Business Ethics

Sustainability

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

Individual Factors

Research regarding individual factors that affect ethical awareness,judgment, intent and behavior include gender, education andnationality.

True

TRUE or FALSE: An ethical culture is based upon the norms and values of the company.

True

TRUE or FALSE: Business ethics contributes to investor loyalty.

Omission Lying

intentionally not informing about problems, safety warnings, negative issue)

Corporate social responsibility

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

Normative Descriptive Instrumental

Approaches to stakeholder theory:

Employee Commitment

Ethics Contributes to __________ • Willingness to sacrifice for the organization. (OTY) • Increases group creativity and job satisfaction; decreases turnover. • Less pressure to compromise ethical standards, • Greater absence of misconduct. • Strong community involvement increases loyalty and positive self identity.• The more a company is dedicated to taking care of its employees (ethics), the more likely is that the employees will take care of the organization.

Employee Commitment Investor loyalty Customer Satisfaction Profits

Ethics contributes to:

Integrity Honesty Fairness

Foundational Values for Identifying Ethical Issues

Normative

Identifies ethical guidelines that dictate how firms should treat stakeholders. Principles and values provide direction for normative decisions.

Values

Enduring beliefs and ideals that are socially enforced (trust and integrity, accountability).

Ethical awareness

The ability to perceive whether a situation or decision has an ethical dimension.

Ethical issue intensity

The relevance or importance of an event or decision in the eyes of the individual, work group, and/or organization

Commission Lying

creating a perception by words that intentionally deceive the receiver of the message;

Ethical issues

involve a situation, a problem, or even an opportunitythat requires introspection (thought), discussion and investigationbefore a decision can be made.

two-way street.

relationship between companies and their stakeholders is a _________

organizational misconduct

relationships are not only associated with organizational success but also in ________

Corporate Intelligence Related

(Hacking)

Misuse of Company Time and Resources

(Using company computer software and Internet services for personal business)

Sexual Harassment

(any repeated, unwanted behavior of a sexual nature perpetrated upon one individual by another)

Intellectual Property Rights

(music, books, movies; digital theft; copyright infringement)

Bribery

(offering something (usually money) in order to gain an illicit advantage)

Abusive or Intimidating Behavior

(physical threats, false accusations, profanity, insults, yelling, harshness, being annoying)

Discrimination

(race, color, religion, sex, marital status, age, disability)

Relationships Building effective relationships is considered one of the more important areas of business today A business exists because of relationships among employees, customers, shareholders or investors, suppliers and managers who develop strategies to attain success.

Business ethics issues, conflicts, and success revolve around:

organizational relationships

Businesses exist because of __________ between employees, customers, shareholders, and the community.

junzi

Confucius defined an honest person as ____

Instrumental

Describes what happens if firms behave in a particular way. This approach is useful because it examines relationships involved in the management of stakeholders including the processes, structures, and practices that implement stakeholder relationships within an organization.

individual's personal moral philosophies and values organization's and society's values and culture

Ethical issues typically arise because of conflicts among ________________, the _______________ in which they work, and those of the __________in which they live.

Profits

Ethics Contributes to _________ • Better 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.

Investor Loyalty

Ethics Contributes to ___________ • 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. • Ethical conduct results in investor loyalty and can contribute to success that supports even broader social causes and concerns.

Customer Satisfaction

Ethics Contributes to ______________ • 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. • When an organization has a strong ethical environment, it usually focuses on the core value of placing customer's interests first.

Organizational Factors

In the workplace, the organization's values often have greater influence on decisions than a person's own values.

Moral intensity

Individuals' perceptions of social pressure and the harm they believe their decisions will have on others.

conflicts

Most ethical issues exist because of __________ about what is right and wrong among and within stakeholder groups.

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.•

Morals

Personal principles rarely change

Honesty

Truthfulness or trustworthiness. To tell the truth to the best of your knowledge without hiding anything.

Value dilemma

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

Moral dilemma

Two or more morals in conflict with one another.

Primary and secondary stakeholders

Two types of stakeholders

• 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.

Why Study Business Ethics?

Opportunity

describes the conditions in an organization that limit or permit ethical or unethical behavior.• The ________- that employees have for unethical behavior in an organization can be eliminated through formal codes, policies, and rules that are adequately enforced by management

Ethics

eternal rules; may vary between environments

Stakeholder framework

identifies the internal stakeholders (board of directors, managers and employees) and the external stakeholders (customers, special interest groups and regulators) who agree, collaborate, and engage in confrontations on ethical issues.

Insider Trading

illegal practice of trading on the stock exchange to one's own advantage through having access to confidential information)

Integrity

is one of the most important and often-cited terms regarding virtue. It refers to being whole, sound, and in an unimpaired condition. Integrity relates to product quality, open communication, transparency, and relationships.

Fairness

is the quality of being Just, equitable, and impartial.

Equality

it is about how wealth or income is distributed among employees within a company, a country, or across the globe.

Section 404 of U.S. Sarbanes-Oxley Act of 2002

mandates that all publicly traded companies must establish internal controls and procedures for financial reporting and must document, test, and maintain those controls

ethical issue awareness.

the FIRST STEP toward understanding business ethics is to develop ________

Fraud

(Any purposeful communication that deceives, manipulates, or conceals facts in order to create a false impression)

generalizations

Although it is impossible to describe exactly how any one individual or group might make ethical decisions, there are ____________ about typical behavior patterns within organizations.

Firm survival Profitability, revenues, sales Stakeholders: customers, employees, channel members (manufacturers, wholesalers, retailers) Contribute to societal goals: community, country, world

Business ethics help:

Descriptive

Focuses on the firm's behavior; addresses how decisions are made for stakeholder relationships.

stakeholders

Government agencies, communities, and many others who have a "stake" or claim in some aspect of a company's products, operations, markets, industry, and outcomes are known as ______

Principles

Specific boundaries for behavior that often become the basis for rules (human rights, freedom of speech).

True- That stems from the basic definition

TRUE or FALSE: Business ethics deals with right or wrong behavior within a particular organization.

False - focuses on organizational concerns (legal and ethical - employees, customers, suppliers and society

TRUE or FALSE: Business ethics focuses mostly on personal ethical issues

False

TRUE or FALSE: Investments in business ethics do not support the bottom line

False

TRUE or FALSE: The trend is away from cultural or ethically based initiatives to legal initiatives in organizations

U.S. Sarbanes-Oxley Act of 2002

The ___________- was passed by the U.S. Congress to protect investors from the possibility of fraudulent accounting activities by corporations. Every organization is required to use a recognized internal controls framework for its ________ program.

Reciprocity

This occurs when an action that has an effect upon another is reciprocated with an action that has an approximately equal effect upon another. _______ is the return of small favors that are approximately equal in value.

Secondary stakeholders

Those who are not typically engaged directly in transactions with a company and are therefore not essential to its survival (government agencies and communities).

Primary stakeholders

Those whose continued association and resources are absolutely necessary for a firm's survival (customers, shareholders, employees, suppliers).

1. Equality 2. Reciprocity 3. Optimization

Three fundamental elements that motivate people to be fair:

one must first understand how individuals make ethical decisions in an organizational environment.

To improve ethical decision making in business,_________

Optimization

Trade-off between equity (equality) and efficiency(maximum productivity).