1. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning Chapter 3 Business Ethics, Social Forces, and the Law Twomey Jennings Anderson’s Business Law and the Legal Environment, Comprehensive 20e Anderson’s Business Law and the Legal Environment, Standard 20e Business Law: Principles for Today’s Commercial Environment 2e

2. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 2 What is Business Ethics? Business ethics is the application of values and standards to business conduct and decisions. When a business upholds basic ethical standards, it will enjoy the competitive advantage of a good reputation and, over the long term, better earnings. When a business violates ethical standards, social forces are set into motion, sometimes leading to changes in the law.

3. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 3 What is Business Ethics? Law as the Standard for Business Ethics. –Positive Law: if an act is legal it is ‘moral.’

4. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 4 What is Business Ethics? Universal Standards for Business Ethics. –Natural Law: higher standards for ethics. –A law can be legal but unethical.

5. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 5 What is Business Ethics? Situational Business Ethics or Moral Relativism. Business Stakeholder Standard of Behavior.

6. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 6 Why is Business Ethics Important? Importance of Trust. Business Ethics and Financial Performance. –Enron. –Worldcom. –Arthur Anderson. Good Reputation.

7. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 7 Social Forces Cycle of Social Interaction Social Environment Social Environment Ethics Law

8. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 8 Protection: –of the state, the person, public health, safety and morals. –of property and personal rights. –from exploitation, fraud, and oppression. –of creditors and rehabilitation of debtors. Enforcement of individual intent. Furtherance of trade. Stability and flexibility. Public Policy, Law, and Ethics

9. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 9 Categories of Ethical Behavior Integrity and Truthfulness. Promise-Keeping. Loyalty: Avoiding Conflicts of Interest. Fairness. Doing No Harm. Maintaining Confidentiality.

10. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 10 Blanchard and Peale Test. –Is it legal? –Is it balanced? –How does it make me feel? Front-Page-of-the-Newspaper Test. –Would I want my decision published? Resolving Ethical Dilemmas

11. Copyright © 2008 by West Legal Studies in Business A Division of Thomson Learning 11 Resolving Ethical Dilemmas Laura Nash Test. –Requires examination from all perspectives. Wall Street Journal Model (3 C’s model). –Is my conduct compliant with the law? –What contribution does this action make to others? –What are the consequences?