Business ethics chapter one The Importance of Business Ethics

The Importance of Business Ethics Main Elements Business ethics defined Why study business ethics? The development of business ethics Developing an organizational and global ethical culture The benefits of business ethics Summary

The Importance of Business Ethics Introduction Next class you need to read and discuss “an ethical dilemma in chapter one. And Monsanto attempts to balance stakeholder’s interests case study. We did this introduction last time

Business ethics defined An inquiry into the nature and grounds of morality where the term morality means moral judgment, standards, and rules of conduct. Also, the study of human conduct In summary business ethics comprises the principles, values, and standards that guide behavior in the world of business. Principles: values are specific boundaries for behavior that are universal and absolute. Values: are used to develop norms that are socially enforced like integrity, trust and credibility.

Why Study Business Ethics? Customers’ declining trust is a big issue. See Check figure 1-1 Examples and specific issues: Abusive behavior Harassment Bully Accounting fraud Conflict of interest Defective products Bribery And theft Are all examples of declining ethical standards. Check the story of Johnson&Johnson

Why Study Business Ethics? Insider trading is a serious issue in business and ethics. Getting inside information and using it to ones’ own interest. We call it corruption Code of ethics Gifts , discrimination acts, injustice. Falsification, deception and forgery, in sports (drug) Universities, schools, research, publications And many, many other aspects.

The reason for studying business ethics Studying business ethics is an awareness program. It gives you the awareness to recognize right from wrong. You may identify ethical issues when they arise and use the approaches available for resolving them. You will also learn more about the ethical decision making process and about ways to promote ethical behavior within your org. you will be able to cope with conflicts between your own personal values and those of the org in which you work.

The development of business ethics Check table 1-2 and see for yourself

Developing an organizational and global ethical culture Its hard to develop a global ethical culture. why? But its very important to create certain regulations, I mean governmental rules and regulations beside organizational ones in order to have an ethical culture.

The Benefits of Business Ethics 1- employee commitment 2- investor loyalty 3-customer satisfaction These three within an ethical culture will lead to: 4- ethics contribute to profit.

Stakeholder relationships, social responsibility, and corporate governance chapter two Chapter’s main elements: Stakeholders define ethical issues in business Social responsibility and the importance of a stakeholder orientation Social responsibility and ethics (Corporate Social Responsibility). Corporate governance provides formalized responsibility to stakeholders Implementing a stakeholder perspective

Stakeholders define ethical issues in business The relationship between companies and their stakeholders is two-way communication. What this statement means? The conclusion of this point is that companies need to reconsider its relationship with all the surrounding parties and constituencies in the society

Identifying your stakeholders 1- primary stakeholders 2- secondary stakeholders Explain figure 2-2- what do the arrows represent in the figure.

Social responsibility and the importance of stakeholder orientation What is meant by stakeholder’s orientation? What about classical theory vs modern theory? Conclusion: ethics and social responsibility cannot be just a reactive approach to issues as they arise. Firms and corporations need to view ethical concerns as a part of their foundation and incorporate ethics in their business strategy

Social responsibility and ethics SR and Ethics are interchangeable. Socially responsible orgs are more ethical entities than others. ISO 26000 for CSR ISO 1400 for the environment ISO 1800 for health and safety! Going green- many companies are going green Renewable energy investments. Example the wind and the solar energy.

Social responsibility and ethics What is corporate Citizenship? The extent to which businesses strategically meet the economic, legal, ethical, and philanthropic responsibilities placed on them by their various stakeholders. What is reputation and why is it important in this context?

Corporate governance How Corporate Governance provides formalized responsibility to stakeholders? Two views of corporate governance: A- shareholder model of Corporate Governance B- stakeholder model of Corporate Governance The role of boards of directors Greater demand for accountability and transparency Executive compensation

Implementing a stakeholder perspective 1- assessing the corporate culture To implement the stakeholder’s perspective, you need to have it in your mission, norms, values and system. You need to have a visionary leadership. Your culture must support it. 2- identifying stakeholder groups Some stakeholders exert more influence and power than others. The company must identify these groups, prioritize, and evaluate.

Implementing a stakeholder perspective 3- identifying stakeholder issues Obesity, overweight in the US is an issue. Climate change for some companies is an issue, GM food and biotechnology for Monsanto is an issue. Carbon dioxide emission for Toyota is an issue 4- assessing org commitment to social responsibility The previous steps lead to step four where companies could act socially responsible with accordance to their stakeholders’ issue

Implementing a stakeholder perspective 5- identifying resources and determining urgency Resources must be specified and urgency must be considered. Resources must be quickly allocated based on that urgency. Use porter strategy. 6- gaining stakeholder feedback. This is an information and data collection exercise here. Via public and private data mining to find out what our stakeholders think of us. Next with chapter 3 Emerging Business Ethics Issues. Read the chapter dilemma. Chapter 3 is a presentation chapter- an individual task.