF CHARITIES – are power over him? He who rules himself
formed to assist the parent organization rules over the whole world.”
in social services. Examples: are Human
Nature, First Harvest, and other social • “It is a curious phenomenon that God
enterprises under the parent has made the hearts of the poor, rich
organization, Gawad Kalinga. and those of the rich, poor.”

9. FAIR TRADE ORGANIZATIONS – ensure • What we should aim at is the creation

that small producers like farmers get a of people power, which is opposed to
fair price for their produce. the power of violence and is different
from the coercive power of the state.”
• Dr. Maria Montessori (Italy):
Developed the Montessori approach to
early childhood education. Her quotes:
• “The greatest sign of success for a
teacher….is to be able say, The children
are now working as if I did not exist.”
• “One test of correctness of educational
procedure is the happiness of the child.”
• “Establishing lasting peace is the work
• are individuals with innovative solutions of education; all politics can do is keep
to society’s most pressing social us out of war.”
problems.
• Florence Nightingale (U.K.): Founder of
• They are ambitious and persistent, modern nursing, she established the
tackling major social issues and offering first school for nurses and fought to
new ideas for wide-scale change. improve hospital conditions. Her
quotes:
• Find what is not working and solve the
problem by changing the system, • “I attribute my success to this – I never
spreading the solution, and persuading gave or took any excuse.”
entire societies to move in different
• “Were there none who were
directions.
discontented with what they have, the
Historical Leading Social Entrepreneurs world would never reach anything
better.”
• Susan B. Anthony (U.S.): Fought for
Women’s Rights in the United States, • “It may seem a strange principle to
including the right to control property enunciate as the very first requirement
and helped spearhead the adoption of in a hospital that it should do the sick
the 19th amendment. Her quotes: no harm.”

• “I declare to you that woman must not • John Muir (U.S.): Naturalist and
depend upon the protection of man, but conversationalist, he established the
must be taught to protect herself, and National Park System and helped found
there I take my stand.” the Sierra Club.

• “Independence is happiness.” • “The mountains are calling, and I must

go.”
• “Men, their rights, and nothing more;
women, their rights, and nothing less.” • “The clearest way into the Universe is
through a forest wilderness.”
• Vinoba Bhave (India): Founder and
leader of the Land Gift Movement, he • “Everybody needs beauty as well as
caused the redistribution of more than bread, places to play in and pray in,
7,000,000 acres of land to aid India’s where nature may heal and give
untouchables and landless. His quotes: strength to body and soul.”

• “If a man achieves victory over this • Jean Monnet (France): Responsible for
body, who in the world can exercise the reconstruction of the French

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 Business Ethics

economy following World War II, income communities, providing them

including the establishment of the with livelihood training, farming, and
European Coal and Steel Community processing equipment. The brand has
(ECSC). The ECSC and the European won countless international awards for
Common Market were direct precursors social entrepreneurship and organic
of the European Union. His quotes: product development.
• “Make men work together to show Primary Goal: to use business to build a
them that beyond their differences and better Filipino society, especially for the
geographical boundaries there lies a poor.
common interest.”
Core Principles: Pro-Philippines, Pro-
• “People only accept change when they Poor, Pro-Environment
are faced with necessity, and only
recognize necessity when a crisis is
upon them.”
• “Nothing is possible without men;
nothing is lasting without institutions.”

Social Entrepreneurs in the Philippines

Social Entrepreneur of the World
(World Entrepreneurship Forum, 2012
Chairman of Gawad Kalinga
• Tony Meloto is the founder of Gawad
Kalinga. As a kid, he lived near the
slums and was exposed to Filipinos
living in extreme poverty. But it wasn’t
until he was on assignment in Australia
that he felt the call to help and give
back to the community. In 1995, he
started Gawad Kalinga, a movement
that helps build communities. Gawad
Kalinga has been expanding in leaps and
bounds since then, being implemented
in over 2,000 communities as well as
developing countries Indonesia,
Cambodia and Papua New Guinea.
• GK Enchanted Farm is Gawad Kalinga’s
initiative to raise social entrepreneurs
who will truly help local farmers and
artisans, creating a ripple effect that will
showcase Filipino products and
hopefully help end poverty.

Camille Meloto and Anna Meloto-Wilk

Human Nature
Following in their father Tony Meloto’s
footsteps, sisters Camille and Anna,
together with Anna's husband Dylan
Wilk, created Human Nature. A beauty
and personal care brand, Human Nature
produces high quality, natural, and
earth-friendly products that help low-

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