Business in aChanging World

McGraw-Hill/Irwin Copyright © 2009 by the McGraw-Hill Companies, Inc. All rights reserved.

Chapter 2Business Ethics and Social Responsibility

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Ethisphere links ethics to profitsPublication that illuminates the relationship between ethics and profits.

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Business Ethics & Social Responsibility

Exec who allegedly made $270M off Enron to pay SEC $31.5M

Business Ethics – principles and standards that determine acceptable conduct in business

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Business Ethics & Social Responsibility

A Timeline of Ethical and Socially Responsible Concerns

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Business Ethics & Social Responsibility

Social responsibility– business’s obligation to maximize its positive impact and minimize its negative impact on society

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Business Ethics & Social Responsibility

Laws and regulations encourage businesses to conform to society’s standards, values, and attitudes. Sarbanes-Oxley Act - 2002

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The Role of Ethics in Business

Concern about unethical business practices continue –

HealthSouth’s accounting improprieties and securities fraud

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The Role of Ethics in Business

Unethical and/or Illegal•Accounting fraud•Deceptive advertising•Unfair competitive practices•Internet theft

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The Role of Ethics in BusinessEthical Conduct•Builds trust•Promotes confidence•Validates relationships

Learn how to recognize and resolve ethical issues

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Recognizing Ethical Issues in Business

Ethical issue – an identifiable problem,

situation, or opportunity that requires a person to choose from among several actions that may be evaluated as right or wrong, ethical or unethical.

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Recognizing Ethical Issues in Business

How to judge the ethics of a situation –

examine the situation from your stakeholders’ position, including customers and competitors

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Types and Incidences of Observed Misconduct

Many business issues may seem straightforward and easy to resolve on the surface, but are in reality very complex.

Recognizing Ethical Issues in Business

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1. Overly aggressive financial or business objectives

2. Abusive & intimidating behavior3. Conflict of interest4. Fairness & honesty5. Communications6. Business relationships

Sources of Unethical Behavior in Organizations

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Sources of Unethical Behavior

Abusive and intimidating behavior

“Bullies” behavior:

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Conflict of interest – – the most common ethical issue identified

by employees.– Advance personal interests over others’

interests– Benefit self at the expense of the company

Sources of Unethical Behavior in Organizations

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Least Corrupt Countries

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Business Ethics

Fairness & honesty – the heart of business ethics•How employees use resources•No harm to customers•Accurate representations•Disclosure

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Business Ethics

Most Popular Office Supplies Employees Pilfer

“More Employees Taking Supplies,” The News Journal

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Personal Ethics

25,000 high school students:•62% cheated on exams at least once•35% copied documents from Internet•27% shoplifted•23% cheated to win at sports

Honesty?

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Ethical Concerns

•False/misleading advertising•Deceptive personal selling tactics•Product safety and quality•Unsubstantiated claims•Product labeling

Communications

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Ethical Concerns

•Relationships with customers•Relationships with suppliers•Relationships with co-workers

Business Relationships

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Ethical Concerns

The act of taking someone else’s work and presenting it as your own without mentioning the source

Plagiarism

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Making Decisions About Ethical Issues

Questions to Consider in Determining Whether an Action Is Ethical

Open discussion of ethical issues does not eliminate ethical problems; it does promote trust and learning in an organization.

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Improving Ethical Behavior in Business

Ethical decisions in an organizations are influenced by three key factors

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Improving Ethical Behavior in Business

Codes of Ethics – Formalized rules and standards that describe what a company expects of its employees.

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Improving Ethical Behavior in Business

Key Things to Consider in Developing a Code of Ethics

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Codes of Ethics

According to the NBES, employees in organizations with written standards of conduct are more likely to report misconduct when they observe it.

National Business Ethics Survey (NBES)

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Codes of Ethics

The act of an employee exposing an employer’s wrongdoing to outsiders, such as the media or government regulatory agencies.

Whistleblowing

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Business Ethics – Taking Responsibility

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Nature of Social Responsibility

1. Economic2. Legal3. Ethical4. Voluntary (philanthropic)

4 Dimensions

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Pyramid of Social Responsibility

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Nature of Social Responsibility

The extent to which businesses meet the legal,ethical, economic, and voluntary responsibilitiesplaced on them by their stakeholders.

Corporate Citizenship

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Nature of Social Responsibility

1. Intel Corporation2. Eaton Corporation3. Nike Inc.4. Deere and Co.

Best Corporate Citizens

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Nature of Social Responsibility

Arguments For and Against Social Responsibility

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Social Responsibility Issues

• Primary concern with profit or ROI• Financial community at large• Proper accounting procedures• Protecting owner’s rights and investments

Owners & Stockholders

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Social Responsibility Issues

• Provide a safe workplace• Adequate compensation• Listen to grievances• Fair treatment

Employee Relations

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Social Responsibility Issues

Consumerism – the activities that independent individuals, groups, and organizations undertake to protect their rights as consumers.

Consumer Relations

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Social Responsibility Issues

• Animal rights• Pollution• Going Green

Environmental Issues

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Social Responsibility Issues

•General community and global welfare•Hardcore unemployed•Charitable contributions (United Way)•Avon’s Breast Cancer Awareness Crusade

Community Relations

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