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Business ethics lecture 1

Business Ethics


Introduction



Class
Rules of engagement
 Communication

mode

 Participation
 Questioning
 Open



but within etiquettes


Any response to above


Ethics - Origin


Ethos (Greek)







“Character” and “sentiment of the community”

Ethikos (Greek) – authority of custom and
tradition
Mos (Latin) – moral, mores and Morales
Referring to:




Customs
Habits of life
Traditions of people


Carroll & Gannon (1997)


Specific Def. (Shea, 1988)






Ethical Standards





“the principles of conduct governing an
individual or a profession”
“standards of behaviour”

Help to guide decisions and actions
Whether Individual, corporations, professions,
nations

“rules or standards that govern
behaviours” (Toffler, 1986)


Ethics Defined






“Customary norms and ways of behaving in a
society” (Hegel)
“Character” and “sentiment of the community”
“the principles of conduct governing an individual or
a profession….standards of behaviour” (Shea, 1988)
“rules or standards that govern behaviours” (Toffler,
1986)
“the basic ground rules by which individual acts. We
often give complex explanations of our actions, but
in fact we act for simple reasons. The ground rules
are a framework for defining which actions are
personally permissible, and which are not”
(Drummond & Bain,1994)


Ethics Defined (Contd.)


“how people try to live their lives according to a
standard of “right” and “wrong” behaviour – in
both how we think and behave towards others
and how we would like them to think and behave
towards us.” (Ghillyer, 2010)






Societal perspective

“inquiry into the nature of grounds of morality
where the term morality is taken to mean
judgements, standards and rules of conduct.”
(O.C. Ferrell)
Ethical Standards



Help to guide decisions and actions
Whether Individual, corporations, professions,
nations


Business Ethics




“Business ethics is the study of how personal moral
norms apply to the activities and goals of commercial
enterprise. It is not a separate moral standard, but the
study of how the business context poses its own unique
problems for the moral person who acts as an agent of
this system” (Laura Nash)
Falls into three basic areas of managerial decision
making





Choices about the law
Choices about the economic and social issues that are
beyond the law’s domain
Choices about the pre-eminence of one’s own self-interest


Business Ethics (Contd.)


“Business ethics involves the application of
standards of moral behaviour to business
situations” (Ghillyer, 2010)




The application of ethical standards to business
behaviour

“the principles and standards that guide
behaviour in the world of business” (O.C. Ferrell)


Business Ethics (Contd.)


Who determines the actions as right or
wrong









Investors
Employees
Customers
Interest groups
The legal system
The community

Approaches



Descriptive
Normative


Lacking BE


Ethical misconduct







NBES
Volume of organization
Level of management
Accounting frauds, conflicts of interests, defective
products, harassment, abusive behaviour, employee
theft and bribery
Harris Interactive Poll – perception of trust






Enron, WorldCom, Anderson Worldwide, Global
Crossing, Adelphia etc.

Involvement of individuals, Corporations, Govt
officials, Researchers, Sports
Judgement of decisions – SOCIETY
Reasons


Developments


1960


Ethical Climate






Major Ethical Dilemmas









Social Unrest
Anti-war sentiment
Loyalty to employer – loyalty to ideals
Environment
Employee-employer tension
Civil rights
Honesty
Work ethics
Drug

BE Developments




Code of conducts & value statements
Social responsibility
Legal / Personnel departments


Developments (Cntd.)


1970


Ethical Climate








Ethical Dilemmas






Scandals
Recession
Unemployment
Heightened environment concerns
Public pressure over business accountability
Employee militancy
Human rights
Firm’s covering rather than correcting

BE Developments





ERC – 1977
Compliance with law
Foreign Corrupt Practices Act
Values movement


Developments (Cntd.)


1980s


Ethical Climate







Ethical Dilemmas








Social contract
Stringent rules – defence contractor
Downsizing & loyalty to employer eroded
Health care emphasized
Bribes & illegal practices
Influence paddling
Deceptive advertising
Financial frauds
Transparency

BE Developments





Code of Ethics for Government Service - 1980
Defence industry initiative
Ethic officers – Ombudsman
False Claims Act


Developments (Cntd.)


1990s


Ethical Climate








Ethical Dilemmas






Global expansion
Child labour
Environment
Internet / Cultural borders
Forbidden - common
Unsafe work practices -3rd world
Increased corporate liability
Financial mismanagement and fraud

BE Developments






Federal sentencing guidelines for organizations
Lawsuits
Global Sullivan Principles
Board responsibility
Voluntary disclosure – annual reports issuance on ethics


Developments (Cntd.)


2000s


Ethical Climate








Economic growth – financial failures
High profile firms
Personal data
Hackers & data thieves
Aggression and fundamentalism

Ethical Dilemmas








Cyber crimes
Privacy
Financial mismanagement
International corruption
Loss of privacy
IP
SD


Developments (Cntd.)


BE Developments








Sarbanes Oxley Act -2002
Anticorruption
CSR and Integrity Management
UN Convention -2003
UN Global Compact – 2004
Revised Federal Sentencing Guidelines – 2004
Ethics programs


Ethical Culture and Benefits


Organizational


Ethics Officer






Global


The Caux Round Table




NYSE
UPS
Baxter Intl

NAFTA, WTO, EU,

Benefits





Employee commitment
Investor loyalty
Customer satisfaction
Profits


Levels of BE
Individual level
Organizational level
Association Level
Societal Level
International Level




End of Session
 Book:
 Business

Ethics: Ethical Decision
Making and Cases By O.C. Ferrell,
John Fraedrich and Linda Ferrell



Write down your strengths and
weaknesses on a page and
submit


Outline Chap1 & 2


The importance of Business Ethics







Stakeholder Relationships, Social Responsibility
and Corporate Governance






Understanding Business Ethics
Why study BE
Evolution of BE
Benefits
Stakeholder relationship
Stakeholder influence in CSR
Corporate Governance

Relevant Cases




Wall-Mart – P292
The Fall of Enron – P318
PETCO - 422





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