BUSINESS ETHICS AND SOCIAL

RESPONSIBILITY
MODULE
Module No. 1: Week 1: Fourth Quarter

RESPONSIBILITIES AND ACCOUNTABILITIES OF

ENTREPRENEURS TO EMPLOYEES, GOVERNMENT,
CREDITORS AND SUPPLIERS

Learning Competencies
1. Discuss the responsibilities and accountabilities of entrepreneurs to: a. employees b. government
c. creditors d. suppliers e. consumers f. general public g. other stakeholders

Codes: 1. ABM_ESR12-IVi-l-3.1

Objectives
After studying this module, you are expected to:
1. Identify the responsibility and accountability of entrepreneurs to employees,
government, creditors and suppliers;
2. Discuss the responsibilities and accountabilities of entrepreneurs to employees, government,
creditors and suppliers;
3. Appreciate the importance of the responsibilities of entrepreneurs to employees, government,
creditors and suppliers

Let’s Recall
PRE-TEST:
Multiple Choice. Read and analyze each statement below and choose the letter that corresponds the
correct answer.
1. What refers to the duty or obligation to satisfactorily perform or complete a task (assigned by
someone, or created by one’s own circumstances) that one must fulfill, and which has a consequent
penalty for failure?
A. Responsibility C. Accountability
B. Transparency D. Fairness
2. What responsibility of an entrepreneur which makes sure that the physical environment of the
workers is well taken-cared of by providing a well illuminated and ventilated workable space for
the employees?
A. Pay wages/salaries and taxes
B. Assignment of right jobs
C. Create and maintain an ergonomic workplace
D. None of the above

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 3. Businesses must treat their injured employee with respect and file the claim without attempting
to cause a delay in processing or attempt to deter the worker from filing a claim at all.
A. Facilitate employees’ compensation insurance
B. Support career development
C. Train and educate employees
D. Enforce anti-discrimination law
4. The entrepreneur should provide employment security to the employees of his organization,
which will cause the sense of satisfaction among them and they will work with full interest,
dedication, and commitment and will feel free from the apprehensions of losing a job and will
have the higher degree of faith in the employer.
A. Respect human rights
B. Give rewards and Benefits
C. Give security and employment
D. All of the above
5. The following are responsibilities of an entrepreneur to the government EXCEPT for:
A. Compliance of government rules
B. Payment of taxes
C. Give rewards and benefits
D. None of these
6. What responsibility of the entrepreneurs to pay taxes to the government?
A. Payment of taxes
B. Not to seek political patronage by unfair means
C. Cooperate with government for economic development
D. None of the above
7. Loans are obtained for particular objectives. Hence, entrepreneurs should utilize the loan
amount only for the desired objectives.
A. Obtain loans on reasonable conditions
B. Follow mortgage rules
C. Follow business ethics
D. Poor utilization of debt capital
8. The entrepreneurs have the responsibility to provide regular information to the suppliers
regarding changes happening in the demand of the commodities in domestic or in foreign markets.
A. Pay fair prices of Goods at a reasonable time
B. Promote healthy competition
C. Inform about changes in market
D. None of the above
9. Any unhealthy and hostile rivalries among dealers should not be permitted by the entrepreneur.
A. Motivate indigenous supplies
B. Provide technical advice
C. Inform suppliers of future developments
D. Promote healthy competition
10. What is your analysis of the given statements below?
Statement 1: A supplier is an entity (person or institution) that extends credit by giving another entity
permission to borrow money intended to be repaid in the future.
Statement II: Mismatching of jobs with employee’s qualification is encouraged.
A. Both Statements are true C. Only Statement 1 is true
B. Only Statement II is true D. Both Statements are false

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 Let’s Understand

KEY TERMS!

Responsibility – refers to the duty or obligation to satisfactorily perform or complete a

task (assigned by someone, or created by one’s own circumstances) that one must fulfill,
and which has a consequent penalty
for failure.
Accountability – is the obligation to demonstrate that work has been conducted in
compliance with agreed rules and standards or to report RESPONSIBILITIES and
ACCOUNTABILITIES of ENTREPRENEURS to Employees, Government,
Creditors, and Suppliers fairly and accurately on performance results vis-à-vis
mandated roles and/or plans. An entrepreneur is one who organizes, manages and
assumes the risk of an enterprise. An entrepreneur should be aware of the ethics and
social.

DISCUSSION
RESPONSIBILITIES and ACCOUNTABILITIES of ENTREPRENEURS
To Employees, Government, Creditors and Suppliers

An entrepreneur is one who organizes, manages and assumes the risk of an enterprise.
An entrepreneur should be aware of the ethics and social standard follow them.

