C2: Defining Business Ethics Flashcards
Business ethics
the application of ethical standard to business behaviour
2 approaches of business ethics from different perspectives
Descriptive
Normative
Descriptive perspective
we are documenting what is happening
summation of customs, attitude, and rules that are observed within a business situations
Normative (prescriptive)
recommending what should be happening
evaluation of degree to which the observed customs, attitudes and rules can be said ethical
Expectation of business ethics
should not be a separate set of standards from general ethics
It’s argued that BE
should be the same both inside and outside a business situation
Who are stakeholders?
Someone with a share or interest in a business enterprise
How many stakeholders in a business
8 stakeholders 1. Stock/share holders 2, Employees 3. Customers 4. Suppliers/vendors 5. Retailer/wholesalers 6. Federal government 7. Creditors 8. Community
Stakeholder interest - Stock/shareholders
- growth in the value of company stock
- dividend income
impact on unethical behaviour - shareholder
- false misleading financial information on which to base for decision making
- loss of stock value
- cancellation of dividend
interest employees
- stable employment at a fair pay rate
- a safe and comfortable working environment
impact unethical behavior - employee
- loss of employment
- not enough money to pay severance packages and meet pension obligations
interests - customers
fair exchange - acceptable value and quality of products/services
safe and reliable products
IUB - Fed government
loss of tax revenue
failure to comply with all relevant legislation
Interest - suppliers/vendors
prompt payment for delivered goods
regular orders with an acceptable profit margin
IUB - suppliers/vendor
Delayed payments for delivered goods and services
unpaid invoices when the company declared bankruptcy
Interest - retailers/whosalers
accurate deliveries of quality products on time and at a reasonable cost
safe and reliable products
interest - federal government
Tax revenue
operation in compliance with all relevant legislation
IUB - customers
poor service quality
interest - creditors
principal and interest payments
repayment of debt according to the agreed schedule
IUB - Community
Unemployment of local residents
Economic decline
interest - community
employment of local residents
economic growth
protection of the local government
IUB - creditors
loss of principal and interest payments
failure to repay debt according to the agreed schedule
Oxymoron
The combination of two contradictory terms
ex: defeaning silence, pretty ugly
Corporate governance
the system by which business corporations are directed and controlled
Code of ethics
a company’s written standards of ethical behaviour that are designed to guide managers and employees in making the decisions and choices that face every day
code of ethics serve a dual function
- as a message to organization’s stakeholders (represent a clear corporate commitment to the highest standards of ethical behaviour)
- an internal document (represent a clear guide to managers and employees in makin decisions and choices every day)
History BE - 1960s
Increased presence of employees voice made more employees more comfortable speaking out against actions of their employers that they feel irresponsible/unethical.
Major Ethical Dilema (MED) - 1960’s
- Pollution
- Profits over people
- civil rights
- products safety
- product safety
- job security
BE Development (BED) - 1960’s
- consumers bill of rights
- corporate codes of conduct
- expectations of equality, social justice & economic stability
HBE - 1970s
Issue of CSR has advanced from an abstract debate to a core performance-assessment issue with clearly established legal liabilities
MED - 1970s
pollution
labour issues: workplace safety, wage equality, forced labour
covering up unethical conduct to protect corporate image
BED - 1970s
1977 Foreign Corrupt Practice Act (FCPA)
BE gains credence as a distinct area of academic study
1977 Ethics Resource Center (ERC)
1980s
Corporate ethics have moved from the domain of legal and human resource departments into the organizational mainstream with the appointment of corporate ethics officers with clear mandates
MED - 1980s
Savings & loans scandal
Bribery and corruption in international contracts
waste and fraud in government contracting and defense spending
BED - 1980s
1986 Defense Industry Initiative on BE and Conduct
1986 False Claims Act amended to control waste, fraud and abuse in federal
1990s
Codes of ethics have matured from cosmetic public relations documents into performance-measurement documents that an increasing number of organizations are now committing to share with all their stakeholders
MED - 1990s
Financial fraud
avoidance of regulations by opening manufacturing plants in developing countries
corporate liability for personal damage
BED - 1990s
Ethical performance documented in annual report
2000s
greater accountability for chief executives officers and BODs in signing off the financial performance records of the organizations they represent
MED - 2000s
cyber crime falsifying financial reports privacy issues (data mining & identity protection) International corruption Loss of privacy
BED - 2000s
2002 Sarbanes-Oxley Act
Anti corruption efforts grow
emphasis on CSR
2010 Dodd-franks Wall Street Reform and Consumer Protection Act
Ethical Dilemma
A situation in which there is no obvious right or wrong decision, but rather a right or right answer
Resolution
Resolution of an ethical dilemma can be achieved by first recognizing the type of conflict you are dealing with
4 types of Conflict
Truth vs loyalty
Short term vs long term
Justice vs mercy
individual vs community
Truth vs loyalty
Do you tell the truth or remain loyal to the person or organization that is asking you not to reveal the truth?
Short term vs Long term
Consequences of decision have shorter or longer term
Justice vs mercy
do you perceive this issues as a question of dispensing justice or mercy?
Individual vs Community
Will your choice affect one individual or a wider group of community
3 resolution principles
Ends based
Rules based
The Golden Rule
Ends based
which decision would provide the greatest good for the greatest number of people?
Rules based
What would happen if everyone made the same decision as you?
The Golden Rule
Do unto others as you would have them do unto you
Justifying Unethical Behaviour
- A belief that the activity is within reasonable ethical and legal limits
- A belief that the activity is in the individual’s or the corporation’s best interest - ind expected to take
- A belief the the activity is safe because it will never be found out or publicized - a classic crime-and-punishment issue of discovery
- A belief that the activity helps the company - co condone and even protects the ind who commit it
