Management 9e by coulter ch2

Business Ethics


Introduction


Class



Rules of engagement





Communication mode



Participation



Questioning



Open but within etiquettes

Any response to above

Ethics - Origin


Ethos (Greek)








“Character” and “sentiment of the community”

Ethikos (Greek) – authority of custom
and tradition
Mos (Latin) – moral, mores and
Morales
Referring to:




Customs
Habits of life
Traditions of people

Carroll & Gannon (1997)




Ethical Standards





Specific Def. (Shea, 1988)
 “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







“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.)


“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)






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



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


Business Ethics




“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





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.)


“Business ethics involves the application of
standards of moral behaviour to business
situations” (Ghillyer, 2010)




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.)


Who determines the actions as right or
wrong









Investors
Employees
Customers
Interest groups
The legal system
The community

Approaches



Descriptive
Normative

Lacking BE


Ethical misconduct







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






Enron, WorldCom, Anderson Worldwide, Global
Crossing, Adelphia etc.

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

Reasons


Developments


1960


Ethical Climate






Major Ethical Dilemmas









Social Unrest
Anti-war sentiment
Loyalty to employer – loyalty to ideals
Environment

Employee-employer tension
Civil rights
Honesty
Work ethics
Drug

BE Developments




Code of conducts & value statements
Social responsibility
Legal / Personnel departments


Developments (Cntd.)


1970


Ethical Climate








Ethical Dilemmas






Scandals
Recession
Unemployment
Heightened environment concerns
Public pressure over business accountability
Employee militancy
Human rights
Firm’s covering rather than correcting

BE Developments





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


Developments (Cntd.)



1980s


Ethical Climate







Ethical Dilemmas








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





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


Developments (Cntd.)


1990s


Ethical Climate








Ethical Dilemmas







Global expansion
Child labour
Environment
Internet / Cultural borders
Forbidden - common
Unsafe work practices -3rd world
Increased corporate liability
Financial mismanagement and fraud

BE Developments






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


Developments (Cntd.)



2000s


Ethical Climate








Economic growth – financial failures
High profile firms
Personal data
Hackers & data thieves
Aggression and fundamentalism

Ethical Dilemmas








Cyber crimes

Privacy
Financial mismanagement
International corruption
Loss of privacy
IP
SD


Developments (Cntd.)


BE Developments








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



Organizational


Ethics Officer






Global


The Caux Round Table




NYSE
UPS
Baxter Intl

NAFTA, WTO, EU,

Benefits






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


The importance of Business Ethics







Stakeholder Relationships, Social Responsibility
and Corporate Governance






Understanding Business Ethics
Why study BE
Evolution of BE
Benefits
Stakeholder relationship
Stakeholder influence in CSR
Corporate Governance

Relevant Cases




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