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Learning Objectives
• Provide an understanding of the major social issues that companies need to address in the global marketplace in order to be considered socially responsible practitioners
• Consider the use of codes of ethics by global companies to address issues relating to social responsibility
• Demonstrate how corporate social responsibility and ethical practice can provide competitive advantage in the global marketplace
Business Ethics Across Cultures
Ethical practice
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Definition of Ethics
Consumer Sentiments about Business
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A Business Week (Bernstein 2000) cover story describes Americans as "uneasy about Big Business" (145). Their Business Week/Harris Poll found that 72% of Americans say they believe that business has too much power over American life. •
Furthermore, 66% of those polled agree that companies care more about making large profits than about selling safe, reliable, quality products. •
In 1999, a worldwide survey found that two‐thirds of consumers surveyed wanted companies to contribute to broader societal goals (Isa 2003).
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The 2002 Cone Corporate Citizenship Study found 89% of Americans agreeing that, following the recent corporate scandals, “it is more important than ever for companies to be socially responsible.”
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Voice of the People Survey (n=36,000, 47 countries, 6 continents) conducted by Gallup International and Environics International found 43% of global companies and 52% of large national companies are not trusted to operate in the best interest of society. These rankings are among the lowest of 17 different types of social institutions.
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• Ethics are the moral principles and values that govern actions and decisions with respect to what is right or wrong.
• Business ethics is the systematic study of how moral standards are applied to business decisions, behavior and institutions.
• An ethical dilemma is a decision that involves the tradeoff between lowering one’s personal values in exchange for increased organizational or personal gain.
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Basic Ethical Reasoning
Where do they come from?
• Personal Moral Philosophy and Ethical Behavior are Derived From:
1. Definition of the Ethical Problem.
2. Selection of an Ethical Standard.
3. Application of Ethical Standard
– Societal Culture and Norms
– Business Culture and Industry Practices
– Organizational Culture and Expectations
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Classifying Marketing Decisions According to
Ethical and Legal Relationships
Ethical Test
Is It Legal?
Ethical
Ethicality
I Ethical ‐ Legal
II Ethical ‐ Illegal
III Unethical ‐ Legal
IV Unethical ‐ Illegal
I and IV Easy
II and III Difficult
Ethical but illegal
Ethical and legal
Unethical and illegal
Unethical but legal
Unethical
Illegal
Legal
Legality
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Basic Rights of the Consumer
Ethical Test (Cont)
Benefit Cost Test Do the benefits exceed the costs to whomsoever they accrue?
Safety
Categorical Imperative Are you willing to allow everyone to practice the proposed action or do you want to be a special case?
Light of Day Test
What would be your reaction if the action were brought out into the open for public scrutiny?
Right to
Do Unto Others Test
Golden Rule ‐ If you would like others
to do the same to you ‐ passes the test
Ventilation Test
Seek out others views. Discuss the 5 tests with them. If others feel it is OK ‐
passes the test
Be Informed
Choose
Be heard
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Consequences Based Theories
(Teleological)
Three Ethical Theories/Approaches
• Consequences Based
• Derived from “Telos” – End of Purpose
• Outcomes or Consequences are Key
• Duty Based
Types:
• Managerial Egoism
• Virtue Based
• Utilitarianism
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Managerial Egoism
Utilitarianism
• Proper conduct is driven by the greatest good for the greatest number of individuals.
• Attractive to Managers
• Compatible with Traditional Business Ideology
• Net Benefits Exceed Net Costs
• Accommodates Complex Situations
• Criticisms
• Managers act exclusively in their own self‐
interest or that of their firm.
• Consequences for me, Benefits for me
• Personal self‐interest or Organizational gain
• Many Criticisms
• Some even question whether is can be an ethical theory.
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Duty Based Theories
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Virtue Ethics
• Deontological from deon meaning duty.
• Universal principles should guide all actions; tempered with penalties.
• Actions are best judged as good standing alone without regard to consequences.
