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Business Ethics

Business Ethics. Introduction. Class Rules of engagement Communication mode Participation Questioning Open but within etiquettes Any response to above. Ethics - Origin. Ethos (Greek) “Character” and “sentiment of the community” Ethikos (Greek) – authority of custom and tradition

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Business Ethics

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  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 -3rd 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

  19. 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

  20. 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

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