Ethical Decision-Making Framework Model
Action
Make a
decision
Assessment
Make sure
you have al
lthe facts
about the
ethical
dillemia
Application
Apply ethical
principles to your
decision
Alternati
ves
Consider
your
choices
Analysis
Identify
your
decision
and tests
its validity
Assessment
Alternatives
Summary
Ethical
Assessment
#1
Ethical
Assessment
#2
Ethical
Assessment
#3
Week One
Summary
Week Two
Summary
Week Three
Summary
Week Four
Summary
Analysis
Application
Action
Notes
Ethical Decision-Making Framework Model
Week Five
Summary
Week Six
Summary
Week Seven
Summary
Week Eight
Summary
Instructions: Below (on page 2) is a sample of the template data to assist you in your creative
thinking for week one! On the weekly ethics portfolio, you are welcome to submit it along with
the week one assignment, however it is not required. It is a note taking template. I highly
encourage everyone to submit it each week, as this helps to keep you on track, but again, it is
not required. You will use the template note-taking document to assist you in the final ethics
portfolio assignment.
Additional Guidance:
For the week one assessment results, please add them to the template that you will use for the
final course project. This template is a type of “note taking” document. For the formal final
assignment, you will need to have your final project in paragraph format, proper APA format,
etc. For the purpose of the week one assignment, etc. you are welcome to just include bullet
point comments, as a note taking type record of your thoughts. Or you may elect to begin to
formalize the document in paragraph format. You will not be deducted credit if you submit
bullet point format for week one.
The instructions on this assignment are intentionally somewhat “loose” to not box you in on
your thinking. You can begin to relate some of your assessment results to the template
information. As you build this template document over the next several weeks, it will begin to
“come together” and make sense and you continue to record your thoughts on all the items
required each week. It may not seem to full start to make sense until week three or four, but it
will!
The week one assessment results serve as somewhat of a foundational start and you will
continue to build on those elements for the future weeks. You are welcome to discuss the
results “overall” and conceptually. You do not need to box your thinking into what only the
results say in black and white. Please feel free to expand on your thinking of what you believe
the results mean to you.
The great thing about an ethics class, is that there is really not a “wrong” answer! You just need
to show that you are outlining your thinking and that you continue to correlate your thinking to
Ethical Decision-Making Framework Model
the assignments each week. Sometimes you may say, “I didn’t really agree with everyone” And
that is ok! Or you may say, “My response this week didn’t directly tie into my assessment
results, but for this topic, I do feel differently because…” And that is ok!
Example:
Assessment
Alternatives
Summary
Ethical
If I had chosen
Assessment #1 ABC then my
results may have
been XYZ. If I had
not selected ABC
then my ethical
outlook may be
different in the
following ways…
XYZ
Analysis
Application
The Pro’s and Ethical principles
Con’s of my
from the reading
selection are… or a journal
ABC. They are article that
pro’s because support my
of XYZ. They viewpoints are…
are con’s
ABC
because of XYZ
Action
Notes
For the current
Any additional
time I will apply
thoughts that you
these actions in my may have!
professional life
by… ABC In the
future I could see
this impacting my
professional career
by… XYZ
Week 1- The Importance of Business Ethics and Your Personal Impact
People in all of their rich diversity are the basic building blocks of organizations. Everyone deserves to be
respected at work and to be satisfied with their jobs and accomplishments. Business ethics offers many
insights into managing individuals and teams for high performance in today’s complex workplace. In this
unit you will assess several elements of your personal views on ethics related to business. In this unit we
identify ethical value systems and describe the personal impact each employee has on business ethics
within an organization. As we go through week one you will be able to explore and examine several
varied elements of business ethics. The following are the core course objectives that we will accomplish
during week one.
Upon completing this unit you will be able to:
•
Explore conceptualizations of business ethics from an organizational perspective
•
Examine the historical foundations and evolution of business ethics
•
Provide evidence that ethical value systems support business performance
•
Gain insight into the extent of ethical misconduct in the workplace and the pressures for
unethical behavior
Chapter 1 Summary
This chapter provided an overview of the field of business ethics and introduced the framework for the
discussion of this subject. Business ethics comprises organizational principles, values, and norms that
may originate from individuals, organizational statements, or the legal system that primarily guide
individual and group behavior in business. Investors, employees, customers, special interest groups, the
legal system, and the community often determine whether a specific action is right or wrong, ethical or
unethical.
