© 2013 cengage learning. all rights reserved. 1 part two: ethical issues and the...

© 2013 Cengage Learning. All Rights Reserved. 1

Part Two: Ethical Issues and the Institutionalization of Business Ethics

Chapter 3: Emerging Business Ethics Issues

Recognizing an Ethical Issue

An ethical issue is a problem, situation, or opportunity that requires an individual or group to choose among actions New ethical issues are emerging constantly Can be difficult to recognize ethical issues

Failure to do so puts corporations at risk• Is a problem in industries where winning is

perceived to be a game



Specific Types of Observed Misconduct

Honesty

Honesty: Truthfulness or trustworthiness Telling the truth to the best of your knowledge Dishonesty: A lack of integrity, incomplete

disclosure, or an unwillingness to tell the truth

Issues related to honesty arise when people perceive business as something where normal rules do not apply


Fairness and Integrity

Fairness: The quality of being just, equitable, and impartial Equality: How wealth or income is distributed Reciprocity: Occurs when an action that has an effect

upon another is returned Optimization: The tradeoff between equity and

efficiency

Integrity: Uncompromising adherence to ethical values One of the most important terms relating to virtue


Ethical Issues and Dilemmas in Business

An ethical dilemma is a problem, situation, or opportunity that requires an individual or group to chose among several wrong or unethical actions There is no ethical choice



Shareholder Issues

Misuse of Company Resources

The leading form of observed misconduct Can range from unauthorized use of

equipment and computers to embezzling company funds

Time theft costs organizations hundreds of billions in lost productivity annually


Abusive or Intimidating Behavior

One of the most common ethical problems Can be physical threats, false accusations,

profanity, insults, harshness, ignoring someone, or unreasonableness Intent is important in determining abuse

Bullying is a growing problem• Is associated with a hostile workplace



Actions Associated with Bullies

Lying

Three types of lies Joking without malice Commission lying is creating a false perception

with words that deceive the receiver Creating noise

Omission lying is intentionally not informing channel members of problems relating to a product that affects awareness, intention, or behavior


Conflicts of Interest

Exist when an individual must choose whether to advance his/her personal interests, those of the organization, or some other group Individuals must separate personal interests

from business dealings


Bribery

The practice of offering something in order to gain an illicit advantage Different types of bribery

Active bribery: The person who promises or gives the bribe commits the offense

Passive bribery: An offense committed by the official who receives the bribe

Facilitation payments: Legal as long as they are small


Corporate Intelligence

The collection and analysis of information on Markets Technologies Customers and competitors Socioeconomic and external political trendsThree intelligence models• Passive monitoring system for early warning• Tactical field support• Support dedicated to top management strategy


Corporate Intelligence

Hacking System hacking Remote hacking Physical hacking

Social engineering Shoulder surfing Password guessing Dumpster diving Whacking Phone eavesdropping


Discrimination

Is illegal in the U.S. A company can be sued for discrimination if it

Refuses to hire an individual for discriminatory reasons

Unreasonably excludes an individual from employment

Unreasonably discharges an individual Discriminates against an individual with respect to

hiring, employment terms, promotion, or privileges


Discrimination (continued)

Equal Employment Opportunity Commission (EEOC)

The Age Discrimination in Employment Act Affirmative Action Programs

Efforts to recruit, hire, train, and promote qualified individuals from groups that have traditionally been discriminated against


Sexual Harassment

A repeated, unwanted behavior of a sexual nature perpetrated upon an individual by another Hostile work environment

The conduct was unwelcome The conduct was severe, pervasive, and regarded

by claimant as hostile/offensive The conduct was such that a reasonable person

would find it hostile or offensive


Dual Relationship

A personal, loving, and/or sexual relationship with someone with whom you share professional responsibilities A key ethical issue in sexual harassment

Unethical dual relationship: The relationship causes a conflict of interest or impairment of professional judgment


To Avoid Sexual Misconduct, a Firm Needs

1. Statement of policy2. Definition of sexual harassment3. Non-retaliation policy4. Specific procedures for prevention5. Establish, enforce, and encourage victims to

report6. Establish a reporting procedure7. Timely reporting requirements to the proper

authorities


Environmental Issues

Are becoming significant concerns in business Air pollution: Gases and particulates in the air that

can linger or be carried long distances by winds The Kyoto Protocol: An international treaty on climate

change that commits nations to reducing greenhouse gas emissions

Water pollution: Results from dumping sewage and toxic chemicals in places where they can filter into water supplies


Environmental Issues (continued)

Recycling: The reprocessing of materials, especially steel, aluminum, paper, glass, rubber, and some plastics Consumers consider recycling to be the most

important thing they can do to live “greener” lives Alternative energy: Is considered “green”

because it produces fewer emissions and creates less pollution

Wind HydropowerSolar BiofuelsGeothermal Nuclear

© 2013 Cengage Learning . All rights reserved. 22


Consumers’ Favorite Green Practices

Fraud

Any purposeful communication that deceives, manipulates, or conceals facts in order to create a false impression Accounting fraud

Misrepresentation of company’s financial reports Dramatic changes in accounting field Increased competition and pressures to perform

can create opportunities for misconduct Accountants should abide by a strict code of ethics


Marketing Fraud

The process of dishonestly creating, distributing, promoting, and pricing products Puffery: Exaggerated advertising claims,

blustering, and boasting Can be difficult to distinguish from fraud

Implied falsity: An advertising message that misleads, confuses, or deceives the public

Literally false: Claims can be divided into tests prove and bald assertions (non-establishment claims)


Consumer Fraud

When consumers attempt to deceive businesses for personal gain Price tag switching, item switching, or lying to

obtain discounts Collusion involves an employee who helps a

consumer commit fraud Duplicity involves a consumer duping a store Guile is associated with a person who uses

tricks to obtain an unfair advantage


Financial Misconduct The failure to understand and manage ethical

risks was a key problem in the recent financial crisis Many firms rewarded risk-taking Difficult-to-understand financial instruments and

murky accounting played roles Government calls for reform

Stricter controls on hedge funds and other instruments

Greater transparency Dodd-Frank Wall Street Reform and Consumer

Protection Act© 2013 Cengage Learning. All Rights Reserved. 27

Insider Trading

Two types of insider trading Legal insider trading: Involves legally buying

and selling stock in an insider’s own company, but not all the time

Illegal insider trading: The buying or selling of stocks by insiders who possess material that is not public


Intellectual Property Rights and Privacy

Involve the legal protection of intellectual properties

Books, movies, software Can be difficult to enforce

Many privacy issues in the business world Employee use of technology Consumer privacy Can be challenging for businesses today to meet

the needs of consumers while protecting privacy

Identity theft is a growing problem


The Challenge of Determining Ethical Issues in Business

Most ethical issues become visible through stakeholder concerns

Determining ethical issues is a challenge Changing societal standards over time

The ethical decision making process starts when ethical issue awareness occurs and a discussion begins


© 2013 cengage learning. all rights reserved. 1 part two: ethical issues and the...

Documents