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)

Specific Def. (Shea, 1988) “the principles of conduct governing an

individual or a profession” “standards of behaviour”

Ethical Standards 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

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

Major Ethical Dilemmas 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

Scandals Recession Unemployment Heightened environment concerns Public pressure over business accountability

Ethical Dilemmas 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

Social contract Stringent rules – defence contractor Downsizing & loyalty to employer eroded Health care emphasized

Ethical Dilemmas 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

Global expansion Child labour Environment Internet / Cultural borders Forbidden - common

Ethical Dilemmas 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

NYSE UPS Baxter Intl

Global The Caux Round Table

NAFTA, WTO, EU, Benefits

Employee commitment Investor loyalty Customer satisfaction Profits

Levels of BE

International Level

Societal Level

Association Level

Organizational level

Individual 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 Understanding Business Ethics Why study BE Evolution of BE Benefits

Stakeholder Relationships, Social Responsibility and Corporate Governance

Stakeholder relationship Stakeholder influence in CSR Corporate Governance

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