chapter 1 ethics in business

Ethical culture

Organizational principles, values, and norms that are adhered to by the company and its personnel.

Business ethics

Organizational principles, values, and norms that may originate from individuals, organizational statements, or from the legal system that primarily guide individual and group behavior in business

Morals

Personal philosophies that define right and wrong.

Ethics Contributes to Investor Loyalty

Provides a foundation for efficiency, productivity, and profits.•Negative publicity, lawsuits, and fines can lower stock prices, diminish customer loyalty, and threaten a company's long-term viability.•Demand for socially responsible investing is increasing.

Sustainability

Relates specifically to the environment (air, land, and water)

Reagan-Bush Era

Self-regulation rather than regulation by government was in the public's interest.

federal Sentencing Guidelines for Organizations (FSGO)

Set the tone for organizational ethical compliance programs.

Principles

Specific boundaries for behavior that often become the basis for rules

Value dilemma

Two or more beliefs/ideals in conflict with one another.

Moral dilemma

Two or more morals in conflict with one another.

Ethics Contributes to Profits

etter business performance.•Part of strategic planning toward obtaining the outcome of higher profitability.•Business ethics is becoming more than just a function of compliance; It's becoming an integral part of management's efforts to achieve competitive advantage.

Corporate social responsibility

Actions associated by firms with various stakeholder (other than investors) interests as a priority.

Values

Enduring beliefs and ideals that are socially enforced

Bottom Line for Business Ethics

Firm survival Profitability revenues sales Stakeholders Contribute to societal goals

Defense Industry Initiative on Business Ethics and Conduct (DII

was developed to guide corporate support for ethical conduct.

Ethics Contributes to Customer Satisfaction

High levels of perceived corporate misconduct decreases customer trust. Companies viewed as socially responsible increase customer trust and satisfaction. Consumer respondents stated they would pay more for products from companies that give back to society in a socially responsible and sustainable manner.