Business Ethics:
Ethical Decision Making and
Cases, Seventh Edition
O.C. Ferrell
University of New Mexico
John Fraedrich
University of Wyoming
Linda Ferrell
University of New Mexico
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Business Ethics
• Comprises principles and standards that guide behavior in the world of business
• Right or wrong, acceptable or unacceptable behavior within the organization
• Determined by you and key stakeholders
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Social Responsibility
• Obligation a business assumes toward society
• Designed to maximize the positive influence and minimize the negative
• Includes economic, legal, ethical, and philanthropic dimensions
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Why Study Business Ethics and Social Issues?
In a National Business Ethics Survey, employees perceived misconduct in these types of organizations:
• For profit 31%
• Government 38%
• Nonprofit 29%
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Business Ethics Development
Before 1960
U.S. politics:
• A living wage
• The New Deal
• The Fair Deal
Theology’s domain
Philosophy’s domain
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The 1960s
The Great Society
• Consumer’s Bill of Rights
• Ralph Nader
• Wholesome Meat 1967
• Radiation Control 1968
• Clean Water 1972
• Toxic Substances 1976
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The 1970s
Corporate Social
Responsibility
• Bribery
• Deceptive advertising
• Price collusion
• Product safety
• The environment
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The 1980s
• Organized field of study
• Business ethics centers
• Business ethics courses
• Defense industry initiative
• Multinationals
• Self-regulation (Reagan/Bush)
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The 1990s
The U.S. and Clinton
• Free trade
• Self-regulation
• Federal Sentencing Guidelines for
Organizations (FSGO)
• More multinationals
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Federal Sentencing
Guidelines for Organizations
• Standards and procedures (code of ethics)
• High level oversight
• Care in delegation of authority
• Effective communication (training)
• Systems to monitor, audit, and report
• Consistent enforcement
• Continuous improvement
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The 21 st Century
• Sarbanes-Oxley Act
• NAFTA
• Mercosur
• WTO
• Caux Round Table
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Common Unethical Acts
• Insider trading of stocks and bonds
• Bribery
• Falsifying documents
• Deceptive advertising
• Defective products
• Employee theft
• Questionable activities of online companies
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Benefits of Business Ethics
• Better ethical climate
• Employee commitment and trust
• Investor loyalty and trust
• Customer satisfaction and trust
• Long term profits
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