Chapter 4 Business Ethics and Social Responsibility

example of ethical dilemma

"You've just done a great job on a recent project at your company. Your boss has been very vocal about acknowledging your work and the increased revenue that resulted from it. Privately, she said that you clearly earned a bonus of at least 10%, but due to company politics, she was unable to secure the bonus for you. She also implied that if you were to submit inflated expense reports for the next few months, she would look the other way, and you could pocket the extra cash as well-deserved compensation for your contributions." (more examples on pg 59)

How people may view ethics as relative:

"it's not okay to steal paper from the office supply store...but it is perfectly fine to 'borrow' supplies from the storage closet at work to use at home. Why? The company owes me a bigger salary" this is dangerous in business bc it can help people rationalize bigger and bigger ethical deviations

example of planned obsolescence:

- apple came out with the iPhone for $599, but then 2 months later dropped the price $200 to make it more available, everyone who paid $599 was angry, this could have lead to less consumers for apple so apple gave everyone who bought it for $599 a $100 Apple Store credit - how some think apple purposely ruins the battery in one phone when they come out with a new one, so you have to purchase it

examples of stakeholders

- different stakeholders have different expectations, needs, and levels of interest - the federal government is a key stakeholder to pharmaceutical companies but a minor stakeholder to local art studios - the community at a large is a key stakeholder for a coffee shop chain but a minor stakeholder for a web design firm

key principles of most decision guides:

- do you fully understand each dimension of the problem? - who would benefit? who would suffer? - are the alternative solutions legal? Are they fair? - does your decision make you feel comfortable at a "gut feel" level? - could you defend your decision on the TV news? - have you considered and reconsidered your responses to each question?

ethical dilemmas

a decision that involves a conflict of values; every potential course of action has some significant negative consequences. when whatever you do will have a negative consequence, forcing you to choose among bad options

code of ethics

a formal, written document that defines the ethical standards of an organization and gives employees the info they need to make ethical decisions across a range of situations

ethics

a set of beliefs about right and wrong, good and bad

consumerism

a social movement that focuses on 4 consumer rights: 1) the right to be safe 2) the right to be informed 3) the right to choose 4) the right to be heard

social audit

a systematic evaluation of how well a firm is meeting its ethics and social responsibility goals

corporate philanthropy

all business donations to nonprofit groups, including money, products, and employee time

stakeholders

any groups that have a stake - or personal interest - in the performance and actions of an organization

corporate responsibility

business contributions to the community through the actions of the business itself rather than donations of money and time

planned obsolescence

deliberately designing products to fail in order to shorten the time between consumer repurchases - represents a clear violation of social responsibility - in long term, the market itself weeds out offenders - in short term, this thins consumer wallets and abuses consumer trust

green marketing

developing and promoting environmentally sound products and practices to gain a competitive edge

sustainable development

doing business to meet the needs of the current generation, without harming the ability of future generations to meet their needs

whistle blowers

employees who report their employer's illegal or unethical behavior to either authorities or the media

who are the core stakeholder groups for most businesses?

employees, customers, investors, and the broader community

universal ethical standards

ethical norms that apply to all people across a broad spectrum of situations

what do the most socially responsible firms do?

feature proactive policies that focus on meeting the needs of all their stakeholders - not just investors but also employees, customers, the broader community, and the environment. The stance of a company regarding social responsibility sets the tone for the organization and clearly influences the decisions of individual employees

2002 Sarbanes-Oxley Act

federal legislation that sets higher ethical standards for public corporations and accounting firms. limits conflict-of-interest issues and require financial officers and CEOs to certify the validity of their financial statements

how to fix the problem of viewing ethics as relative/creating bigger and bigger ethical deviations:

identifying universal ethical standards that apply to everyone across the broad spectrum of situations

how do laws and yourself influence ethics?

laws provide basic standards of behavior, but truly ethical behavior goes beyond the basics. ex: your actions can be completely legal, yet still unethical (pg 58 for examples)

cause-related marketing

marketing partnership between businesses and non profit organizations, designed to spike sales for the company and raise money for the non-profit

what are the effects of more engaged employees?

more engaged employees are much less likely to behave badly and much more likely to report others who do, which dramatically lowers the risk for the company

what culture has more influence than any other variable on the ethical conduct of individual employees?

organizational culture - when the company has better ethics, it leads to the employees having stronger ethics. The company should also hold the employees responsible for their actions

what is a strong predictor of ethical leadership?

personal empathy - "understanding of another's situation, feelings and motives." business leaders who scored higher on empathy also exhibited the highest levels of ethical leadership. these factors all come into play as you face ethical dilemmas

carbon footprint

refers to the amount of harmful greenhouse gases that a firm emits throughout its operations, both directly and indirectly

business ethics

the application of right and wrong, good and bad, in a business setting

social responsibility

the obligation of a business to contribute to society

why is there a need for senior manager commitment?

when employees perceive more management commitment, they tend to be more fully engaged

what did the Character Counts nonprofit, nonpartisan organization do?

worked with a diverse group of educators, community leaders, and ethicists to identify 6 core values that transcend political, religious, class, and ethnic divisions (6 core values on exhibit 4.2 pg 58)

ethical choices begin with ethical individuals. what influences this?

your personal needs, your family, your culture, your religion, personality traits (self esteem, self confidence, sense of humor, independence, etc)