A. Employee
Employees are the true assets of an organization. They are the ones who contribute
effectively towards the success of every business so, in return entrepreneur has responsibilities
and accountabilities to fulfill for the safety and welfare of their employees.
The following are the responsibilities and accountabilities of an entrepreneur to his/her
employees.

1. Pay Wages/Salaries and Taxes

The company should have an attractive compensation packages to attract more
potential talents who can be a help in achieving organization’s long-term goals.
Entrepreneurs have the responsibility to pay their employees of their business at least
the minimum hourly wage in their locality. Wages/salaries should always be on time and
without delay so as the employees can meet their individual obligations thus, motivates them
to stay and do well in the business.

2. Assignment of Right Jobs

Taking into consideration the technical and the educational background of the employees in
assigning them to the job where they are good at or aligned with their skills and abilities.
Mismatching of jobs with employee’s qualification is discouraged.

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3. Create and Maintain an Ergonomic Workplace
Entrepreneurs must also make employees aware of areas in their business that have a
high risk for injury and train their employees in safety procedures to minimize the risk of
injury. Working environment that are properly ventilated and illuminated improve employee’s
performance, their health and well-being.

4. Facilitate Employees’ Compensation Insurance

When injuries occur through no fault of their employees, it’s their responsibility to file
a claim with their employees’ insurance provider. Businesses must treat their injured
employee with respect and file the claim without attempting to cause a delay in processing or
attempt to deter the worker from filing a claim at all.

5. Support Career Development

Career development is providing support and encouragement for employees to enhance their
skills and capabilities as an employee. Provide a human resources development system that
supports the careers of employees, a self-development support program, and transfer
opportunities for willing employees.

6. Train and Educate Employees

Acquisition of new knowledge and skills through the professional and personal development
of employees is a pre-requisite and a guarantee of business’s success. Professional
development also includes dialogues with colleagues, peer mentoring and peer collaboration
for achieving business goals.
Every individual wants to develop. So, the responsibility of the entrepreneur is that he
should make all possible efforts for the individual development of the employees and may
impartially provide them equal opportunities for that. These opportunities include imparting
education and training, give timely promotions, transfers at the right time and their
participation in the management of the business, etc.

7. Enforce Anti-Discrimination Law

Employees cannot be disadvantaged, dismissed, or not given employment for any
reasons mentioned. Any problems or issues that arise with guests or colleagues from overseas
may require involvement of embassies, government agencies, local cultural groups, or
diplomatic services to help resolve them.

8. Respect Human Rights

Business operations are interrelated with a wide range of people and societies
throughout the world, and implements and enforces a code of conduct that fosters respect for
human rights.

9. Give rewards and Benefits

Reward employees fairly and attractively, in line with the prevailing conditions on the
local market. Gather data from the labor market on a regular basis, ensuring that reward
structures remain competitive. Employees are more likely to strive in their work if there is
anticipated reward, they’ve value, such as salary increase, bonus, and promotion, rather than
if there is none.

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 It is also mandated in the Labor Code of the Philippines that entrepreneur should pay
fringe benefits such as PhilHealth, Social Security, PAG-IBIG, taxes out of employees’
wages/salaries for each employee working in their business.
Recognition boosts esteem and morale in which employees feel important, satisfied,
and inspired. Recognizing employees for accomplishments can be an important reason for
employees to stay.
Providing these benefits motivate many employees to stay and do well in the business.

10. Give security of Employment

The entrepreneur should provide employment security to the employees of his
organization, which will cause the sense of satisfaction among them and they will work with
full interest, dedication, and commitment and will feel free from the apprehensions of losing
a job and will have the higher degree of faith in the employer.

B. Government
In Business, the responsibilities of entrepreneurs towards the government, professional
institutes, and other business institutions are very essential. The government sets the targets
for the balanced and rapid economic development of the country.
Responsibilities and accountabilities of entrepreneurs to the government are:
1. Compliance of government rules
The rules framed by the government for business should be fully complied with. The
entrepreneur should follow the laws regarding obtaining licenses for a specific business, the
operation of the business determination and production and etc.

2. Payment of Taxes
The government imposes various types of taxes, like, income Taxes, sales tax, excise
tax, tariff duties and wealth tax on the entrepreneur and business, for raising financial
resources. Entrepreneurs should honestly pay these taxes.

3. Not to correct the Government Machinery

The government appoints the officers to implement its policies. The social
responsibility of the entrepreneur is that he may not correct the government officers and
employees for getting wrong favors or some Anti-Social purposes.

4. Not to Seek Political Patronage by Unfair Means

The responsibility of the entrepreneurs is that they do not seek political patronage by
providing undue economic help to any political party or politicians during elections. By giving
anti-social activities with political patronage hits the democratic values.

