Business Ethics Summary

Dumping

The belief that consumers should dictatethe economic structure of society

-States that consume goods at an increasing rate is desirable
-Equates personal happiness with purchasing and consuming products

Ethical leaders must model organizational values

Place what is best for the organization over their own interests

Train and develop employees throughout their careers

Establish reporting mechanisms

Understand employee values and perceptions

Recognize the limits of organizational rules and values

1.Ethical leaders have strong personal character.
2.Ethical leaders have a passion to do right.
3.Ethical leaders are proactive.
4.Ethical leaders consider all stakeholders’ interests.
5.Ethical leaders are rolemodels for the organization’s values.
6.Ethical leaders are transparentand actively involved in decisionmaking.
7.Ethical leaders take a holistic view of the firm’s ethical culture.

Compliance-based approach emphasizes obedience to rules and regulations and sets processes in place to ensure compliance

Integrity-based approach views ethics as an opportunity to implement core values

Competing conflict management style: Highly assertive, not very cooperative, believe in winning at any cost, and measure success by how much the other side loses

Avoiding conflict management style: Not effective because they avoid conflict at any cost even if it leads to misconduct, are uncooperative, and are non-assertive

Accommodating conflict management style: Highly cooperative, non-assertive, and give in to the other side even if it means sacrificing their own interests and values

Compromising conflict management style: In between the assertiveness and cooperativeness dimensions, believe best approach to resolving conflicts is for each side to give something up in order to gain something of value

Collaborating conflict management style: Most advantageous, leaders are cooperative and assertive, and leaders collaborate with others to find a creative way to obtain a beneficial solution

a group is more likely to move toward a more extreme position than the group members might have done individually

1.Emphasize to each team member that he or she is a “critical evaluator” with the responsibility to express opinions and objections freely
2.Eliminate leadership biases by refusing to express an opinion when assigning tasks to a group
3.Set up a number of independent groups to work on the same issue
4.Encourage each team member to express the group’s ideas with someone he or she can trust from outside the group
5.Express the need to examine all alternatives
6.Invite outside experts into group meetings, and allow members to interact with these experts
7.Assign one person to be “Devil’s advocate”

Transactional leaders attempt to create employee satisfaction through negotiating, or “bartering,” for desired behaviors or levels of performance

Transformational leaders strive to raise employees’ level of commitment and foster trust and motivation

Authentic leaders are passionate about the company, live out corporate values daily in their behavior in the workplace, and form long-term relationships with employees and other stakeholders

coercive leader demands instantaneous obedience and focuses on achievement,
initiative, and self-control. Although this style can be very effective during times of
crisis or during a turnaround, it otherwise creates a negative climate for organizational
performance.

authoritative leader—considered to be one of the most effective styles—inspires
employees to follow a vision, facilitates change, and creates a strongly positive performance
climate.

affiliative leader values people, their emotions, and their needs and relies on
friendship and trust to promote flexibility, innovation, and risk taking

democratic leader relies on participation and teamwork to reach collaborative
decisions. This style focuses on communication and creates a positive climate for
achieving results.

pacesetting leader can create a negative climate because of the high standards that
he or she sets. This style works best for attaining quick results from highly motivated
individuals who value achievement and take the initiative.

coaching leader builds a positive climate by developing skills to foster long-term
success, delegating responsibility, and skillfully issuing challenging assignments.

Recognize ethical issues

Avoid misconduct whenever possible

Detect ethical risk areas

Answer stakeholder concerns when an ethical issue comes to light

Recover from a misconduct disaster by improving upon weaknesses in the ethics program

international treaty to address greenhouse gas emissions

most influential regulatory agency; deals
with environmental issues and enforces
environmental legislation in the U.S.

Can file civil suits against companies that violate environmental laws

1 Taking Action on Climate Change and Improving Air Quality
2 Protecting America’s Water
3 Cleaning Up Communities and Advancing Sustainable Development
4 Ensuring the Safety of Chemicals and Preventing Pollution
5 Better waste management, restoration of contaminated waste sites, and emergency
response

a strategic process involving stakeholder assessment to create long-term relationships with customers, while
maintaining, supporting and enhancing the natural environment

when accepted rules no longer serve and decision makers must weigh values and reach a judgment

a) Refer to a person’s personal philosophies about what is right or wrong

b) Specific and pervasive boundaries for behavior that should not be violated

c) Enduring beliefs and ideals that are socially enforced

Misuse of company resources

Abusive behavior

Harassment

Accounting fraud

Conflicts of interest

Defective products

Bribery

Employee theft

Right

to safety

to be informed

to choose

to be heard

an organization’s obligation to maximize positive impact and minimize negative impact on stakeholders

- Set tone for compliance

- Preventative actions against misconduct

- A company could avoid/minimize potential penalties

Defense Industry Initiative on Business Ethics and Conduct (DII)

Increased accounting regulations

Aimed at making the financial industry more transparent/responsible

adopting international standards like the United Nations Global Compact

Customers

Investors
Employees

Suppliers
Government agencies

Communities

Normative

Principles and values help identify ethical guidelines that dictate how to treat stakeholders

Descriptive

Focuses on actual behavior, addressing decisions and strategies in stakeholder relationships

Instrumental

Examines stakeholder relationships and describes outcomes for particular behaviors

Primary stakeholders: those whose continued
association is absolutely necessary for a firm’s
survival

Secondary stakeholders: do not typically
engage in transactions with the firm and are not
essential to a firm’s survival

Economic: maximizing stakeholder wealth and value

Legal: abiding by all laws and government regulations

Ethical: follow standards of acceptable behavior as judged by stakeholders

Philanthropic: "giving back" to society

Shareholder model
-Founded in classic economic precepts
-Maximizing wealth for investors and owners

Stakeholder model
-A broader view of the purpose of business
-Includes satisfying concerns of primary stakeholders including employees, suppliers, regulators, communities and special interest groups