1. © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. McGraw-Hill/ Irwin 5-1 Business and Society POST, LAWRENCE, WEBER Ethical Dilemmas in Business Chapter 5

2. © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. McGraw-Hill/ Irwin 5-2 Figure 5-1 Observations of unethical behavior at work Percentage of type of observed misconduct: Unsafe working conditions 56% Deceptive sales practices 56% Mishandling proprietary or confidential information 50% Violations of privacy rights 38% Shipping low-quality or unsafe products 37% Employment discrimination 36% Sexual harassment 34% Altering product quality or safety test results 32% Antitrust violations or unfair competitive practices 32% Environmental breaches 31% Source: 2000 Organizational Integrity Survey: A Summary, Integrity Management Services, KPMG LLP

3. © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. McGraw-Hill/ Irwin 5-3 Figure 5-2 Why should business be ethical? Fulfill public expectation for business. Prevent harming others. Seek profitability. Improve business relations and employee productivity. Reduce penalties under U.S. Corporate Sentencing Guidelines. Protect business from others. Protect employees from their employers. Promote personal morality.

4. © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. McGraw-Hill/ Irwin 5-4 Figure 5-3 Why ethical problems occur in business

5. © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. McGraw-Hill/ Irwin 5-5 Figure 5-4 International ethics codes and ethical issues addressed in codes Source: William C. Frederick, “The Moral Authority of Transnational Corporate Codes,” Journal of Business Ethics 10 (1991), pp. 165-177; and Kathleen A. Getz, “International Codes of Conduct: An Analysis of Ethical Reasoning,” Journal of Business Ethics 9(1990), pp. 567-577.

6. © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. McGraw-Hill/ Irwin 5-6 Exhibit 5-A Professional codes of conduct in accounting American Institute of Certified Public Accountants (AICPA) Responsibilities: in carrying out their responsibilities as professionals, members should exercise sensitive professional and moral judgments. The Public Interest: members should act in a way that will honor the public interest. Integrity: members should perform all professional responsibilities with the highest sense of integrity. Objectivity and Independence: a member should maintain objectivity and be free of conflicts of interest in discharging services. Due care: a member should discharge professional responsibility to the best of the member’s ability. Scope and nature of services: members should observe the Principles of the Code of Professional Conduct in determining the scope and nature of services to be provided. Source: www.aicpa.org.

7. © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. McGraw-Hill/ Irwin 5-7 Exhibit 5-A(continued) Professional codes of conduct in finance Association for Investment Management and Research (AIMR) Members of the Association shall: 1) Act with integrity, competence, dignity, and in an ethical manner when dealing with the public, clients, prospects, employers, employees, and fellow members. 2) Practice and encourage others to practice in a professional and ethical manner that will reflect credit on members and their profession. 3) Strive to maintain and improve their competence and the competence of others in the profession. 4) Use reasonable care and exercise independent professional judgment. Source: www.aimr.org/ethics

8. © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. McGraw-Hill/ Irwin 5-8 Exhibit 5-B Professional codes of conduct in marketing American Marketing Association (AMA) Members of the AMA have embraced the following topics: Marketers must accept responsibility for the consequences of their activities. Marketers shall uphold and advance the integrity, honor, and dignity of the marketing profession. Participants in a marketing exchange should be able to expect that products services offered are safe, communications about offered products and services are not deceptive, all obligations in an exchange are discharged in good faith, and appropriate internal methods exist for equitable redress of grievances concerning purchases. Marketers should not demand, encourage or apply coercion to obtain unethical behavior in their relationships with others. Source: www.awma.org

9. © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. McGraw-Hill/ Irwin 5-9 Exhibit 5-B(continued) Professional codes of conduct in information technology Source: www.acm.org/constitution/code Association for Computing Machinery (ACM) General imperatives for ACM members include: contributing to society and human well-being, avoid harm to others, be honest and trustworthy, be fair and take action not to discriminate, honor property rights, honor copyrights and patents, give proper credit for intellectual property, respect privacy of others, and honor confidentiality.

10. © The McGraw-Hill Companies, Inc., 2002 All Rights Reserved. McGraw-Hill/ Irwin 5-10 Exhibit 5-C Global anticorruption and bribery efforts The Organization for Economic Cooperation and Development treaty on combating bribery was ratified in 1998 by the U.S., U.K., Canada, Germany, and Japan. The central provision required each signatory to make it a criminal offense to offer any undue pecuniary promise to a foreign public official or third party. The European Criminal Law Convention on Corruption called for criminal statutes making “trading in influence” a crime in 1998. Members from the Global Forum on Fighting Corruption and Safeguarding Integrity among Justice and Security Officials (1999) declared that governments should adopt effective anti-corruption principles and practices. In September 1999, Russian politicians, former intelligence chiefs, and lawyers formed a national anti-corruption committee in response to $20 billion lost in graft, bribery, and kickbacks.