Read and reflect on the assigned readings for the week. Then post what you thought was the most important concept(s), method(s), term(s), and/or any other thing that you felt was worthy of your understanding in each assigned textbook chapter.Your initial post should be based upon the assigned reading for the week, so the textbook should be a source listed in your reference section and cited within the body of the text. Other sources are not required but feel free to use them if they aid in your discussion.
Also, provide a graduate-level response to each of the following questions:
Describe an ethical dilemma that you faced in the workplace. Analyze how you would resolve the dilemma using (1) utilitarianism, (2) the principle of rights, (3) the principle of justice, (4) virtue ethics and (5) the Golden Rule. Based on your analysis of these principles, what course of action would result in the most ethical outcome? Determine what ethical principle(s) or tests(s), if any, were employed by senior management or required by the company’s code of conduct. Finally, describe the course of action that you took in the situation and ascertain whether you would choose the same course of action again or if you would act differently based on your analysis of the ethical principles, management’s behavior and the requirements (if any) of the company’s code of conduct.
Business & Society
Ethics, Sustainability & Stakeholder
Management
10th Edition
© 2018 Cengage
1
Chapter 7
Business Ethics
Essentials
© 2018 Cengage
2
Learning Outcomes
1. Describe the public’s opinion of business ethics.
2. Define business ethics, explain the conventional approach to
3.
4.
5.
6.
business ethics and identify the sources of ethical norms in
individuals.
Analyze economic, legal, and ethical aspects of a decision by
using a Venn model.
Identify, explain, and illustrate three models of management
ethics.
In terms of making moral management actionable, describe
and discuss Kohlberg’s three levels of moral development
and Gilligan’s ethics of care.
Identify and discuss six major elements of moral judgment.
© 2018 Cengage
3
Chapter Outline
• The Public’s Opinion of Business Ethics
• Business Ethics: Some Basic Concepts
• Ethics, Economics and Law—A Venn Model
• Three Models of Management Ethics
• Making Moral Management Actionable
• Developing Moral Judgment
• Elements of Moral Judgment
• Summary
© 2018 Cengage
4
Business Ethics Scandals
• The public’s interest in business ethics is at
an all-time high, spurred by scandals.
• The Enron scandal impacted business so
greatly it is called “The Enron Effect.” But
more scandals followed:
• Worldcom, Tyco, Arthur Andersen
• And then the Wall Street financial
scandals:
• AIG, Bear Stearns, Lehman Bros, Fannie Mae,
Freddie Mac, and Bernie Madoff
• Business will never be the same.
© 2018 Cengage
5
© 2018 Cengage
6
The Public’s Opinion
of Business Ethics (1 of 2)
• The public’s view of business ethics has
•
•
never been very high.
Anecdotal evidence suggests that many
people see business ethics as an
oxymoron, and think that there’s only a
fine line between a business executive and
a crook.
A Gallup poll taken in December, 2015
revealed that only 17% of the public
thought business executives had high or
very high ethics. (Down from 21% in 2012.)
© 2018 Cengage
7
The Public’s Opinion
of Business Ethics (2 of 2)
National Business Ethics Survey Findings • Observed ethical misconduct at work has
decreased slightly, from 45% to 41%.
• Reporting bad behavior (whistle-blowing) is down
slightly, from 65% to 63%.
• Retaliation against those who report misconduct
has stayed about the same at 21%.
• Pressure to compromise is down to 9%.
© 2018 Cengage
8
Are the Media Reporting Business
Ethics More Vigorously?
•
•
•
•
It is sometimes difficult to tell whether business
ethics have really deteriorated or whether the
media is doing a more thorough job of reporting
ethics violations.
There is no doubt that news media outlets are
reporting ethical problems more frequently and
fervently.
The media had a field day with the Bernie Madoff
Ponzi scheme, which defrauded thousands of
investors of $50 billion.
Investigate reporting on ethics has been shown on
60 Minutes, 20/20, Dateline NBC, Rock Center
and Frontline.
© 2018 Cengage
9
Is It Society That Is Changing?
• History shows that a good number of what
are now called unethical practices were at
one time considered acceptable.
• Or it may be that those practices never were
acceptable to the public, but because they
were not known, it seemed they were
tolerated.
• It is difficult to say whether business ethics
are getting better, worse, or staying the
same, but perceptions and expectations are
significantly driving businesses’ reputations.
© 2018 Cengage
10
Business Ethics Today versus Earlier
Periods
© 2018 Cengage
11
Business Ethics:
Some Basic Concepts (1 of 2)
Ethics – are standards of conduct, which originate
from some external group or source such as society,
in general, or business, in particular.
Morals – standards of conduct that originate within
the individual
Business Ethics –
•
•
Is concerned with rightness, wrongness, fairness
or justice of actions, decisions, policies, and
practices that take place within a business context
or in the workplace.
Is the study of practices in organizations and is a
quest to determine whether these practices are
acceptable or not.
© 2018 Cengage
12
Business Ethics:
Some Basic Concepts (2 of 2)
Descriptive Ethics •
•
Involves describing, characterizing, and
studying morality.
Focuses on what is occurring.
Normative Ethics •
Focuses on what ought or should be
occurring.
•
Demands a more meaningful moral anchor
than just “everyone is doing it.”
Normative Ethics is our primary concern in this
text.
© 2018 Cengage
13
The Conventional Approach
to Business Ethics
The conventional approach to business ethics involves a
comparison of a decision or practice to prevailing
societal norms.
