Business ethics
chapter one
The Importance of Business Ethics
1-Define
2-Why study
3-History
4-Benefits
The Importance of Business Ethics
Main Elements
1.
2.
3.
4.
Business ethics defined
Why study business ethics?
The development of business ethics
Developing an organizational and global
ethical culture
5. The benefits of business ethics
6. Summary
Ethics defined
Ethics is the study and philosophy of human
conduct, with an emphasis on determining
right from wrong.
• Values and principles are very important of
reference.
• Society is the source of such values. That is
why what is ethical for one society might not
be ethical for another one.
The Importance of Business Ethics
Introduction
Next class you need to read and discuss “an ethical
dilemma in chapter one. And
Monsanto attempts to balance stakeholder’s interests
case study.
Business ethics defined
business ethics comprises the principles, values,
and standards that guide behavior in the
world of business.
Principles: values are specific boundaries for
behavior that are universal and absolute.
Values: are used to develop norms that are
socially enforced like integrity, trust and
credibility.
Why Study Business Ethics?
Customers’ declining trust is a big issue.
See Check figure 1-1
Examples and specific issues:
• Abusive behavior
• Harassment
• Bully
• Accounting fraud
• Conflict of interest
• Defective products
• Bribery
• And theft
Are all examples of declining ethical standards.
Check the story of Johnson & Johnson
Why Study Business Ethics?
Insider trading is a serious issue in business and ethics.
Getting inside information and using it to ones’ own
interest.
We call it corruption
is the process of using inside information.
Code of ethics
Gifts , discrimination acts, injustice.
Falsification, deception and forgery, (Plagiarism
Universities, schools, research, publications)
And many, many other aspects.
The reason for studying business
ethics
• Business ethics is very important course for business
leaders because they can identify ethical issues when they
arise and use the approaches available for resolving them
a. True
b. False
• Studying business ethics is an awareness program. It gives
you the awareness to recognize right from wrong. You may
identify ethical issues when they arise and use the
approaches available for resolving them. You will also learn
more about the ethical decision making process and about
ways to promote ethical behavior within your org. you will
be able to cope with conflicts between your own personal
values and those of the org in which you work.
The development of business ethics
• Check table 1-2 and see for yourself
a.
b.
c.
d.
e.
According to the development and evolvement of business ethics (from the 60s up to the 21st century),
the 21st century is characterized by
Financial misconduct
Sustainability
Intellectual property theft
Cybercrime
All of the above
Developing an organizational and
global ethical culture
Its hard to develop a global ethical culture.
But its very important to create certain
regulations, I mean governmental rules and
regulations beside organizational ones in
order to have an ethical culture.
The Benefits of Business Ethics
1- employee commitment and trust
2- ethics contribute to investor loyalty
3-ethics contribute to customer satisfaction
These three within an ethical culture will lead
to:
4- ethics contribute to profit.
See figure 1-3.
Stakeholder relationships, social
responsibility, and corporate governance
chapter two
Chapter’s main elements:
• Stakeholders define ethical issues in business
• Social responsibility and the importance of a
stakeholder orientation
• Social responsibility and ethics (Corporate Social
Responsibility).
• Corporate governance provides formalized
responsibility to stakeholders
• Implementing a stakeholder perspective
Stakeholders define ethical issues in
business
The relationship between companies and their
stakeholders is two-way communication. What this
statement means?
The conclusion of this point is that companies need to
reconsider its relationship with all the surrounding
parties and constituencies in the society
Identifying your stakeholders
1- primary stakeholders
2- secondary stakeholders
Explain figure 2-2- what do the arrows represent
in the figure.
- …….
are those whose continued association is absolutely necessary for a firm’s survival
a.
b.
c.
d.
e.
Primary stakeholders
Secondary stakeholders
The media
Trade associations
Special interest groups
Social responsibility and the
importance of stakeholder orientation
What is meant by stakeholder’s orientation?
Conclusion: ethics and social responsibility cannot be just a reactive approach to
issues as they arise.
Firms and corporations need to view ethical concerns as a part of their foundation
and incorporate ethics in their business strategy
- Which of the following is true regarding socially responsible organizations
a. Social responsibility is an integral part of the organization ‘s business strategy
b. Social responsibility and strategy are two different issues and separated from
each other.
c. Organizations must be socially responsible in order to improve their
reputation in their target market
d. None of the above.
Social responsibility and ethics
SR and Ethics are interchangeable.
Socially responsible orgs are more ethical entities
than others.
ISO 26000 for CSR
ISO 1400 for the environment
ISO 1800 for health and safety!
Going green- many companies are going green
Renewable energy investments. Example the wind
and the solar energy.
Social responsibility and ethics
What is corporate Citizenship?
The extent to which businesses strategically meet the economic, legal, ethical, and
philanthropic responsibilities placed on them by their various stakeholders.
What is reputation and why is it important in this context?
……….. Is the extent to which businesses strategically meet economic, legal, ethical,
and philanthropic responsibilities placed on them by their various stakeholders
a. Business ethics
b. Corporate governance
c. Corporate citizenship
d. Stakeholder orientation
e. All of the above.
Corporate governance
How Corporate Governance provides formalized responsibility to stakeholders?
• Two views of corporate governance:
A- shareholder model of Corporate Governance
B- stakeholder model of Corporate Governance
The role of boards of directors
Greater demand for accountability and transparency
Executive compensation
- After taking this business ethics’ course, which of the followings do you suggest
for business leaders?
a. To adopt the share holder approach
b. To adopt the stakeholder approach
c. To adopt the economic approach
d. To adopt the customer approach
Implementing a stakeholder
perspective
1- assessing the corporate culture
To implement the stakeholder’s perspective, you
need to have it in your mission, norms, values
and system. You need to have a visionary
leadership. Your culture must support it.
2- identifying stakeholder groups
Some stakeholders exert more influence and
power than others. The company must
identify these groups, prioritize, and evaluate.
Implementing a stakeholder
perspective
3- identifying stakeholder issues
Overweight in the US is an issue. Climate change for
some companies is an issue, GM food and
biotechnology for Monsanto is an issue. Carbon
dioxide emission for Toyota is an issue
4- assessing org commitment to social responsibility
The previous steps lead to step four where
companies could act socially responsible with
accordance to their stakeholders’ issue
Implementing a stakeholder
perspective
5- identifying resources and determining urgency
Resources must be specified and urgency must be
considered. Resources must be quickly allocated based
on that urgency. Use porter strategy.
6- gaining stakeholder feedback.
This is an information and data collection exercise here.
Via public and private data mining to find out what our
stakeholders think of us.
Next with chapter 3 Emerging Business Ethics Issues.
Read the chapter dilemma.
Chapter 3 is a presentation chapter- an individual task.