1. Copyright © Houghton Mifflin Company4-1 O.C. Ferrell University of New Mexico John Fraedrich University of Wyoming Linda Ferrell University of New Mexico Business Ethics Ethical Decision Making and Cases, Seventh Edition For in-class note taking, choose Handouts or Notes Pages from the print options, with three slides per page.

2. Copyright © Houghton Mifflin Company4-2 Chapter 4 The Institutionalization of Business Ethics

3. Copyright © Houghton Mifflin Company4-3 Institutionalization in Business Ethics Relates to established laws, customs, and expected organizational programs that are considered normative in establishing reputation Institutions provide the requirements and societal expectations to reward and sanction ethical decision making

4. Copyright © Houghton Mifflin Company4-4 Boundaries and Core Practices Boundaries –Voluntary –Mandated Core practices –Helps ensure compliance with legal requirements and industry regulation

5. Copyright © Houghton Mifflin Company4-5 Laws and Regulatory Issues Established by the government to set minimum standards for acceptable behavior Laws are passed because society does not always trust business to act in its best interest

6. Copyright © Houghton Mifflin Company4-6 Types of Laws Civil Criminal The difference between the two is enforcement.

7. Copyright © Houghton Mifflin Company4-7 Business Ethics Disputes Generally resolved through lawsuits Most laws affecting business fall into one of five categories: –Laws regulating competition –Laws protecting consumers –Laws promoting equity and safety –Laws protecting the environment –Laws that encourage ethical conduct

8. Copyright © Houghton Mifflin Company4-8 Laws Protecting Consumers Require business to provide accurate information about products and services and to follow safety standards FTC’s Bureau of Consumer Protection

9. Copyright © Houghton Mifflin Company4-9 Laws Promoting Equity and Safety Laws promoting equity in the workplace protect the rights of minorities, women, older persons, and persons with disabilities Affirmative action programs

10. Copyright © Houghton Mifflin Company4-10 Laws Protecting the Environment Environmental Protection Agency (EPA) Many environmental laws have resulted in the elimination or modification of goods and services

11. Copyright © Houghton Mifflin Company4-11 The Sarbanes-Oxley Act Establishes a system of federal oversight of corporate accounting practices Requires top managers to certify that their firms’ financial reports are complete and accurate, making CEOs and CFOs accountable Provides protection for “whistle- blowing” employees

12. Copyright © Houghton Mifflin Company4-12 Benefits of Sarbanes-Oxley Greater accountability of top managers Renewed investor confidence Greater protection of retirement plans Greater penalties for senior managers

13. Copyright © Houghton Mifflin Company4-13 Cost of Compliance Estimated at $1 million per $1 billion in revenues Especially compliance with Section 404

14. Copyright © Houghton Mifflin Company4-14 Philanthropic Issues Involves business’s contribution to the local community and society Quality of life issues Philanthropic issues Strategic philanthropy