1. Business Ethics

2. Introduction  Class  Rules of engagement Communication mode Participation Questioning Open but within etiquettes  Any response to above

3. Ethics - Origin  Ethos (Greek) “Character” and “sentiment of the community”  Ethikos (Greek) – authority of custom and tradition  Mos (Latin) – moral, mores and Morales  Referring to: Customs Habits of life Traditions of people

4. Carroll & Gannon (1997) Specific Def. (Shea, 1988)  “the principles of conduct governing an individual or a profession”  “standards of behaviour”  Ethical Standards Help to guide decisions and actions Whether Individual, corporations, professions, nations  “rules or standards that govern behaviours” (Toffler, 1986)

5. Ethics Defined  “Customary norms and ways of behaving in a society” (Hegel)  “Character” and “sentiment of the community”  “the principles of conduct governing an individual or a profession….standards of behaviour” (Shea, 1988)  “rules or standards that govern behaviours” (Toffler, 1986)  “the basic ground rules by which individual acts. We often give complex explanations of our actions, but in fact we act for simple reasons. The ground rules are a framework for defining which actions are personally permissible, and which are not” (Drummond & Bain,1994)

6. Ethics Defined (Contd.)  “how people try to live their lives according to a standard of “right” and “wrong” behaviour – in both how we think and behave towards others and how we would like them to think and behave towards us.” (Ghillyer, 2010) Societal perspective  “inquiry into the nature of grounds of morality where the term morality is taken to mean judgements, standards and rules of conduct.” (O.C. Ferrell)  Ethical Standards Help to guide decisions and actions Whether Individual, corporations, professions, nations

7. Business Ethics  “Business ethics is the study of how personal moral norms apply to the activities and goals of commercial enterprise. It is not a separate moral standard, but the study of how the business context poses its own unique problems for the moral person who acts as an agent of this system” (Laura Nash)  Falls into three basic areas of managerial decision making Choices about the law Choices about the economic and social issues that are beyond the law’s domain Choices about the pre-eminence of one’s own self-interest

8. Business Ethics (Contd.)  “Business ethics involves the application of standards of moral behaviour to business situations” (Ghillyer, 2010) The application of ethical standards to business behaviour  “the principles and standards that guide behaviour in the world of business” (O.C. Ferrell)

9. Business Ethics (Contd.)  Who determines the actions as right or wrong Investors Employees Customers Interest groups The legal system The community  Approaches Descriptive Normative

10. Lacking BE  Ethical misconduct NBES Volume of organization Level of management Accounting frauds, conflicts of interests, defective products, harassment, abusive behaviour, employee theft and bribery Harris Interactive Poll – perception of trust  Enron, WorldCom, Anderson Worldwide, Global Crossing, Adelphia etc.  Involvement of individuals, Corporations, Govt officials, Researchers, Sports  Judgement of decisions – SOCIETY  Reasons

11. Developments  1960 Ethical Climate  Social Unrest  Anti-war sentiment  Loyalty to employer – loyalty to ideals Major Ethical Dilemmas  Environment  Employee-employer tension  Civil rights  Honesty  Work ethics  Drug BE Developments  Code of conducts & value statements  Social responsibility  Legal / Personnel departments

12. Developments (Cntd.)  1970 Ethical Climate  Scandals  Recession  Unemployment  Heightened environment concerns  Public pressure over business accountability Ethical Dilemmas  Employee militancy  Human rights  Firm’s covering rather than correcting BE Developments  ERC – 1977  Compliance with law  Foreign Corrupt Practices Act  Values movement

13. Developments (Cntd.)  1980s Ethical Climate  Social contract  Stringent rules – defence contractor  Downsizing & loyalty to employer eroded  Health care emphasized Ethical Dilemmas  Bribes & illegal practices  Influence paddling  Deceptive advertising  Financial frauds  Transparency BE Developments  Code of Ethics for Government Service - 1980  Defence industry initiative  Ethic officers – Ombudsman  False Claims Act

14. Developments (Cntd.)  1990s Ethical Climate  Global expansion  Child labour  Environment  Internet / Cultural borders  Forbidden - common Ethical Dilemmas  Unsafe work practices -3 rd world  Increased corporate liability  Financial mismanagement and fraud BE Developments  Federal sentencing guidelines for organizations  Lawsuits  Global Sullivan Principles  Board responsibility  Voluntary disclosure – annual reports issuance on ethics

15. Developments (Cntd.)  2000s Ethical Climate  Economic growth – financial failures  High profile firms  Personal data  Hackers & data thieves  Aggression and fundamentalism Ethical Dilemmas  Cyber crimes  Privacy  Financial mismanagement  International corruption  Loss of privacy  IP  SD

16. Developments (Cntd.) BE Developments  Sarbanes Oxley Act -2002  Anticorruption  CSR and Integrity Management  UN Convention -2003  UN Global Compact – 2004  Revised Federal Sentencing Guidelines – 2004  Ethics programs

17. Ethical Culture and Benefits  Organizational Ethics Officer  NYSE  UPS  Baxter Intl  Global The Caux Round Table  NAFTA, WTO, EU,  Benefits Employee commitment Investor loyalty Customer satisfaction Profits

18. Levels of BE Individual level Organizational level Association Level Societal Level International Level

21. End of Session  Book: Business Ethics: Ethical Decision Making and Cases By O.C. Ferrell, John Fraedrich and Linda Ferrell  Write down your strengths and weaknesses on a page and submit

22. Outline Chap1 & 2  The importance of Business Ethics Understanding Business Ethics Why study BE Evolution of BE Benefits  Stakeholder Relationships, Social Responsibility and Corporate Governance Stakeholder relationship Stakeholder influence in CSR Corporate Governance  Relevant Cases Wall-Mart – P292 The Fall of Enron – P318 PETCO - 422