2. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 6-1 Chapter 6 Business Ethics Fundamentals 1 Business Ethics Fundamentals Search the Web Ethics Officers Association is a professional association of managers of corporate ethics and compliance. Visit EOA’s web site at:: www.eoa.org www.eoa.org

3. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 6-2 Chapter 6 Business Ethics Fundamentals 2 Chapter Six Objectives Describe how the public regards business ethics Provide a definition of business ethics Explain the conventional approach to business ethics Analyze economic, legal, and ethical aspects of business using the Venn Model Identify four important ethics questions Describe three models of management ethics Discuss Kohlberg’s three levels of developing moral judgment Identify the elements of moral judgment

4. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 6-3 Chapter 6 Business Ethics Fundamentals Chapter Six Outline Business Ethics and Public Opinion What Does Business Ethics Mean? Ethics, Economics and Law: Venn Model Four Important Ethics Questions Three Models of Management Ethics Making Moral Management Actionable Developing Moral Judgment Elements of Moral Judgment Summary

5. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 6-4 Chapter 6 Business Ethics Fundamentals Introduction to Chapter Six Business Ethics Public’s interest in business ethics increased during the last four decades Public’s interest in business ethics spurred by the media

6. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 6-5 Chapter 6 Business Ethics Fundamentals Introduction Inventory of Ethical Issues in Business Employee-Employer Relations Employer-Employee Relations Company-Customer Relations Company-Shareholder Relations Company-Community/Public Interest

7. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 6-6 Chapter 6 Business Ethics Fundamentals 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?

8. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 6-7 Chapter 6 Business Ethics Fundamentals Business Ethics: What Does It Really Mean? Expected and Actual Levels of Business Ethics Ethical Problem Society’s Expectations of Business Ethics Actual Business Ethics 1950sEarly 2000sTime Business Ethics:Today vs. Earlier Period

9. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 6-8 Chapter 6 Business Ethics Fundamentals Business Ethics: What Does It Really Mean? Definitions 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

10. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 6-9 Chapter 6 Business Ethics Fundamentals Business Ethics: What Does It Really Mean? 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”

11. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 6-10 Chapter 6 Business Ethics Fundamentals 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

12. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 6-11 Chapter 6 Business Ethics Fundamentals 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

13. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 6-12 Chapter 6 Business Ethics Fundamentals Ethics and the Law Law often represents an ethical minimum Ethics often represents a standard that exceeds the legal minimum EthicsLaw Frequent Overlap

14. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 6-13 Chapter 6 Business Ethics Fundamentals Making Ethical Judgments Behavior or act that has been committed Prevailing norms of acceptability Value judgments and perceptions of the observer compared with

15. Ethics, Economics, and Law 6-14

16. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 6-15 Chapter 6 Business Ethics Fundamentals 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?

17. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 6-16 Chapter 6 Business Ethics Fundamentals 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

18. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 6-17 Chapter 6 Business Ethics Fundamentals 3 Models of Management Ethics Three Types Of Management Ethics

19. Three Approaches to Management Ethics 6-18

20. Three Models of Management Morality and Emphasis on CSR 6-19

21. Moral Management Models and Acceptable Stakeholder Thinking 6-20

22. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 6-21 Chapter 6 Business Ethics Fundamentals Making Moral Management Actionable Important Factors Senior management Ethics training Self-analysis

23. Developing Moral Judgment 6-22

24. Developing Moral Judgment 6-23

25. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 6-24 Chapter 6 Business Ethics Fundamentals Developing Moral Judgment External Sources of a Manager’s Values Religious values Philosophical values Cultural values Legal values Professional values

26. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 6-25 Chapter 6 Business Ethics Fundamentals Developing Moral Judgment Internal Sources of a Manager’s Values Respect for the authority structure Loyalty Conformity Performance Results

27. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 6-26 Chapter 6 Business Ethics Fundamentals 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

28. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 6-27 Chapter 6 Business Ethics Fundamentals Elements of Moral Judgment Amoral ManagersMoral Managers Moral Imagination Moral Identification Moral Evaluation Tolerance of Moral Disagreement and Ambiguity Integration of Managerial and Moral Competence A Senses of Moral Obligation

29. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 6-28 Chapter 6 Business Ethics Fundamentals Selected Key Terms Amoral management Business ethics Compliance strategy Conventional approach to business ethics Descriptive ethics Ethical relativism Ethics Feminist Ethics Immoral management Integrity strategy Intentional amoral management Kohlberg’s levels of moral development Moral development Moral management Normative ethics Unintentional amoral management

30. Business and Society: Ethics and Stakeholder Management, 5E Carroll & Buchholtz Copyright ©2003 by South-Western, a division of Thomson Learning. All rights reserved. 6-29 Chapter 6 Business Ethics Fundamentals Selected Key Terms Amoral management Business ethics Ethics Immoral management Levels of moral development Moral management Morality