Business ethics
chapter one
The Importance of Business Ethics
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
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.
We did this introduction last time
Business ethics defined
An inquiry into the nature and grounds of morality where
the term morality means moral judgment, standards,
and rules of conduct.
Also, the study of human conduct
In summary 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
Code of ethics
Gifts , discrimination acts, injustice.
Falsification, deception and forgery, in sports (drug)
Universities, schools, research, publications
And many, many other aspects.
The reason for studying business
ethics
• 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
Developing an organizational and
global ethical culture
Its hard to develop a global ethical culture. why?
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
2- investor loyalty
3-customer satisfaction
These three within an ethical culture will lead
to:
4- ethics contribute to profit.
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.
Social responsibility and the
importance of stakeholder orientation
What is meant by stakeholder’s orientation?
What about classical theory vs modern theory?
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
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?
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
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
Obesity, 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.