LWC1 Ethics chap 1-4

Business Ethics

Principles and standards that guide behavior in the world of Business. Deals with the question about whether practices are acceptable.

Business Ethics before 1960

-Primarily thru a religious perspective.
-Fair Deal program defined civil rights and environmental responsibilities as ethical issues business had to address

Business Ethics 1960's

-Rise of social issues in Business
-Society turned to causes
-culminated the "consumer bill of rights

Business Ethics 1970's

-Business ethics as an emerging field
-developed as an independent field of study
-explored ethical issues attempting to understand how decisions were made
-taught and wrote about social responsibility and organizations responsibility to have a positive i

Business Ethic's 1980's

Consolidation
-centers on Business ethics provided publications, courses, and seminars
-companies established ethics committees
-The Defense Industry on Business Ethics and Conduct was developed

Business Ethics 1990's

Institutionalization of Business Ethics
-Government continued to support self regulation
-Federal Sentencing Guidelines for Organizations (FSGO) set the tone for organizational misconduct

Business Ethics 2000's

A new focus on Business Ethics
-ushered in a new set of ethics scandals
-Sarbanes-Oxley Act of 2002 stiffened penalties for corporate fraud and established an accounting oversight board
-2004 amendment to FSGO required business governing authority be well

What is involved in developing an ethical culture in an organization?

-Communication core values to employees
-Creating ethics programs and appointing ethic officers to oversee them
-Develop an ethic culture

benefits to business of a clear ethical framework

-Employee commitment and trust
-Investor loyalty
-Customer Satisfaction and trust

Direct stakeholders

Customers
Investors
Employees

Indirect stakeholders

Community members
Disadvantaged groups
Governments
Suppliers

Social Responsibility

viewed as a contract with society, business ethics involve carefully thought out rules of business conduct that guide decision making.

Steps to social responsibilty

Philanthropic - Giving back to society
Ethical - following standards of acceptable behavior
Legal - abiding by all laws and government regulations
Economic - maximizing stakeholder wealth and value

International Organization for Standardization (ISO)

corporate responsibility standard, IS26000, assist organizations in contributing to sustainable development. It is intended to encourage them to go beyond legal compliance

Corporate Governance

the system by which companies are directed and controlled" It involves a set of relationships between a company's management, its board, its shareholders and other stakeholders; it deals with prevention or mitigation of the conflict of interests of stake

Shareholder model of Corporate Governance

-Maximizing wealth for investors and owners
-focuses on developing and improving the formal system for maintaining performance accountability between top management and the firms shareholders
-drives a firms decisions toward serving the best interest of i

Stakeholders model of Corporate Governance

-Due to limited resources company must determine which stakeholders are primary
-Managers then implement the appropriate mechanisms to develop long term relationships
-must create governance systems that consider stakeholder welfare in tandem with corpora

Step 1 in implementing a stakeholder perspective-Assessing the corporate culture

-Identify the organizational missions, values, and norms that are likely to have implications for social responsibility

Step 2-in implementing a stakeholder perspective- Identifying stakeholder groups

-recognize stakeholders needs wants and desires
-proper assessment of power held by a given stakeholder community also requires an evaluation of the extent to which that community can collaborate with others to pressure the firm

Step 3-in implementing a stakeholder perspective- Identifying stakeholder issues

-Understanding the nature of the main issues of concern to the stakeholders
-the level power and legitimacy determines the degree of urgency in addressing their needs

Steps 1-3 consist of

generating information about social responsibility among a variety of influences in and around the organization

Step 4 -in implementing a stakeholder perspective-
Assessing the organizations commitment to social responsibility

-Brings 1st 3 steps together to arrive at an understanding of social responsibility that specifically matches the organization of interest
-will be used to evaluate current practices ant to select concrete social responsibility

Step 5-in implementing a stakeholder perspective-
Identifying resources and determining urgency

prioritization of stakeholders and issues along with assessment of past performance provides for allocating resources

Step 6-in implementing a stakeholder perspective-
Gaining stakeholder feedback

-stakeholders general assessment of the firm and its practices can be obtained through satisfaction or reputation surveys
-gauge stakeholders perceptions of the firm's contribution to certain issues
-more formal research may be conducted using focus group

Ethical Issue

a situation, a problem, or an opportunity that requires thought, discussion or investigation to make a decision

Ethical issues in the context of organizational ethics

Characteristics of the job, the culture, and the organization of the society in which one does business can create ethical issues.

