Copyright © 2003 by South-Western. All Rights Reserved. CHAPTER TWO ACHIEVING BUSINESS SUCCESS BY DEMONSTRATING ETHICAL BEHAVIOR AND SOCIAL RESPONSIBILITY

Copyright © 2003 by South-Western. All Rights Reserved.

CHAPTER TWOCHAPTER TWO

ACHIEVING BUSINESS SUCCESS BY ACHIEVING BUSINESS SUCCESS BY DEMONSTRATING ETHICAL DEMONSTRATING ETHICAL

BEHAVIOR AND SOCIAL BEHAVIOR AND SOCIAL RESPONSIBILITY RESPONSIBILITY

Text by Profs. Gene Boone & David KurtzText by Profs. Gene Boone & David KurtzMultimedia Presentation byMultimedia Presentation byProf. Milton PressleyProf. Milton PressleyThe University of New OrleansThe University of New Orleans

[email protected]@uno.edu


• Explain the concepts of business ethics and Explain the concepts of business ethics and social responsibilitysocial responsibility

• Describe the factors that influence business Describe the factors that influence business ethicsethics

• List the stages in the development of ethical List the stages in the development of ethical standardsstandards

• Identify common ethical dilemmas in the Identify common ethical dilemmas in the workplaceworkplace

• Discuss how organizations shape ethical Discuss how organizations shape ethical behaviorbehavior

LEARNING GOALSLEARNING GOALSLEARNING GOALSLEARNING GOALS


• Relate the ways government regulation Relate the ways government regulation affects business ethics and social affects business ethics and social responsibilityresponsibility

• Describe how businesses’ social Describe how businesses’ social responsibility is measuredresponsibility is measured

• Summarize the responsibilities of business Summarize the responsibilities of business to the general public, customers, and to the general public, customers, and employees employees

• Explain why investors and the financial Explain why investors and the financial community are concerned with business community are concerned with business ethics and social responsibilityethics and social responsibility

LEARNING GOALSLEARNING GOALSLEARNING GOALSLEARNING GOALS


CONCERN FOR ETHICAL AND CONCERN FOR ETHICAL AND SOCIETAL ISSUESSOCIETAL ISSUESCONCERN FOR ETHICAL AND CONCERN FOR ETHICAL AND SOCIETAL ISSUESSOCIETAL ISSUES• Business ethics:Business ethics: standards standards

of business conduct and of business conduct and moral valuesmoral values


Figure 2.1: Forces Shaping Business Ethics and Social Responsibility


INDIVIDUAL BUSINESS ETHICSINDIVIDUAL BUSINESS ETHICSINDIVIDUAL BUSINESS ETHICSINDIVIDUAL BUSINESS ETHICS

• Development of Development of Individual EthicsIndividual Ethics

Figure 2.2: Stages of Moral and Ethical Development


Figure 2.3: Common Business Ethical Challenges

On-the-Job Ethical DilemmasOn-the-Job Ethical DilemmasOn-the-Job Ethical DilemmasOn-the-Job Ethical Dilemmas



• Conflict of interest: Conflict of interest: situation in situation in which a business decision may be which a business decision may be influenced by the potential for influenced by the potential for personal gainpersonal gain

• Honesty and IntegrityHonesty and Integrity• HonestHonest employee tells the truth employee tells the truth• Employee with Employee with integrityintegrity adheres to adheres to

deeply felt ethical principals in deeply felt ethical principals in business situationsbusiness situations

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• Loyalty Versus TruthLoyalty Versus Truth• Unfavorable Truth can cause ethical Unfavorable Truth can cause ethical

conflictconflict• If so, employees may have to decide If so, employees may have to decide

between loyalty and truthfulnessbetween loyalty and truthfulness

• Whistle-Blowing:Whistle-Blowing: employee’s employee’s disclosure to the media or disclosure to the media or government authorities of illegal, government authorities of illegal, immoral, or unethical practices of immoral, or unethical practices of the organizationthe organization


HOW ORGANIZATIONS SHAPE HOW ORGANIZATIONS SHAPE ETHICAL CONDUCTETHICAL CONDUCTHOW ORGANIZATIONS SHAPE HOW ORGANIZATIONS SHAPE ETHICAL CONDUCTETHICAL CONDUCT

Figure 2.4: Structure of an Ethical Environment



• Ethical AwarenessEthical Awareness• Code of Conduct: Code of Conduct: formal statement formal statement

that defines how the organization that defines how the organization expects and requires employees to expects and requires employees to resolve ethical questionsresolve ethical questions

