Business ethics and social responsibility are closely related concepts that address how companies should conduct themselves. Business ethics is a general term that comprises an overall approach to moral and ethical decisions and activities. Social responsibility has evolved over time and essentially represents an expanded view of business ethics in the early 21st century. Operating ethically and responsibly can affect company relationships with key stakeholders for the long term.

Business Ethics Impact

The ethical nature of a business can enhance or degrade its brand in the same way an individual's ethics affect his reputation. In the past, companies would often concern themselves only with the possibilities of whether poor ethics would be discovered. Due to the evolution of the Internet and digital technology, companies have had to adjust to the reality that poor ethical choices routinely get discovered and lead to negative company and brand effects. Attracting and retaining core customers is usually more possible for companies that operate honestly and ethically in their business activities.

Ethical Arenas

Ethical considerations cover the full gamut of business decisions. Accounting, human resources and customer communication are common areas where businesses of all types have struggled. In other cases, business ethics help or hinder companies in areas more specific to their industry and commerce. Manufacturers, for instance, must ponder ethics when deciding how to produce goods and the potential impact of production on the environment. Not all ethical dilemmas are clear right or wrong choices. Some are gray areas where companies take a stance that hopefully align with values appreciated by customers, communities and partners.

Social Responsibility Impact

Because of increased pressure from consumer and environmental watch groups and society as a whole, companies are also forced to deal with the consequences of failing to act socially responsibly. Social responsibility describes an unwritten, informal requirement to appease the public and key stakeholders while operating a profitable business. In essence, a company must normally balance earning money with treating customers, communities, employees and business partners fairly and responsibly. Failure to do so can lead to negative publicity and consumer backlash, which ultimately affects the bottom line.

Bottom Line Responsibility

Social responsibility has increasingly become part of a company's business strategy. Generally, social responsibility extends beyond basic ethics and emphasizes that companies act as good community citizens while also meeting shareholder requirements. Giving back to communities through philanthropy and active involvement in activities help companies meet the informal expectations stakeholders have. While profits generated by socially responsible behavior are often intangible and hard to measure, keeping up with competitive standards and public demands aids long-term stability.