Classification of Ethical Issues in Business Susan D. Baker and Debra R. Comer1 This list contains five broad categories for classifying ethical issues that may arise in business. Some examples of specific types of these issues are bullet-pointed in each category. Categories Human Resource Issues (responsibilities employers have to their employees) • hiring, compensation, performance appraisal, discipline, and termination procedures • training • company benefits • privacy (drug testing) • privacy (e-mail, voicemail, computer, hacking, whacking, phone eavesdropping) • diversity discrimination • sexual harassment • favoritism • bullying • occupational health and safety • work-life balance • company’s loyalty to employees Consumer Confidence Issues (responsibilities employers and employees have to their customers/clients) • customer confidentiality/privacy • product safety • truth in advertising (withholding information from customers, hiding/distorting/ falsifying information) • treatment of customers regarding pricing, billing, quality, etc. • selling customers products/services they don’t need • favoritism toward/discrimination against customers Use of Corporate Resources Issues (responsibilities employees have to their employers and fellow employees) • use of corporate reputation • use of corporate resources • compliance with oversight agencies (e.g., accrediting bodies or regulators) • reports and reporting practices • providing honest information • employee theft (ideas, supplies, time, expense account padding) • fraud • employee integrity (honesty, taking credit for someone else’s ideas/work, stealing someone else’s ideas/work, not taking responsibility for one’s mistakes, asking for special treatment that co-workers don't receive, doing one's share of work) • employee loyalty to company Conflict of Interest Issues (responsibilities employees have to their employers and stakeholders) • overt bribes • subtle bribes (gifts, entertainment) • use of personal influence (to benefit family and/or friends) • use of privileged information/insider trading • company-vendor relations Corporate Social Responsibility Issues (responsibilities organizations have to their stakeholders) • public health and safety • environmental (e.g., conservation of natural resources, environmental pollution, environmental sustainability) • corporate philanthropy by company (includes community service) Other Ethical Issues (Not Included in Above Categories or Applicable to More Than One Category) • whistleblowing • fiduciary responsibilities _____________________________________ 1 ©2014 Susan D. Baker and Debra R. Comer. Adapted from Baker, S. D., & Comer, D. R. (2012). 'Business ethics everywhere': An experiential exercise to develop students' ability to identify and respond to ethical issues in business Journal of Management Education, 36(1), 95 - 125. BUAD 625: List of Stakeholders Typically stakeholders are identified as “primary” or “secondary” according to their relationship with the firm. This may be based on economic relationship (Lawrence & Weber, 2014) or on contributions to the long-term health and success of the organization (Waddock, 2009). Some examples follow. Use this list as you consider case analyses and real-world examples: Primary Stakeholders for Business Organizations 1. Stockholders/owners 2. Employees (including managers) 3. Customers 4. Suppliers 5. Distributors (Wholesalers, retailers) 6. Partners and Allies 7. Others (financial relationship): ?? 8. Others (long-term health and success): Communities; Government Secondary Stakeholders 1. Media 2. Activists 3. Citizen groups 4. General public 5. NGOs (independent citizen organizations that are legal entities such as Rotary International; USAID; human advocacy groups) 6. IGOs (international governmental organizations such as United Nations; World Health Organization; Islamic Development Bank; International Monetary Fund) 7. Trade, industry, and civic associations ********** Nonprofit and nongovernmental organizations and governments would have different sets of primary stakeholders. Notice the differences, particularly for governmental organizations. Primary Stakeholders for Nonprofit and Nongovernmental Organizations 1. Funders 2. Employees (including managers) 3. Clients 4. Suppliers 5. Distributors (Wholesalers, retailers) 6. Other: Primary Stakeholders for Governmental Organizations (e.g. Agencies, Departments) 1. Relevant political bodies 2. Employees (including managers) 3. Clients or customers 4. Society (community) 5. General public (citizens, taxpayers) References: Lawrence, A. T., & Weber, J. (2014). The corporation and its stakeholders. Business and society: Stakeholders, ethics, public policy (14th ed., pp. 2-23). New York: McGraw-Hill. Waddock, S. (2009). Stakeholders: the relationship key. Leading corporate citizens: Vision, values, value added (3rd ed., pp.183225). New York: McGraw-Hill/Irwin. • Ethics, Stakeholders, Corporate Strategy, and Value Creation • Corporate Citizenship: Social Responsibility, Responsiveness, and Performance 1 Learning Outcomes (1 of 2) 1. Explain the importance of stakeholder theory and compare and contrast it with shareholder approach. 