• Ethical ReasoningEthical Reasoning• Sorting through several options to Sorting through several options to

arrive at suitable decisionarrive at suitable decision

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• Ethical ActionEthical Action• Providing structures and Providing structures and

approaches that allow decisions to approaches that allow decisions to be turned into ethical actionsbe turned into ethical actions

• Ethical LeadershipEthical Leadership• Ethical behavior demonstrated by Ethical behavior demonstrated by

executives – especially in extreme executives – especially in extreme or emergency situationsor emergency situations

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CONTROLLING BUSINESS CONTROLLING BUSINESS BEHAVIOR THROUGH BEHAVIOR THROUGH GOVERNMENT REGULATIONGOVERNMENT REGULATION

CONTROLLING BUSINESS CONTROLLING BUSINESS BEHAVIOR THROUGH BEHAVIOR THROUGH GOVERNMENT REGULATIONGOVERNMENT REGULATION

• Not all companies voluntarily Not all companies voluntarily behave ethically and responsiblybehave ethically and responsibly

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• Regulated industry: Industry in which competition is either limited or eliminated, and government monitoring substitutes for market control

Regulation of Competition

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CONTROLLING BUSINESS BEHAVIOR CONTROLLING BUSINESS BEHAVIOR THROUGH GOVERNMENT REGULATIONTHROUGH GOVERNMENT REGULATIONCONTROLLING BUSINESS BEHAVIOR CONTROLLING BUSINESS BEHAVIOR THROUGH GOVERNMENT REGULATIONTHROUGH GOVERNMENT REGULATION


• Many laws enacted during past 40 years

• Federal and states regulate businesses and practices


ConsumerProtection

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• Deregulation: regulatory trend toward elimination of legal restraints on competition

• Has created considerable controversy

• Latest industry undergoing deregulation is the electric utility industry


ConsumerProtection

Deregulation

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• Internet remains a frontier for regulation

• Regulation of Web-based business is difficult since the Internet is a borderless market

• Regulation will require global cooperation

• Children’s On-line Privacy Protection Act attempts to protect the privacy of children


ConsumerProtection

Deregulation

Government Regulationof Cyberspace

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ACTING RESPONSIBLY TO ACTING RESPONSIBLY TO SATISFY SOCIETYSATISFY SOCIETYACTING RESPONSIBLY TO ACTING RESPONSIBLY TO SATISFY SOCIETYSATISFY SOCIETY• Social Responsibility:Social Responsibility:

management’s acceptance of the management’s acceptance of the obligation to consider profit, obligation to consider profit, consumer satisfaction, and societal consumer satisfaction, and societal well-being of equal value in well-being of equal value in evaluating the firm’s performanceevaluating the firm’s performance

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Figure 2.5Figure 2.5Anheuser-Busch: Anheuser-Busch: Encouraging Encouraging Responsible Sales of Responsible Sales of Alcoholic BeveragesAlcoholic Beverages

Figure 2.5Figure 2.5Anheuser-Busch: Anheuser-Busch: Encouraging Encouraging Responsible Sales of Responsible Sales of Alcoholic BeveragesAlcoholic Beverages


ACTING RESPONSIBLY TO ACTING RESPONSIBLY TO SATISFY SOCIETYSATISFY SOCIETYACTING RESPONSIBLY TO ACTING RESPONSIBLY TO SATISFY SOCIETYSATISFY SOCIETY• Social Audits:Social Audits: formal formal

procedures that identify and procedures that identify and evaluate all company evaluate all company activities relate to social activities relate to social issues such as conservation, issues such as conservation, employment practices, employment practices, environmental protection, environmental protection, and philanthropyand philanthropy

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ACTING RESPONSIBLY TO ACTING RESPONSIBLY TO SATISFY SOCIETYSATISFY SOCIETYACTING RESPONSIBLY TO ACTING RESPONSIBLY TO SATISFY SOCIETYSATISFY SOCIETY

Figure 2.6 Responsibilities of Business



Responsibilities tothe General Public


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• Corporate Corporate philanthropy: philanthropy: corporate support of corporate support of charitable and social charitable and social causes and causes and organizations that work organizations that work toward the greater toward the greater public goodpublic good• Corporations giving Corporations giving

back to the communities back to the communities in which they earn in which they earn profitsprofits


Figure 2.7Business Responsibilities to the General Public


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• Public Health IssuesPublic Health Issues• One of the most One of the most

complex issues complex issues facing businessfacing business

• What should What should businesses do about businesses do about products that are products that are inherently dangerous inherently dangerous • TobaccoTobacco• AlcoholAlcohol• HandgunsHandguns