• Suggests costs/benefits analysis is inappropriate in some situations.
• Means as well as ends should be morally evaluated.
• Criticisms
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• Morality of aspiring to be a virtuous person.
• Moral virtue is a character trait that is morally valued.
• MacIntyre defines virtue as acquired human qualities that enable persons to achieve “the good” in their chosen vocations.
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Individual and Organizational Moral Development
Dimensions of Virtue Ethics
• Virtues are Good Habits
• They should be Practiced
• Appropriate Virtues are Discovered by Witnessing and Imitating Behavior
• Aristotle’s Golden Mean
• Core Virtues for Marketing:
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• Individuals
– Preconventional Stage
– Conventional Stage
– Principled Stage
• Organizational
Integrity
Fairness
Respect
Empathy
Trust
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• Criticisms
Stage 1: Amoral
Stage 2: Legalistic
Stage 3: Responsive
Stage 4: Emerging Ethical
Stage 5: Developed Ethical
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Improving Ethical Reasoning
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Seven Step Moral Reasoning Process
The Legal Test
The Duties Test
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Fidelity
Gratitude
Justice
Nonmaleficence
Beneficence
Special Obligations Test
Motives Test
Consequences Test
Utilitarian Test
Rights Test (consumers’ rights)
Justice Test
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What is the moral core issue?
Who are the parties involved?
Who is/are morally responsible?
What information do I need?
What arguments can be brought forward?
What is my/our conclusion?
How do I feel?
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Can Cause Bitterness in Organization
Whistleblowing
• Act of disclosing wrongdoing in an organization
• Like blowing a whistle to call attention to a thief
• Types
Internal External
• Dissent ‐ Must speak out against others in organization
• Breach of Loyalty ‐ Perceived as one who violates confidentiality and loyalty
• Accusation ‐ Singles out specific individuals as threats to organization or the public
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Possible Retaliation
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Bribery
Fired – RBS/Halifax
Blacklisted
Transferred to undesirable locations
Lifestyles, sex lives and mental stability questioned
Physical abuse and murder possible
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• A payment, usually to a public official, to induce that person to either do something improper or to influence decisions or actions
• Extortion ‐ same as bribery ‐ recipient of payment initiates transaction
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Whistleblower
Case
• International consulting firm ‐ designs and supervises construction of hydroelectric power generating systems
• Your proposal is far superior to any other technically lowest bid
• Watch this video
• http://www.youtube.com/watch?v=tmV‐
aXr_3q0&feature=related
• To get job, must deposit $250,000 in official’s personal Swiss bank account
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Corporate Social Responsibility
Should you pay the money?
Foreign Corrupt Practices Act of 1997
Grease payment allowed
Standard Practice in most foreign countries
Results in lost business opportunities for UK companies
• British tax payers may be used to pay bribe
• BAE accused of secretly paying £1bn to Saudi prince •
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• A company’s commitment to minimizing or eliminating any harmful effects and maximizing its long‐run beneficial impact on society. – Mohr, Webb, and Harris Journal of Consumer Affairs (2001, 47)
• Marketing Concept is the marketing philosophy that stresses consumer orientation, emphasizes long‐range profitability and suggests the integration of marketing and other organizational functions.
• Societal Marketing Concept expands the marketing concept by focusing the decision maker’s attention not only on satisfaction of consumer needs, but also on the broader societal consequences of satisfying these consumer needs.
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Three Concepts of Social Responsibility
Web based resources
Societal responsibility
• http://www.helium.com/items/1496496‐
ethical‐issues‐faced‐by‐marketers
• http://wiki.answers.com/Q/What_are_the_et
hical_issues_in_marketing
• http://www.cyberessays.com/lists/ethical‐
dilemmas‐faced‐by‐marketers‐in‐emerging‐
markets/page0.html
Stakeholder responsibility
Profit
General
public
Customers
Profit
Ecological
Responsibility
Responsibility Employees environment
Owners/
Stockholders
Suppliers/Distributors
Public interest groups
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