business ethics in a global economy

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business ethics in a global economy

  1. 1. © 2013 Cengage Learning. All Rights Reserved. 1Dr. Jingjing WengCollege of ManagementYuan Ze UniversityBusiness Ethics in a GlobalEconomy
  2. 2. Recommended text bookEthical Decision Making for Business: AManagerial Approach (9th edition)Fraedrich, Ferrell and Ferrel (2013).International Edition.華泰文化© 2013 Cengage Learning. All Rights Reserved. 2
  3. 3. Business EthicsEthics is a part of decision making at alllevels of work and management Just as important as functional areas ofbusiness Deals with questions of whether practices areacceptable No universally accepted approach for resolvingissues© 2013 Cengage Learning. All Rights Reserved. 3
  4. 4. Why Study Business Ethics?• Business decisions under great scrutiny• Global financial crisis created diminishedstakeholder trust• Deals with questions about whether practicesare acceptable• No universally-accepted approach for resolvingissues© 2013 Cengage Learning. All Rights Reserved. 4
  5. 5. Why Study Business Ethics?• Reports of unethical behavior are on the rise• Society’s evaluation of right or wrong affects itsability to achieve its business goals• Studying business ethics is a response togovernment policies and stakeholder demandsfor ethics initiatives• Individual ethics alone is not sufficient• Studying business ethics helps identify ethicalissues to key stakeholders© 2013 Cengage Learning. All Rights Reserved. 5
  6. 6. Business Ethics DefinedComprises principles, values, and standardsthat guide behavior in the world of business Ethical decisions occur when accepted rules nolonger serve and decision makers must weighvalues and reach a judgment Values and judgments are critical in ethical decisionsPrinciples: Specific boundaries for behaviorthat are universal and absolute• Freedom of speech, civil libertiesValues: Used to develop socially enforcednorms• Integrity, accountability, trust© 2013 Cengage Learning. All Rights Reserved . 6
  7. 7. A Crisis in Business EthicsNearly half of employees observe misconduct inthe workplace After the financial crisis, business decisions andactivities have come under scrutiny The financial sector has not regained stakeholder trust• Consumer trust of businesses is declining• No sector is exempt from ethical misconduct• Stakeholders determine what is ethical/unethical• Investors• Employees• Customers• Interest groups• Legal system• Community© 2013 Cengage Learning. All Rights Reserved. 7
  8. 8. © 2013 Cengage Learning. All Rights Reserved. 8Specific Issues Misuse of company resources Abusive behavior Harassment Accounting fraud Conflicts of interest Defective products Bribery Employee theft
  9. 9. © 2013 Cengage Learning. All Rights Reserved 9Americans’ Trust in Business Sectors(% of respondents who say they trust the following businesscategories)
  10. 10. © 2013 Cengage Learning. All Rights Reserved. 10The Reasons for Studying Business Ethics Having good individual values/morals is notenough to stop ethical misconduct Ethics training helps provide collectiveagreement in diverse organizations Business ethics decisions can be complicated Studying business ethics helps identify ethicalissues to key stakeholders
  11. 11. © 2013 Cengage Learning. All Rights Reserved. 11Source: Adapted from “BusinessA Timeline of Ethical and SociallyResponsible Concerns1960s 1970s 1980s 1990s 2000sEnvironmentalissuesEmployeemilitancyBribes andillegalcontractingpricesSweatshops and unsafeworking conditions inthird-world countriesCybercrimeCivil rightsissuesHuman rightsissuesInfluencepeddlingRising corporate liabilityfor persona damages(for example, cigarettecompanies)FinancialmisconductIncreasingemployee-employertensionCovering uprather thancorrectingissuesDeceptiveadvertisingFinancialmismanagement andfraudGlobal issues,Chinese productsafetyChanging workethicDisadvantagedconsumersFinancial fraud(for example,savings andloan scandal)Organizational ethicalmisconductSustainabilityRising drug use TransparencyissuesIntellectualproperty theftEthics Timeline,” Ethics Resource Center, http://www.ethics.org/resources/business-ethics-timeline.asp (accessed May 27, 2009). Copyright ©2006, Ethics Resource Center (ERC). Used with permission of the ERC, 1747 Pennsylvania Ave. N.W., Suite 400, Washington, DC, 2006, www.ethics.org.
  12. 12. Before 1960: Ethics in BusinessTheological discussions of ethics emerged Catholic social ethics included a concern formorality in business, workers’ rights, and livingwages Protestants developed ethics courses in theirseminaries and theology schools The Protestant work ethic encouraged hard work© 2013 Cengage Learning. All Rights Reserved. 12
  13. 13. The 1960s: The Rise of Social Issuesin BusinessSocial consciousness emerged Increased anti-business sentiment JFK’s Consumer Bill of Rights— a new era ofconsumerism Right to safety, to be informed, to choose, and tobe heard Consumer protection groups fought forlegislation changes Ralph Nader© 2013 Cengage Learning. All Rights Reserved. 13