© 2018 Cengage
14
Sources of Ethical Norms
© 2018 Cengage
15
Ethics and the Law
• The law and ethics can overlap in many
respects.
• The law is a reflection of what society
thinks are minimal standards of conduct
and behavior.
• Research of illegal corporate behavior
focuses on two questions:
1. What leads firms to behave illegally?
2. What are the consequences of
engaging in illegal behavior?
© 2018 Cengage
16
Making Ethical Judgments
© 2018 Cengage
17
The Danger of Ethical
Relativism
• A serious danger of using the
conventional approach to business
ethics is:
Ethical Relativism • One picks and chooses which source of
norms one wishes to use based on what
will justify current actions or maximize
freedom.
© 2018 Cengage
18
Ethics, Economics, and Law –
A Venn Model
© 2018 Cengage
19
Three Models of
Management Ethics
Immoral Management • An approach devoid of ethical principles and an
active opposition to what is ethical.
• The operating strategy of immoral management is
focused on exploiting opportunities for corporate
or personal gain.
Moral Management • Conforms to highest standards of ethical
behavior or professional standards of conduct.
Amoral Management –
• Different in nature from the others, it has two
kinds:
• Intentional: Does not consider ethical factors.
• Unintentional: Casual or careless about
ethical factors.
© 2018 Cengage
20
Characteristics of Immoral
ManagersThese Managers:
•
•
Intentionally do wrong
•
Are Self-centered and self-absorbed
•
Care only about self or organization’s profits
or success
•
Actively oppose what is right, fair, or just
•
Exhibit no concern for stakeholders
•
Are the “bad guys”
An ethics course probably would not help
them
© 2018 Cengage
21
Examples of Immoral
Management • Stealing petty cash
• Cheating on expense reports
• Taking credit for another’s accomplishments
• Lying on time sheets
• Coming into work hungover
• Telling a demeaning joke
• Taking office supplies for personal use
• Showing preferential treatment toward certain
employees
• Rewarding employees who display wrong
behaviors
• Harassing a fellow employee
© 2018 Cengage
22
Characteristics of Moral
Managers
These Managers:
• Conform to the highest standards of ethical
behavior or professional standards of conduct.
• Ethical Leadership is commonplace.
• Their goal is to succeed within the confines of
sound ethical precepts.
• Demonstrate high integrity in thinking,
speaking and doing.
• Follow both the letter and the spirit of the law.
• Possess an acute moral sense and moral
maturity.
• Moral managers are the “good guys.”
© 2018 Cengage
23
Habits of Moral Leaders 1. They have a passion to do right.
2. They are morally proactive.
3. They consider all stakeholders.
4. They have a strong ethical character.
5. They have an obsession with fairness.
6. They undertake principled decisionmaking.
7. They integrate ethics wisdom with
management wisdom.
© 2018 Cengage
24
Positive Ethical Behaviors
of Moral Leaders •
•
•
•
•
•
•
Giving proper credit where it is due
Being straightforward and honest with other
employees
Treating all employees equally
Being a responsible steward of company
assets
Resisting pressure to act unethically
Recognizing and rewarding ethical behavior of
others
Talking about the importance of ethics and
compliance on a regular basis
© 2018 Cengage
25
Characteristics of Amoral
ManagersIntentionally Amoral Managers
•
•
•
Don’t think ethics and business should “mix.”
Business and ethics exist in separate spheres.
A vanishing breed.
Unintentionally Amoral Managers
•
•
•
•
•
Don’t consider the ethical dimension of decisionmaking.
Don’t “think ethically.”
Have no “ethics buds.”
Well intentioned, but morally casual or
unconscious.
Ethical gears are in neutral.
© 2018 Cengage
26
© 2018 Cengage
27
Two Hypotheses Regarding
Moral Management Models
Population hypothesis
• The distribution of the three models
approximate a normal curve, with the
amoral group occupying the large middle
part of the curve and the moral and
immoral categories occupying the tails.
Individual hypothesis
• Within the individual manager, these three
models may operate at various times and
under various circumstances.
© 2018 Cengage
28
Three Models of Management
Morality and Emphases on CSR
© 2018 Cengage
29
Moral Management Models And Acceptance
or Rejection of Stakeholder Thinking
© 2018 Cengage
30
Making Moral Management
Actionable •
•
•
The characteristics of immoral, moral and
amoral management provide benchmarks for
managerial self-analysis, and help managers
recognize the need to move from the immoral
or amoral ethic to the moral ethic.
Amoral management is a morally vacuous
condition that can easily be disguised as an
innocent, practical, bottom-line philosophy. But
it is the bane of the management profession.
Most managers are not “bad guys,” but
managerial decision-making cannot be
ethically neutral. Both immoral and amoral
management must be discarded and the
process of developing moral judgment begun.