5. Cooperate with Government for Economic Development

The government sets the targets for the balanced and rapid economic development of
the country. For that, the entrepreneur should provide cooperation to the government by proper
utilization of available resources in accordance with the government targets.

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C. Creditors
A creditor is an entity (person or institution) that extends credit by giving another entity
permission to borrow money intended to be repaid in the future.
Various plans are prepared for development and expansion of the business and for that
various projects are also formulated. For their completion, capital is the foremost requirement,
which is fulfilled through loans from the individuals, Financial Institutions and Banks.

Responsibilities and accountabilities of Entrepreneur towards creditors are:

1. Obtain Loans on Reasonable Conditions
Some certain conditions are required to be fulfilled to obtain any type of loan. These
conditions should be reasonable, both for the creditors and the business organization.

2. Follow Mortgage Rules

The creditors provide loans in secured and unsecured forms. If the creditor has
provided the secured loan on the mortgaged property, the entrepreneur should follow the rules
of mortgaged property.

3. Follow Business Ethics

Both the entrepreneurs and creditors should follow the business ethics in providing
loans and in repayment of loans. The loan procedures should be honestly complied with.

4. Proper Utilization of Debt Capital

Loans are obtained for particular objectives. Hence, entrepreneurs should utilize the
loan amount only for the desired objectives. The loan amount should not be utilized by small
entrepreneurs for unproductive activities. Not only that, but loan capital should also be
invested only for objectives and projects specified for the loans. Loan capital should be utilized
with the utmost economy.

5. Regular Payment of Installment and Interest

The entrepreneurs should pay loan installments and interest regularly, according to
repayment conditions. If installments and interests are not paid timely, the loan burden goes
on increasing and it also has an adverse effect on the reputation of the business organization.

D. Suppliers
The services of the suppliers are also important for any business because they supply
raw materials, machinery, labor, and other materials. Without hem, the smooth operation of
the business is quite difficult.
Entrepreneurs’ responsibilities and accountabilities towards their suppliers are the
following:

1. Pay fair prices of goods at a reasonable time

The entrepreneurs should pay reasonable prices for the materials purchased from the
suppliers. Often, the farmers provide cotton, sugarcane, and jute etc. to various industries, for
use as raw materials. However, the Industrialists pay them very low prices for these
commodities.
Entrepreneurs should pay reasonable prices for this type of raw material. The
responsibility of the entrepreneurs is that payment to the suppliers may be made in time so

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that they may not have to face financial difficulties and may carry out their operations
efficiently and smoothly.

2. Inform about Changes in Market

The entrepreneurs have the responsibility to provide regular information to the
suppliers regarding changes happening in the demand of the commodities in domestic or in
foreign markets. So that the suppliers may make necessary changes in their manufacturing
projects, according to the requirements.

3. Give guarantee of Minimum Price

The entrepreneurs should give the guarantee of minimum prices to the suppliers so that
they may feel assured about the certainty of the price and may continue to maintain their will
power.

4. Provide technical Advice

The entrepreneur has the responsibility to provide technical assistance to the suppliers
for the production of a new and substitute or replaces supplies/commodities. The
entrepreneurial organizations and Institutions and suppliers together should short research
projects.

5. Inform Suppliers of Future Developments

The Entrepreneur should provide information about possible future development to the
suppliers so that they will be aware of these circumstances, thus, develop and become capable
of increasing their resources so as to meet the increasing demand in the future.

6. Promote Healthy Competition

The entrepreneur should not encourage unhealthily and hostile competitions among
the suppliers, for the sake of obtaining goods from them at the minimum price, only healthy
competition should be encouraged. Besides, encouragement should be provided to individual
suppliers and institutional suppliers.

Let’s Apply
True or False. Read each item carefully. Write TRUE if the statement is true and
write FALSE if the statement is false. Write your answer in your activity notebook.

1. The idea of Milton Friedman that the mission of business is to produce goods
and services at a profit, thus maximizing its contribution to society is associated with.
2. A corporation can be considered a moral agent, it is therefore responsible to
society for its actions.
3. One of the social responsibilities of the business organization towards their
consumer is being honest in advertising and marketing.
4. Unsafe products can improve the company’s reputation.
5. Responsibility refers to the obligation of an individual or an organization to
account for its activities, accept responsibility for them, and to disclose the result in a
transparent manner.

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 6. An entrepreneur must sell quality products at fair price.
7. As a businessman or entrepreneur he must pay the incorrect amount of taxes to
the government.
8. Equally important is the social responsibility of entrepreneur to his
community in terms of job creation and environment observation.
9. Entrepreneurs must provide goods and services which the society needs at a
price which the society can afford to pay.
10. An entrepreneur must provide fair return of investment.

