1. Archie B. Carroll Ann K. Buchholtz
Business & Society Ethics, Sustainability, and Stakeholder Management Eighth Edition
Archie B. Carroll
Ann K. Buchholtz
© 2012 South-Western, a part of Cengage Learning

2. Chapter 7 Business Ethics Fundamentals
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Learning Outcomes
Describe how the public regards business ethics.
Define business ethics and appreciate the complexities of making ethical judgments.
Explain the conventional approach to business ethics.
Analyze economic, legal, and ethical aspects by using a Venn Model.
Enumerate and discuss the four important ethics questions.
Identify and explain three models of management ethics.
Describe Kohlberg’s three levels of developing moral judgment.
Identify and discuss the elements of moral judgment.
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Chapter Outline
The Public’s Opinion of Business Ethics
Business Ethics: Meaning, Types, Approaches
Ethics, Economics and Law: A Venn Model
Four Important Ethics Questions
Three Models of Management Ethics
Making Moral Management Actionable
Developing Moral Judgment
Elements of Moral Judgment
Summary
Key Terms
Discussion Questions
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Business Ethics
The public’s interest in business ethics is at an all-time high, spurred by headline- grabbing scandals.
The Enron scandal impacted business to greatly it is called “The Enron Effect.”
Business will never be the same.
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6. Inventory of Ethical Issues in Business
Employee-Employer Relations
Employer-Employee Relations
Company-Customer Relations
Company-Shareholder Relations
Company-Community/Public Interest
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7. Business Ethics: Meaning, Types, Approaches
The discipline that deals with moral duty and obligation.
Moral Conduct
Relates to principles of right, wrong, and fairness in behavior.
Business Ethics
Concerned with morality and fairness in behavior, actions, and practices that take place within a business context.
Is the study of practices in organizations and is a quest to determine whether these practices are acceptable or not.
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8. Business Ethics: Meaning, Types, Approaches (continued)
Descriptive Ethics
Involves describing, characterizing, and studying morality.
Focuses on what is occurring.
Normative Ethics
Concerned with supplying and justifying a coherent moral system of thinking and judging.
Focuses on what ought or should be occurring.
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9. Three Approaches to Business Ethics
Conventional Approach
Based on how common society today views business ethics and on common sense.
Principles Approach
Based upon the use of ethics principles to justify and direct behavior, actions, and policies.
Ethical Tests Approach
Based on short, practical questions to guide ethical decision making and behavior and practices.
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Ethics and the Law
The law and ethics can overlap in many respects.
The law is a reflection of what society thinks are minimal standards of conduct and behavior.
Research focuses on two questions:
Why do firms do illegal things?
What are the consequences of engaging in illegal behavior?
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11. The Conventional Approach to Business Ethics
What is the true nature of the practice, behavior, or decision that occurred?
What are society’s (or business’s) prevailing norms of acceptability?
What value judgments are being made by someone about the practice or behavior, and what are that person’s perceptions of applicable norms?
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Ethical Relativism
Ethical Relativism
Picking and choosing which source of norms one wishes to use based on what will justify current actions or maximize freedom.
A serious danger of the conventional approach to making ethical judgments.
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13. Four Important Ethical Questions
What is?
What ought to be?
How do we get from what is to what ought to be?
What is our motivation in all this?
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14. Five Levels for Questions
Level of the individual
Level of the organization
Level of the industry or profession
Societal level
Global or international level
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What Is?
What are your personal ethics?
What are your organization's ethics?
What are the ethics practice in your industry?
What are society’s ethics?
What global ethics are in practice today?
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What Ought to Be?
How ought we treat our aging employees?
How safe ought we make this product?
How clean an environment should we aim for?
Should we outsource aspects of production to China or India?
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17. Three Models of Management Ethics
Immoral Management
An approach devoid of ethical principles and an active opposition to what is ethical.
The operating strategy of immoral management is focused on exploiting opportunities for corporate or personal gain.
Moral Management
Conforms to high standards of ethical behavior or professional standards of conduct.
Amoral Management
Intentional: Does not consider ethical factors.
Unintentional: Casual or careless about ethical factors.
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18. Characteristics of Immoral Managers
Intentionally do wrong
Self-centered and self-absorbed
Care only about self or organization’s profits/success
Actively oppose what is right, fair, or just
Exhibit no concern for stakeholders
An ethics course probably would not help them
The “bad guys”
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19. Characteristics of Moral Managers
Conform to high level of:
Ethical or right behavior
Personal and professional standards
Ethical leadership is commonplace
Goal is to succeed within confines of sound ethical precepts
High integrity is displayed
Embrace letter and spirit of the law
Possess an acute moral sense and moral maturity
The “good guys”
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20. Habits of Moral Leaders
They have a passion to do right.
They are morally proactive.
They consider all stakeholders.
They have a strong ethical character.
They have an obsession with fairness.
They undertake principled decision making.
They integrate ethics wisdom with management wisdom.
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Integrity Strategy
Related to moral management; is characterized by a conception of ethics as the driving force of an organization.
Guiding values and commitments make sense and are clearly communicated.
Company leaders are personally committed, credible, and willing to take action on values.
Espoused values are integrated into normal channels of management decision making.
The organization’s systems support and reinforce its values.
All managers have the skills, knowledge, and competencies to make ethically sound decisions daily.
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22. Characteristics of Amoral Managers
Intentionally Amoral Managers
Don’t think ethics and business should “mix.”
Business and ethics exist in separate spheres.
A vanishing breed.
Unintentionally Amoral Managers
Don’t consider the ethical dimension of decision making.
Don’t “think ethically.”
Have no “ethics buds.”
Well-intentioned, but morally casual or unconscious.
Ethical gears are in neutral.
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23. Hypotheses Regarding Moral Management Models
Population hypothesis
The distribution of the three models approximate a normal curve, with the amoral group occupying the large middle part of the curve and the moral and immoral categories occupying the tails.
Individual hypothesis
Within the individual manager, these three models may operate at various times and under various circumstances.
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24. Why Managers and Employees Behave Ethically
Most of Us
Many of Us
Very Few Of Us
1. To avoid some punishment
2. To receive some reward
3. To be responsive to family, friends, or superiors
4. To be a good citizen
5. To do what is right, pursue some ideal
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25. External Sources of a Person’s Values
Philosophical values
Cultural values
Legal values
Religious values
Professional values
The Web of Values
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26. Internal Sources of a Person’s Values
Norms prevalent in business include
Respect for the authority structure
Loyalty to bosses and the organization
Conformity to principles and practices
Performance counts above all else
Results count above all else
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Key Terms
Amoral management
Business ethics
Compliance strategy
Conventional approach to business ethics
Descriptive ethics
Ethical egoism
Ethical relativism
Ethics
Immoral management
Integrity strategy
Intentional amoral management
Kohlberg’s levels of moral development
Moral development
Moral management
Normative ethics
Unintentional amoral management
© 2012 South-Western, a part of Cengage Learning