© 2018 Cengage
31
Developing Moral Judgement
Kohlberg’s Levels of Moral Development
© 2018 Cengage
32
Why Managers and Employees
Behave Ethically
© 2018 Cengage
33
Ethics of Care as
Alternative to Kohlberg
© 2018 Cengage
34
Different Sources of a Person’s Values
External sources:
© 2018 Cengage
35
Sources Internal to the
Organization
Norms prevalent in business include • Respect for the authority structure
• Loyalty to bosses and the organization
• Conformity to principles and practices
• Performance counts above all else
• Results count above all else
© 2018 Cengage
36
Elements of Moral Judgment • Moral imagination
• Moral identification and ordering
• Moral evaluation
• Tolerance of moral disagreement and
ambiguity
• Integration of managerial and moral
competence
• A sense of moral obligation
© 2018 Cengage
37
Key Terms
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
amoral management
bottom-line mentality
Business ethics
Compliance strategy
Conventional approach to
business ethics
Conventional level of moral
judgment (level 2)
Descriptive ethics
Elements of moral judgment
Ethical relativism
Ethical tests approach
Ethics
Gilligan’s ethics of care
Immoral management
Individual hypothesis
Integrity strategy
Intentional amoral
management
© 2018 Cengage
•
•
•
•
•
•
•
•
•
•
•
•
Individual hypothesis
Integrity strategy
Intentional amoral
management
Kohlberg’s levels of moral
development
Moral development
Moral management
Normative ethics
Population hypothesis
Preconventional level of
moral judgment (level 1)
Principles approach
Postconventional level of
moral development
Unintentional amoral
management
38
Business & Society
Ethics, Sustainability & Stakeholder
Management
10th Edition
© 2018 Cengage
1
Chapter 8
Managerial and
Organizational
Ethics
© 2018 Cengage
2
Learning Outcomes
1. Identify and explain the different levels at which business ethics
2.
3.
4.
5.
6.
may be addressed.
Enumerate and discuss the principles of managerial ethics and
ethical tests for guiding ethical decisions.
In terms of managing organizational ethics, identify the factors
affecting an organization’s ethical culture and provide examples of
these factors at work.
Describe the best practices that management may take to improve
an organization’s ethical culture.
Identify and explain concepts from “behavioral ethics” that affect
ethical decision making and behavior in organizations.
Explain the cascading effect of moral decisions, moral managers,
and moral organizations.
© 2018 Cengage
3
Chapter Outline
• Ethics Issues Arise at Different Levels
• Managerial Ethics and Ethical Principles
• Managing Organizational Ethics
• Best Practices for Improving an Organization’s Ethics
• Behavior Ethics—Toward a Deeper Understanding
• Moral Decisions, Managers, and Organizations
• Summary
© 2018 Cengage
4
Personal and Organizational
Ethics
• Managers encounter day-to-day ethical
challenges in such areas as:
•
conflicts of interest
•
sexual harassment
•
customer dealings
•
pressure to compromise on personal
standards, and more
• Many managers have no training in ethics
or ethical decision making.
• Ethics is vital to business success.
© 2018 Cengage
5
Ethics Issues
Arise at Different Levels
Personal level •
Situations faced in our personal lives outside the context of
our employment.
Managerial and Organizational levels •
Workplace situations faced by managers and employees.
Industry or profession level •
A manager or organization might experience business ethics
issues at the industry or professional level.
Societal and global levels •
Managers acting in concert through their companies and
industries can bring about constructive changes.
© 2018 Cengage
6
Managerial Ethics and Ethical
Principles
• Three major approaches to ethical decision
making 1. Conventional Approach • Discussed in chapter 7
2. Principles Approach • Managers desire to make decisions based on
a more solid foundation than is provided by
the conventional approach to ethics.
• A principle of business ethics is an ethical
concept, guideline, or rule that assists you in
taking the ethical course.
3. Ethical Tests Approach • Discussed later in this chapter.
© 2018 Cengage
7
Types of Ethical Principles
Teleological theories • Focuses on consequences or results of an
action.
Deontological theories • Focuses on duties, without regard to
consequences.
Aretaic theories • Focuses on the virtue of an action.
© 2018 Cengage
8
Principles Approach to Ethics
Major principles of ethics • Principle of Utilitarianism
• Kant’s Categorical Imperative
• Principle of Rights
• Principle of Justice
• Ethical Due Process
• Rawl’s Principle of Justice
• Ethics of care
• Virtue ethics
• Servant leadership
• The Golden Rule
© 2018 Cengage
9
Ethical Tests Approach to Decision
Making
Test of Common Sense
Test of One’s Best Self
Test of Making Something Public
Test of Ventilation
Test of the Purified Idea
Test of The Big Four (greed, speed, laziness, or haziness)
Gag Test
© 2018 Cengage
10
Managing Organizational Ethics
• Ethical decision making is at the heart of
business ethics.
• One must sharpen one’s decision-making
skills to avoid amoral thinking, and achieve
moral management.
• A manager must see the organization’s ethical
climate as part of its corporate culture.
• An ethical climate is shaped through actions
taken, policies established, and examples set.
© 2018 Cengage
11
Factors Affecting the Morality of
Managers and Employees
© 2018 Cengage
12
Factors Affecting the
Organization’s Moral Climate
1. Behavior of superiors – the number one
influence on moral climate
2. Behavior of one’s peers – the second
influence; people do pay attention to what
their peers in the firm are doing
3. Industry or professional ethical practices
– ranked in the upper half; these context
factors are influential
4. Personal financial need – ranked last
© 2018 Cengage
13
•
Improving the Organization’s
Ethical Culture
The emphasis is on creating an ethical
organizational culture or climate, one in
which ethical behavior, values and policies are
displayed, promoted, and rewarded.
• Compliance vs. Ethics Orientation1. Ethics thinking is principles based; compliance
thinking is rule-bound and legalistic. A
compliance orientation can undermine ethical
thinking.
2. Compliance can squeeze out ethics.
3. Managers many not consider tougher issues
that a more ethics-focused approach might
require.
© 2018 Cengage
14
Best Practices for Improving an
Organization’s Ethics
• Three key elements that must exist if an ethical
organizational culture is to be developed and
sustained:
1. The continuous presence of ethical leadership
reflected by the board of directors, senior executives
and managers.
