Chapter 1

An Overview of Business Ethics

Why differentiate between rules/policies/law & ethics?

the difference between an ordinary decision & an ethical one is the point where rules no longer serve values & judgement play a key role in ethics decisions employees need a buffer zone of expected ethical behavior

Business ethics...
comprises principles & standards that guide behavior in the world of business whether a specific behavior is ethical or unethical is often determined by stakeholders
investors customers the community employees the legal system

social responsibility is the obligation a business assumes to maximize its positive effect while minimizing its negative effect on society social responsibility consists of the following responsibilities:
economic (satisfy investors) legal (obey the law) ethical (expected activities & behaviors) philanthropic (desired activities & behaviors)

Ethics & social responsibility have distinct meanings...

Before 1960: Ethics in Business...

theological discussions of ethics emerged
Catholic social ethics included a concern for morality in business, workers rights & living wages Protestants developed ethics courses in their seminaries & schools of theology (also, the Protestant work ethic encouraged frugality & hard work)

societal social consciousness emerged

as well as an anti-business sentiment

The 1960s: The Rise of Social Issues in Business...

JFKs Consumer Bill of Rights ushered in a new era of consumerism

right to safety, to be informed, to choose & to be heard

consumer protection groups fought for consumer protection legislation

Ralph Nader

business professors began to write about social responsibility philosophers became involved in business ethics business became more concerned with their public image & addressed ethics more directly conferences were held & centers developed issues: bribery, deceptive advertising, price collusion, product safety, & environmental

The 1970s: Business Ethics as an Emerging Field...

The 1980s: Consolidation

membership in business ethics organizations increased ethics centers provided:
publications, course, conferences & seminars

firms established ethics committees the Defense Industry Initiatives emerged & became the foundation for the Federal Sentencing Guidelines for Organizations

The 1990s: Institutionalization of Business Ethics...

the Federal Sentencing Guidelines for Organizations set the tone for ethical compliance took preventative actions against misconduct, a company could avoid or minimize the potential penalties

The Federal Sentencing Guidelines for Organizations...

standards & procedures capable of detecting & preventing misconduct high level oversight care in delegation of authority effective communication (training) systems to monitor, audit & report misconduct consistent enforcement continuous improvement

2000 and Beyond...

a move from legally based ethics initiatives to culturally or integrity based programs realization that business ethics programs are good for business businesses are working more closely together, globally, to establish standards of acceptable behavior

Why study business ethics?

reports of unethical behavior are on the rise societys evaluation of right or wrong affects its ability to achieve its business goals FSGO & stakeholder demands for ethics initiatives individual ethics is not enough helps identify ethical issues