Study Question 1: What is ethical behavior?
 Ethics
– Code of moral principles.
– Set standards of “good” and “bad” as opposed
to “right” and “wrong.”
 Ethical behavior
– What is accepted as good and right in the
context of the governing moral code.
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Study Question 1: What is ethical behavior?
 Law, values, and ethical behavior:
– Legal behavior is not necessarily ethical
behavior.
– Personal values help determine individual
ethical behavior.
• Terminal values
• Instrumental values
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Study Question 1: What is ethical behavior?
 Utilitarian view of ethics — greatest good to
the greatest number of people.
 Individualism view of ethics — primary
commitment is to one’s long-term self-interests.
 Moral-rights view of ethics — respects and
protects the fundamental rights of all people.
 Justice view of ethics — fair and impartial
treatment of people according to legal rules and
standards.
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Figure 3.1 Four views of ethical
behavior.
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Study Question 1: What is ethical behavior?
 Cultural issues in ethical behavior:
– Cultural relativism
• Ethical behavior is always determined by cultural
context.
– Cultural universalism
• Behavior that is unacceptable in one’s home
environment should not be acceptable anywhere
else.
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Figure 3.2 The extremes of cultural relativism and
ethical imperialism in international business ethics.
Source: Developed from Thomas Donaldson, “Values in Tension: Ethics Away from Home,”
Harvard Business Review, vol. 74 (September-October 1996), pp. 48-62.
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Study Question 1: What is ethical behavior?
How international businesses can respect core or universal values:
Respect for human dignity
• Create culture that values employees, customers, and suppliers.
• Keep a safe workplace.
• Produce safe products and services.
Respect for basic rights
• Protect rights of employees, customers, and communities.
• Avoid anything that threatening safety, health, education, and living
standards.
Be good citizens
• Support social institutions, including economic and educational
systems.
• Work with local government and institutions to protect environment.
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Study Question 2: How do ethical dilemmas
complicate the workplace?
 An ethical dilemma occurs when choices,
although having potential for personal and/or
organizational benefit, may be considered
unethical.
 Ethical dilemmas include:
–
–
–
–
–
Discrimination
Sexual harassment
Conflicts of interest
Customer confidence
Organizational resources
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Study Question 2: How do ethical dilemmas
complicate the workplace?
 Ethical behavior can be rationalized by
convincing yourself that:
– Behavior is not really illegal.
– Behavior is really in everyone’s best interests.
– Nobody will ever find out.
– The organization will “protect” you.
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Study Question 2: How do ethical dilemmas
complicate the workplace?
 Factors influencing ethical behavior include:
– The person
• Family influences, religious values, personal standards, and
personal needs.
– The organization
• Supervisory behavior, peer group norms and behavior, and
policy statements and written rules.
– The environment
• Government laws and regulations, societal norms and
values, and competitive climate in an industry.
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Figure 3.3 Factors influencing ethical managerial
behavior—the person, organization, and environment.
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Study Question 3: How can high ethical
standards be maintained?
Checklist for dealing with ethical dilemmas
Step 1. Recognize the ethical dilemma
Step 2: Get the facts
Step 3. Identify your options
Step 4. Test each option: Is it legal? Is it right? Is it beneficial?
Step 5. Decide which option to follow
Step 6. Double-check decision by asking the “spotlight” questions:
“How would I feel if my family found out about my decision?” “How
would I feel about this if my decision were printed in the local
newspaper?”
Step 7. Take action.
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Study Question 3: How can high ethical
standards be maintained?
 Ethics training:
– Structured programs that help
participants to understand ethical
aspects of decision making.
– Helps people incorporate high ethical
standards into daily life.
– Helps people deal with ethical issues
under pressure.
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Study Question 3: How can high ethical
standards be maintained?
 Whistleblowers
– Expose misdeeds of others to:
• Preserve ethical standards
• Protect against wasteful, harmful, or illegal acts
Jeffrey Wigand on 60 minutes
http://www.youtube.com/watch?v=hkTk4HKf9XI
 Laws protecting whistleblowers vary
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Study Question 3: How can high ethical
standards be maintained?
