2. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-1 BA 385 - Business Environment Week 3 ~ Part 1 Fall 2003

3. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-2 BA 385 - Business Environment Agenda Intro Current Events Presentations - Chapter 6 –Public Opinion –Descriptive vs. Normative –The Venn Model for Ethical Decision Making –Four Important Ethics Questions –Moral vs. Immoral vs. Amoral Management –Levels of Moral Judgment –Elements of Moral Judgment Business Ethics Fundamentals

4. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-3 BA 385 - Business Environment Interest in Business Ethics Public’s interest in business ethics increased during the last four decades Public’s interest in business ethics spurred by the media

5. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-4 BA 385 - Business Environment Public’s Opinion of Business Ethics Gallup Poll finds that only 17 percent to 20 percent of the public thought the business ethics of executives to be very high or high To understand public sentiment towards business ethics, ask three questions –Has business ethics really deteriorated? –Are the media reporting ethical problems more frequently and vigorously? –Are practices that once were socially acceptable no longer socially acceptable?

6. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-5 BA 385 - Business Environment Business Ethics:Today vs. Earlier Period Expected and Actual Levels of Business Ethics Ethical Problem Society’s Expectations of Business Ethics Actual Business Ethics 1950sEarly 2000sTime

7. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-6 BA 385 - Business Environment Business Ethics: What Does It Really Mean? Ethics involves a discipline that examines good or bad practices within the context of a moral duty Moral conduct is behavior that is right or wrong Business ethics include practices and behaviors that are good or bad

8. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-7 BA 385 - Business Environment Two Key Branches of Ethics Descriptive ethics involves describing, characterizing and studying morality –“What is” Normative ethics involves supplying and justifying moral systems –“What should be”

9. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-8 BA 385 - Business Environment Conventional Approach to Business Ethics Conventional approach to business ethics involves a comparison of a decision or practice to prevailing societal norms –Pitfall: ethical relativism Decision or Practice Prevailing Norms

10. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-9 BA 385 - Business Environment Sources of Ethical Norms Fellow Workers Family Friends The Law Regions of Country Profession Employer Society at Large Fellow Workers Religious Beliefs The Individual Conscience

11. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-10 BA 385 - Business Environment Ethics and the Law Law often represents an ethical minimum Ethics often represents a standard that exceeds the legal minimum EthicsLaw Frequent Overlap

12. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-11 BA 385 - Business Environment Making Ethical Judgments Behavior or act that has been committed Prevailing norms of acceptability Value judgments and perceptions of the observer compared with

13. Venn Diagram 6-14

14. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-13 BA 385 - Business Environment Four Important Ethical Questions What is? What ought to be? How to we get from what is to what ought to be? What is our motivation for acting ethically?

15. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-14 BA 385 - Business Environment 3 Models of Management Ethics 1.Immoral Management—A style devoid of ethical principles and active opposition to what is ethical. 2.Moral Management—Conforms to high standards of ethical behavior. 3.Amoral Management –Intentional - does not consider ethical factors –Unintentional - casual or careless about ethical considerations in business

16. Three Approaches to Management Ethics 6-18

17. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-16 BA 385 - Business Environment Making Moral Management Actionable Important Factors Senior management Ethics training Self-analysis

18. Kohlbergs Levels of Moral Judgment 6-22

19. Why Manager Behave Ethically 6-23

20. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-19 BA 385 - Business Environment External Sources of a Manager’s Values Religious values Philosophical values Cultural values Legal values Professional values

21. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-20 BA 385 - Business Environment Internal Sources of a Manager’s Values Respect for the authority structure Loyalty Conformity Performance Results

22. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 1-21 BA 385 - Business Environment Elements of Moral Judgment Moral imagination Moral identification and ordering Moral evaluation Tolerance of moral disagreement and ambiguity Integration of managerial and moral competence A sense of moral obligation