Chapter 9 - Business Ethics
Principle of Rights
"rights theory"; the belief that human beings have certain fundamental rights; whether an action or decision is ethical depends on how it affects the rights of various groups, such as owners, employees, consumers, suppliers, the community, and society; a dilemma for those who support rights theory is that they may disagree on which rights are most important; believe that whichever right is stronger in a particular circumstance takes preceence
Apply Utilitarianism
1) a determination of which individuals will be affected by the action in question 2) a cost benefit-analysis 3) a choice month alternative actions that will produce max societal utility (the greatest positive net benefits for the greatest number of individuals)
Businesses should evaluate..
1) the legal implications of each decision 2) the public relations impact 3) the safety risks for consumers and employees 4) financial implications ...when making decisions
Alternative to Layoffs
1. 4 day weeks 2. unpaid vacations and voluntary furloughs 3. wage freezes 4. pension cuts 5, flex work schedules
Utilitarianism
John Stuart Mill; an approach to ethical reasoning in which an action is evaluated in terms of its consequences for those whose it will affect; a "good" action is one that results in the greatest good for the greatest number of people; may not seem the most ethical
Kantian Ethical Principles
Kant believed that human beings are qualitatively different from other physical objects and are endowed with moral integrity and the capacity to reason and conduct their affairs rationally; when people are treated merely as a means to an end, they are being treated as the equivalent of objects and are being denied their basic humanity
Triple Bottom Line
a corporation's profits, its impact on people, and its impact on the planet
Cost-Benefit Analysis
a decision making technique that involves weighing the costs of a given action against the benefits of that action
Business Process Pragmatism
a systematic approach to organizing ethical concerns and issues 1) inquiry - understand/identify the problem 2) Discussion - list of possible actions and evaluate them 3) decision - craft a consensus decision or plan of action for the corp 4) justification - articulate the reasons for the proposed action(s); share with stakeholders 5) evaluations - occurs once the decision has been made and implemented; solution should be analyzed to determine if it was effective
Categorical Imperative
an ethical guideline developed by Kant under which an action is evaluated in terms of what would happen if everybody else in the same situation acted the same way
Duty-Based Ethics
an ethical philosophy rooted in the idea that every person has certain duties to others. Those duties may be derived from religious principles or from other philosophical reasoning
Outcome-Based Ethics
an ethical philosophy that focuses on the impacts of a decision of society or on key stakeholders
Ethical Req.
businesspersons must remember than an action that is legal is not necessarily ethical
Internal Codes of Ethics
codes are not laws, they are rules that the co sets forth and that it can also enforce; typically outline the co's policies on particular issues and indicate how employees are expected to act
The Internet Can Ruin Reputations
cyberspace provides a forum in which displeased groups can post derogatory remarks; the internet has increased the potential for a major corp to suffer damage to its reputation or loss of profits thru negative publicity
Hiring Procedures
employers conduct internet searches to discover what job candidates have posted on their social media pages; many believe that judging a candidate based on what they do outside of the work environment is unethical and it invades privacy; people who don't use social media also raise red flags, which can be seen as unethical as well
Gray Areas
ethics is less certain than law, but law can also be uncertain; make is difficult to predict with certainty how a court will apply a given law to a particular action
Ethics Training
for an ethical code to be effective, its provisions must be clearly communicated to employees
Religious Ethical Principles
generally are absolute with respect to the behavior of their adherents; e.g. 10 Commandments of the Old Testament and the Qur'an (Muslim) and Hindus use the four Vedas
Global Business Ethics
given the various cultures and religions threat the world, conflicts in ethics frequently arise between foreign and US businesspersons
Stakeholders
groups that are affected by corporate decisions; e.g. employees, customers, creditors, suppliers, and the community in which the corp operates; a corp should consider the impact of its decision on the stakeholders
Sarbanes Oxley Act
help reduce corporate fraud and unethical management decisions; the act requires companies to set up confidential systems so that employees and others can raise "red flags" about suspected illegal or unethical auditing and accounting practices
Profit Maximization as Goal
if all firms strictly adhere to the goal of profit maximization, resources flow to where they are most highly valued by society: corps can focus of their strengths; profit maximization can lead to the most efficient allocation of scarce resources; many have become dissatisfied with this theory
Legal Requirements
laws have to be general enough to apply in a variety of circumstances
Outcome Based Ethics
looks at the impacts of a decision in an attempt to maximize benefits and minimize harms; utilitarianism theory
Foreign Corrupt Practices Act (FCPA)
prohibits US businesspersons from bribing foreign officials to secure advantageous contracts; passed by Congress as a response to US corp foreign reps involved in scandals; does not prohibit payment of substantial sums to minor officials whose duties are ministerial
Short-Run and Long-Run Profit Maximization
short run: a company may increase its profits by continuing to sell a product, even tho it knows that the product is defective long run: because of law suits, large settlements, and bad publicity, such unethical conduct will cause profits to suffer thus, business ethics is consistent only long-run profit maximization
Business Ethics
the application of moral and ethical principles in a business context
Ethical Reasoning
the application of morals and ethic to a situation; applies to everyone involved in the business
Corporate Citizenship
the corp came to be viewed as a citizen that was expected to participate in bettering communities and society
National Labor Relations Board (NLRB)
the federal agency that investigates unfair labor practices made some social media guidelines illegal; e.g. Costco cannot prohibit its employees from criticizing the company or coworkers, supervisors, managers via social media
Corporate Social Responsibility (CSR)
the idea that corporations can and should act ethically and be accountable to society for their actions; can help companies grow and prosper; social aspect of CSR requires that corps demonstrate that they are promoting goals the society deems worthwhile and and are moving toward solutions to social problems; corps that are viewed as good citizens may see increases in sales
Moral Minimum
the min level of ethical behavior expected by society, which is usually defined as compliance with the law
Why is studying ethics important?
the public perception of the corp has changed from an entity that primary generates revenues for its owners to an entity that participates in society as a corporate citizen
Ethics
the study of what constitutes right or wrong behavior; it is the branch of philosophy that focuses on morality and the way in which moral principles are derives and applied to one's conduct in daily life; fairness, justness, rightness, or wrongness of an action
Attitude of Top Management
top management has to demonstrate its commitment to ethical decision making; managers who set unrealistic production or sales goals increase the probability that employees will act unethically; business owners misbehavior can have negative consequences for themselves and their business
Image
unethical corp decision making can negatively affect suppliers, consumers, the community, and society as a whole; as well as the reputation of the co. and the people who run it