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- Ethics is a set of moral principles or values that governs the conduct of an individual or group.
- It is the study of what is "right" or "good" for human beings, what people "ought to do".
What are some differences between law and ethics?
- legal acts may be unethical and ethical acts may be illegal
- legality is often a reliable guide to ethical behavior, but it is not a perfect standard
- law provides sanctions, ethical standards may not
- law is enforced by government, ethics by your conscience
Name some rationalizations that might be signs of a possible ethical dilemma.
- "everybody does it"
- "it won't hurt anyone"
- "the system is unfair"
- "I was just following orders"
What are the 3 steps to ethical decision-making at the individual level?
- awareness of ethical issues and dilemmas
- ethical reasoning
- ethical action / decision
What is the court of public opinion?
Name the 4 ethical theories.
- Ethical fundamentalism
- Ethical relativism
- Kantian ethics
Explain ethical fundamentalism.
looking at an outside source for ethical rules (eg. religious literature)
- based on results
- ethical is what brings the greatest good to the greatest number of people
- cost/benefit analysis
- ends justify means
Explain ethical relativism.
- no moral absolutes
- everyone is free to do what is right in his/her own eyes
- do your own thing
Explain Kantian ethics.
- based on duty
- people owe moral duties that are based on universal rules that are discovered through reasoning
- no exceptions or special treatment
- judge by estimating the consequences if everyone would do it
- do unto others as you want them do unto you
- ends and means have to be ethical
Why should a business be ethical?
- Internal benefits
- External benefits
What are some internal benefits of ethical behavior of a business?
trust => cooperation => synergies => reduced transaction costs + increased efficiency => increased profit
Ethical leadership starts...
...at the top and trickles down.
To be ethical, a comapny needs to be ________ free.
To be thical, a company needs to be hypocritical free.
What are some external benefits of ethical behavior of a business?
- reputation is part of goodwill and can enhance profits
- benefit to society through forming of values and norms by the company's threatment of its employees and communities
- may lead to less government regulation if businesses behave ethically by themselves
What are the 4 theories of social responsibility for businesses?
- maximizing profits
- moral minimum
- stakeholder interest
- corporate citizenship
What ethical duty does a business owe to society under the theory of maximizing profits?
Maximize profits for shareholders within the contraint of fair competition (old thought process).
What ethical duty does a business owe to society under the theory of moral minimum?
- Make profit, but avoid causing harn to others / correct any injury caused
- environmental and occupational safety laws
=> shareholders still come first
What ethical duty does a business owe to society under the theory of stakeholder interest?
Duty to consider the effects of its actions on persons other than shareholders (customers, creditors, suppliers...)
What ethical duty does a business owe to society under the theory of corporate citizenship?
Duty to do "good", help solve problems caused by others, promote the same social goals as other members of society
Which theory/theories of social responsibility is/are used by most organizations?
moral minimum or stakeholder interest
Which theory/theories of social responsibility is/are used by most of the largest organizations?
What are some arguments against social involvement of businesses?
- improper; serve shareholders only
- unfair; diverts funds rightfully belonging to shareholders and/or employees to unrelated third party
- lack of accountability; allows abuses to occur
- corporations have little expertise
Why aren't businesses more ethical?
- pressured for results
- lack of enforcement
- comfort through rationalizing
What are the 4 steps to ethical decision-making at the organizational level?
- Awareness of ethical issues/dilemmas
- Ethical reasoning - train employees
- Ethical action/decision
- Ethical leadership
Why is legal compliance the moral/ethical minimum?
- Simply obeying the law does not make the business practice ethical.
- Managers must contemplate the thical implications of a business decision.
How can a company set the right ethical tone?
- attitude at the top - the behavior of the company's managers is model to other employees
- code of ethics - establish rules of ethical behavior and incentives for employees
- corporate compliance programs - SOX, social audits
What are the 3 tests for resolving ethical dilemmas?
- Wall Street Journal Model
- Texas Instruments Ethics Quick Test
What are the 3 steps to resolve ethical dilemmas according to the Wall Street Journal model?
- compliance - are any laws violated?
- contribution - what does this action contribute to customers, employees, shareholders?
- consequences - how will this action affect the company, me, employees, shareholders?
___________ __________ creates the ethical system in a business, with rules and rewards/punishments.
Corporate governance creates the ethical system in a business, with rules and rewards/punishments.
What is the question you have to ask yourself when faced with an ethical dilemma according to the front-of-the-newspaper-test?
Would you be willing to see your actions on the front page of the newspaper for everyone to read?
What is the Texas Instruments Ethics Quick Test?
- Is the action legal?
- Does it comply with our values?
- Will you feel bad if you do it?
- How will it look in the newspaper?
- If you know it's wrong, don't do it!
- If you're not sure, ask.
- Keep asking until you get an answer.
What are moral absolutes?
Lines you would never cross to be successful, win, gain a contract etc.
How are business ethics different on a global level?
- employees must be trained in cross-cultural business pratices
- act with American values while overseas to justify in public
- differentiate bribes from "grease" payments
What are "grease" payments?
Payment to make a process faster; not a bribe