Ethics are an individuals personal beliefs about what constitutes right and wrong behavior. Important areas of ethical concern for managers are how the organization treats its employees, how employees treat the organization, and how the organization and its employees treat other economic agents. The ethical context of organizations consists of each managers individual ethics and messages sent by organizational practices. Organizations use leadership, culture, training, codes, and guidelines to help them manage ethical behavior.

In recent years a variety of new ethical issues have begun to emerge. One of these is ethical leadership and its key role in shaping ethical norms and the culture of the organization. Another involves corporate governance and focuses on the need for the board of directors to maintain appropriate oversight of senior management. And, third, ethical issues in information technology relate to issues such as individual privacy and the potential abuse of an organizations information technology resources by individuals.

Social responsibility is the set of obligations an organization has to protect and enhance the society in which it functions. Organizations may be considered responsible to their stakeholders, to the natural environment, and to the general social welfare. Even so, organizations present strong arguments both for and against social responsibility. The approach an organization adopts toward social responsibility falls along a continuum of lesser to greater commitment: the obstructionist stance, the defensive stance, the accommodative stance, and the proactive stance.

Government influences organizations through regulation, which is the establishment of laws and rules that dictate what businesses can and cannot do in prescribed areas. Organizations, in turn, rely on personal contacts, lobbying, political action committees, and favors to influence the government.

Organizations use three types of activities to formally manage social responsibility: legal compliance, ethical compliance, and philanthropic giving. Leadership, culture, and allowing for whistle blowing are informal means of managing social responsibility. Organizations should evaluate the effectiveness of their socially responsible practices as they would any other strategy.