  14. 14. The 1970s: Business Ethics as anEmerging FieldBusiness professors began to write aboutsocial responsibility An organization’s obligation to maximizepositive impact and minimize negative impacton stakeholders• Philosophers involved• Businesses concerned with public image• Conferences held and centers developed• Issues:Bribery Deceptive advertisingPrice collusion Product safetyEnvironment© 2013 Cengage Learning. All Rights Reserved 14
  15. 15. The 1980s: ConsolidationIncreased membership in business ethicsorganizations Ethics centers provided publications, courses,conferences, and seminars Firms established ethics committees Defense Industry Initiative on Business Ethicsand Conduct (DII) The foundation for the Federal SentencingGuidelines for Organizations Corporate support for ethics© 2013 Cengage Learning. All Rights Reserved . 15
  16. 16. The 1990s: Institutionalization ofBusiness EthicsContinued support for self-regulation,deregulation, and free trade Health-related issues more regulated The Federal Sentencing Guidelines forOrganizations (FSGO) in 1991 Set tone for compliance Preventative actions against misconduct A company could avoid/minimize potentialpenalties© 2013 Cengage Learning. All Rights Reserved. 16
  17. 17. The Federal Sentencing Guidelinesfor OrganizationsStandards and procedures for preventingmisconduct High level of oversight Care in delegation of authority Effective communication Employee training Systems to monitor, audit, and reportmisconduct Consistent enforcement and continuousimprovement© 2013 Cengage Learning. All Rights Reserved. 17
  18. 18. The 21st Century: A New FocusContinued issues with corporate non-compliance Public/political demand for improved ethical standards Sarbanes-Oxley Act (2002) Most extensive ethics reform Increased accounting regulations FSGO reforms (2004, 2008, 2010) Requires governing authorities to be informed of businessethics programs Dodd-Frank Wall Street Reform and ConsumerProtection Act (2009) Aimed at making the financial industry moretransparent/responsibleA firm’s greatest danger is not discoveringmisconduct early© 2013 Cengage Learning. All Rights Reserved 18
  19. 19. Organizational Ethical CultureEthical culture: The component ofcorporate culture that captures the valuesand norms that an organization defines asappropriate Creates shared valuesGoal is to: Minimize need for enforced compliance Maximize utilization of principles/ethical reasoning© 2013 Cengage Learning. All Rights Reserved. 19
  20. 20. Global Ethical CultureNations working together to establishstandards of ethical behavior NAFTA MERCOSUR WTO Companies can demonstrate theircommitment to social responsibility throughadopting international standards Global Sullivan Principles Coalition for Environmentally Responsible Economies(CERES) United Nations Global Compact© 2013 Cengage Learning. All Rights Reserved. 20
  21. 21. © 2013 Cengage Learning. All Rights Reserved. 21Source: Adapted from “BusinessThe Role of Organizational Ethics inPerformance
  22. 22. Ethics Contributes to EmployeeCommitmentCommitment comes from employees whoare invested in the organization Employees willing to make personal sacrificesfor the organization The more company dedication to ethics, thegreater the employee dedication Concerns include a safe work environment,competitive salaries and benefits packages, andfulfillment of contractual obligations© 2013 Cengage Learning. All Rights Reserved. 22
  23. 23. Ethics Contributes to InvestorLoyaltyCompanies perceived by their employees asbeing honest are more profitable Ethical climates in organizations provide aplatform for Efficiency Productivity Profitability© 2013 Cengage Learning. All Rights Reserved. 23
  24. 24. Ethics Contributes to CustomerSatisfactionConsumers respond positively to sociallyconcerned businesses Being good can be profitable Customer satisfaction dictates business success A strong organizational ethical climate placescustomers’ interests first Research shows a strong relationship betweenethical behavior and customer satisfaction© 2013 Cengage Learning. All Rights Reserved. 24
  25. 25. Ethics Contributes to Profits Corporate concern for ethical planning is beingintegrated with strategic planning Maximizes profitability Corporate citizenship is positively associatedwith Return on investment and assets Sales growth Studies have found a positive relationshipbetween corporate citizenship andperformance© 2013 Cengage Learning. All Rights Reserved. 25
  26. 26. Guest Lecture (Mar. 20) Ethics in global finance: Emerging trends intimes of crisis Time: 3/20 (Wed) 12:00-14:00 Place: R70304 Speaker: Eddy S. Fang, PhD (Cambridge)Lecturer in Economics, Business School, Xi’anJiaotong -- Liverpool University Preparation before the lecture: reading case 9(pp214) of the textbook© 2013 Cengage Learning. All Rights Reserved. 26
  27. 27. Class Discussion todayHarvard University’s Justice with Michael Sandelhttp://www.justiceharvard.org/about/course/The moral side of murder?http://www.youtube.com/watch?v=Y4HqXP47lPQ&feature=relatedWeekly news sharing from next week!!(International news or news related to businessethics)© 2013 Cengage Learning. All Rights Reserved. 27

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