2. The existence of a set of core ethical values
infused throughout the organization by way of policies,
processes and practices; and
3. A formal ethics program which includes a code of
ethics, ethics training, and an ethics officer.
© 2018 Cengage
15
Improving Ethical Culture
© 2018 Cengage
16
Top Management Leadership
(Moral Management) (1 of 2)
• This premise cannot be overstated:
• The moral tone of an organization is set by
top management.
• In a poll of communication professionals,
more than half believed that top management
is an organization’s conscience.
• Managers and employees look to their bosses
at the highest levels for their cues as to what
practices and policies are acceptable.
© 2018 Cengage
17
Top Management Leadership
(Moral Management) (2 of 2)
• Weak Ethical Leadership – led an employee to embezzle
$20,000 over a 15 year period, explaining that she thought it
was OK because her boss used firm employees for personal
needs, took money from the firm’s petty cash box, raided the
soft drink machine, and used company stamps. Her boss said
it was all true, and that she should not be dealt with too
harshly.
• Strong Ethical Leadership – When a batch of tubes in
production failed a critical safety test, leaving in question the
10,000 already manufactured, the VP, without hesitation, said
“scrap them.” That act set the tone for the corporation for
years, because everyone present knew of situations in which
faulty products had been shipped under pressure of time and
budget.
© 2018 Cengage
18
Two Pillars of Leadership
© 2018 Cengage
19
Effective Communication
of Ethical Messages
Requires –
•
•
•
•
Written and verbal communication
Non-verbal communication
Candor – forthright, sincere, and honest
Fidelity – be faithful to detail, accurate,
avoid deception or exaggeration
• Confidentiality – exercise care in deciding
what information to disclose to others.
Trust can be shattered if confidences are
breached.
© 2018 Cengage
20
Ethics and Compliance
Programs and Officers (1 of 2)
Ethics programs typically include:
•
•
•
•
•
Written standards of conduct
Ethics training
Mechanisms to seek ethics advice or information
Methods for reporting misconduct anonymously
Inclusion of ethical conduct in the evaluation of
employee performance
• Disciplinary measures for employees who violate
ethical standards
• A set a guiding values or principles
© 2018 Cengage
21
Ethics and Compliance
Programs and Officers (2 of 2)
Compliance programs
• Structure
• Oversight
• Due Diligence
• Communication
• Monitoring
• Promotion &
Enforcement
• Response3
Compliance Officers
• Head up compliance
programs
• Implement the array of
ethics and compliance
initiatives
• Many hired after
Sarbanes-Oxley
• Started with compliance
issues, ethics became
focal point later on
© 2018 Cengage
22
Setting Realistic Objectives • Managers must be keenly sensitive to the possibility of
unintentionally creating situations in which others may
perceive a need or incentive to cut corners or do the wrong
thing.
• Unrealistic expectations are the primary driver of employees
perceiving excessive pressure to achieve goals.
• Example: A marketing manager set a sales goal of a 20%
increase for the next year when a 10% increase was all that
could be realistically and honestly expected, even with
outstanding performance. A subordinate might believe he or
she should go to any lengths to achieve the 20% goal.
© 2018 Cengage
23
Ethical Decision-Making Processes
© 2018 Cengage
24
Ethics Check Ethics Check 1. Is it legal?
2. Is it balanced?
3. How will it make me feel about myself?
© 2018 Cengage
25
Ethics Quick Test 1. Is the action legal?
2. Does it comply with our values?
3. If you do it, will you feel bad?
4. How will it look in the newspaper?
5. If you know it’s wrong, don’t do it.
6. If you’re not sure, ask.
7. Keep asking until you get an answer.
© 2018 Cengage
26
Codes of Ethics or Conduct •
A way of establishing standards of
behavior and communicating them to
managers and employees.
•
The single most important element of an
ethics and compliance program.
•
Virtually all major corporations have codes
of conduct today.
•
Many have worldwide codes or standards.
•
Some codes of conduct are designed
around stakeholders, others on conduct.
© 2018 Cengage
27
Content of Codes of Conduct •
Employment practices
•
Employee, client, and vendor information
•
Public information and communications
•
Conflicts of interest
•
Relationships with vendors
•
Environmental issues
•
Ethical management practices
•
Political involvement
© 2018 Cengage
28
Disciplining
Violators of Ethics Standards •
Management must discipline violators of
accepted ethical norms and standards.
•
One reason many question the sincerity of
business with regard to codes of conduct
is that many business are unwilling to
discipline violators, implicitly approving
their behavior.
•
Before disciplining anyone, the firm needs
to have communicated its ethics standards
clearly and convincingly.
© 2018 Cengage
29
Ethics “Hotlines”
and Whistle-Blowing
Mechanisms
•
An effective ethical culture is contingent
on employees having (with support of top
management) a mechanism for reporting
violations.
•
Hotlines are the most common way to
report corporate fraud.
•
Can be telephone, web, or email-based.
© 2018 Cengage
30
Business Ethics Training Goals of training are to learn:
1. the fundamentals of business ethics
2. to solve ethical dilemmas
3. to identify causes of unethical behavior
4. about common managerial ethical
issues
5. whistle-blowing criteria and risks
6. to develop a code of ethics and execute
an internal ethical audit
© 2018 Cengage
31
Ethics Audits and Risk
Assessments Ethics Audits •
Intended to carefully review such ethics initiatives
as ethics programs, codes of conduct, hotlines,
and ethics training programs.
Sustainability Audit •
Helps to identify sustainability issues within an
organization.
