The main goal of each company is to achieve competitive advantage and financial goals. However, for many managers and owners, especially those in small family businesses, it is difficult to balance between ethical business and profitability. An additional problem is the perception of entrepreneurs that social responsibility and business ethics are generally required from the general public. The problem of this research is insufficient awareness of the importance of business ethics and social responsibility within small and medium-sized enterprises. Therefore, this final thesis analyzed the ethical and social responsibility of the small family enterprise BD lantern d.o.o. from Karlovac. The primary research method was the case study method. First, the publicly available and internal company and business information and the current level of business ethics were investigated. Then, interviews were conducted with both company directors / owners, and finally survey with all employees of this company. The perception and reflection on business ethics and the need to develop an ethical code and the introduction of social responsibility have been analyzed. Based on the results obtained, a solution was offered to improve business ethics in the company BD lampion d.o.o. through the proposed code of ethics and socially responsible business strategy.