Chapter 1
An Overview of Business
Ethics
Why differentiate between
rules/policies/law & ethics?
the difference between an ordinary decision & an
ethical one is the point where rules no longer
serve
values & judgement play a key role in ethics
decisions
employees need a “buffer zone” of
expected ethical behavior
Business ethics...
comprises principles & standards that guide
behavior in the world of business
whether a specific behavior is ethical or
unethical is often determined by stakeholders
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investors
customers
the community
employees
the legal system
Ethics & social responsibility
have distinct meanings...
social responsibility is the obligation a
business assumes to maximize its positive
effect while minimizing its negative effect on
society
social responsibility consists of the following
responsibilities:
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economic (satisfy investors)
legal (obey the law)
ethical (expected activities & behaviors)
philanthropic (desired activities & behaviors)
Before 1960: Ethics in Business...
theological discussions of ethics emerged
– Catholic social ethics included a concern for
morality in business, workers’ rights & living wages
– Protestants developed ethics courses in their
seminaries & schools of theology (also, the
Protestant work ethic encouraged frugality & hard
work)
The 1960s: The Rise of Social Issues
in Business...
societal social consciousness emerged
– as well as an anti-business sentiment
JFK’s Consumer Bill of Rights ushered in a new
era of consumerism
– right to safety, to be informed, to choose & to be
heard
consumer protection groups fought for
consumer protection legislation
– Ralph Nader
The 1970s: Business Ethics as an
Emerging Field...
business professors began to write about social
responsibility
philosophers became involved in business ethics
business became more concerned with their public
image & addressed ethics more directly
conferences were held & centers developed
issues: bribery, deceptive advertising, price
collusion, product safety, & environmental
The 1980s: Consolidation
membership in business ethics
organizations increased
ethics centers provided:
– publications, course, conferences & seminars
firms established ethics committees
the Defense Industry Initiatives emerged &
became the foundation for the Federal
Sentencing Guidelines for Organizations
The 1990s: Institutionalization of
Business Ethics...
the Federal Sentencing Guidelines for
Organizations set the tone for ethical
compliance
took preventative actions against
misconduct, a company could avoid or
minimize the potential penalties
The Federal Sentencing
Guidelines for Organizations...
standards & procedures capable of detecting &
preventing misconduct
high level oversight
care in delegation of authority
effective communication (training)
systems to monitor, audit &
report misconduct
consistent enforcement
continuous improvement
2000 and Beyond...
a move from legally based ethics initiatives
to culturally or integrity based programs
realization that business ethics programs are
good for business
businesses are working more closely
together, globally, to establish standards of
acceptable behavior
Why study business ethics?
reports of unethical behavior are on the rise
society’s evaluation of right or wrong affects
its ability to achieve its business goals
FSGO & stakeholder demands for ethics
initiatives
individual ethics is not enough
helps identify ethical issues