Asia Edition Ch01

8/3/2019 Asia Edition Ch01

1/23

The Importance of BusinessEthics

C H A P T E R 1

Business Ethics and Policy: Ethical Decision Making and Cases


2/23

Why Study Business Ethics?

Business decisions under great

scrutiny

Global financial crisis created

diminished stakeholder trust Deals with questions about

whether practices are

acceptable

No universally-accepted

approach for resolving issues

Source: Jack Hollingsworth/Corbis


3/23

Business Ethics Defined The term ethics has many nuances.

Defined as inquiry into the nature and

grounds of morality where the termmorality is taken to mean moral judgments,

standards and rules of conduct.

It has also been called the study and

philosophy of human conduct, with the

emphasis on determining right and wrong


4/23

Business Ethics Defined One difference between an ordinary

decision and ethical one lies in the point

where the accepted rules no longer serve,and the decision maker is faced with the

responsibility for weighing values and

reaching a judgment in a situation which is

not quite the same as any he or she hasfaced before.


5/23

Business Ethics Comprises principles, values, and standards that guide

behavior in the world of business

Principles: Specific boundaries for behavior that areuniversal and absolute

Freedom of speech, civil liberties

Values: Used to develop socially enforced norms Integrity, accountability, trust


6/23

Values

Exits when a group of states conscious of certaincommon interests and common values, form a

society in the sense that they conceive

themselves to be bound by a common set of rules

in their relations with one another, and share inthe working of common institutions (Bull, 1977).

Values are used to develop norms that are

socially enforced. Societal members are not

necessarily right, their judgments influence

societys acceptance or rejection of a business

and its activities.


7/23

Americans Trust in Business

(% of respondents who say they trust the

following business categories a great deal)


8/23

A Crisis in Business Ethics

Consumer trust of businesses is declining

No sector is exempt from ethical misconduct

Stakeholders determine what is ethical/unethical

Investors

Employees

Customers

Interest groups

Legal system

Community

Source: Stockbyte


9/23

Why Study Business Ethics?

Reports of unethical behavior are on the rise

Societys evaluation of right or wrong affects its

ability to achieve its business goals Studying business ethics is a response to

Sarbanes-Oxley, FSGO, and stakeholder

demands for ethics initiatives

Individual ethics alone is not sufficient Studying business ethics helps identify ethical

issues to key stakeholders


10/23

A Timeline of Ethical and Socially

Responsible Concerns


11/23

Before 1960: Ethics in Business

Theological discussions of ethics emerged

Catholic social ethics included a concern for

morality in business, workers rights and livingwages

Protestants developed ethics courses in their

seminaries and schools of theology

The Protestant work ethic encouraged hard work


12/23

The 1960s: The Rise of Social Issues in

Business Societal social consciousness emerged

Anti-business sentiment rose

JFKs Consumer Bill of Rights-A new era of consumerism

Right to safety, to beinformed, to choose,and to be heard

Consumer protection groupsfought for consumerprotection legislation

Ralph Nader Source: Hisham Ibrahim


13/23

The 1970s: Business Ethics as an

Emerging Field

Business professors began to write about socialresponsibility

An organizations obligation to maximize positive

impact and minimize negative impact on stakeholders Philosophers became involved

Businesses became concerned with public image

Conferences were held and centers developed

Issues: Bribery Product safety

Deceptive advertising Environment

Price collusion


14/23

The 1980s: Consolidation

Membership in business ethics organizationsincreased

Ethics centers provided:

Publications, courses, conferences and seminars

Firms established ethics committees

Defense Industry Initiative on Business Ethics andConduct (DII) emerged

Foundation for the Federal Sentencing Guidelinesfor Organizations

Corporate support for ethics


15/23

The 1990s: Institutionalization of

Business Ethics

The Federal Sentencing Guidelines for Organizations

(FSGO)

Set tone for compliance Preventative actions against misconduct

A company could avoid/minimize potential

penalties


16/23

The Federal Sentencing Guidelines for

Organizations Standards and procedures capable of detecting and

preventing misconduct

High level oversight

Care in delegation of authority

Effective communication (training)

Systems to monitor, audit, and report misconduct

Consistent enforcement

Continuous improvement


17/23

The 21st Century: A New Focus

Continued issues with corporate non-compliance Growing public/political demand for improved ethical standards

Sarbanes-Oxley Act (2002)

Most extensive ethics reform Increased accounting regulations

FSGO reform (2004) Requires governing authorities to be well-informed regarding

business ethics programs

Firms greatest danger is not discovering misconductearly

Basic assumptions of capitalism being debated Fears in the wake of global recession and financial meltdown


18/23

Organizational and Global Ethical

Culture Ethical culture describes the component of

corporate culture that captures the values and normsthat an organization defines as appropriate conduct

Creates shared values Goal is to:

Minimize need forenforced compliance

Maximize utilization of

principles/ ethicalreasoning

Source: Triangle Images


19/23

Prevalence of Misconduct by Industry


20/23

Ethics Contributes to Employee

Commitment Comes from employees who believe their future

is tied to the organizations

Are willing to make personal sacrifices for theorganization

The more dedication on the part of the company,

the greater the employee dedication

Concerns include a safe work environment,

competitive salaries and benefit packages, and

fulfillment of contractual obligations


21/23

Ethics Contributes to Investor

Loyalty Companies perceived by their employees as

having a high level of honesty and integrity are

more profitable than companies with a low level

of honesty and integrity

Ethical climates in organizations provide platform

for:

Efficiency

Productivity

Profitability


22/23

Ethics Contributes to Customer

Satisfaction Consumers respond positively to socially concerned

businesses

Being good can be extremely profitable

Customer satisfaction dictates business success A strong organizational ethical climate

places customers interests first

Research shows a strong relationship between ethicalbehavior and customer satisfaction


23/23

Ethics Contributes to Profits

Corporate concern for ethicalconduct is being integrated withstrategic planning

Maximize profitability

Corporate citizenship ispositively associated with:

Return on investment andassets

Sales growth

Studies have found a positiverelationship between citizenshipand performance

Source: PhotoLink

Asia Edition Ch01

Documents

Transcript of Asia Edition Ch01