Fraud Risk Assessment •
Review processes that identify and monitor
conditions that may pertain to the company’s
exposure to compliance/misconduct risk and to
review methods for dealing with concerns.
© 2018 Cengage
32
Corporate Transparency
Corporate Transparency • A quality, characteristic, or state in which
activities, processes, practices, and
decisions that take place in companies
become open or visible to the outside
world.
• The degree to which an organization:
• provides public access to information.
• accepts responsibility for its actions.
• makes decisions more openly.
• establishes incentives for leaders to
uphold standards.
© 2018 Cengage
33
Board of Director Leadership
and Oversight • Leadership and oversight of ethical
initiatives by boards has not been a given.
The Sarbanes-Oxley Act
•
Companies are required to protect
whistle-blowers without fear of retaliation.
•
It is a crime to alter, destroy, conceal,
cover up, or falsify documents to prevent
their use in a federal government lawsuit.
© 2018 Cengage
34
Behavioral Ethics—Toward a
Deeper Understanding (1 of 3)
Behavioral Ethics helps us to understand many of the
behavioral processes that are taking place:
• Bounded ethicality – occurs when managers
and employees find that behaving ethically is
difficult because of various organizational
pressures.
• Conformity bias – the tendency people have to
take their cues for ethical behavior from their
peers, rather than exercising their own,
independent judgment.
• Overconfidence bias –people may be more
confident of their moral character than they
have reason to be.
© 2018 Cengage
35
Behavioral Ethics—Striving
Towards a Deeper
Understanding (2 of 3)
• Self-serving bias – people may process information in
a way that supports their preexisting beliefs & selfinterest.
• Framing – ethical judgments are affected by how an
issue is posed; if posed as an “ethical” issue, they
make more ethical decisions.
• Incrementalism – a predisposition toward the
“slippery slope.”
• Role morality – a tendency to use different ethical
standards for different roles in life.
• Moral equilibrium – a tendency for people to keep an
ethical scoreboard in their heads, and use this
information when making future decisions, balancing
decisions, and avoiding a moral “surplus.”
© 2018 Cengage
36
Behavioral Ethics—Striving
Towards a Deeper
Understanding (3 of 3)
• Ill-conceived goals – poorly set goals that encourage
negative behaviors.
• Motivated blindness – overlooking the questionable
actions of others when it is in one’s own best interest.
• Indirect blindness – one holds others less accountable
for unethical behaviors when they are carried out
through third parties.
• The slippery slope – causes people not to notice others’
unethical behavior when it gradually occurs in small
increments.
• Overcoming values – the act of letting questionable
behaviors pass if the outcome is good. This can occur
when managers put more emphasis on results rather
than on HOW the results are achieved.
© 2018 Cengage
37
Moral Decisions, Managers,
and Organizations
• The goal of managers should be to create
moral decisions, moral managers, and
ultimately, moral organizations, while
recognizing that what we frequently
observe in business is the achievement of
moral standing at only one of these levels.
• The ideal is to create a moral organization
that is fully populated by moral managers,
making moral decisions (and practices,
policies, and behaviors), but this is seldom
achieved.
© 2018 Cengage
38
© 2018 Cengage
39
Key Terms (1 of 2)
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Aretaic theories
Behavioral ethics
Bounded ethicality
Categorical imperative
Codes of conduct
Codes of ethics
Test of common sense
Compensatory justice
Competing rights
Compliance officer
Compliance orientation
Conflict of interest
Conformity bias
Core ethical values
Corporate
transparency
Deontological theories
Distributive justice
Ethical due process
Ethic of reciprocity
© 2018 Cengage
• Ethical leadership
• Ethical tests
• Ethics and compliance
officer
• Ethics audits
• Ethics of care
• Ethics officer
• Ethics orientation
• Ethics programs
• Ethics screen
• Formal ethics program
• Framing
• Fraud risk assessments
• Golden Rule
• Ill-conceived goals
• Incrementalism
• Indirect blindness
• Legal rights
40
Key Terms (2 of 2)
•
•
•
•
•
•
•
•
•
•
•
•
•
Moral rights
Moral tone
Motivated blindness
Moral equilibrium
Negative right
Opacity
Overcoming values
Overconfidence bias
Positive right
Principle of caring
Principle of justice
Principle of rights
Principle of
utilitarianism
• Procedural justice
• Process fairness
• Rights
© 2018 Cengage
•
•
•
•
•
•
•
•
•
•
Role morality
Self-serving bias
Servant leadership
Slippery slope
“Smell” test
Sustainability audit
Teleological theories
Transparency
Utilitarianism
Virtue ethics
41
Business & Society
Ethics, Sustainability & Stakeholder
Management
10th Edition
© 2018 Cengage
1
Chapter 9
Business
Ethics and
Technology
© 2018 Cengage
2
Learning Outcomes (1 of 2)
1. Identify and describe what the new world of Big Data is all
about and the implications it holds for business.
2. Explain how social media have changed the world of
business and technology.
3. Discuss how surveillance is a new dimension to being a
consumer and an employee and what its implications are for
stakeholders.
4. Articulate an understanding of technology and the
technological environment.
© 2018 Cengage
3
Learning Outcomes (2 of 2)
5. Identify the characteristics of technology to include their
benefits, side effects, and challenges in business.
6. Comment on the relationship between technology and
ethics.
7. Define information technology and discuss the issues
relating to e-commerce in business.
8. Define biotechnology. Identify the ethical issues involved in
genetic engineering and genetically modified organisms
(GMOs).
