Chapter 1 Business ethics 8e

The Importance of Business Ethics CHAPTER 1 Ethical Decision Making for Business 8e Fraedrich/ Ferrell/ Ferrell... Chapter Objectives• To explore conceptualizations of business ethics fr

The Importance of Business

Ethics

CHAPTER 1

Ethical Decision Making for Business 8e Fraedrich/ Ferrell/ Ferrell

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

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