Social responsibility refers to the fact that businesses should not just be concerned with profit maximisation but should do so in a socially responsible manner. This responsibility requires the management of the business to consider the social and economic effects of their decisions on society. Businesses should therefore pursue profit maximisation within acceptable moral limits.
Ethics concerns the rules and principles that define right and wrong good and bad conduct. Ethics also deals with moral ability and obligations.
Business ethics is also called management ethics and it is the application of ethical principles to business relationships and activities.
Statt (1999,19) sees business ethics as the application of ethical concerns to the world of business and has three areas of concern namely;
1. Code of Ethics
Where a company has explicit guidelines for the members about what constitutes acceptable behaviour to stakeholders like staff or customers
2. Changes in the board of directors
To include people from outside the business world who reflect broader interests.
3. Social responsibility
By a company in the marketing of its goods and services, The entrepreneurs and employees have ethical responsibilities or obligations which are placed on them by virtue of the positions they occupy in the organisation.
- Entrepreneurs should adhere to high ethical standards e.g. dealing fairly honestly and responsibly with his employees and other stakeholders
- Employees are expected to exhibit the same high ethical standard of behaviour that will affect the company’s image financially and economically.