© 2018 Cengage
4
Chapter Outline
• The New World of Big Data
• Technology and The Technological Environment
• Characteristics of Technology
• Technology and Ethics
• Information Technology
• Biotechnology
• Summary
• Key Terms
© 2018 Cengage
5
Business Ethics & Technology
• We live in an age dominated by advancing
technology. Each new generation
experiences technological advances that
were not seen by previous generations.
• The new generation of young people is
called the iGeneration. Technology is part
of their DNA, and they have no “offswitch.”
• Technology is at the core of most
businesses, but it is a two-edged sword.
• Despite many positive advances, there are
new problems and challenges.
© 2018 Cengage
6
The New World of Big Data (1 of 2)
Big Data –
•
the tons of information that are out there and
how businesses are striving to put it to work.
•
More information from more sources than
ever before.
•
Businesses can access it as quickly as it’s
generated.
•
Advantages of Big Data accompanied by new
issues: data security, privacy, cybercrime.
© 2018 Cengage
7
The New World of Big Data (2 of 2)
Social Media –
• Cutting edge of business communication based
on technology
• Has a dark side where social and ethical issues
arise.
• Unfair reviews and how they respond to them
are a constant challenge
• Places more emphasis on instantaneous rather
than accurate information
Surveillance –
• Monitor customers’ and employees’ actions
• For good, but possible abuses
© 2018 Cengage
8
Technology and
the Technological Environment
Technology •
The totality of the means employed to
provide objects necessary for human
sustenance and comfort.
•
A scientific method used to achieve a practical
purpose.
Technological environment •
The total set of technology-based
advancements or progress taking place in
society.
© 2018 Cengage
9
Characteristics of Technology
Benefits of Technology • Increased production of goods and
services
• Reduced amount of labor needed to
produce goods and services
• Made labor easier and safer
• Results in a higher standard of living
© 2018 Cengage
10
Costs of Technology Technology has some unanticipated
side effects:
• Environmental pollution
• Depletion of natural resources
• Technological unemployment
• Creation of unsatisfying jobs
© 2018 Cengage
11
Challenges of Technology • Data amnesia – forgetfulness from
outsourcing from brains to digital devices.
• Google Effect – knowing that information
is easily accessible on the Internet, we are
less likely to remember it.
• Communications technology affects our
brains, nervous systems, social abilities,
relationships, mental health, physical
health, and family structures.
© 2018 Cengage
12
Technology and Ethics
• Our perspective is to raise ethical
questions that may be related to business
development, and the use of technology.
Two Key Issues • Technological determinism •
The idea that what can be developed will be
developed.
• Ethical lag •
Occurs when the speed of technological
change far exceeds that of ethical
development.
© 2018 Cengage
13
Information Technology
© 2018 Cengage
14
E-Commerce as a Pervasive Technology
Electronic Commerce • Also called e-commerce, e-business, or Web-based
marketing.
• The Internet has reshaped the way business is
conducted.
Online Scams – con artists are using the Internet to scam
the unwary; including fake check scams, free gifts,
phishing, Nigerian money offers, credit card fraud, travel
scams, pyramid schemes, and investment opportunities.
Ongoing Issues in E-Commerce Ethics • Access
• Intellectual property
• Privacy and informed consent
• Protection of children
• Security of information
• Trust
© 2018 Cengage
15
Invasion of Consumer Privacy
via E-Commerce
Cookies –
• Identification tags that websites drop on
our personal-computer hard drives so they
can recognize repeat visitors the next time
we visit their Web sites.
Spam • Unsolicited commercial e-mail. It is sent
through “open-relays” to millions of
persons.
Identity Theft • Tampering with one’s financial accounts.
© 2018 Cengage
16
© 2018 Cengage
17
Government’s Involvement in Consumer
Privacy Protection
Government is involved in consumer privacy, many
think it is not doing enough.
In 2012 the White House issued a proposed a
Consumer Privacy Bill of Rights though it has not
been adopted into law.
1.
Individual Control
2.
Transparency
3.
Respect for Context
4.
Security
5.
Access and Accuracy
6.
Focused Collection
7.
Accountability
A proposed Consumer Privacy Protection Act of 2015 was still in
committee.
© 2018 Cengage
18
Business Initiatives
with Consumer Privacy Protection
Ethical leadership
Privacy policies
Chief privacy officers
Data security
© 2018 Cengage
19
Questionable Businesses and Practices
Made possible by electronic commerce and the use of the
Internet.
Three business categories viewed as questionable:
• Web-based pornography
• Internet gambling
• Web-based downloading of music, movies, books, and
other copyrighted digital material
Illegal Downloading – represents theft of intellectual
property
Monitoring Technology – raises questions when
companies use technology to monitor consumers as they
use a company’s products.
© 2018 Cengage
20
The Workplace and Computer Technology (1 of 2)
•
•
•
•
Biometrics – the use of body measurements, like
eye scans, fingerprints, or palm prints for
determining and confirming identity
Robotics – use of industrial robots could double by
2018. People worry they will lose their jobs to
robotics technology.
Artificial Intelligence – embraces software
technologies that make a computer or robot
perform equal to or better than normal human
ability in accuracy, capacity, and speed.
Cell Phones and Texting – use of company phones,
or using phones for business while driving is a
business ethics topic.
© 2018 Cengage
21
The Workplace and Computer Technology (2 of 2)
•
Unethical Actions by Employees
•
•
•
•
•
•
•
•
Created a potentially dangerous situation by using new
technology while driving
Wrongly blamed an error the employee made on a
technological glitch
Copied the company’s software for home use
Used office equipment to shop on the Internet for
personal reasons
Used office equipment to network/search for another
job
Accessed private computer files without permission
Used new technologies to intrude on coworkers’
privacy
Visited porn websites using office equipment
• Company Actions – management should clearly define
guidelines for ethical computer use by employees.
