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Introduction to Business Ethics

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David Mackrory

on 28 January 2014

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Transcript of Introduction to Business Ethics

Differences across organizational types
Regional differences: Europe, North America, Asia
The individual
Europe
N. America
Asia
Who is responsible for ethical conduct in business?
Who is the key actor in business ethics?
What are the key guidelines for ethical behaviour?
What are the key issues in business ethics?
What is the dominant stakeholder management approach?
Top management
Government, corporations
Managerial discretion
Corporate governance and accountability
Implicit multiple stakeholder approach, benign managerialism
The corporation
Corporate codes of ethics
Misconduct and immorality in single decisions situations
Focus on shareholder value
Social control by the collective
Government, trade unions, corporate associations
Negotiated legal framework of business
Social issues in organizing the framework of business
Formalised multiple stakeholder approach
Observed ethical misconduct across sectors
Source: Ethics Resource Center (2008)
Types of misconduct across sectors
30
Source: Ethics Resource Center (2008)
Corporate commitments to sustainability
“At BP we define sustainability as the capacity to endure as a group: by renewing assets; creating and delivering better products and services that meet the evolving needs of society; attracting successive generations of employees; contributing to a sustainable environment; and retaining the trust and support of our customers, shareholders and the communities in which we operate.”
“[Sustainability] means enhancing our relationship with host and partner governments, building consumer confidence in diamonds, and ensuring our activities contribute positively to … both present and future generations.”
“Corporate responsibility (CR) at Nokia is a collective effort. We believe that management of CR issues is most effective when sustainability policies and programs are embedded in every aspect of our operations. ”
“ [For Toyota, a guiding principle is] ‘contributing to the development of a prosperous society through the manufacture of automobiles.’ ‘Contributing to the development of a prosperous society’ means ‘contributing to the sustainable development of the earth.’”
“Values, social responsibility and active sustainability are integral [to] our company culture. We are future-oriented in our approach to important issues such as climate change. We operate a broad range of [R&D] activities and provide trend-setting approaches to the mobility of tomorrow.”
Company
Sustainability statement
Source
BP
DeBeers
Nokia
Toyota
Volkswagen
Sustainability Report, 2007
www.debeersgroup.com, 2009
CSR Report, 2007
Sustainability Report, 2008
www.volkswagenag.com, 2009
Ethical impacts of globalization
Globalization provides potential for greater profitability, but also greater risks. Lack of regulation of global capital markets, leading to additional financial risks and instability.
Corporations outsource production to developing countries in order to reduce costs in global marketplace - this provides jobs but also raises the potential for exploitation of employees through poor working conditions.
Global products provide social benefits to consumers across the globe, but may also meet protests about cultural imperialism and westernization. Globalization can bring cheaper prices to customers, but vulnerable consumers in developing countries may also face the possibility of exploitation by MNCs.
Suppliers in developing countries face regulation from MNCs through supply chain management. Small scale indigenous competitors exposed to powerful global players.
Global business activities brings the company in direct interaction to local communities with possibility for erosion of traditional community life; globally active pressure groups emerge with aim to “police“ the corporation where governments are weak and tolerant.
Stakeholders
Ethical impacts of globalization
Stakeholders
Employees
Suppliers & competitors
Civil society (NGOs, etc)
Government & regulation
Consumers
Globalization weakens governments and increases the corporate responsibility for jobs, welfare, maintenance of ethical standards, etc. Globalization also confronts governments with corporations from different cultural expectations about issues such as bribery, corruption, taxation, and philanthropy.
The relationship between morality, ethics and ethical theory

…that can be applied to any situation.

… to produce ethical
theory …

Ethics rationalizes morality …

Morality

Ethics

Ethical theory
Potential solutions to ethical problems
Ethics and the law
Ethics
Law
grey
area

The three components of sustainability
Why is business ethics important?
Power and influence of business in society
Potential to provide major contribution to society
Potential to inflict harm
Increasing demands from stakeholders
Lack of business ethics education or training
Continued occurrence of ethical infractions
Evaluating different ways of managing business ethics
Interesting and rewarding
Relevance of globalization for business ethics

Cultural issues
Legal issues
Accountability issues

Globalization can affect all stakeholders of the
corporation
Defining sustainability
Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs. (World Commission on Environment and Development 1987)
Sustainability refers to the long-term maintenance of systems according to environmental, economic and social considerations
Summary
Definition of business ethics
Business ethics is vital for business in contemporary capitalism
Global view is essential to understand ethical issues
Different regions have distinctly different perspective on business ethics issues
Sustainability is an important goal for business ethics
Crane and Matten
Business Ethics (3rd Edition)
Chapter 1
Introducing
Business Ethics

Lecture 1
Overview
What is business ethics?
Why is business ethics important?
Globalization: a key context for business ethics?
Sustainability: a key goal for business ethics?
What is business ethics?
Business ethics is the study of business situations, activities, and decisions where issues of right and wrong are addressed.
Defining morality, ethics and ethical theory
Morality is concerned with the norms, values and beliefs embedded in social processes which define right and wrong for an individual or a community.
Ethics is concerned with the study of morality and the application of reason to elucidate specific rules and principles that determine right and wrong for any given situation.
These rules and principles are called ethical theories.
What is globalization?
According to Scholte (2005) globalization is not:
‘internationalization’
‘liberalization’
‘universalization’
‘westernization’
Globalization is: a process which diminishes the necessity of a common and shared territorial basis for social, economic, and political activities, processes, and relations.
‘deterritorialization’
Different approaches to business ethics
Who is responsible for ethical conduct in business?
Who is the key actor in business ethics?
What are the key ethical guidelines for ethical behaviour?
What are the key issues in business ethics?
What is the most dominant stakeholder management approach?
Triple bottom line
Coined by John Elkington
Bottom line thinking suggests sustainability as a goal
Three dimensions:
Environmental perspectives
Economic perspectives
Social perspectives
Globalization: a key context for business ethics?
International perspectives on business ethics
Sustainability: a key goal for business ethics?
Does the type of organisation matter?
There are many morally questionable acts that are not against the law. Examples?
Full transcript