Nickels Cover Nickels McHugh

Demonstrating Ethical Behavior and Social Responsibility Chapter Demonstrating Ethical Behavior and Social Responsibility 4 4-2

Ethics More Than Legality Standards are Fundamental Stem From Individual

SEC Investigations (2002) Accounting Energy Software Telecom Arthur Andersen Deloitte & Touche Ernst & Young KPMG PriceWaterhouse Coopers Energy CMS Energy Dynergy Enron Halliburton Reliant Resources Software Computer Associates Network Associates Telecom Global Crossing Lucent Technologies Qwest Communications WorldCom Wall Street Credit Suisse First Boston Hedge Funds Capital Markets Merrill Lynch Source: Business Week, June 10, 2002

Corporate Scandal Fines Company Fine Reason Arthur Andersen $500,000 Obstruction of Justice Shredding Enron Documents Citigroup $5,000,000 Analyst Issued Misleading Information Merrill Lynch $100,000,000 Conflict of Interest Between Investment Bank & Research Dept. Credit Suisse First Boston IPO Shares Unfairly Distributed Source: Business Week, Nov. 4, 2002

How Much Do Americans Trust Corporations? All Corporations Fair Amount 41% Only A Little 35% Not At All 13% A Great Deal 10% No Opinion 1% Your Employer A Lot 50% Only Somewhat 39% Not At All 8% No Opinion 3% Source: USA Today/CNN/Gallup Poll, Jan. 25-27, 2002

Total is more than 100%- respondents could give more than one reason. Why People Volunteer Percent of Respondents Total is more than 100%- respondents could give more than one reason.

Percent of MBA Students Who Would: Ethics of MBA Students Percent of MBA Students Who Would: Buy Stock on Inside Information 52% Reveal Corp. Secrets to Spouse/Family 50% Let a Gift Sway Purchasing Decision 26% Pay Someone Off to Close a Business Deal 13% Source: USA Today

Ethics Check Questions: Is It Legal? Is It Balanced? How Will It Make Me Feel About Myself?

Ethical Decision Resolved Through: Religious Teachings Individual Rights Legislation Court Decisions

Factors Influencing Managerial Ethics Individual Organizational Environmental Values Top Level Mgmt. Philosophy The Firm’s Reward System Job Dimensions Competition Economic Conditions Social/Cultural Institutions Work Background 1. Factors that influence business ethics are analyzed from three different perspectives: individual factors, organizational factors, and environmental factors.If you work through the acetate factor-by-factor, this should allow for maximum participation and full coverage. 2. Ask students which of these factors tends to predominate in terms of overall managerial behavior. Also students can be queried if these factors change noticeably over time. 3. An interesting question to pose to students is what factors most dominate their attitudes concerning ethical behavior. We’ve tried this in our classes and have received some very interesting responses. Let us know by e-mail what your students have to say. Family Status Personality

Codes of Ethics Compliance-Based Integrity-Based

Steps to Improve U.S. Business Ethics Top Management Employees Managers Ethics Office Outsiders Enforcement

Levels of Corporate Social Responsibility Societal Responsibility Stakeholder Responsibility Ecological Environment Customers Profit Responsibility General Public Owners/Stockholders Employees Suppliers/Distributors Public Interest Groups Source: Marketing, 5/E by Berkowitz, Kerin, Hartley, and Rudelius.

Contributions to Charity (In Billions of Dollars)

Estimated Total Given (in Millions Conservation & Education New Philanthropy Donor Estimated Total Given (in Millions Causes Bill Gates $25.6 Health & Education Gordon Moore $6.6 Conservation & Education James Stowers $1.5 Biomedical Research Eli Broad $1.045 Education & Arts Walton Family $.75 Source: Business Week, Dec. 2, 2002

Most Admired Companies by Industry Company Apparel Levi-Strauss Airlines Southwest Food Services McDonald’s Food Products Campbell’s Beverages Coca-Cola Electronics Intel Source: Fortune Magazine

Corporate Annual Giving Merck Johnson & Johnson Pfizer Eli Lilly IBM Microsoft Intel Bank of America $221.0* 176.2 123.9 121.4 116.1 104.7 101.0 91.5 Source: The Taft Group * In Millions

Where Charitable Contributions Go (2001) In Billion $ Source: BusinessWeek. Dec. 2, 2002

Social Audit By Company Outside Company Socially-Conscious Investors Environmentalists Union Officials Customers

International Ethics & Responsibility Ethics Not Unique To U.S.- Leaders Accountable Demand for Socially Responsible Behavior Inter-American Convention Against Corruption

Most Admired Global Companies (Outside of U.S.) Nokia Finland Toyota Motor Japan Sony Japan Nestle’ Switzerland Honda Motor Japan BP Britain Singapore Airlines Singapore L’Oreal France Royal Dutch/Shell Britain & Netherlands Canon Japan Source: Fortune, March 4, 2002