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