1. CHAPTER 5 Business Ethics and Ethical Decision Making

2. Chapter Objectives To define and describe the importance of business ethics To understand the diverse and complex nature of existing and emerging ethical issues To discuss the individual factors that influence ethical or unethical decisions To explore the effect of organizational relationships on ethical decision making To evaluate the role of opportunity in ethical or unethical decisions

3. Business Ethics Principles and standards that guide the behavior of individuals and groups in the world of business

4. 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.

5. Ethical Issues in Business Honesty and fairness Conflict of interest Fraud Discrimination Information technology

6. 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.

7. Moral Philosophies Consequentialism Egoism Utilitarianism Ethical formalism Justice theory

8. 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

9. 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.

10. Social Needs that Motivate Ethical/Unethical Behavior Need for achievement Need for affiliation Need for power

11. 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?

12. Significant Others Superiors, peers, and subordinates in the organization who influence the ethical decision- making process

13. Opportunity Conditions that limit barriers or provide rewards: –Financial gain –Recognition –Promotion –Positive feelings from a job well done

14. 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.

15. 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.