1. MGMT 452 Corporate Social Responsibility
Zeynep Gürhan-Canlı
Business Ethics and Ethical Decision Making
Chapter 5
March 3, 2010

2. Foundations of Business Ethics
Principles and standards that guide the behavior of individuals and groups in the world of business.
Ethical conflict in the organization dictates the need for organizational ethics policies and procedures.
Many ethics conflicts are resolved through negotiation or litigation.
Personal morality is often not sufficient to help people navigate through difficult legal issues.
Antitrust, conflict of interest, etc.

3. Ethical Issues in Business
An ethical issue is a problem, situation, or opportunity requiring an individual, group, or organization to choose among several actions that must be evaluated as right or wrong, ethical or unethical.
Ethical issues:
Honesty and fairness
Conflict of interest
Fraud
Discrimination
Information technology

4. Abusive or Intimidating Behavior
Abusive or intimidating behavior is the most common ethical problem for employees.
It can mean anything from physical threats, false accusations, annoying a coworker, profanity, insults, yelling, harshness, to ignoring someone, or being unreasonable.

5. Lying
To be honest is to tell the truth to the best of your ability. Lying relates to distorting the truth.
Three major types of lies:
Joking without malice, white-lie told in order not to hurt someone’s feelings
Lying by commission, creating a perception or belief by words that intentionally deceives
Lying by omission, intentionally not informing the receiver of material facts

6. Conflict of Interest
A conflict of interest arises when an individual must choose whether to advance his or her own personal interests, those of the organization, or those of some other group.
Organizations often prohibit employees from accepting bribes, personal payments, gifts, or special favors.

7. Fraud
Fraud is any false communication that deceives, manipulates or conceals facts in order to create a false impression or damage others.
Types of fraud
Accounting fraud
Marketing fraud

8. Consumer Fraud
Consumer fraud occurs when consumers attempt to deceive businesses for their own gain. It involves intentional deception to derive an unfair economic advantage by an individual or group over an organization.
For example
Shoplifting
Price-tag switching
Lying to obtain age-related and other discounts
Taking advantage of return policies by returning clothing that has been worn

9. Discrimination Affirmative action programs
Programs that involve efforts to recruit, hire, train, and promote qualified individuals from groups that have traditionally been discriminated against on the basis of race, gender or other characteristics.
Discrimination is still a significant ethical issue forty years after the passage of Title VII of the Civil Rights Act.

10. Information Technology
As the use of the Internet increases, the areas of concern related to its use have increased.
For example
Monitoring employee use of available technology
Consumer privacy
Site development and online marketing
Legal protection of intellectual property such as music, books, and movies

11. The Ethical Decision Making Process
Factors that influence the ethical decision-making process include:
Individual factors.
Organizational relationships.
Opportunity.
The strongest factor influencing employee behavior is organizational relationships.
Role of peers and coworkers in impacting workplace behavior

12. Moral Philosophies Consequentialism Egoism Utilitarianism
A decision is right or acceptable if it helps achieve the desired results
Egoism
maximizing one’s own self-interest
Utilitarianism
Greatest good for the greatest number of people
Ethical formalism
Focuses on the rights of the individual
Justice theory
Evaluations of fairness

13. Kohlberg’s Model: Stages of Moral Development
Punishment and obedience
Individual instrumental purpose and exchange
Mutual interpersonal, expectation, relationships, and conformity
Social justice and conscience maintenance
Prior rights, social contract, or utility
Universal ethical principles

14. Kohlberg’s Model People progress through the previous six stages.
Cognitive moral development should be viewed as a continuum.
People’s moral beliefs and behavior change as they gain education and experience.
There are universal values by which people in the highest level of moral development abide.

15. Social Needs that Motivate Ethical/Unethical Behavior
Need for achievement
Preference for goals that are well defined and moderately challenging
Need for affiliation
Inclination to work with others in the organization rather than alone
Need for power
Desire to influence and control others

16. Corporate Culture
Values, beliefs, goals, norms, and rituals shared by members or employees of an organization.
What is important?
How do we treat each other?
How do we do things around here?
Conveyed through employee handbooks, codes of ethics, memos, and ceremonies.

17. Corporate Culture (cont.)
Gives members meaning and offers direction about how to behave and deal with problems.
Ethical climate
Part of corporate culture that relates to an organization’s expectations about appropriate conduct and focuses specifically on issues of right and wrong.

18. Significant Others
Superiors, peers, and subordinates in the organization who influence the ethical decision-making process.
CEO establishes the ethical tone for the organization.
Obedience to authority accounts for employees following superior’s directives.
The more employees are exposed to unethical activity by co-workers, the more likely they are to also behave unethically.

19. Opportunity Conditions that limit barriers or provide rewards:
Financial gain
Recognition
Promotion
Positive feelings from a job well done
Usually relates to employees’ immediate job context
Where they work
With whom they work
The nature of the work

20. How to Create Ethical Relationships in Business
Listen and learn
Identify the ethical issue
Create and analyze options
Identify the best options
Explain decision and resolve | any differences that may arise

21. Creating an Ethical Climate
Top managers, employees, and stakeholders must support the philosophy that all organizations have responsibilities that extend beyond legal and economic obligations.
Members of the organization must be willing to share their values about workplace ethics.
Ethical concerns should be incorporated into strategic planning.
Management must develop a mechanism for assessing its progress in making ethical decisions that contribute to social responsibility.