Chapter 1 Business ethics 8e

Ethical Decision Making for Business 8e Fraedrich/ Ferrell/ Ferrell CHAPTER The Importance of Business Ethics 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 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 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 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 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 Before 1960: Ethics in Business • A living wage • Theology’s domain • Philosophy’s domain The 1960s: The Rise of Social Issues in Business • Consumer’s Bill of Rights • Ralph Nader The 1970s: Business Ethics as an Emerging Field • Bribery • Deceptive advertising • Price collusion • Product safety • The environment The 1980s: Consolidation • Organized field of study • Business ethics centers • Business ethics courses • Defense industry initiative • Multinationals • Self-regulation (Reagan/Bush) The 1990s: Institutionalization of Business Ethics • Free trade • Self-regulation • Federal Sentencing Guidelines for Organizations (FSGO) • More multinationals 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 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 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 Benefits of Business Ethics • Better ethical climate • Employee commitment and trust • Investor loyalty and trust • Customer satisfaction and trust • Long term profits ... Development of Business Ethics • Developing an Organizational and Global Ethical Culture • The Benefits of Business Ethics • Our Framework for Studying Business Ethics Business Ethics • Comprises... stakeholder demands for ethics initiatives • Individual ethics alone is not sufficient • Studying business ethics helps identify ethical issues to key stakeholders Before 19 60: Ethics in Business • A living... The 19 80s: Consolidation • Organized field of study • Business ethics centers • Business ethics courses • Defense industry initiative • Multinationals • Self-regulation (Reagan/Bush) The 19 90s: