1. McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. Chapter Seven Business Ethics Part 3 Managing Ethics

2. McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. 7-2 Chapter Seven Learning Objectives ETHICSBUSINESS ETHICSDefine ETHICS, more particularly, BUSINESS ETHICS. AMORALITYMORAL UNITYDiscuss and develop two theories of ethical behavior: AMORALITY and MORAL UNITY. Learn to appreciate the four major sources of ethical values in business. Understand how Business Ethics in other countries are shaped by environmental factors and are, therefore, different from ours. Look at the factors in our own business environment that influence ethical behavior. Study how Ethics is effectively built into an organization. Beg a final question: “Is behavior today more ethical than in the past?”

3. McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. 7-3 Los Hermanos Eticas ETHICS IS THE STUDY OF GOOD AND EVIL, JUST AND UNJUST RIGHT AND WRONG,

4. McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. 7-4 I BELIEVE IN THE THEORY OF AMORALITY! I DO WHAT I WANT UNLESS IT BREAKS THE LAW. I’M IN BUSINESS TO MAKE MONEY, NOT TO BE NICE TO PEOPLE.

5. McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. 7-5 I BELIEVE IN THE THEORY OF MORAL UNITY. THERE IS NO SEPARATE AND MORE PERMISSIVE STANDARD FOR GETTING POWER AND MAKING MONEY.

6. McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. 7-6 Sources of the Business Ethos BUSINESS ETHICS RELIGIONLAW CULTUREPHILOSOPHY

7. McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. 7-7 Aristotle’s Theory of Responsibility You are responsible for your actions unless they are involuntary. The two factors that create involuntariness are: IGNORANCE 1.IGNORANCE of facts or consequences of an act; INCAPACITY 2.INCAPACITY to perform an action due to a.high costs b.no power c.no alternative d.external force CAUTION: “There are some things such that a man cannot be compelled to do them—that he must sooner die than do, though he suffer the most dreadful fate.” Aristotle in The Nicomachean Ethics

8. McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. 7-8 Factors that Shape Business Ethics in Other Countries HISTORICAL EXPERIENCE CULTURAL PHILOSOPHY and RELIGION STAGE OF ECONOMIC DEVELOPMENT

9. McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. 7-9 Viewpoints about Ethical Variations ETHICAL UNIVERSALISM Behavior that fulfills basic needs should be the same – everywhere. ETHICAL RELATIVISM Cultural experience creates widely divergent values. Ethical values are subjective.

10. McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. 7-10 Factors Influencing Ethical Behavior Leadership Corporate Culture Strategy and Performance Individual Characteristics Have an ethical day!

11. McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. 7-11 How to Build in Ethics TOP MANAGEMENT COMMITMENT MISSION STATEMENT ETHICS CODE POLICIES/PROCEDURES TRAINING WHISTLE-BLOWER’S HOTLINE ETHICS OFFICER INDEPENDENT AUDIT DISCIPLINARY ACTION

12. McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. 7-12 “Is behavior today, overall, more ethical than in the past?” NO EVIDENCE SUGGESTS THAT THIS IS TRUE.