Chapter 3 Emerging Business Ethics Issues
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Transcript of Chapter 3 Emerging Business Ethics Issues
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Emerging Business EthicsIssues
C H A P T E R 3
Business Ethics and Policy: Ethical Decision Making and Cases
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Recognizing an Ethical Issue
An ethical issue is a situation or a
problem that requires thought, discussion,
or investigation to make a decision
New ethical issues are emerging
constantly Can be difficult to recognize ethical
issues
Failure to do so puts corporations at great
risk
A problem in industries where winningperceived to be a game to be won at all
costs
Source: Triangle Images
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Recognizing an Ethical Issue
Uncertainty is a fact of complex, dynamic
organizational life.
Ethical issues are ever present in uncertain
conditions where multiple stakeholders, interests, and
values are in conflict and laws are unclear.
Managers are involved in ethical decision making as
their decisions and acts can produce tremendous
social consequences, particularly in the realms ofhealth, safety, and welfare of consumers, employees,
and the community.
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Specific Types of Observed
Misconduct2009 2007
Company Resource Abuse 23% N/A
Abusive behavior 22% 21%
Lying to employees 19% 20%
Email or internet abuse 18% 18%
Conflicts of interest 16% 22%
Discrimination 14% 12%
Lying to stakeholders 12% 14%
Employee benefit violations 11% N/A
Health or safety violations 11% 15%
Employee privacy breach 10% N/A
Improper hiring practices 10% 10%
Falsifying time or expenses 10% N/A
Poor product quality 9% 10%
Stealing 9% 12%
Source: 2009 National Business Ethics Survey: Ethics in the Recession, (Washington D.C.: Ethics Resource Center, 2009):p. 3 2-33.
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Honesty
Honesty:Truthfulness or trustworthiness
Dishonesty: A lack of integrity, incomplete
disclosure, or an unwillingness to tell the truth
Issues related to honesty can arise when people
begin to perceive business as something that has
its own rules
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Fairness and Integrity
Fairness: The quality of being just, equitable, and
impartial (not biased)
Equality: How wealth or income is distributed
Reciprocity:Occurs when an action that has apositive effect upon someone else is reciprocated
Optimization:The tradeoff between equity and
efficiency
Integrity: One of the most important terms regardingvirtue. It means uncompromising adherence to ethical
values
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Integrity
Perceived behavioral integrity is the
perceived pattern of alignment between an
actors words and deeds.
It entails both the perceived fit between
espoused (advocate) and enacted
(represent) values, and perceived promise-
keeping.
It includes the perception of behavioral
adherence to psychological contracts.
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Ethical Issues and Dilemmas in
Business An ethical issueis a problem or opportunity that requires
an individual or group to choose among actions that are
evaluated as ethical or unethical
An ethical dilemmais a problem, situation, or opportunitythat requires an individual or group to choose among
several wrong or unethical actions
Source: Flying Colours Ltd.
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Ethical Dilemma
Managing ethical behavior is thus no doubt a
critical social problem for business
organizations.
It is also a very complex problem which
requires an in-depth understanding of the
many factors which contributes to
employees decision to behave ethically orunethically.
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Individual Personality and
Socialization Factors
Individual personalityEgo strength,
machiavellianism and locus of control.
Ego strength is defined as an individualsability to engage in self-directed activity and
to manage tense situation (Crandall, 1973).
Machiavellianism is a measure ofdeceitfulness (deceiving ) and duplicity (two-
fold) (Robinson, 1973).
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Individual Personality and
Socialization Factors
Locus of control is a measure of
whether or not a person believes that
his or her outcomes in life aredetermined by his/her own action
(internal) or by luck, fate or powerful
others and institutions (external)(Levenson, 1974).
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Ethical Dilemma
The content of ones ethical system, the
network of ethical norms and principles one
holds, constitutes a persons ethical
philosophy.
Thus, an individuals ethical philosophy will
likely influence his or her ethical decisions.
However, when and how persons apply their
ethical philosophies will also vary from
individual to individual
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Abusive or Intimidating Behavior
One of the most common ethical problems
Can mean anything from physical threats, false
accusations, profanity, insults, harshness, ignoring
someone, or even unreasonableness
Intent is important in determining abuse
Bullyingis a growing legal problem in the workplace
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Actions Associated with Bullies
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Lying
Three types of lies:
1. Joking without malice
2. Commission lying is creating a false perception
by choosing words that intentionally deceive thereceiver
Creating noise
3. Omission lying is intentionally not informing
channel members of problems, related toproduct that affects awareness, intention, or
behavior
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Conflicts of Interest
Exist when an individual must choose whether to
advance his or her own personal interests, those
of the organization, or some other group
Individual must separate personal interestsfrom business dealings
Briberyis a significant
concern
Source: Triange Images
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Bribery
Bribery is the practice of offering something in order
to gain an illicit advantage
Different types of bribery
Active bribery
Passive bribery
Facilitation payments: are legal as long as they are
small
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Corporate Intelligence
Corporate intelligenceis the collection and analysis
of information on:
Markets
Technologies
Customers and competitors
Socioeconomic and external political trends
Source: Triangle Images
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Corporate Intelligence
Hacking
System hacking
Remote hacking
Physical hacking Dumpster diving
Whacking
Phone eavesdropping
Social engineering Password guessing
Shoulder surfing
Source: Digital Vision
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Ethics and Corporate Intelligence
CItactics used for gathering competitivecorporate intelligence both within their own and
their competitors corporations.