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• Protecting the Protecting the EnvironmentEnvironment• Minimizing pollution Minimizing pollution

and other environmental and other environmental damage is an important damage is an important economic, legal, and economic, legal, and social issuesocial issue

• Recycling: Recycling: reprocessing of used reprocessing of used materials for reusematerials for reuse



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Figure 2.8 FTC Guidelines for Environmental Claims in Green Marketing



• Developing the Quality Developing the Quality of the Workforce: of the Workforce: • Country’s true wealth Country’s true wealth

lies in its peoplelies in its people• Educated, skilled Educated, skilled

workforce provides the workforce provides the intellectual know-how intellectual know-how required to compete required to compete globallyglobally

• U.S. firms must assume U.S. firms must assume more responsibility for more responsibility for enhancing workforce enhancing workforce qualityquality



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Figure 2.9Figure 2.9Wemedia.com and Wemedia.com and HotJobs.com: HotJobs.com: Partnering to Partnering to Encourage Hiring Encourage Hiring People with People with DisabilitiesDisabilities

Figure 2.9Figure 2.9Wemedia.com and Wemedia.com and HotJobs.com: HotJobs.com: Partnering to Partnering to Encourage Hiring Encourage Hiring People with People with DisabilitiesDisabilities



• Corporate Corporate Philanthropy: Philanthropy: act of act of an organization giving an organization giving something back to the something back to the communities in which communities in which it earns profitsit earns profits



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• Business have a social Business have a social and ethical and ethical responsibility to treat responsibility to treat customers fairly and to customers fairly and to not harm themnot harm them

• Consumerism: public Consumerism: public demand that a business demand that a business consider the wants and consider the wants and needs of its customers needs of its customers in making decisionsin making decisions


Responsibilities toCustomers



Figure 2.10: Consumer Rights*

*These frequently quoted consumer rights were first stated by President John F. Kennedy in 1962



• Right to Be SafeRight to Be Safe• Consumers should feel Consumers should feel

assured that what they assured that what they purchase will not harm purchase will not harm them in normal usethem in normal use

• Right to Be InformedRight to Be Informed• Consumers should have Consumers should have

enough access to enough access to education and product education and product information to make information to make responsible buying responsible buying decisionsdecisions





Figure 2.11: Wacky Warning Labels*

*Product liability lawsuits have caused firms to become more careful about including warnings on products including a few who may have gone overboard, as demonstrated by these actual product warning labels



• The Right to ChooseThe Right to Choose• To select which goods To select which goods

and services they want and services they want and need to purchaseand need to purchase

• The Right to Be HeardThe Right to Be Heard• Should be able to Should be able to

express legitimate express legitimate complaints to complaints to appropriate partiesappropriate parties






• Responsibilities to Responsibilities to EmployeesEmployees• Workplace Safety is Workplace Safety is

much improved over much improved over the last centurythe last century

• However, much However, much remains to be doneremains to be done



Responsibilities toEmployees



Figure 2.12 Rates of Workplace Injuries and Illnesses



• Quality of Life Quality of Life IssuesIssues• Balancing work and Balancing work and

family family responsibilitiesresponsibilities

• Ensuring Equal Ensuring Equal Opportunity on the Opportunity on the JobJob• Challenges of an Challenges of an

increasingly diverse increasingly diverse workforceworkforce








• Sexual Harassment and Sexual Harassment and SexismSexism• Sexual Harassment:Sexual Harassment:

inappropriate actions of inappropriate actions of a sexual nature in the a sexual nature in the workplaceworkplace

• Sexism:Sexism: discrimination discrimination against members of against members of either sexeither sex







• Fundamental Goal of Fundamental Goal of any business is to make any business is to make a profit a profit

• But,business must But,business must behave ethically as well behave ethically as well as legallyas legally




Investors & the Financial Community

Investors & the Financial Community © PhotoDisc


WHAT’S AHEADWHAT’S AHEADWHAT’S AHEADWHAT’S AHEAD

• Discussion of the broad Discussion of the broad economic issues influencing economic issues influencing businesses around the globe businesses around the globe that pose both challenges and that pose both challenges and opportunitiesopportunities• Supply and demandSupply and demand• UnemploymentUnemployment• InflationInflation• Government monetary policiesGovernment monetary policies

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Copyright © 2003 by South-Western. All Rights Reserved. CHAPTER TWO ACHIEVING BUSINESS SUCCESS BY DEMONSTRATING ETHICAL BEHAVIOR AND SOCIAL RESPONSIBILITY