How do Ethical issue relate to Honesty

-Because of the economic motive, many in business can become confused with the opposite of honesty, dishonesty.
-Business- as- war mentality may foster the idea that honesty is unnecessary in business.
-an intensely competitive environment creates the pot

How do Ethical issues relate to Fairness

Three fundamental elements that seem to motivate people to be fair: equality, reciprocity and optimization.

Equality

How wealth or income is distributed between employees within a company, a country, or across the globe

Reciprocity

The return of small favors that are approximately equal in value. ex: workers are compensated with wages that are approximately equal to their effort

Optimization

Pick the best for the job w/o discrimination, One or both parties may view an action as unfair or unethical because the outcome was less beneficial than expected.

How Do Ethical issues relate to Integrity

Uncompromising adherence to ethical values

Abusive or intimidating behavior

most common ethical problem for employers

Lying

segmented into causing damage or harm, a "white lie" or statements that are obviously meant to engage or entertain with no malice

Conflict of interest

exist when an individual must chose whether to advance his or her own interests those of the organization or those of some other group

Bribery

practice of offering something usually money in order to gain an illicit advantage

3 challenges of determining ethical issues in business

-Changing societal values
-Determining whether the organization has adopted specific policies on the activity
-Determining whether a specific behavior has an ethical component

Voluntary boundaries of ethical behavior

management initiated boundary of conduct (beliefs, values, voluntary policies)

Mandated Boundaries of ethical behavior

an externally imposed boundary of conduct (laws, rules, regulations)

Stakeholder Orientation

The degree to which a firm understands and addresses stakeholder demands. Comprises three sets of activities: The organization- wide generation of data about stakeholder groups and assessment of the firm's effects on these groups; the distribution of this

Social Responsibility

These stakeholders have concerns about what is fair, just, or in keeping with respect for stakeholders' rights. Four levels:
Economic
Legal
Ethical
Philanthropic

Primary Stakeholders

Are those whose continued association is absolutely necessary for a firm's survival; these include employees, customers, investors, and shareholders, as well as the governments and communities that provide necessary infrastructure.

Secondary Stakeholders

Do not typically engage in transactions with a company and thus are not essential for its survival; these include the media, trade associations, and special- interest groups.

Philanthropic

Activities that are not required of businesses but promote human welfare or goodwill.

Corporate Citizenship

Often used to express the extent to which busi-nesses strategically meet the economic, legal, ethical, and philanthropic responsibilities placed on them by their various stakeholders.Four interrelated dimensions: strong sustained economic performance, rig

Fiduciaries

Persons placed in positions of trust who use due care and loyalty in acting on behalf of the best interests of the organization.

Corporate Governance

Focuses on developing and improving the for-mal system for maintaining performance accountability between top management and the firms' shareholders.

Managing Responsibility and Business Ethics

The steps include: assessing the corporate culture; identifying stakeholder groups; identifying stakeholder issues; assessing the organizational commitment to social responsibility; identifying resources and determining urgency; gaining stakeholder feedba

Social responsibility in business refers to maximizing the visibility of social involvement?

No. Social responsibility refers to an organization's obligation to maximize its positive impact on society and minimize its negative impact.

Stakeholders provide resources that are more or less critical to a firm's long-term success.

Yes. These resources are both tangible and intangible.

Three primary stakeholders are customers, special-interest groups, and the media.

No. Although customers are primary stakeholders, special-interest groups are usually considered secondary stakeholders.

The most significant influence on ethical behavior in the organization is the opportunity to engage in unethical behavior.

No. Ignorant others have more impact on ethical decisions within the organization.

The stakeholder perspective is useful in managing social responsibility and business ethics.

Yes.