2. Provide business examples to explain stakeholder theory 3. Explain the components of corporate social responsibility (CSR) - economic, legal, ethical, and philanthropic. 4. Provide business examples of CSR and corporate citizenship. 2 Learning Outcomes (2 of 2) 5. Explain how corporate citizenship develops in stages in companies. 6. Describe the triple bottom line and its relevance to sustainability. 7. Describe the socially responsible investing movement’s characteristics. 3 Change and the Managerial View of Business Four Major Trends in Business Economic deregulation ʹ less government control • Political liberalization ʹ fall of communism, market reforms • Environmental stewardship ʹ taking better care of the world • Advances in Information Technology ʹ brings vast improvements in productivity and innovation • 4 View of Business Traditional Managerial View New Business View • Shareholder Approach • Stakeholder Approach • Shareholders are the • Business is a set of center of the business. relationships among • Change only happens groups that have a when the shareholders stake (vested interest) are unhappy in the activities of the business. • Shareholders are only one of many stakeholders 5 6 Discussion • What is the separation fallacy: what is the integration thesis (I and II)? Why are they important to business. 7 Stakeholder Framework • Does all stakeholders have equal impact on business decisions?? Why or why not?? • Definitional Stakeholder • Instrumental Stakeholder 8 Discussion Activity • In a group, identify a company that you think does business ethically? • Do you think the three levels of stakeholder framework is important for the business you indicated and how are they connected? • Level 1 - Value Proposition of the Organization • Level 2 Principles for Stakeholder Cooperation • Level 3 Respecting societal standards of conduct 9 Corporate Social Responsibility As a Concept • Corporate social responsibility (CSR) refers to efforts by businesses to work with stakeholders in achieving improved economic, environmental and social performance, sometimes known as the triple bottom line but also identified as corporate citizenship or sustainability. 10 Historical Perspective on CSR Economic Model Legal Model Social Model Stakeholder Model 11 The Pyramid of CSR 12 The CSR Equation Economic Responsibilities + Legal Responsibilities + Ethical Responsibilities = Total Corporate CSR + Philanthropic Responsibilities A stakeholder perspective focuses on the CSR pyramid as a unified whole. 13 Discussion - Debate • In your view, what is the single strongest argument against the idea of corporate social responsibility? What is the single strongest argument for corporate social responsibility 14 Arguments Against CSR • Classical Economics: The classical economic view is that business’ only goal is the maximize profits for owners. • Business Not Equipped: Business is not equipped to handle social activities. • Dilutes Business Purpose: It dilutes the primary purpose of business. • Too Much Power Already: Businesses have too much power already . • Global Competitiveness: It limits the ability to compete in a global marketplace. 15 Arguments For CSR • Enlightened self-interest: Businesses must take actions to ensure long-term viability. • Warding off government regulations. This is one of the most practical reasons. • Resources Available: Business has the resources and expertise. Let it try. • Proaction is better than Reaction. Proaction is also less costly. • Public supports: the public strongly supports CSR. 16 Business Responses to calls for CSR Make the Business Case for CSR Defensive approach Cost-benefit approach Strategic approach Innovation and learning approach 17 IBM - CSR 18 The Business Case for CSR 6 Reasons for Embracing CSR 1. 2. 3. 4. 5. 6. Innovation Cost savings Brand differentiation Long-term thinking Customer engagement Employee engagement Business Benefits of CSR 1. Win new business 2. Increase customer retention 3. Develop and enhance relationships with customers, suppliers, and networks. 4.Attract, retain, and maintain a happy workforce and be an Employer of Choice. 5.Save money on energy and operating costs and manage risk. 6.Differentiate itself from competitors 7.Improve its business reputation and standing 8.Provide access to investment and funding opportunities 9.Generate positive publicity and media opportunities due to media interest in ethical business activities. 