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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) Ethical Standards Specific Def. (Shea, 1988) “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 NYSE UPS Baxter Intl The Caux Round Table 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