Business Ethics

Corporate intelligence is the collection and analysis of information on markets, technologies, customers and competitors, as well as on socioeconomic and external political trends.

1. Puffery: Exaggerated advertising, blustering, and boasting.
2. Implied falsity: Advertiseing message tends to mislead, confuse, or deceive the public.
3. Literally false:
   1. test prove: When a study or test is cited (establishment claims)
   2. bald assertions: States a certain product is superior to any other on the market (non-establischment claims)

• Collusion: Involves an employee who helps a consumer commit fraud.
• Duplicity: involves a consumer duping a store (e.g. customer who stages an accident and then sues the store)
• Guile: "eine List". A person who know right from wrong but uses tricks to obtain an unfair advantage.

Every decision is influenced by following spheres:

1. Workplace
2. Family
3. Religion
4. Legal system
5. Community
6. Profession

The generalized belief about how one is affected by internal or external events

• External control: Externals see themselves as going with the flow.
• Internal control: Internals believe that they control the events in their live by their own effort, skill and trust in their capacity to influence their environment.

Employees carry out all order from a supervisor (sometimes without thinking about the consequences!)

Those who have influence in a work group (managers, coworkers, subordinates, etc.)

In the 1930s, the New Deal specifically blamed business for the country’s economic woes. Businesses were asked to work more closely with the government to raise family income

By the 1950s, the New Deal had evolved into the Fair Deal, defining such matters as civil rights an environmental responsibility as ethical issues that businesses had to address

The Rise of Social Issues in Business

- military-industrial complex: antibusiness attitude

- Growth of ecological problems

- Rise of consumerism -> J.F. Kennedy: Consumers' Bill of Rights: right to safety, to be informed, to choose, to be heard

- President Johnson's Great Society: Responsibility to provide economic stability, equality and social justice

Business Ethics as an Emerging Field

- Start to teach about corporate social responsibility (max. positiv impact on stakeholders, min. negative impact on stakeholders)

- Foreign Corrupt Practices Act (Jimmy Carter): Prohibits bribery in the US

- Business issues emerged: Bribery, deceptive advertising, price collusion, product safety, environment

Consolidation

- Business Ethics became a field of study

- The Stakeholder Theory (R. Edward Freeman): Create value for all stakeholders not only shareholders

- Defense Industry Initiative on Business Ethics and Conduct (DII): 6 principles

- Reagan/Bush era: More self-regulation, less regulation by government

1. Development and distribution of understandable, detailed codes of conduct.
2. Provision of ethics training and development of communication tools
3. creation of an open atmosphere (comfortable reporting of violations wihtout fear of retribution)
4. Internal audits and reportings
5. Preservation of the integrity of the defense industry
6. Adoption of a philosophy of public accountability

Institutionalization of Business Ethics

- Clinton: Still supports more self-regulation (prior Reagan/Bush)

- Federal Sentencing Guidelines for Organizations (FSGO) based on DII (1980s):

• Penalties if violation of the law
• Mitigation of penalties for business that strive to minimize misconduct and establish high ethical standards

- Sarbanes-Oxley Act (2002):

• Fraud became illegal by law
• Increased penalties
• Creation of an Accounting Oversight Board to establish and overview accounting laws
• Requirement of top executives to sign off financial reports
• Prohibits companies from giving loans to executives
• Disclosure of a companies stock sales

Dodd-Frank Wall Street Reform and Consumer Protection Act: After financial crisis in the US. Major changes in the financial law in the US.

1. Normative Approach
2. Descriptive Approach
3. Instrumental Approach