Chapter 6-1 Chapter 6 BUSINESS & SOCIETY Ethics and Stakeholder Management Carroll & Buchholtz 6e Business and Society: Ethics and Stakeholder Management, 6e Carroll & Buchholtz Copyright ©2006 by South-Western, a division of Thomson Learning. All rights reserved Prepared by Deborah Baker Texas Christian University  BUSINESS’S ETHICS FUNDAMENTALS

Chapter 6-2 Chapter 6 Learning Outcomes 1. Describe how the public regards business ethics. 2. Define business ethics and appreciate the complexities of making ethical judgments. 3. Explain the conventional approach to business ethics. 4. Analyze economic, legal, and ethical aspects of business using a Venn Model. 5. Enumerate and discuss the four important ethics questions. 6. Identify and explain three models of management ethics. 7. Describe Kohlberg’s three levels of developing moral judgment. 8. Identify and discuss the elements of moral judgment.

Chapter 6-3 Chapter 6 Outline  The Public’s Opinion of Business Ethics  What Does Business Ethics Mean?  Ethics, Economics and Law: A Venn Model  Four Important Ethics Questions  Three Models of Management Ethics  Making Moral Management Actionable  Developing Moral Judgment  Elements of Moral Judgment  Summary

Chapter 6-4 Introduction to Chapter 6 Business Ethics  Public’s interest in business ethics increased during the last three decades  Public’s interest in business ethics has been spurred by the media  The Enron scandal has come to define modern ethics scandals

Chapter National Business Ethics Survey Findings Introduction to Chapter 6  One in eight employees feel pressure to compromise their organization’s ethics standards  Two-thirds attribute this pressure to internal sources  One in three employees observes misconduct at work  Misconduct observed most include lying, withholding information, abusive behavior toward employees, misreporting time worked, and discrimination  One in three employees fears retaliation  Employees say that their organizations’ concern for ethics is a reason they continue to work there

Chapter 6-6 Inventory of Ethical Issues in Business Employee-Employer Relations Employer-Employee Relations Company-Customer Relations Company-Shareholder Relations Company-Community/Public Interest

Chapter 6-7  The media are reporting ethical problems more frequently and fervently  Investigative reporting on TV shows make it difficult to assess whether public opinion polls are reflecting the actual business ethics of the day or the reactions to the latest scandals covered The Public’s Opinion of Business Ethics

Chapter 6-8 Business Ethics: Today vs. Earlier Periods Ethical Problem Society’s Expectations of Business Ethics Actual Business Ethics 1960sEarly 2000sTime Expected and Actual Levels of Business Ethics

Chapter 6-9 Business Ethics: What Does It Really Mean? Ethics involves a discipline that examinesgood or bad practices within thecontext of moral duty and obligation Moral conduct relates to principles of right and wrongin behavior Business Ethics concerned with good and bad orright and wrong behavior andpractices that take place in business

Chapter 6-10 Descriptive Ethics involves describing, characterizingand studying morality  focuses on “What is” Normative Ethics involves supplying and justifyingmoral systems  focuses on “What should be” Business Ethics: What Does It Really Mean?

Chapter 6-11 Conventional Approach to Business Ethics The conventional approach to business ethics involves a comparison of a decision or practice to prevailing societal norms Decision or Practice Prevailing Norms of Acceptability

Chapter 6-12 Sources of Ethical Norms Fellow Workers Family Friends The Law Regions of Country Profession Employer Society at Large Local Community Religious Beliefs The Individual Conscience

Chapter 6-13 Ethics and the Law  Law often represents an ethical minimum  law reflects society’s codified ethics  Ethics often represents a standard that exceeds the legal minimum EthicsLaw

Chapter 6-14 Making Ethical Judgments Behavior or act that has been committed Prevailing norms of acceptability Value judgments and perceptions of the observer compared with

Chapter 6-15 Ethics, Economics, and Law

Chapter 6-16 Four Important Ethical Questions 1. What is? 2. What ought to be? 3. How to we get from what is to what ought to be? 4. What is our motivation for acting ethically?

Chapter 6-17 Three Models of Management Ethics Amoral Management Moral Management Immoral Management

Chapter 6-18 Three Models of Management Ethics Immoral Management A style devoid of ethical principlesand active opposition to what is ethical Moral Management Conforms to high standardsof ethical behavior Amoral Management  Intentional: does not considerethical factors  Unintentional: casual or carelessabout ethical factors  Intentional: does not considerethical factors  Unintentional: casual or carelessabout ethical factors

Chapter 6-19 Characteristics of Immoral Managers  Intentionally do wrong  Self-centered and self-absorbed  Care only about self or organization’s profits  Actively oppose what is right, fair, or just  Exhibit no concern for stakeholders  Are the “bad guys”  An ethics course probably would not help them

Chapter 6-20 Characteristics of Moral Managers  Conform to high level of ethical or right behavior  Conform to high level of personal and professionals standards  Ethical leadership is commonplace  Goal is to succeed within confines of sound ethical precepts  High integrity is displayed  Embrace letter and spirit of the law  Possess an acute moral sense and moral maturity  Are the “good guys”

Chapter 6-21 Characteristics of Amoral Managers Intentionally Amoral Managers:  Don’t think ethics and business should “mix”  Business and ethics are existing in separate spheres  A vanishing breed Unintentionally Amoral Managers:  Don’t consider the ethical dimension of decision making  Don’t “think ethically”  Have no “ethics buds”  Well-intentioned, but morally casual or unconscious  Ethical gears are in neutral

Chapter 6-22 Three Models of Management Morality and Emphasis on CSR

Chapter 6-23 Moral Management Models and Acceptable Stakeholder Thinking

Chapter 6-24 Making Moral Management Actionable  Senior management leads the transition from amoral to moral management  Business ethics training  Codes of conduct  Mission/Vision statements  Ethics officers  Tighter financial controls  Ethically sensitive decision-making processes  Leadership by example  Recognize that amoral management exists

Chapter 6-25 Developing Moral Judgment Level 1 Level 2 Level 3 Kohlberg’s Levels of Moral Development Preconventional Level Conventional Level Postconventional Level

Chapter 6-26 Developing Moral Judgment

Chapter 6-27 Why Managers Behave Ethically Most of Us Many of Us Very Few Of Us 1. To avoid some punishment 2. To receive some reward 3. To be responsive to family, friends, or superiors 4. To be a good citizen 5. To do what is right, pursue some ideal

Chapter 6-28 Feminist Views of Kohlberg’s Research Recognize their own needs and needs of others Establish connections and participate in social life Sole Concern for Self Level 1 Level 2 Level 3

Chapter 6-29 External Sources of a Manager’s Values Philosophical values Cultural values Legal values Religious values Professional values The Web of Values

Chapter 6-30 “Norms” shape business ethics Internal Sources of a Manager’s Values  Respect for the authority structure  Loyalty to bosses and the organization  Conformity to principles and practices  Performance  Results

Chapter 6-31 Elements of Moral Judgment  Moral imagination  Moral identification and ordering  Moral evaluation  Tolerance of moral disagreement and ambiguity  Integration of managerial and moral competence  A sense of moral obligation

Chapter 6-32  amoral management  business ethics  compliance strategy  conventional approach to business ethics  descriptive ethics  ethical relativism  ethics  immoral management  integrity strategy  intentional amoral management  Kohlberg’s levels of moral development  moral development  moral management  normative ethics  unintentional amoral management Selected Key Terms