Business Ethices Ch#1

Copyright © 2003 by South-Western, a division of

Thomson Learning 1

Chapter One

Business Ethics, The Changing

Environment, And Stakeholder Management

Copyright © 2003 by South-Western, a division of Thomson Learning 2

Chapter Topics1. Business ethics and the changing

environment2. What is business ethics? Why does it

matter?3. Levels of business ethics4. Five myths about business ethics5. Why use ethical reasoning in business?6. Can business ethics be taught and

trained?


Business Ethics and the Changing Environment Businesses & governments operate in changing

technological, legal, economic, social & political environments with competing stakeholders & power claims.

Stakeholders are individuals, companies, groups & nations that cause and respond to external issues, opportunities, and threats.

The rate of change and uncertainty in which stakeholders & society must make & manage business & moral decisions have accelerated due to the impact of:

Internet and information technologies Globalization Deregulation Mergers Wars


Environmental Forces and Stakeholders

Local, national, and international environments are increasingly moving toward and into a global system of dynamically interrelated interactions among local, national, and regional politics, economies, regulations, technologies, demographics, and international law.

Economic environment Technological Political Governmental and regulatory Legal Demographic


Stakeholder Management Approach The stakeholder management approach is a way

of understanding the effects of environmental forces and groups on specific issues that affect real-time stakeholders and their welfare.

This approach attempts to enable individuals and groups to articulate collaborative win-win strategies: based on:

Identifying and prioritizing issues, threats, or opportunities Mapping who the stakeholders are Identifying their stakes, interests, and power sources Showing who the members of coalitions are or may become Showing what each stakeholder’s ethics are and should be Developing collaborative strategies and dialogue from a

higher ground perspective to move plans and interactions to the desired closure for all parties


What is Business Ethics? Why Does It

Matter? Ethical solutions to business and organizational

problems may have more than one right alternative and sometimes, no right solution may seem available.

We can learn from case studies, role playing, and discussions about how our actions affect others in different situations.

Laura Nash has defined business ethics as “the study of how personal moral norms apply to the activities and goals of commercial enterprise,” as dealing with three basic areas of managerial decision making:

Choices about what the laws should be and whether to follow them

Choices about economic and social issues outside the domain of law

Choices about the priority of self-interest over the company’s interests


What Are Unethical Business Practices?

Surveys have identified the following recurring themes to prominent everyday ethical issues facing businesses and their stakeholders:

Managers lying to employees Office nepotism and favoritism Taking credit for other’s work Receiving/offering kickbacks Stealing from the company Firing an employee for whistle-blowing Padding expense accounts Divulging confidential information or trade

secrets Terminating employment without sufficient notice Using company property/materials for personal

use


What Are Unethical Business Practices?

The most unethical behavior, per one survey, happens in the following areas:

Government Sales Law Media Finance Medicine Banking Manufacturing


Why Does Ethics Matter In Business?

“Doing the right thing” matters to employers, employees, stakeholders, and the public.

For companies, it means saving billions of dollars each year in lawsuits, settlements, and theft

Tobacco industry Dow Corning

Costs to businesses include: Deterioration of relationships Damage to reputation Declining employee productivity,creativity,

and loyalty Ineffective information flow throughout the

organization Absenteeism


Levels of Business Ethics

Because ethical problems are not only an individual or personal matter, it is helpful to see the different levels at which issues originate and how they move to other levels.

Five levels are: Individual Organizational Association Societal International

Examination of the RU 486 story


Asking Key Questions The following questions can be asked when a

problematic decision or action is experienced or perceived before it becomes an ethical dilemma:

What are my core values and beliefs? What are the core values and beliefs of my

organization? Whose values, beliefs, and interests may be at

risk in this decision? Why? Who will be harmed or helped by my decision or

by the decision of my organization? How will my own and my organization’s core

values and beliefs be affected or changed by this decision?

How will I and my organization be affected by the decision?


Five Myths About Business Ethics

A myth is “a belief given uncritical acceptance by the members of a group, especially in support of existing or traditional practices and institutions.”

Myth 1: Ethics is a personal, individual affair, not a public or debatable matter

Myth 2: Business and ethics do not mix Myth 3: Ethics in business is relative Myth 4: Good business means good

ethics Myth 5: Information and computing are

amoral

Myth 1: Ethics is a personal, individual affair, not a public or debatable matter

This myth supported in part by Milton Friedman, a well known economist.


Myth 2: Business and ethics do not mix This myth is based on scientific,

rather than religious or ethical, principles.

This myth given by widespread consequences of compute hacking on individual, commercial and govt system that effect public welfare.


Myth 3: Ethics in business is relative

It holds that no right or wrong way of believing or acting exists.

Right and wrong are in the eyes of the beholder


Myth 4: Good business means good ethics

Myth 5: Information and computing are amoral



Why Use Ethical Reasoning In Business? Ethical reasoning is required in business

for at least three reasons: Many times laws are insufficient and do not

cover all aspects or gray areas of a problem Free-market and regulated-market

mechanisms do not effectively inform owners and managers about how to respond to complex issues and crises that have far-reaching ethical consequences

Complex moral problems require an intuitive or learned understanding and concern for fairness, justice, and due process to people, groups, and communities


Can Business Ethics Be Taught And Trained?

Ethic courses should not: Advocate a set of rules from a

single perspective Not offer only one best solution to

specific ethical problems Not promise superior or absolute

ways of thinking and behaving in situations



Ethic courses and training can do the following:

Provide people with rationales, ideas, and vocabulary

Help people make sense of their environments Provide intellectual weapons Enable employees to act as alarm systems for

company practices Enhance conscientiousness and sensitivity Enhance moral reflectiveness and strengthen

moral courage Increase people's ability to become morally

autonomous ethical dissenters Improve the firm’s moral climate



Other scholars argue that ethical training can add value to the moral environment of a firm and to relationships in the workplace by:

Finding a match between employer’s and employee’s values

Managing the push-back point Handling an unethical directive Coping with a performance system

that encourages unethical means


Stages Of Moral Development

Kohlberg’s 3 levels of moral development: Level 1: Preconventional level (self-orientation)

Stage 1: Punishment Stage 2: Reward seeking

Level 2: Conventional level (others orientation)

Stage 3: Good person Stage 4: Law and order

Level 3: Postconventional level (universal, humankind orientation)

Stage 5: Social contact Stage 6: Universal ethical principles

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Business Ethices Ch#1

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