Chapter 2 Conducting Business Ethically and Responsibly Power

“The more I help others to succeed, the more I succeed. ” — Ray

Key Topics • Individual codes of ethics and the importance of ethics in the workplace • Key terms Ø Social responsibility in U. S. business Ø Environmental issues and stakeholder relationships Ø Approaches and implementation Ø Implications for small business Copyright © 2005 Prentice Hall, Inc. All rights reserved. 3

What Is Ethical Behavior? • Ethics Ø Right and wrong, good and bad, in actions that affect others • Ethical Behavior Ø Conforming to generally accepted ethical norms Copyright © 2005 Prentice Hall, Inc. All rights reserved. 4

Ethical Considerations • Regarding a particular act… Ø Utility: Does it optimize what is best for those who are affected by it? Ø Rights: Does it respect the rights of the individuals involved? Ø Justice: Is it consistent with what we regard as fair? Ø Caring: Is it consistent with people’s responsibilities to each other? Copyright © 2005 Prentice Hall, Inc. All rights reserved. 5

Expanded Model of Ethical Judgment Making Gather the facts concerning the act or policy Data Gathering Is the act or policy acceptable according to the four ethical norms? • Utility: Does it optimize the satisfaction of all constituencies? • Rights: Does it respect the rights and duties of the individuals involved? • Justice: Is it consistent with the canons of justice? • Caring: Is it consistent with the responsibility to care? Analysis No on all criteria No on one or Yes on all two criteria Is there any reason for overriding one or two of the ethical norms? Is one ethical norm more important than the others? Is there any reason why a person may have been forced into committing an act or following a policy? No Judgment The act or policy is not ethical. Copyright © 2005 Prentice Hall, Inc. All rights reserved. Yes The act or policy is ethical. Figure 2– 2 6

Company Practices and Business Ethics Best Approach: Open, Honest, Responsive! The Coca Cola Scare

How Much Privacy Does Your Employer Owe You? • Email • Internet • Cellular

Formalizing the Commitment to Ethics Adopting Written Codes Instituting Ethics Programs Copyright © 2005

Social Responsibility: Balancing Commitments to Stakeholders • Stakeholders Ø Groups, individuals, and organizations that are directly affected by the practices of an organization Employees Customers Investors CORPORATION Suppliers Local Communities Copyright © 2005 Prentice Hall, Inc. All rights reserved. 10

Responsibility Toward the Environment • Air pollution • Water pollution • Land pollution Ø

Responsibility Toward Customers Consumer Rights Unfair Pricing Ethics in Advertising Copyright © 2005 Prentice

Responsibility Toward Employees Legal and Social Commitments Copyright © 2005 Prentice Hall, Inc. All

Responsibility Toward Investors • Improper financial management • Check kiting • Insider trading •

Approaches to Social Responsibility Level of Social Responsibility Highest Lowest Obstructionist Stance Actively Avoids Responsibility Defensive Stance Does Legal Minimum Copyright © 2005 Prentice Hall, Inc. All rights reserved. Accommodative Stance Responds to Requests Proactive Stance Actively Seeks Opportunities to Contribute 15

Ethics, Social Responsibility, and the Small Business Do small businesses face different issues with regard to ethics and social responsibility? Copyright © 2005 Prentice Hall, Inc. All rights reserved. 16

Chapter Review • Discuss how individuals develop their personal codes of ethics. • Explain why ethics matter in the workplace. • Distinguish social responsibility from ethics. • Show social responsibility applies to environmental issues and to relationships with customers, employees, and investors. • Identify four approaches to social responsibility. • Describe the four steps a firm must take to implement a social responsibility program. • Explain how social responsibly and ethics affect small business. Copyright © 2005 Prentice Hall, Inc. All rights reserved. 17