Defining Business Ethics Chapter 2 Defining Business Ethics Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

Business Ethics Application of ethical standards to business behavior Approachable in two perspectives Descriptive - Documentation of what is happening Normative (prescriptive) - Recommendation of what should happen Not applicable as a separate set of moral standards or ethical concepts from general ethics

Who are the Stakeholders? Someone with a share or interest in a business enterprise Not every stakeholder will be relevant in every business situation Concern is the extent to which stakeholders would be impacted by unethical behavior

Figure 2.1 - Stakeholder Interests

Figure 2.2 - Stakeholder Impact from Unethical Behavior

An Ethical Crisis: Is Business Ethics an Oxymoron? Ethical track record of many organizations have been unable to tackle: Unethical concerns that can arise in the business environment Impact that such unethical behavior can have on the stakeholders of an organization Standard of corporate governance is at the lowest level in business history

An Ethical Crisis: Is Business Ethics an Oxymoron? Corporate governance: System by which business corporations are directed and controlled Business ethics is considered an oxymoron as the business world lacks any sense of ethical behavior Oxymoron: Combination of two contradictory terms

Code of Ethics Company’s written standards of ethical behavior that are designed to guide managers and employees in making the decisions and choices they face every day Cornerstones of the organization Mission Values Principles

An Ethical Crisis: Is Business Ethics an Oxymoron? Dual function of code of ethics Message to the organization’s stakeholders, representing a commitment to the highest standards of ethical behavior Internal document, representing a guide to managers and employees in making every day decisions and choices

Figure 2.3 - A Brief History of Business Ethics

Resolving Ethical Dilemmas Ethical dilemma: Situation in which there is no obvious right or wrong decision, rather a right or right answer Recognizing the type of conflict can lead to the resolution of an ethical dilemma Truth versus loyalty Short term versus long term Justice versus mercy Individual versus community

Resolving Ethical Dilemmas Resolution principles Ends-based Which decision would provide the greatest good for the greatest number of people? Rules-based What would happen if everyone made the same decision as you? The golden rule Do unto others as you would have them do unto you

Justifying Unethical Behavior Belief that an activity is within reasonable ethical and legal limits Belief that an activity is in the individual’s or the corporation’s best interests Belief that the activity is safe because it will never be found out or publicized Belief that because an activity helps the company, it will be condoned and the perpetrator protected