© 2018 Cengage
22
Ten Commandments
of Computer Ethics
© 2018 Cengage
23
Biotechnology
Biotechnology •
Involves using biology to discover, develop,
manufacture, market, and sell products and
services. Biotechnology is striving to heal,
fuel, and feed the world.
Bioethics •
A field that deals with the ethical issues
embedded in the commercial use of
biotechnology.
•
Proceduralism is the primary tool for
bioethicists. It is using protocols to ensure
that classical safeguards are not violated.
© 2018 Cengage
24
Realms of Biotechnology
Genetic Engineering
Genetically
Modified Foods
© 2018 Cengage
25
Genetic Engineering
Stem cell research
Cloning
Cloning Animals for Food
Genetic testing and profiling
© 2018 Cengage
26
Genetically Modified Organisms
(GMOs)
• Also referred to as genetically engineered
organisms (GEOs)
• Fear over health and environmental
effects; critics call them “Frankenfoods.”
• Many U.S. crops are genetically modified:
•
•
•
•
Sugar beets (95%)
Soybeans (91%)
Cotton (88%)
Corn (85%)
• Most Americans consume genetically
modified organisms every day.
© 2018 Cengage
27
Labeling of GMOs • Safety of GMOs is not in question,
according to scientific research.
• But one of the most frequently discussed
issues with GMOs is labeling.
• FDA does not mandate GMO labeling in
the U.S.
• The Non-GMO Project believes that people
have the right to make informed choices
about whether they consume GMO
products.
© 2018 Cengage
28
Key Terms
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Artificial intelligence
Big Data
bioethics
biometrics
Biotechnology
botnets
botnet scam
chief privacy officer
cloning
Cookies
Digital amnesia
electronic commerce
embryonic stems cells
ethical lag
genetic engineering
genetic profiling
© 2018 Cengage
• genetic testing
• genetically modified
foods (GMFs)
• Genetically modified
organisms (GMOs)
• Google effect
• Information technology
• identity theft
• online scams
• phishing
• Spam
• technoethics
• technological
determinism
• technological
environment
• technology
• therapeutic cloning
29
Business & Society
Ethics, Sustainability & Stakeholder
Management
10th Edition
© 2018 Cengage
1
Chapter 10
Ethical Issues in
the Global
Arena
© 2018 Cengage
2
Learning Outcomes
1. Describe the ethical and social challenges faced by
multinational corporations (MNCs) operating in the
global environment.
2. Summarize the key implications for managers of the
following ethical issues: infant formula controversy,
Bhopal tragedy, factory collapses, sweatshops, and
human rights abuses.
3. Define corruption, differentiate between bribes and
grease payments, and outline the major features of the
Foreign Corrupt Practices Act.
4. Identify and discuss strategies companies may employ for
improving global business ethics.
© 2018 Cengage
3
Chapter Outline
• Business Challenges in a Global Environment
• Ethical Issues in the Global Business Environment
• Improving Global Business Ethics
• Summary
• Key Terms
© 2018 Cengage
4
Ethical Issues in the
Global Business Environment
• The growth of global business as a critical
element in the world economy is one of
the most important developments of the
past half century.
• Characterized by a rapid growth of foreign
direct investment in developing nations
like China, India, and Russia.
• In less-developed countries (LDCs),
because there are no government
regulations, the temptation is to lower or
reject standards.
• The expanded marketplace has been called
the transnational economy.
© 2018 Cengage
5
Business Challenges in a Global
Environment
• A multinational corporation (MNC) or
multinational enterprise (MNE) seeks to
be accepted into an unfamiliar society.
Two major challenges:
1. Achieving corporate legitimacy in an
unfamiliar society.
2. Differing philosophies between MNCs
and host countries.
© 2018 Cengage
6
The Dilemma of the Multinational
Corporation
© 2018 Cengage
7
Ethical Issues
in the Global Business Environment
Product safety
Plant safety
Advertising practices
Human resource management
Human rights
Environmental problems
Business practices
© 2018 Cengage
8
Questionable Marketing
and Plant Safety Practices
The Infant Formula Controversy–
•
•
Nestle mass-marketed infant formula to poor
mothers in tropical LDCs, knowing the health
risks.
As a result, there was a dramatic increase in
infant malnourishment and sickness.
Plant Safety and the Bhopal Tragedy–
•
Union Carbide’s plant safety practices led to the
“worst industrial accident in history,” killing more
than 2,000 people, and injuring 200,000 others.
The lack of regulation in LDCs is a temptation to lower
or reject standards used in the firm’s home country.
© 2018 Cengage
9
•
•
Human Rights, Sweatshops, and
Labor Abuses (1 of 3)
MNCs’ use of women and children to cheaply staff
factories.
Many major corporations and many countries have
been involved.
Sweatshops •
Characterized by child labor, low pay, poor working
conditions, worker exploitation, and health and
safety violations.
•
Increased scrutiny of sweatshop practices in recent
years.
Fair Labor Association (FLA) – mission “to
combine the efforts of business, civil society organizations,
and colleges and universities to promote and protect
workers’ rights and to improve working conditions globally
through adherence to international standards.”
