Business Ethics Summary

- 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

a problem, situation, or opportunity that requires an individual or group to choose among actions

a problem, situation, or opportunity that requires an individual or group to chose among several wrong or unethical actions

Joking without malice

Commission lying is creating a false perception with words that deceive the receiver

Omission lying is intentionally not informing channel members of problems relating to a product that affects awareness, intention, or behavior

Any purposeful communication that deceives, manipulates, or conceals facts in order to create a false impression

e.g. accounting fraud

Puffery: Exaggerated advertising claims, blustering, and boasting

Implied falsity: An advertising message that misleads, confuses, or deceives the public

Literally false: Claims can be divided into tests prove (establishment claims) and bald assertions (non-establishment claims)

Collusion involves an employee who helps a consumer commit fraud

Duplicity involves a consumer duping a store

Guile is associated with a person who uses tricks to obtain an unfair advantage

when insiders possess material that is not public

Relates to individual differences in relation to a general belief about how one is affected by internal versus external events or reinforcements

e.g. External locus of control go with the flow because that’s all they can do

Internal locus of control believe they can control events; are masters of their destinies and trust in their capacity to influence their environment

Liberty principle (equality principle): States that each person has basic rights that are compatible to the basic liberties of others

Difference principle: States that economic and social equalities (or inequalities) should be arranged to provide the most benefit to the least-advantaged members of society

The "father" of free market capitalism

Developed the idea of the invisible hand

Markets reward or punish for unethical conduct without the need for government regulation

Currently the dominant form of capitalism

Economic value orientation: Values that
can be quantified by monetary means

Idealism: Places special value on ideas and
ideals as products of the mind

Realism: The view that an external world
exists independent of our perceptions

We shouldn't jduge ideas on the basis of truth or falsehood, but in terms of the ends they serve.

Goodness theories: Focus on the end result
of actions and the goodness or happiness
created by them

Obligation theories: Emphasize the means
and motives by which actions are justified

Nice

Teleology

Egoism in teleology

Utilitarianism in teleology

Rule utilitarians: Determine behavior based on principles designed to promote the greatest utility

Act utilitarians: Examine a specific action itself; not the rules governing it

Deontology

Rule deontologists: Conformity to general
moral principles determines ethicalness

Act deontologists: Actions are the proper
basis on which to judge morality

Descriptive relativism: Relates to observations of other cultures

Metaethical relativism: Proposes people see situations from their own perspectives

Normative relativism: Assumes one person’s opinion is as good as another’s

Distributive justice: An evaluation of the results of a business relationship

Procedural justice: Considers the processes and activities that produce desired outcomes

Interactional justice: Based on relationships between organizational members, including employees and managers

Illegal acts committed for personal and/or organizational gain by abusing the trust and authority associated with a given position

Written codes of conduct

Ethics officers to oversee the program

Careful delegation of authority

Formal ethics training

Rigorous auditing, monitoring, enforcement,
and revision of program standards