19 Discussion Differentiate between corporate social responsibility and corporate social responsiveness. Given an example of each and how does corporate social performance relate to these terms? 20 Corporate Citizenship Broad View • A reflection of shared moral and ethical principles. • A vehicle for integrating individuals into the communities in which they work. • A form of enlightened self-interest that balances stakeholders’ claims and enhances a company’s long-term value. Narrow View • Corporate community relations 21 Stages of Corporate Citizenship 22 Development Challenges That Trigger Movement of Corporate Citizenship 23 Global Corporate Citizenship • …and Global CSR are topics in which there has been an explosion of interest. • Multinational enterprises are expected to: • be good corporate citizens in the countries in which they do business. • tailor their initiatives to conform to the cultural environment. • International academics and business people around the world are now researching and advocating CSR and corporate citizenship concepts. • Convergence in global CSR approaches will continue as the world economic stage becomes the common environment within which businesses function. 24 The Relationship Between Social and Financial Performance Perspective 1: Socially Responsible firms are more financially profitable. Good Corporate Social Performance Good Corporate Financial Performance Good Corporate Reputation Perspective 2: A firm’s financial performance drives its social performance. Good Corporate Financial Performance Good Corporate Social Performance Good Corporate Reputation Perspective 3: There is an interactive Relationship Among CSP, CFP, and CR. Good Corporate Social Performance Good Corporate Financial Performance Good Corporate Reputation 25 One Bottom Line, or Many? • The stakeholder-bottom line perspective • Impacts or benefits of social performance cannot be fully measured or appreciated by considering only the impact on the firm’s bottom line. • CSP cannot be fully comprehended unless it includes impacts and measures on consumers. employees, the community and other stakeholder groups. 26 The Triple Bottom Line Perspective Business Must Attend to Three Key Spheres of Sustainability – • Economic • Social • Environmental The goal is corporate sustainability. 27 Socially Responsible, Sustainable, Ethical Investing Socially Responsible Investing - • Emerged in the 1970s • Over $3.74 trillion in socially responsible investments in the U.S. Social Screening • A technique used to screen firms for socially-responsible investment purposes. 28 TEAM CHARTER ASSIGNMENT Written assignment Definition of team charter: A document developed by team members that states the team’s mission, goals and guiding principles Deliverables: Submit an e-copy of your assignment by using the assignment link in Module 6 (one submission per team). The team charter should be typed double-spaced, 12 font-size, and should not exceed three pages. The team charter should be prepared using the foundation readings of “MIT IS&T Team Readings” and Stein and Hurd’s “Sanctions,” describe the contract and group dynamics practices of your team. Your charter should address the following issues: Issue Description Mission/Goal issues • What is the team trying to accomplish? How? Role Issues • • Norms and Ground Rules • • What roles will the team have? What roles should each member be doing to help the team accomplish its goals? What norms and ground rules (e.g. appropriate behavior, monitor process and progress, deal with individuals who dominate, don’t participate, resist, are too noisy/quiet) have your established for your team? How will you handle the roles within your team? (Permanent assignment? Rotating?) How will you make decisions in your team? What rules have you developed for participation and information sharing? What standards did you develop for attendance and lateness? How will you deal with interruptions? What standards did you develop to maintain quality in your team assignments? How will your team handle interpersonal conflicts? How will your team resolve communications issues? What is your team's policy about team members who miss meetings or don't contribute to team assignments? What is your warning procedure for nonperforming members? • How can we best learn from each other? • • • • • • Sanction Issues Synergy Issues • • • List only the names of those team members who participated in the assignment. Those who haven't participated will not receive credit. You must submit by the due date else the assignment will not be graded. 
Purchase answer to see full attachment