© 2018 Cengage
10
Sweatshops,
Human Rights, and Labor Abuses (2 of 3)
Social Accountability 8000 (SA8000) –
An effort to improve sweatshop conditions created
by Social Accountability International (SAI):
1. Child Labor
2. Forced Labor
3. Health and Safety
4. Freedom of Association & Collective Bargaining
5. Discrimination
6. Discipline
7. Working Hours
8. Remuneration
9. Management Systems
© 2018 Cengage
11
Sweatshops,
Human Rights, and Labor Abuses (3 of 3)
Individual Company Initiatives
• Many businesses have developed global
outsourcing guidelines
• Despite best efforts, suppliers have
learned how to conceal abuses
•
•
•
Keeping double books
Tutoring managers and employees on what to
say when questioned about hours, pay, and
safety practices
Hidden production – secretly shifting work to
subcontractors that violate pay and safety
standards
© 2018 Cengage
12
Alien Tort Claims Act
and Human Rights Violations
Alien Tort Claims Act (ATCA) •
Efforts to sue transnational companies for
violations of international law in countries
outside the U.S.
•
Efforts by foreign individuals to sue U.S. firms
in U.S. courts for the actions of their
companies abroad.
• In 2013, the U.S. Supreme Court held that the
law cannot be applied to actions that take
place overseas, but only to actions which take
place in the United States.
© 2018 Cengage
13
Corruption, Bribery,
and Questionable Payments
Corruption – attempts to influence the
outcomes of decisions wherein the nature
and extent of the influence are not made
public.
Bribery – the practice of offering something
(usually money) in order to gain an illicit
advantage.
Questionable payments – those not easily
categorized; they may be “grease” payments
(allowed), or bribes (not permitted)
© 2018 Cengage
14
Corruption
Instances of corruption • Bribery of government officials
• Giving of questionable political
contributions
• Misuse of company assets for political
favors
• Kickbacks and protection money for police
• Free junkets for government officials
• Secret price-fixing agreements
• Insider dealing, and more
© 2018 Cengage
15
Arguments For and Against Bribery
For Bribery
Against Bribery
Necessary for profits
Wrong and illegal in most
developed nations
Common practice
Compromises personal beliefs
Accepted practice
Managers should not deal with
corrupt governments
Form of commission, tax, or
compensation
Once started, it never stops
One should take a stand for
honesty, morality, and ethics
Creates a dependence on
corruption
Deceives stockholders and
costs customers
© 2018 Cengage
16
Bribes or Grease Payments?
Grease Payments •
Relatively small sums of money given to minor
officials for the purpose of getting them to:
•
Do what they are supposed to be doing
•
Do what they are supposed to be doing faster
•
Do what they are supposed to be doing
better
Bribes •
•
Relatively large amounts of money given for the
purpose of influencing officials to make decisions
or take actions that they otherwise might not.
Money given, often to high-ranking officials, to
get them to purchase goods or services.
© 2018 Cengage
17
Initiatives Against Bribery
Foreign Corrupt Practices Act
Transparency International
Corruption Perception Index
Bribe Payers Index
OECD Antibribery Initiatives
UN Convention Against Corruption
Individual Country Initiatives
© 2018 Cengage
18
Improving Global Business Ethics
• Business ethics is much more complex at
the global level than at the domestic level.
• Complexity arises from the fact that a
wide variety of value systems,
stakeholders, cultures, forms of
government and socio-economic
conditions and standards of ethical
behavior exist throughout the world.
• Because the U.S. and European MNCs
have played such a leadership role, these
firms have a heavy responsibility.
© 2018 Cengage
19
Balancing & Reconciling the Ethics
Traditions of Home & Host Countries
The Challenge
of the Multinational Corporation
Home Country
Ethical Standards
© 2018 Cengage
OR
Host Country
Ethical Standards
20
Ethical Choices in
Home vs. Host Country Situations
© 2018 Cengage
21
Strategies for
Improving Global Business Ethics
Four major strategies that could help
MNCs conduct global business while
maintaining ethics:
1. Create global codes of conduct.
2. Link ethics with global strategy.
3. Suspension of business activities in certain
countries.
4. Create ethical impact statements and
audits.
© 2018 Cengage
22
Corporate Action
Against Corruption
Five vital steps for an anticorruption program:
1. High-level commitment by top management
2. Detailed statements of policies and
operating procedures
3. Training and discussion of policies and
procedures
4. Hotlines and help lines for all organizational
members
5. Investigative follow-up, reporting, and
disclosure
© 2018 Cengage
23
Key Terms (1 of 2)
• Alien Tort Claims
Act (ATCA)
• Anticorruption
movement
• Bhopal tragedy
• Bribe Payers’ Index
(BPI)
• Bribery
• Caux Round Table
Principles
• Corruption
• Corruption
Perception Index
(CPI)
• Cultural relativism
© 2018 Cengage
• Ethical impact
statements
• Ethical imperialism
• Ethical Supply
Chains
• Fair Labor
Association (FLA)
• Foreign Corrupt
Practices Act (FCPA)
• GBS Codex
• globalization
• Grease payments
• Hypernorms
• Infant formula
controversy
24
Key Terms (2 of 2)
• Internationalization
• Institutional void
• ISO 26000 – Social
Responsibility
• ISO 37001 – AntiBribery
Management
Systems
• Moral minimums
• Multinational
corporations
(MNCs)
• Multination
enterprises (MNEs)
© 2018 Cengage
• Social
Accountability
International (SAI)
• Sweatshops
• Transnational
economy
• Transparency
International (TI)
• UN Convention
Against Corruption
(UNCAC)
• UN Global Compact
25
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