Ethics, Corporate Responsibility,

and Sustainability

Chapter Five

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Learning Objectives

LO1 Describe how different ethical perspectives guide decision making

LO2 Explain how companies influence their ethics environment

LO3 Outline a process for making ethical decisionsLO4 Summarize the important issues surrounding corporate

social responsibilityLO5 Discuss reasons for businesses’ growing interest in the

natural environmentLO6 Identify actions managers can take to manage with the

environment in mind

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Ethics

Ethics The system of rules

that governs the ordering of values

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It’s a Personal Issue

If the employer pays for the computer and the time you spend sitting in front of it, is it ethical for you to use the computer to do tasks unrelated to your work?

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Ethics

Ethical issue Situation, problem, or opportunity in which an

individual must choose among several actions that must be evaluated as morally right or wrong

Business ethics The moral principles and standards that guide

behavior in the world of business.

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Caux Principles

Kyosei living and working

together for the common good, allowing cooperation and mutual prosperity to coexist with healthy and fair competition

Human dignity concerns the value of

each person as an end, not a means to the fulfillment of others’ purposes

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Ethical Systems

Egoism An ethical system defining acceptable behavior

as that which maximizes consequences for the individual

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Ethical Systems

Kohlberg’s model of cognitive moral development Perspective that what is moral comes from what

a mature person with “good” moral character would deem right.

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Business Ethics

Ethical climate In an organization,

the processes by which decisions are evaluated and made on the basis of right and wrong

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Danger Signs

1. Excessive emphasis on short-term revenues over longer-term considerations.

2. Failure to establish a written code of ethics.3. A desire for simple, “quick fix” solutions to

ethical problems.4. An unwillingness to take an ethical stand that

may impose financial costs.

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Danger Signs (cont.)

5. Consideration of ethics solely as a legal issue or a public relations tool

6. Lack of clear procedures for handling ethical problems.

7. Responding to the demands of shareholders at the expense of other constituencies

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A Process for Ethical Decision Making

Figure 5.1

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Corporate Social Responsibility

Economic responsibilities To produce goods and services that society wants

at a price that perpetuates the business and satisfies its obligations to investors.

Legal responsibilities To obey local, state, federal, and relevant

international laws

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Corporate Social Responsibility

Ethical responsibilities Meeting other social expectations, not written as

law.

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Ecocentric Management

Ecocentric management Goal is the creation of sustainable economic

development and improvement of quality of life worldwide for all organizational stakeholders.