Chapter 4 Business Ethics Social Reponsibility Lawyers houses are built on the heads of fools Anonymous Pamela S Evers Reindance Productions LLC 2009 Compare Views The one and only social responsibility of business is to increase its profits Milton Friedman b 1912 Nobel Laureate in Economics The business of business is serving society not just making money Dayton Hudson Corporate Constitution Pamela S Evers Reindance Productions LLC 2009 What is Ethics Ethics is the study of how people should act Ethics also refers to the values and beliefs related to the nature of human conduct Based on ethical standards or moral orientation Business ethics business conduct that seeks to balance the values of society with the goal of profitable operation Pamela S Evers Reindance Productions LLC 2009 What are Ethical Standards Positivist view asserts that moral standards are codified or stated in positive law Thus if an act is legal the act must be ethical Natural law theory asserts that moral standards are universal and cannot be changed or modified by law Thus these standards should be followed even if the standards are greater than the law requires Pamela S Evers Reindance Productions LLC 2009 Divine Command Do what the Bible tell you Ethics of Conscience Follow your conscience Ethical Egoism First do what s best for yourself Ayn Rand The Ethics of Selfishness Duty Ethics Do the right thing Immanuel Kant s categorical imperative Ethics of Respect Show respect don t dis me Ethics of Rights Everyone has inalienable rights Utilitarianism Do what is best for the most Ethics of Justice Do what is fair Virtue Ethics Be a good person Pamela S Evers Reindance Productions LLC 2009 Recognizing Resolving Ethical Dilemmas Pamela S Evers Reindance Productions LLC 2009 Ethical reasoning Utilitarianism Bentham Mill holds that all decisions should be evaluated to the utility they create the good of the many over the good of the one or the few a cost benefit analysis Duty based Ethics Kant s categorical imperative holds that one should not act unless you would be willing for all others to act similarly Pamela S Evers Reindance Productions LLC 2004 2009 Ethical reasoning Situational ethics or moral relativism examines the circumstances of an act to determine whether the act was or was not ethical The business stakeholder standard of behavior determines whether an act is or is not ethical by examining the interests of various stakeholders with regard to a particular business action Pamela S Evers Reindance Productions LLC 2004 2009 Too Complicated Pamela S Evers Reindance Productions LLC 2009 Easier Methods of Resolving Ethical Dilemmas Laura Nash Model Have you defined the problem accurately How would you define the problem if you stood on the other side of the fence How did this situation occur in the first place What is your intention in making this decision How does the intention compare with probable results Pamela S Evers Reindance Productions LLC 2009 Laura Nash Model cont Can you discuss your decision with the affected parties Are you confident that your position will be as valid over a long period of time as it seems now Could you discuss your decision with your supervisor coworkers officers board friends and family Whom could your decision or action injure Pamela S Evers Reindance Productions LLC 2009 Easier Methods of Resolving Ethical Dilemmas Blanchard Peale Three Part Test Is it legal Is it balanced How does it make me feel Positive law approach Stakeholder standard Moral relativism Front Page of the Newpaper Test If considering a business action would you like to see it on the front page of the newspaper Pamela S Evers Reindance Productions LLC 2009 Think About These Situations And The Related Ethical Issues Discrimination Stealing food a car Disposing of hazardous waste Writing a new employee policy Expanding or closing your business Dealing with an aggressive competitor Firing an employee Pamela S Evers Reindance Productions LLC 2009 Responsibility to Employees Shareholders Apply various models for ethical decision making to a company s employment decisions Safety requirements Johnson Controls excluded women from manufacturing line at battery plant Executive compensation compared to hourly compensation Plant closings Outsourcing Whistleblowers Whistleblowers Cooper Rowley and Watkins Pamela S Evers Reindance Productions LLC 2009 Responsibility to Customers Community Apply various models for ethical decision making to a company s product design decisions Product safety acceptable risk Excess packaging becomes waste Using harmful raw materials Outsourcing Pamela S Evers Reindance Productions LLC 2009 Responsibility Overseas Apply various models for ethical decision making to a company s international operations Union Carbide and the Bhopal disaster that Dow Chemical successor corporation continues Texaco s environmental disaster in Ecuador Apparel manufacturers and child labor issues Texaco s oil impacts Ecuadoran child Aguinda v Texaco Pamela S Evers Reindance Productions LLC 2009 Business Ethics is Important Trust business activity is based upon trust whether between employer and employee company and consumer supplier and manufacturer government and business Reputation a good reputation is a valuable commodity e g goodwill Law unethical business activity ultimately at least in theory is limited by government consumers and other stakeholders who use the courts and legislation to limit unethical behavior Pamela S Evers Reindance Productions LLC 2009 Ethical Businesses Evidence does exist that good ethical business is profitable Ethics and competitiveness are inseparable John Akers former chairman IBM www accountability org uk www businessethics com www ethicalcorp com http www csrwire com ethisphere Pamela S Evers Reindance Productions LLC 2009 Ethical Corporations IKEA Trader Joe s AFLAC Eaton Corp Stonyfield Farms Salesforce com Pamela S Evers Reindance Productions LLC 2004 2009 Green Mountain Coffee Roasters Advanced Micro Devices NIKE Motorola Intel International Business Machines Agilent Technologies Timberland Company Starbucks General Mills Pitney Bowes Applied Materials Texas Instruments Patagonia The bar chart shows the percentage of British citizens that engaged in the activity About 15 of British citizens are activists doing 5 or more activities within a year Pamela S Evers Reindance Productions LLC 2009 NEXT International Law The time is always right to do what is right Martin Luther
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