 Barriers to whistleblowing include:
– Strict chain of command
– Strong work group identities
– Ambiguous priorities
 Organizational methods for overcoming
whistleblowing barriers:
– Ethics staff units who serve as ethics
advocates
– Moral quality circles
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Study Question 3: How can high ethical
standards be maintained?
 Ethical role models:
– Top managers serve as ethical role models.
– All managers can influence the ethical behavior of
people who work for and with them.
– Excessive pressure can foster unethical behavior.
– Managers should be realistic in setting performance
goals for others.
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Study Question 3: How can high ethical
standards be maintained?
 Codes of ethics:
– Formal statement of an organization’s values and
ethical principles regarding how to behave in
situations susceptible to the creation of ethical
dilemmas.
Areas often covered by codes of ethics:
–
–
–
–
–
Bribes and kickbacks
Political contributions
Honesty of books or records
Customer/supplier relationships
Confidentiality of corporate information
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Study Question 4: What is corporate social
responsibility?
 Corporate social responsibility:
– Looks at ethical issues on the organization
level.
– Obligates organizations to act in ways that
serve both its own interests and the interests
of society at large.
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Study Question 4: What is corporate social
responsibility?
 Organizational stakeholders
– Those persons, groups, and other organizations directly
affected by the behavior of the organization and holding a
stake in its performance.
 Typical organizational stakeholders
–
–
–
–
–
–
–
Employees
Customers
Suppliers
Owners
Competitors
Regulators
Interest groups
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Figure 3.4 Multiple stakeholders in
the environment of an organization.
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Study Question 4: What is corporate social
responsibility?
 Beliefs that guide socially responsible
business practices:
– People do their best with a balance of work and
–
–
–
–
family life.
Organizations perform best in healthy
communities.
Organizations gain by respecting the natural
environment.
Organizations must be managed and led for longterm success.
Organizations must protect their reputations.
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Study Question 4: What is corporate social
responsibility?
 Perspectives on corporate social responsibility:
– Classical view—
• Management’s only responsibility is to maximize profits.
– Socioeconomic view—
• Management must be concerned for the broader social
welfare, not just profits.
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Study Question 4: What is corporate social
responsibility?
 Arguments against
social responsibility:
– Reduced business
profits
– Higher business costs
– Dilution of business
purpose
– Too much social
power for business
– Lack of public
accountability
 Arguments in favor of
social responsibility:
– Adds long-run profits
– Improved public image
– Avoids more
government regulation
– Businesses have
resources and ethical
obligation
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Study Question 4: What is corporate social
responsibility?
 Criteria for evaluating corporate social
performance:
– Is the organization’s …
• Economic responsibility met?
• Legal responsibility met?
• Ethical responsibility met?
• Discretionary responsibility met?
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Study Question 4: What is corporate social
responsibility?
 Strategies for pursuing social
responsibility:
– Obstructionist — meets economic
responsibilities.
– Defensive — meets economic and legal
responsibilities.
– Accommodative — meets economic, legal,
and ethical responsibilities.
– Proactive — meets economic, legal,
ethical, and
discretionary responsibilities. 25
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Study Question 5: How do organizations and
governments work together in society?
 How government influences organizations:
– Common areas of government regulation of
business affairs:
• Occupational safety and health
• Fair labor practices
• Consumer protection
• Environmental protection
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Study Question 5: How do organizations and
governments work together in society?
 How organizations influence governments:
– Personal contacts and networks
– Public relations campaigns
– Lobbying
– Political action committees
– Sometimes by illegal acts, such as bribery or illegal
financial contributions to political campaigns
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Study Question 5: How do organizations and
governments work together in society?
 Corporate governance:
– The oversight of the top management of an
organization by a board of directors.
 Corporate governance involves:
– Hiring, firing, and compensating the CEO.
– Assessing strategy.
– Verifying financial records.
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