today we'll be delving into two very interesting Concepts uh business ethics and social responsibility so let's go ahead and get started now business ethics and social responsibility are very crucial considerations in today's business landscape let's start out by defining both of these terms so first thing is business ethics now business ethics refers to the moral principles and values that guide ethical behavior in the business context it involves making decisions and conducting business operations with Integrity honesty fairness and respect for stakeholders now think of business ethics as sort of a moral compass that guides businesses to help navigate complex situations ensuring that they act in an ethical manner it involves evaluating the consequences of actions considering the interests of stakeholders which we'll cover in a future video complying with laws and regulations and fostering an ethical culture within the organization now that we understand a little bit about business ethics let's turn our attention to social responsibility now social responsibility extends really beyond the ethical behavior of businesses and encompasses what we call their broader obligations towards Society social responsible businesses understand that they have a role to play in making a positive impact on society now this includes considering the interests of various stakeholders such as employees customers communities and the environment beyond their financial bottom line or their profit one particular aspect of social responsibility is environmental responsibility so socially responsible businesses really strive to minimize their environmental impact adopting things like sustainable practices conserving resources and reducing pollution and waste another important impact of social responsibility is community engagement now businesses actively engage with the communities in which they operate which can include supporting local development initiatives investing in social causes and just fostering positive relationships within community members so business ethics and social responsibility really go hand in hand business ethics provide a little bit of the foundation for responsible decision making while social responsibility expands the scope to consider the broader impact on society so by embracing business ethics and social responsibility businesses can build trust enhance their reputation and contribute to the well-being and sustainable development of society as a whole now what we often think of social responsibility we commonly think of what we call now as the stakeholder model but that really wasn't the only particular model for social responsibility that existed in fact in the 1970s there was a popular model which was known as the shareholder model of social responsibility and that model was popularized by the Nobel prize-winning Economist Milton Friedman and the basic idea behind it I'm not going to get into much of the specifics but the the general sense of the shareholder model of social responsibility was that businesses should focus on creating profit in in generating profit for for their shareholders and in doing so they would create enormous amounts of capital that could then in turn be used to support different types of social causes but businesses in themselves shouldn't really be interested in sort of the broader social conditions because a business's purpose at the end of the day is to generate profit and so it should seek to achieve its purpose as great or as significantly as it can and then as a result generating that profitability for shareholders and so we've known that over the past several decades that that that has shifted in terms of what Society expects of businesses today we don't expect our institutions and our organizations to merely be profit generators at the you know to the detriment of those other kind of groups but we expect them to operate within the confines of the society as as a whole and to make decisions that ultimately benefit society as a whole and don't work to the detriment of any one group and so we've seen that as a transition over the last several decades going more from a shareholder model of social responsibility to what we now refer to as a stakeholder model of social responsibility meaning that businesses shouldn't just generate profit but if profit is done at the to the detriment of let's say employees or to the community or to the environment then you know ultimately that's not something that we want to promote and so we expect more of businesses which just makes it so much more important that businesses are aware and consider all the different facets and all the different groups that can be affected by their decisions so that they can again apply ethical Frameworks but also make sure that they're applying those guidelines so that they know that the potential decisions that are going to be made how they're going to affect different groups and ultimately change course if they need to