© 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW Twomey Jennings 1 st Ed. Twomey & Jennings BUSINESS LAW Chapter 3 Business Ethics, Social Forces and the Law Chapter 3 Business Ethics, Social Forces and the Law

© 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW Twomey Jennings 1 st Ed. 2 What is Business Ethics? Business ethics is the application of values and standards to business conduct and decisions. When a business upholds basic ethical standards, it will enjoy the competitive advantage of a good reputation and, over the long term, better earnings. When a business violates ethical standards, social forces are set into motion, sometimes leading to changes in the law. Business ethics is the application of values and standards to business conduct and decisions. When a business upholds basic ethical standards, it will enjoy the competitive advantage of a good reputation and, over the long term, better earnings. When a business violates ethical standards, social forces are set into motion, sometimes leading to changes in the law.

© 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW Twomey Jennings 1 st Ed. 3 What is Business Ethics? Law as the Standard for Business Ethics. –Positive Law: if an act is legal it is ‘moral.’ Universal Standards for Business Ethics. –Natural Law: higher standards for ethics. –A law can be legal but unethical. Situational Business Ethics/Moral Relativism. Business Stakeholder Standard of Behavior. Law as the Standard for Business Ethics. –Positive Law: if an act is legal it is ‘moral.’ Universal Standards for Business Ethics. –Natural Law: higher standards for ethics. –A law can be legal but unethical. Situational Business Ethics/Moral Relativism. Business Stakeholder Standard of Behavior.

© 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW Twomey Jennings 1 st Ed. 4 Why is Business Ethics Important? Importance of Trust. Relationship to Financial Performance. –Ford and Firestone. –Johns-Manville. Good Reputation. Importance of Trust. Relationship to Financial Performance. –Ford and Firestone. –Johns-Manville. Good Reputation.

© 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW Twomey Jennings 1 st Ed. 5 Social Forces Cycle of Social Interaction Social Environment Social Environment Ethics Law

© 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW Twomey Jennings 1 st Ed. 6 Public Policy, Law & Ethics Protection: –of the state, the person, public health, safety and morals. –of property and personal rights. –from exploitation, fraud, and oppression. –of creditors and rehabilitation of debtors. Enforcement of individual intent. Furtherance of trade. Stability and flexibility. Protection: –of the state, the person, public health, safety and morals. –of property and personal rights. –from exploitation, fraud, and oppression. –of creditors and rehabilitation of debtors. Enforcement of individual intent. Furtherance of trade. Stability and flexibility. Mortenson Co. v Timberline (1999) The ‘One Click’ Warranty Waiver.

© 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW Twomey Jennings 1 st Ed. 7 How to Recognize and Resolve Ethical Dilemmas Integrity and Truthfulness. Promise-Keeping. Loyalty: Avoiding Conflicts of Interest. Fairness. Doing No Harm. Maintaining Confidentiality. Integrity and Truthfulness. Promise-Keeping. Loyalty: Avoiding Conflicts of Interest. Fairness. Doing No Harm. Maintaining Confidentiality.

© 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW Twomey Jennings 1 st Ed. 8 Define the problem. Identify who could be injured. Define the problem from opposing viewpoint. Would you be willing to tell your family about your decision? Would you be willing to tell the community? Reach a decision. Define the problem. Identify who could be injured. Define the problem from opposing viewpoint. Would you be willing to tell your family about your decision? Would you be willing to tell the community? Reach a decision. How to Analyze Ethical Dilemmas

© 2004 West Legal Studies in Business A Division of Thomson Learning BUSINESS LAW Twomey Jennings 1 st Ed. 9 Resolving Ethical Dilemmas Blanchard and Peale Test. –Is it legal? –Is it balanced? –How does it make me feel? Front-Page-of-the-Newspaper Test. –Would I want my decision published? Laura Nash Test. –Requires examination from all perspectives. Wall Street Journal Model (3 C’s model). –Is my conduct compliant with the law? –What contribution does this action make to others? –What are the consequences? Blanchard and Peale Test. –Is it legal? –Is it balanced? –How does it make me feel? Front-Page-of-the-Newspaper Test. –Would I want my decision published? Laura Nash Test. –Requires examination from all perspectives. Wall Street Journal Model (3 C’s model). –Is my conduct compliant with the law? –What contribution does this action make to others? –What are the consequences?