Business Ethics & Social Responsibilitty
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Transcript of Business Ethics & Social Responsibilitty
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What is Business Ethics?
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Business Ethics
The application of general ethical concepts to the unique situations confronted in business. It asks what is right or wrong behavior in business and what principles or rules can be used as guidance in business situations.
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Two Characteristics
Tells people what they ought to do Set of principles or rules
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Why Study Ethics?
Will not make you more ethical
Help in trying to do the right thing
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What is Ethics?
Ethics and Religion Ethics and Social Responsibility
Ethics - two levels of concernindividual
organizational Soc. Responsibility - Win -Win Ethics - Don’t do things that may be in your
own self interest
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Relativism
Egoism
Utilitarianism
Deontologism
TheThe 44 ConceptsConcepts ofof
EthicsEthics
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Concepts of Ethics
Developed by moral philosophers over generations
Used to distinguish ethical from unethical behavior
Each has problems
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Relativism
There is no universal standard by which morality can be judged
What is correct for one society may be wrong for another
Ethics and morality are relative
What do you think of this?
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Relativism - Problems
There are no absolutes - murder, slavery, torture, rape OK
What is meant by a society?Sub-societies
Leads to conclusion - each person’s opinion is correct
Nothing that anyone does is morally wrong
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Egoism
One ought to act in his or her own self interest
Ethical behavior is that which promotes one’s own self interest
Does not mean should not obey laws - only do so if in self interest
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Egoism
What do you think of this concept?
Problem - Externalities associated with private actions - OK to dump toxic wastes as long as don’t get caught
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Utilitarianism
The morality of an action can be determined by its consequences
An action is ethical if it promotes the greatest good for the greatest number
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Benefits and Costs of an Action to Whomsoever They AccrueB1 + B2 + B3 + . .+Bn> C1 + C2 + C3 + . . .+Cn
Then the Action is Ethical
B1 + B2 + B3 + . .+Bn< C1 + C2 + C3 + . . .+Cn
Then the Action is Unethical
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Utilitarianism Example
Harry Truman and Decision to Drop Bomb on Japan
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What do you think of this concept? How do you quantify benefits and costs? How do you value benefits and costs? Can lead to unjust consequences Restrictions against the majority to protect a
minority is not utilitarian
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Deontologism
Derived from the Greek word for Duty Actions are not justified by their
consequences. Factors other than good outcomes determine the rightness of actions
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Utilitarianism Vs. Deontologism
Utilitarianism - The ends justify the means
Deontologism - It is the means which are important
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Catagorical Imperative
Developed by Immuel Kant “I ought never to act except in such a way
that I can also will that my maxim should become a universal law”
Are you willing to permit everyone to adopt the action?
Yes - Moral No - Immoral
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Guidance in Dealing with People
People should never be treated as a means to an end, but as ends in themselves
To treat people as ends requires respect for persons
Reject slavery Deals with murder, rape, etc How to deal with employees
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General Ethical Behavior
Builds security, friendliness, cooperation and trust in a society
These are public goods created by generally ethical behavior
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What are Characteristics of Public Goods? Not subject to exclusion - cannot exclude
people from consumption even if they do not contribute
Joint Supply - Provide for one individual, provide for all
Free Rider Problem
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Catagorical Imperative and Public Goods Security, Friendliness, Cooperation and
Trust Not Subject to Exclusion Joint Supply Free Rider Problem
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Examples
Is it Ethical to Rob Banks?
Is it Ethical to Give Everyone in this Class an A?
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What Do You Think of Deontologism? Conflicts between duties Utilitarians argue that secretly appeal to
consequences to demonstrate the rightness of actions
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Ethical Tests
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Is It Legal Test?
Quadrant II
Ethical and Illegal
Quadrant IV
Unethical and Illegal
Quadrant I
Ethical and Legal
Quadrant III
Unethical and Legal
Ethical
Unethical
LegalIllegalCorporate
Decisions
Codification
Manifestation
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Ethical Tests
1. Is It Legal?I Ethical - Legal
II Ethical - IllegalIII Unethical -
Legal IV Unethical - Illegal
I and IV Easy
II and III Difficult
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Ethical Tests
2. Benefit Cost Test Do the benefits exceed the costs
to whomsoever they accrue?
3. Categorical Imperative Are you willing to allow
everyone to practice the proposed action or do you want to be a special case?
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Ethical Tests
4. Light of Day TestWhat would be your reaction if theaction were brought out into the open
for public scrutiny?
