BUS ETHICS M1

• Business ethics


  Organizational principles, values, and norms that guide individual and group behavior in business
• Morals


  A person's personal philosophies about what is right or wrong
• Values


  Enduring beliefs and ideals that are socially enforced, e.g. teamwork, trust, integrity
• Principles


  Specific and pervasive boundaries for behavior that should not be violated, e.g. human rights, freedom of speech, fundamentals of justice
• Three major approaches to business ethics

  • Conventional approach
  • Principles approach
  • Ethical tests approach
• Management ethics


  The discipline dealing with what is good and bad, or right and wrong, or with moral duty and obligation
• Three models of management ethics

  • Immoral management
  • Amoral management
  • Moral management
• Negative publicity associated with major misconduct lowers the public's trust in certain business sectors
• Decreased trust leads to a reduction in customer satisfaction and customer loyalty, which in turn can negatively impact the firm or industry
• Potential risk areas for ethical issues

  • Misuse of company resources
  • Abusive behavior
  • Harassment
  • Accounting fraud
  • Conflicts of interest
  • Defective products
  • Bribery
  • Product knockoffs
  • Employee theft
• Business ethics is more than an extension of an individual's own personal ethics
• Many people believe if a company hires good people with strong ethical values, then it will be a "good citizen" organization
• The main concern in business ethics is with the application of principles, values, and standards in the business context across various industries
• Professionals in any field, including business, must deal with individuals' personal moral dilemmas because such dilemmas affect everyone's ability to function on the job
• Only when a person's morals influence his or her performance on the job does it involve a dimension within business ethics
• Many people with limited business experience suddenly find themselves making decisions about product quality, advertising, pricing, sales techniques, hiring practices, and pollution control
• The morals they learned from family, religion, and school may not provide specific guidelines for these complex business decisions, hence, the need to study business ethics in a specialized and/or specific manner
• The development of business ethics

  1. Before 1960: Foundations of ethics in business

  2. 1960s: The rise of social issues in business

  3. 1970s: Business ethics as an emerging field

  4. 1980s: Consolidation

  5. 1990s: Institutionalization of business ethics

  6. 2000s: The 21st century of business ethics
• Business ethics was founded in 1960
• Prior to 1960, ethical issues related to business were often discussed within the domain of theology or philosophy or in the realm of legal and competitive relationships
• In the 1920s, progressive movement attempts to provide citizens with a "living wage", defined as income sufficient for education, recreation, health, and retirement
• In the 1930s came the New Deal that specifically blamed businesses for the country's economic woes
• The first book on business ethics, "Business Ethics: Studies in Fair Competition", was published in 1937
• By the 1950s, the New Deal evolved into US President Harry Truman's Fair Deal, a program that defined such matters in business and society like civil rights and environmental responsibility as ethical issues that businesses had to address
• The 1960s saw the decay of inner cities and the growth of ecological problems such as pollution and the disposal of toxic and nuclear wastes
• This period also saw the rise of consumerism- activities undertaken by independent individuals, groups, and organizations to protect their rights as consumers
• In 1962, US President John Kennedy outlined four basic consumer rights: the right to safety, the right to be informed, the right to choose, and the right to be heard
• Business ethics began to develop as a field of study in the 1970s where theologians and philosophers laid the groundwork by suggesting certain moral principles could be applied to business activities
• By the end of the 1970s, a number of major ethical issues had emerged, including bribery, deceptive advertising, price collusion, product quality and safety, and ecology
• In the 1980s, business academics and practitioners acknowledged business ethics as a field of study, and a growing number of business schools began to offer courses in the subject
• Consumers' Bill of Rights

  The right to choose, and the right to be heard
• Business Ethics as an Emerging Field


  1970s
• Business ethics development in the 1970s

  • Theologians and philosophers laid the groundwork by suggesting certain moral principles could be applied to business activities
  • Business professors began to teach and write about corporate social responsibility, an organization's obligation to maximize its positive impact on stakeholders and minimize its negative impact to the community and the environment
• Ethical issues that emerged by the end of the 1970s

  • Bribery
  • Deceptive advertising
  • Price collusion
  • Product quality and safety
  • Ecology
• Consolidation of Business Ethics as a field of study

  1980s
• Stakeholders


  Any group or individual who can affect or is affected by the achievement of the organization's objectives
• Principles of the Defense Industry Initiative on Business Ethics and Conduct (DII)

  • The DII supports codes of conduct and their widespread distribution
  • Member companies are expected to provide ethics training for their employees as well as continuous support between training periods
  • Defense contractors must create an open atmosphere in which employees feel comfortable reporting violations without fear of retribution
  • Companies need to perform extensive internal audits and develop effective internal reporting and voluntary disclosure plans
  • The DII insists that member companies preserve the integrity of the defense industry
  • Member companies must adopt a philosophy of public accountability
• The Reagan-Bush era in the 1980s promoted self-regulation rather than government regulation
• Corporations began operating internationally, giving birth to multinational corporations
• Institutionalization of Business Ethics

  1990s