Class 4: The importance of Business Ethics

ethical culture

acceptable behavior as defined by the company and industry - the goal is to minimize the need for enforced compliance with rules and maximize the use of principles that contribute to ethical reasoning in difficult or new situations - creates shared values and support for ethical decisions and is driven by the ethical leadership of top management

values

enduring beliefs and ideals that are sociall enforced

morals

personal philosophies that define right and wrong

principles

specific boundaries for behavior that often become the basis for rules

ethics

study of right and wrong behavior

workplace integrity

the pressure to compromise organizational standards, observed misconduct, reporting of misconduct when observed, and retaliation against reports

value dilemma

two or more beliefs/ideals in conflict with one another

moral dilemma

two or more choices in conflict with one another, all undesirable

ethics contributes to profits

better business performance

ethicas contributes to

- employee commitment - investor loyalty - customer satisfaction - profits

why study business ethics?

- firm survival - profitability, revenues, sales - stakeholder expectations - contribute to societal goals - identify ethical issues - recognize approaches for resolving ethical issues - cope with conflicts between your own personal values and those of the organization in which you work - gain knowledge to make more ethical business decisions

ethics contributes to customer satisfaction

- high levels of perceived corporate misconduct decreases consumer trust - companies viewed as socially responsible increase customer trust and satisfaction

ethics contributes to employee commitment

- increases job satisfaction; decreases turnover

Business ethics

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

ethics contributes to investor loyalty

- provides a foundation for efficiency, productivity, and profits - negative publicity, lawsuits, and fines can lower stock prices - demand for socially responsible investing is increasing