5. Do Unto Others TestGolden Rule - If you would like others to do the same to you - passes the test
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Ethical Tests
6. Ventilation TestSeek out others views. Discuss the 5
tests with them. If others feel it is OK - passes the test
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Examples
Robbing a Bank
Driving Above the Speed Limit
Cheating on an Exam
Having Sex with an Intern
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Ethical Dilemmas in Business
Conflict of InterestHave two interests - cannot
purse one without having negative impact on other
Two Types Private Interest Conflicts with
Corporate Business Interest Conflicts with Public
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Conflict of Interest Mini Case
Personnel Director Brother - in - law out of work Lackluster performer Unemployment about to run out - will loose
house Sister asks you to recommend him for job What would you do?
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Whistleblowing
Act of disclosing wrongdoing in an organization
Like blowing a whistle to call attention to a thief
TypesInternal
External
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Can Cause Bitterness in Organization Dissent - Must speak out against others in
organization Breach of Loyalty - Perceived as one who
violates confidentiality and loyalty Accusation - Singles out specific
individuals as threats to organization or the public
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Possible Retaliation
Fired Blacklisted Transferred to undesirable locations Lifestyles, sex lives and mental stability
questioned Physical abuse and murder possible
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Failure to Reveal Wrongdoing
Severe problems for society or organization
Can be implicated as an accessory before or after the fact
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Ethics of Whistleblowing
When is it ethical to reveal wrongdoing ?
When is it ethical to remain silent?
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Whistleblowing Example
In charge of Quality Control Company makes parts for automobile
brakes Find defect in brake part Could cause failure in brakes Failure not certain May take many years to develop
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Whistleblowing Example (cont.)
Go to VP of Production, your boss He tells you to overlook defect - company
may loose too much money
What would you do?
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Challenger Disaster
Morton-Thiokol “O” rings Cold in Florida Engineers warned “O” Rings could fail NASA management made decision to
launch Space Shuttle anyway
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Cautious Approach to Whistleblowing1. Make sure situation involves an imminent
threat to society or to the business
2. Document all allegations
3. Examine internal whistleblowing first
4. Should you remain anonymous?
5. Get another job first!!!
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Bribery
A payment, usually to a public official, to induce that person to either do something improper or to influence decisions or actions
Extortion - same as bribery - recipient of payment initiates transaction
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Case
International consulting firm - designs and supervises construction of hydroelectric power generating systems
Your proposal is far superior to any othertechnically
lowest bid To get job, must deposit $250,000 in
official’s personal Swiss bank account
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Should you pay the money?
Foreign Corrupt Practices Act of 1997 Grease payment allowed Standard Practice in most foreign countries Results in lost business opportunities for US
companies American tax dollars may be used to pay
bribe
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Bluffing and Deception
Negotiating a labor contract Plant has experienced losses over past
several years - not clear why Want concessions from labor Tell labor that plant will be closed if no
concessions are made. In reality , no such plans contemplated
Is This Ethical?
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Managerial Implications
Top Management LeadershipOrganizational Culture
Realistic Goal Setting Ethics Audit Code of Ethics Ethics Committee
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Managerial Implications
Ethics Advocate Whistleblowing Mechanism Ethics Training
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Polaroid in and Out of South Africa Apartheid System 17% White 70% African Whites only could be in government,
possess firearms Enforced segregation of races Blacks relegated to “native reserves”
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Apartheid (cont.)
Blacks allowed to own 13% of land Whites - 87% Black workers paid less than Whites
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US Involvement in South Africa
320 American companies there American companies controlled
43% of petroleum market23% of auto sales
70 percent of computer business
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Polaroid
Rumors that products used in Pass Book System
Commission to South AfricaNo sales to government
Improve salaries for Blacks for local distributors and suppliers
Training program so Blacks could take better jobs
Some profits for Black education
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Success of Program
Improvements in Black salaries, advancement and benefits
Principle of same pay for same job accepted Ban on direct sales successful Ban on indirect sales not successful
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Sales to Government through Frank and Hirsch Secretly selling Polaroid products to
government Billed as shipments through drugstore in
Johannesburg Polaroid terminated its involvement in
South Africa
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Ethical Questions
What is the ethics of American companies doing business in a country with human rights abuses?
Was Polaroid responsible for the use of its products?
Are companies responsible for the use of their products?
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Ethical Questions
Was Polaroid’s presence a positive or negative influence on Blacks?
What is happening in South Africa today?