Business ethics lecture 1

Business Ethics


Introduction
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Class
Rules of engagement
 Communication

mode

 Participation
 Questioning
 Open

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but within etiquettes

Any response to above


Ethics - Origin
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Ethos (Greek)
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“Character” and “sentiment of the community”

Ethikos (Greek) – authority of custom and
tradition
Mos (Latin) – moral, mores and Morales
Referring to:
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Customs
Habits of life
Traditions of people


Carroll & Gannon (1997)
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Specific Def. (Shea, 1988)
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Ethical Standards

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“the principles of conduct governing an
individual or a profession”
“standards of behaviour”

Help to guide decisions and actions
Whether Individual, corporations, professions,
nations

“rules or standards that govern
behaviours” (Toffler, 1986)


Ethics Defined
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“Customary norms and ways of behaving in a
society” (Hegel)
“Character” and “sentiment of the community”
“the principles of conduct governing an individual or
a profession….standards of behaviour” (Shea, 1988)
“rules or standards that govern behaviours” (Toffler,

1986)
“the basic ground rules by which individual acts. We
often give complex explanations of our actions, but
in fact we act for simple reasons. The ground rules
are a framework for defining which actions are
personally permissible, and which are not”
(Drummond & Bain,1994)


Ethics Defined (Contd.)
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“how people try to live their lives according to a
standard of “right” and “wrong” behaviour – in
both how we think and behave towards others
and how we would like them to think and behave
towards us.” (Ghillyer, 2010)
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Societal perspective

“inquiry into the nature of grounds of morality
where the term morality is taken to mean
judgements, standards and rules of conduct.”
(O.C. Ferrell)
Ethical Standards

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Help to guide decisions and actions
Whether Individual, corporations, professions,
nations


Business Ethics
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“Business ethics is the study of how personal moral
norms apply to the activities and goals of commercial
enterprise. It is not a separate moral standard, but the
study of how the business context poses its own unique
problems for the moral person who acts as an agent of
this system” (Laura Nash)
Falls into three basic areas of managerial decision
making
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Choices about the law
Choices about the economic and social issues that are
beyond the law’s domain
Choices about the pre-eminence of one’s own self-interest

Business Ethics (Contd.)
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“Business ethics involves the application of
standards of moral behaviour to business
situations” (Ghillyer, 2010)
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The application of ethical standards to business
behaviour

“the principles and standards that guide
behaviour in the world of business” (O.C. Ferrell)


Business Ethics (Contd.)
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Who determines the actions as right or
wrong
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Investors
Employees
Customers
Interest groups
The legal system
The community

Approaches
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Descriptive
Normative


Lacking BE
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Ethical misconduct
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NBES

Volume of organization
Level of management
Accounting frauds, conflicts of interests, defective
products, harassment, abusive behaviour, employee
theft and bribery
Harris Interactive Poll – perception of trust
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Enron, WorldCom, Anderson Worldwide, Global
Crossing, Adelphia etc.

Involvement of individuals, Corporations, Govt
officials, Researchers, Sports
Judgement of decisions – SOCIETY
Reasons


Developments
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1960
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Ethical Climate
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Major Ethical Dilemmas
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Social Unrest
Anti-war sentiment
Loyalty to employer – loyalty to ideals
Environment
Employee-employer tension
Civil rights
Honesty
Work ethics
Drug

BE Developments
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Code of conducts & value statements

Social responsibility
Legal / Personnel departments


Developments (Cntd.)
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1970
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Ethical Climate
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Ethical Dilemmas
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Scandals
Recession
Unemployment
Heightened environment concerns

Public pressure over business accountability
Employee militancy
Human rights
Firm’s covering rather than correcting

BE Developments
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ERC – 1977
Compliance with law
Foreign Corrupt Practices Act
Values movement


Developments (Cntd.)
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1980s
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Ethical Climate
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Ethical Dilemmas
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Social contract
Stringent rules – defence contractor
Downsizing & loyalty to employer eroded
Health care emphasized
Bribes & illegal practices
Influence paddling
Deceptive advertising
Financial frauds
Transparency

BE Developments
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Code of Ethics for Government Service - 1980
Defence industry initiative
Ethic officers – Ombudsman
False Claims Act

Developments (Cntd.)
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1990s
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Ethical Climate
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Ethical Dilemmas
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Global expansion
Child labour
Environment
Internet / Cultural borders
Forbidden - common
Unsafe work practices -3rd world

Increased corporate liability
Financial mismanagement and fraud

BE Developments
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Federal sentencing guidelines for organizations
Lawsuits
Global Sullivan Principles
Board responsibility
Voluntary disclosure – annual reports issuance on ethics


Developments (Cntd.)
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2000s
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Ethical Climate
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Economic growth – financial failures
High profile firms
Personal data
Hackers & data thieves
Aggression and fundamentalism

Ethical Dilemmas
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Cyber crimes
Privacy
Financial mismanagement
International corruption
Loss of privacy
IP
SD


Developments (Cntd.)
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BE Developments

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Sarbanes Oxley Act -2002
Anticorruption
CSR and Integrity Management
UN Convention -2003
UN Global Compact – 2004
Revised Federal Sentencing Guidelines – 2004
Ethics programs


Ethical Culture and Benefits
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Organizational
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Ethics Officer
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Global
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The Caux Round Table
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NYSE
UPS
Baxter Intl

NAFTA, WTO, EU,

Benefits
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Employee commitment
Investor loyalty
Customer satisfaction
Profits


Levels of BE
Individual level
Organizational level
Association Level

Societal Level
International Level




End of Session
 Book:
 Business

Ethics: Ethical Decision
Making and Cases By O.C. Ferrell,
John Fraedrich and Linda Ferrell



Write down your strengths and
weaknesses on a page and
submit


Outline Chap1 & 2
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The importance of Business Ethics
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Stakeholder Relationships, Social Responsibility
and Corporate Governance
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Understanding Business Ethics
Why study BE
Evolution of BE
Benefits
Stakeholder relationship
Stakeholder influence in CSR
Corporate Governance

Relevant Cases
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Wall-Mart – P292
The Fall of Enron – P318
PETCO - 422