MGMT 202 1st Edition Lecture 2 Outline of Last Lecture I. Breaches of Trust in Employment SectorsA. Business sectorB. Government sectorC. Non-profit sectorII. Trends in Recent Ethical Breaches in SocietyIII. Model for Ethical Decision-MakingA. Stake-holder analysisB. FinancialC. Legal D. EthicalIV. Testing the Model: Employers Using Facebook in Hiring ProcessOutline of Current Lecture I. History of Business EthicsA. Before 1960 (Ethics in Business)B. The 1960’s (The Rise of Social Issues)C. The 1970’s (Ethics as an Emerging Field)D. The 1980’s (Consolidation)E. The 1990’s (Institutionalization of Ethics)F. The Twenty-First Century (A New Focus)i. Passage of the 2002 Sarbanes-Oxley Actii. Fallen CEO’sCurrent LectureBefore 1960 (Ethics in Business):Agonizing phases of questioning the morality of capitalismPassage of the 1934 Securities Exchange ActThe role of religious leadersUnited Fruit scandal – company got involved with government and CIA in overturning a president in Guatemala The 1960’s (The Rise of Social Issues):Anti-business climate – acid rainThe 1962 Consumer’s Bill of Rights – 4 rights every consumer has – the right to be safe; the rightto be informed (where the product comes from, what its contents are); the right to choose (monopolistic holds are not good); the right to be heard Corvair scandal – government took action against GM – style was prioritized over safetyThe 1970’s (Ethics as an Emerging Field):The emergence of Corporate Social Responsibility (CSR) – Milton Friedman – maximize shareholder wealth; donate to charity if shareholders give assent Passage of the 1977 Foreign Corrupt Practices Act – illegal to bribe to secure access to foreign marketsFord Pinto scandal – exploded from slow rear-end collisions; 53 people died; unrealistic goals=compromise of safetyThe 1980’s (Consolidation): business ethics have finally arrived; social policy groups starting to formEstablishment of the 1986 Defense Industry InitiativeNeoliberalism – encourage free flow of moneyUnion Carbide scandal – established facility in India (former British colony); double set of rulesReagan and Bush – self-regulation over government regulation, resulted in neoliberalismPrivate enterprises are more efficientThe 1990’s (The Institutionalization of Ethics):The continuance of self-regulation and free tradePassage of the 1991 Federal Sentencing Guidelines for Organizations Act – compelled companies to provide ethical training to prevent ethical misconduct; essentially let companies off the hook if one of their employees went rogueXerox scandal – accelerating revenues for equipment sales (accounting scandal)The Twenty-First Century (A New Focus): The fall of the “Arthur Anderson” – caught shredding documents; company no longer exists; caused Sunbeam to come under scrutiny and fallThe loss of confidence in financial reporting and corporate ethicsImclone scandalPassage of the 2002 Sarbanes-Oxley Act:-creation of accounting oversight boards-greater transparency in financial reports-executives “sign-off” on firms financial reports-fines and jail time if executives misrepresent their financial position-requires executives to disclose stock sales immediately-prohibited firms from giving loans to executives…and much moreFallen CEO’s: Bernie Evers (“fines and jail time if executives misrepresent their financial position”), Martha Stewart/Sam Waxell (broke “requires executives to disclose stock sales