1. The Institutionalization of Business Ethics C H A P T E R 4 Ethical Decision Making For Business 8e Fraedrich/Ferrell/Ferrell CHAPTER 4

2. Institutionalization in Business Ethics Three dimensions to effective business ethics compliance –Voluntary practices: Include the beliefs, values, and voluntary contractual obligations All businesses have some voluntary commitments (e.g., philanthropy) –Mandated boundaries: Externally imposed boundaries of conduct (e.g., laws and regulations) –Core practices: Documented best practices, often encouraged by legal and regulatory forces

3. Most Laws Affecting Business Fall into 5 Categories Regulating competition Protecting consumers Protecting equity and safety Protecting the environment Those that encourage ethical conduct Source: Ryan McVay

4. Laws Regulating Competition Laws passed to prevent the establishment of monopolies, inequitable pricing practices, and other practices that reduce or restrict competition among businesses –e.g. Anti Trust Law, Fair-Trade Agreement

5. Laws Protecting Consumers Laws protecting consumers require businesses to provide accurate information about products and services and to follow safety standards

6. Laws Promoting Equity and Safety Laws promoting equity in the workplace protect the rights of minorities, women, older persons, and persons with disabilities

7. Laws Protecting the Environment Largely in response to stakeholder concerns about businesses’ impact on environment Sustainability has become an important concept to businesses lately. –Means “meeting the present needs without compromising （危及） future generations’ abilities to meet their own needs” –Being a green company can boost profits The Environmental Protection Agency (EPA)

8. Gatekeepers and Stakeholders Trust is the glue that holds businesses together Gatekeepers are overseers of business actions –Accountants, regulators, lawyers, financial rating corporations, auditors Source: © image100/Corbis

9. Philanthropic Issues Involve business’s contribution to the local community and society Quality of life issues –Responsible production of goods and services –Technology improvements…yet not damaging to the environment or jeopardizing ( 危及） personal privacy Philanthropic issues –Making the local community a better place to live Strategic philanthropy: Synergistic and mutually beneficial use of a company’s core competencies and resources to deal with social issues