1. The Importance of Business Ethics
Ethical Decision Making for Business 8e Fraedrich/ Ferrell/ Ferrell
CHAPTER 1
The Importance of Business Ethics

2. Chapter Objectives
To explore conceptualizations of business ethics from an organizational perspective
To examine the historical foundations and evolution of business ethics
To provide evidence that ethical value systems support business performance
To gain insight into the extent of ethical misconduct in the workplace and the pressures for unethical behavior

3. Chapter Outline Why Study Business Ethics?
The Development of Business Ethics
Developing an Organizational and Global Ethical Culture
The Benefits of Business Ethics
Our Framework for Studying Business Ethics

4. Business Ethics
Comprises principles and standards that guide behavior in the world of business
Right or wrong, acceptable or unacceptable behavior within the organization
Determined by you and key stakeholders 4

5. A Crisis in Business Ethics
Consumer trust of businesses is declining
No sector is exempt from ethical misconduct
Stakeholders determine what is ethical/unethical
Investors
Employees
Customers
Interest groups
Legal system
Community 5

6. Why Study Business Ethics?
Reports of unethical behavior are on the rise
Society’s evaluation of right or wrong affects its ability to achieve its business goals
Studying business ethics is a response to Sarbanes-Oxley, FSGO, and stakeholder demands for ethics initiatives
Individual ethics alone is not sufficient
Studying business ethics helps identify ethical issues to key stakeholders
Due to the need for professional experience and understanding the complexities of the legal environment. Even a person with good personal ethics will need business ethics training to confront complex ethical situations in the workplace. 6

7. Before 1960: Ethics in Business
A living wage
Theology’s domain
Philosophy’s domain 7

8. The 1960s: The Rise of Social Issues in Business
Consumer’s Bill of Rights
Ralph Nader 8

9. The 1970s: Business Ethics as an Emerging Field
Bribery
Deceptive advertising
Price collusion
Product safety
The environment 9

10. The 1980s: Consolidation Organized field of study
Business ethics centers
Business ethics courses
Defense industry initiative
Multinationals
Self-regulation (Reagan/Bush) 10

11. The 1990s: Institutionalization of Business Ethics
Free trade
Self-regulation
Federal Sentencing Guidelines for Organizations (FSGO)
More multinationals 11

12. The Federal Sentencing Guidelines for Organizations
Standards and procedures capable of detecting and preventing misconduct
High level oversight
Care in delegation of authority
Effective communication (training)
Systems to monitor, audit, and report misconduct
Consistent enforcement
Continuous improvement 12

13. The 21st Century: A New Focus
Continued issues with corporate non-compliance
Sarbanes-Oxley Act (2002)
FSGO reform (2004)
Firm’s greatest danger is not discovering misconduct early
Basic assumptions of capitalism being debated 13

14. Organizational and Global Ethical Culture
Ethical culture describes the component of corporate culture that captures the values and norms that an organization defines as appropriate conduct 14

15. Benefits of Business Ethics
Better ethical climate
Employee commitment and trust
Investor loyalty and trust
Customer satisfaction and trust
Long term profits 15