Bus 300 Chapter 5

code of ethics

formal statement of the ethical priorities a business adheres to

stakeholders

individuals or groups who have an interest, stake, or claim in the actions and overall performance of a company

ethical strategy

a strategy, or course of action, that does not violate these accepted principles

US Foreign Corrupt Practices Act

outlawed the practice of paying bribes to foreign government officials in order to gain business- amended to allow for facilitating payments

Convention on Combating Bribery of Foreign Public Officials in International Business Transactions

was adopted by the Organization for Economic Cooperation and Development (OECD)- obliges member states to make the bribery of foreign public officials a criminal offense

hire and promote people with a well-grounded sense of personal ethics build an organization culture that places a high value on ethical behavior make sure that leaders within the business articulate the rhetoric of ethical behavior and act in a manner that is consistent with that rhetoric put decision-making processes in place that require people to consider the ethical dimensions of business decisions

How can managers make ethical decisions

noblesse oblige

advocates argue that businesses need to recognize this- honorable and benevolent behavior that is the responsibility of successful companies- give something back to the societies that have made their success possible

moral theorists

argue that fundamental human rights form the basis for the moral compass that managers should navigate by when making decisions which have an ethical component

John Rawls

argued that all economic goods and services should be distributed equally except when an unequal distribution would work to everyone's advantage

freedom of association freedom of speech freedom of assembly freedom of movement

basic human rights are taken for granted in developed countries

Universal Declaration of Human Rights

basic principles that should always be adhered to irrespective of the culture in which one is doing business

articulate values that place a strong emphasis on ethical behavior emphasize the important of a code of ethics implement a system of incentives and rewards that recognize people who engage in ethical behavior and sanction those who do not

build and organizational culture that places a high value on ethical behavior

straw men approaches to ethics

deny the value of business ethics or apply the concept in an unsatisfactory way

enables managers to walk away from a decision that is profitable, but unethical gives an employee the strength to say no to a superior who instructs her to pursue actions that are unethical gives employees the integrity to go public to the media and blow the whistle on persistent unethical behavior in a company

develop moral courage

unrealistic performance expectations

encourage managers to cut corners or act in an unethical manner

ethics offiers

ensure all employees are trained in ethics, ethics is considered in the decision-making process, and the company's code of conduct is followed

cultural relativism

ethics are culturally determined and firms should adopt the ethics of the cultures in which they operate

veil of ignorance

everyone is imagined to be ignorant of all his or her particular characteristics

other approaches to ethics

favored by moral philosophers and are the basis for current models of ethical behavior

societal culture

firms headquartered in cultures where individualism and uncertainty avoidance are strong are more likely to stress ethical behavior than firms headquarters in cultures where masculinity and power distance rank high

justice theories

focus on the attainment of a just distribution of economic goods and services

friedman doctrine cultural relativism righteous moralist naive immoralist

four common straw men approaches

personal ethics

generally accepted principles of right and wrong governing the conduct of individuals- expatriates may face pressure to violate their personal ethics because they are away from their ordinary social context and supporting culture- managers fail to question whether a decision or action is ethical, and instead rely on economic analysis when making decisions

leadership

helps establish the culture of an organization, and set the examples that others follow- when leaders act unethically, subordinates may act unethically too

refrain from promoting individuals who have acted unethically try to hire only people with strong ethics prospective employees should find out as much as they can about the ethical climate in an organization prior to taking a position

hire and promote people with a well grounded sense of personal ethics

rights theories

human beings have fundamental rights and privileges which transcend national boundaries and cultures- establish a minimum level of morally acceptable behavior

naive immoralist

if a manager of a multinational see that firms from other nations are not following ethical norms in a host nation, that manager should not either- all approaches offer inappropriate guidelines for ethical decision making

Kantian ethics

immanuel Kant- people should be treated as ends and never purely as means to the ends of others- people have dignity and need to be respected- people are not machines

external stakeholders

individuals or groups who have some claim on a firm such as customers, suppliers, and unions

give life and meaning to words make sure that leaders emphasize the importance of ethics verbally and through their actions

make sure that leaders within the business articulate the rhetoric of ethical behavior and act in a manner that is consistent with that rhetoric

utilitarian ethics

moral worth of actions or practices is determined by their consequences- actions are desirable if they lead to the best possible balance of good consequences over bad consequences- but, it is difficult to measure the benefits, costs, and risks of an action- approach fails to consider justice

employment practices human rights environmental pollution corruption moral obligations of multinational companies

most common ethical issues in business involve

righteous moralist

multinational's home country standards of ethics should be followed in foreign countries

tragedy of the commons

occurs when a resource held in common by all, but owned by no one, is overused by individuals, resulting in degradation

just distribution

one that is considered fair and equitable

friedman doctrine

only social responsibility of business is to increase profits, so long as the company stays within the rules of law

organizational culture

organization culture can legitimize unethical behavior or reinforce the need for ethical behavior

internal stakeholders

people who work for or who own the business such as employees, board of directors, and stockholders

moral intent

place moral concerns ahead of other concerns in cases where either the fundamental rights of stakeholders or key moral principles have been violated

ask whether decisions fall within the accepted values of standards that typically apply in the organizational environment decisions can be communicated to all stakeholders affected by it if colleagues would approve of decisions

put decision making processes in place that require people to consider the ethical dimensions of business decisions

social responsibility

refers to the idea that managers should consider the social consequences of economic actions when making business decisions- should be a presumption in favor of decisions that have both good economic and good social consequences- right way for a business to behave

ethical dilemmas

situations in which none of the available alternatives seems ethically acceptable

real-world decisions are complex, difficult to frame and involve consequences that are difficult to quantify ethical obligations of an MNE toward employment conditions, human rights, corruption, environmental pollution, and the use of power are not always clear cut- right course of action not always clear

some ethical dilemmas

but anyone can despoil

some parts of the environment are a public good that no one owns

home country standards host country standards something in between

standards when work conditions in a host nation are clearly inferior to those in the multinational's home nation

identify which stakeholders a decisions would affect and in what ways

step 1 managers use to thing through ethical problems

determine whether a proposed decision would violate the fundamental rights of any stakeholders

step 2 managers use to thing through ethical problems

establish moral intent

step 3 managers use to thing through ethical problems

engage in ethical behavior

step 4 managers use to thing through ethical problems

audit decisions and review them to make sure that they are consistent with ethical principles- often overlooked even though it is critical to finding out whether a decision process is working

step 5 managers use to thing through ethical problems

decision making processes

values and norms are shared among employees of an organization- organization culture that does not emphasize business culture encourages unethical behavior

establish minimal acceptable standards that safeguard the basic rights and dignity of employees audit foreign subsidiaries and subcontractors regularly to ensure they are meeting the standards take corrective action as necessary

what firms should do to practice ethics

business ethics

accepted principles of right or wrong governing the conduct of business people

ethics

accepted principles of right or wrong that govern conduct of person, members of a profession, and actions of an organization