Business people in large corporations are
highly motivated to gather such intelligence.
Their attitudes towards the ethicality of specific
practices, however, are influenced by the
corporate culture, perceived effectiveness of
the techniques and perception of the
competitors technique.
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Discrimination
Discriminationis illegal in the U.S.
A company in the U.S. can be sued for discrimination
if it:
Refuses to hire an individual for discriminatoryreasons
Unreasonably excludes an individual from
employment
Unreasonably discharges an individual Discriminates against an individual with respect to
hiring, employment terms, promotion, or privileges
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Discrimination
Equal Employment Opportunity Commission
(EEOC)
Age discrimination
The Age Discrimination in Employment Act
Affirmative action programs
Efforts to recruit, hire, train and promote qualified
individuals from groups that have traditionally
been discriminated against based on race,gender, or other characteristics
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Sexual Harassment
A repeated, unwanted behavior of a sexual nature
perpetrated upon one individual by another
Hostile Work Environment
The conduct was unwelcome The conduct was severe, pervasive, and regarded
by the claimant as so hostile or offensive as to
alter his or her conditions of employment
The conduct was such that a reasonable personwould find it hostile or offensive
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Dual Relationship
Key ethical issue in sexual harassment
Dual relationship:A personal, loving, and/or sexual
relationship with someone with whom you share
professional responsibilities
Unethical dual relationship:The relationship
causes a conflict of interest or impairment of
professional judgment
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To Avoid Sexual Misconduct, a Firm
Needs:1. Statement of policy
2. Definition of sexual harassment
3. Non-retaliation policy4. Specific procedures for prevention
5. Establish, enforce, and encourage victims to report
6. Establish a reporting procedure
7. Timely reporting requirements to the properauthorities
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Consumers Favorite Green Practices
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Environmental Issues
The environment is a significant and growing issue in
business
The Kyoto Protocol:An international treaty on
climate change that commits nations to reducing
greenhouse gas emissions
Water pollution:Results from dumping sewage and
toxic chemicals in places where they can filter into
water supplies
Green energy sourcesare perceived to have lower
emissions or waste than traditional ones
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What Consumers Think About Green
Products
Source: 2009 Green Home Furnishings Consumer Study, World Market Center Las Vegas and the Sustainable Furnishings Council
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Fraud
Any purposeful communication that deceives,
manipulates, or conceals facts in order to create a
false impression is fraud
Accounting fraud
Misrepresentation of companys financial reports
Sarbanes-Oxley Act sought to improve this
2008-2009 Wall Street financial meltdown and
recession revealed continuing problems
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Marketing Fraud
The process of committing fraud in the creating,
distributing, promoting and pricing products
Can be hard to distinguish between fraud and
puffery, which is exaggerated advertising claims,blustering and boasting
Implied falsitymeans that an advertising message
has a tendency to mislead, confuse, or deceive the
public
Literally falseclaims can be divided into tests prove
and bald assertions (non-establishment claims)
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Consumer Fraud
When consumers attempt to deceive businesses for
personal gain
Collusion involves an employee who helps a
consumer commit fraud
Duplicityinvolves a consumer duping a store
Guile is associated with a person who uses tricks
to obtain an unfair advantage
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Financial Misconduct
The failure to understand manage ethical risks played
a key part in the financial meltdown and recession of
2008-2009
Many firms rewarded
risk-taking
Illegal insider trading is the
buying or selling of stocks by
insiders who possess materialthat is still not public
Source: Mark Karrass/Corbis
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Intellectual Property Rights and
Privacy
Intellectual Property Rightsinvolve the legal
protection of intellectual properties, such as music,
books, and movies
Can be difficult to monitor/enforce internationally
Many privacy issuesin the business world
Employee use of technology
Consumer privacy
It can be a challenge for businesses today to meet
the needs of consumers while protecting their
privacy
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The Challenge of Determining Ethical
Issues in Business
Most ethical issues will become visible through
stakeholder concerns about an event, activity, or the
results of a business decision
Determining ethical issues is a challenge
Changing societal standards over time
The ethical decision making process starts when
ethical issue awareness occurs and individuals begin
discussion