Chapter 6 – Business Ethics & Social Responsibility

Dignity & Professionalismin the Workplace

Chapter 6--Ethics &Social Responsibility

Business Ethics vs. Old-Fashioned Greed and Arrogance:• Adelphia—Misuse of corporate funds• Arthur Andersen—Auditing irregularities• Enron—Off-books partnerships to hide debts and

losses• Global Crossing—Deceptive accounting• Merrill Lynch—Stock fraud• Tyco—Misuse of corporate funds• WorldCom—Hiding billions in expenses• Xerox—Misstating revenues• Martha Stuart—Insider trading

Law and Ethics

Many times law andethics are in conflict.

Law Ethics

Let’sDiscussLet’s

Discuss

EthicsEthics

Ideally speaking ethics is the first mechanism Ideally speaking ethics is the first mechanism which would control business conduct. However, which would control business conduct. However, often in the workplace it does not control but is often in the workplace it does not control but is controlled. Law should be regard as a last resort controlled. Law should be regard as a last resort after the market and self-regulation (ethics) have after the market and self-regulation (ethics) have demonstrably failed.demonstrably failed.

Achieving An EthicalBusiness Corporation

The Obstacles The emphasis on profit The effect of the group

Steps to Take Involvement of top management Openness in Communication

Theories of EthicsTheories of Ethics Ethical fundamentalismEthical fundamentalism—People look to an —People look to an

outside source or central figure for ethical guidelinesoutside source or central figure for ethical guidelines UtilitarianismUtilitarianism—People choose the alternative that —People choose the alternative that

would provide the greatest good to societywould provide the greatest good to society Kantian ethicsKantian ethics—A set of universal rules based on —A set of universal rules based on

reasoning establishes ethical dutiesreasoning establishes ethical duties Rawls’s social justice theoryRawls’s social justice theory—Moral duties are —Moral duties are

based on an implied social contractbased on an implied social contract Ethical relativismEthical relativism—Individuals decide what is —Individuals decide what is

ethical based on their own feelings about right and ethical based on their own feelings about right and wrongwrong

Formalism---Formalism---Ethics measured by the “rightness” Ethics measured by the “rightness” of rules. The moral person is a person of good of rules. The moral person is a person of good will and ethical decisions are based on what is will and ethical decisions are based on what is right, not on the consequences of those right, not on the consequences of those decisions.decisions.

Utilitarianism & FormalismUtilitarianism & Formalism

Utilitarianism: Utilitarianism: A brand of teleology in A brand of teleology in which the greatest good for the greatest which the greatest good for the greatest number is the goalnumber is the goal..

Formalism: Formalism: Ethics measured by the Ethics measured by the “rightness” of rules. The moral person is a “rightness” of rules. The moral person is a person of good will and ethical decisions are person of good will and ethical decisions are based on what is right, not on the based on what is right, not on the consequences of those decisions.consequences of those decisions.

Corporate Codes

• Corporate codes of conduct are common tools for organizations committed to ethical behavior. These codes are an attempt to set the base level for ethics in the organization.

Code of business conduct are attempts to….

Let’s Not Forget----- Social Responsibility costs money &

there is always a debate as to who has a right to spend this money--the officers/directors or the stockholders…...

Critics of Social Responsibility--

“It’s the duty of the directors & officers to mind the store---

not to give it away…”

Politics

Often, companies participate in lobbying

This is a form of “Freedom of Speech” but can, and is regulated. It is not absolute. Often businesses can influence the election results indirectly by the amount of campaign contributions they give. This is very much a social issue. Should business “stay out” of politics completely?

JUDGE JUDY READY TO RULE----

Case: Florida League of Prof. Lobbyists v. Meggs----State law preventing lobbyists from being paid on a contingencybasis is challenged as a violation of Free Speech…....

Don’t utter a word...

There is no “Free Speech”

in my courtroom….period!

Choice of Forum Clause