Let’s Analyze
Multiple Choice. Read and analyze each statement below and choose the letter
that corresponds the correct answer.

1. It refers to the obligation to demonstrate that work has been conducted in compliance
with agreed rules and standards or to report fairly and accurately on performance results
vis-à-vis mandated roles and/or plans
of an individual or an organization to account for its activities, accepts responsibility for them,
and to disclose the results in a transparent manner?
A. Responsibility C. Accountability
B. Transparency D. Fairness
2. What responsibility of an entrepreneur to pay their employees of their business at least
the minimum hourly wage in their locality?
A. Pay wages/salaries and taxes
B. Assignment of right jobs
C. Create and maintain an ergonomic workplace
D. None of the above
3. What responsibility of an entrepreneur in which employees cannot be disadvantaged,
dismissed, or not given employment for any mentioned.
A. Facilitate employees’ compensation insurance
B. Support career development
C. Train and educate employees
D. Enforce anti-discrimination law
4.Reward employees fairly and attractively is one of the responsibilities of an entrepreneur to
his/her employees.
A. Respect human rights
B. Give rewards and Benefits
C. To give security and employment
D. All of the above
5. The following are responsibilities of an entrepreneur to the government EXCEPT for:
A. Compliance of government Rules
B. Payment of taxes
C. Assumption of welfare arrangements
D. None of these

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6.What responsibility of the entrepreneurs which is not to seek political patronage by providing
undue economic help to any political party or politicians during elections?
A. Payment of taxes
B. Not to seek political patronage by unfair means
C. To cooperate with government for economic development
D. None of these
7. Loans should always be paid in on the maturity date, which facilitates regular capital
flow in the business society and also saves the Banks and Financial Institutions from
adverse effects.
A. Obtain loans on reasonable conditions
B. Follow mortgage rules
C. Repayment of loan
D. Poor utilization of debt capital
8. The entrepreneurs have the responsibility to provide regular information to the
suppliers regarding changes happening in the demand of the commodities in domestic
or in foreign markets.
A. Pay fair prices of Goods at a reasonable time
B. Inform about Changes in Market
C. Give guarantee of Minimum Price
D. Motivate Indigenous Supplies
9. Any unhealthy and hostile rivalries among dealers should not be permitted by the
entrepreneur.
A. Motivate Indigenous Supplies
B. Provide technical Advice
C. Inform Suppliers of Future Developments
D. Promote Healthy Competition
10. What is your analysis of the given statements below?
Statement 1: The Entrepreneur should not provide information about possible future
development to the suppliers, in time, so that they mold themselves according to the changing
circumstances.
Statement II: Entrepreneur should provide cooperation to the government by proper
utilization of available resources in accordance with the government targets.

A. Both Statements are true C. Only Statement 1 is true

B. Only Statement II is true D. Both Statements are false

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 Let’s Try

Direction. Read the given selection and answer the question written below.

Starbucks
Every Starbucks bar counter has a barista who is expert in preparing coffee. A Starbucks
barista is trained in grounding coffee beans, brewing, and serving fresh coffee. He/ She
should know all the regular customers of the store by name and remember their coffee
preferences. He/ She must also be able to pour coffee with one hand and whipped cream
with the other while talking with the customer. This is what later on called the Starbucks
experience. This is a unique way of serving coffee while building a more personal
relationship with patrons.

Today, Starbucks is the number one provider of not only the finest coffee-drinking experience
in the world, specifically in 24,000 stores in 70 countries. True to its mission, “ to inspire and
nurture the human spirit – one person, one cup and one neighborhood at a time.” Starbucks
continue to meet this goal by creating value and satisfaction for its customers.

Based on the reading above, answer the following briefly:

1. How did Starbucks evolve from a coffee bean roaster to a café?

2. What customer need did the owner of the Starbucks seek to meet with the changes he
made in Starbucks?
3. List down the social responsibilities and accountabilities that the Starbucks Company
shows to their customers, general public, and to other stakeholders.

Rubrics in Essay

Focus Content Organization

4 Sharp, distinct controlling Substantial, specific, and or Sophisticated arrangement of

point made about the illustrative content with evident and/or
topic with evident content, demonstrating strong subtle transitions.
awareness development and
sophisticated ideas

3 Apparent point made Sufficiently developed content Functional arrangement of

about the with adequate elaboration or content that sustains a logical
topic with sufficient explanation order with some evidence of
awareness of topic transitions.

2 No apparent point but Limited content with Confused or inconsistent

evidence of a topic inadequate elaboration or arrangement of content with or
explanation without attempts at transition.

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