Studying business ethics is important for many reasons. Recent incidents of unethical activity in business
underscore the widespread need for a better understanding of the factors that contribute to ethical and
unethical decisions. Individuals’ personal moral philosophies and decision making experience may not
be sufficient to guide them in the business world. Studying business ethics helps you begin to identify
ethical issues and recognize the approaches available to resolve them.
The study of business ethics evolved through five distinct stages. Before 1960, business ethics issues
were discussed primarily from a religious perspective. The 1960s saw the emergence of many social
issues involving business and the concept of social conscience as well as a rise in consumerism, which
culminated with Kennedy’s Consumers’ Bill of Rights. Business ethics began to develop as an
independent field of study in the 1970s, with academics and practitioners exploring ethical issues and
attempting to understand how individuals and organizations make ethical decisions. These experts
began to teach and write about the idea of corporate social responsibility, an organization’s obligation
to maximize its positive impact on stakeholders and minimize its negative impact. In the 1980s, centers
of business ethics provided publications, courses, conferences, and seminars, and many companies
established ethics committees and social policy committees. The Defense Industry Initiative on Business
Ethics and Conduct was developed to guide corporate support for ethical conduct; its principles had a
major impact on corporate ethics.
However, less government regulation and an increase in businesses with international operations raised
new ethical issues. In the 1990s, government continued to support self-regulation. The FSGO sets the
tone for organizational ethics programs by providing incentives for companies to take action to prevent
organizational misconduct. The twenty-first century ushered in a new set of ethics scandals, suggesting
many companies had not embraced the public’s desire for higher ethical standards. The Sarbanes–Oxley
Act stiffened penalties for corporate fraud and established an accounting oversight board. The Dodd–
Frank Wall Street Reform and Consumer Protection Act was later passed to reform the financial system.
The current trend is away from legally based ethical initiatives in organizations and toward cultural
initiatives that make ethics a part of core organizational values. The ethical component of a corporate
culture relates to the values, beliefs, and established and enforced patterns of conduct employees use
to identify and respond to ethical issues. The term ethical culture describes the component of corporate
culture that captures the rules and principles an organization defines as appropriate conduct. Ethical
culture can be viewed as the character of the decision making process employees use to determine
whether their responses to ethical issues are right or wrong.
Research and anecdotes demonstrate building an ethical reputation among employees, customers, and
the general public provides benefits that include increased efficiency in daily operations, greater
employee commitment, increased investor willingness to entrust funds, improved customer trust and
satisfaction, and better financial performance. The reputation of a company has a major effect on its
relationships with employees, investors, customers, and many other parties and thus has the potential
to affect its bottom line.
Finally, this text introduces a framework for studying business ethics. Each chapter addresses some
aspect of business ethics and decision making within a business context. The major concerns are ethical
issues in business, stakeholder relationships, social responsibility and corporate governance, emerging
business ethics issues, the institutionalization of business ethics, understanding the ethical decision
making process, moral philosophies and cognitive moral development, corporate culture, organizational
relationships and conflicts, developing an effective ethics program, implementing and auditing the
ethics program, global business ethics, ethical leadership, and sustainability.
Week 2 - Key Relationships and Emerging Business Ethics Issues
Relationships are associated with both organizational success and misconduct. Business ethics offers
many insights into social responsibility. In this unit you will assess several elements of relationship
between stakeholder orientation and social responsibility. In this unit we identify ethical issues within an
organization both past and present. As we go through week two you will be able to explore and examine
several varied elements of business ethics. The following are the core course objectives that we will
accomplish during week two.
Upon completing this unit you will be able to:
•
Define social responsibility
•
Examine the relationship between stakeholder orientation and social responsibility
•
Explore the role of corporate governance in structuring ethics and social responsibility in
business
•
List the steps involved in implementing a stakeholder perspective in social responsibility and
business ethics
•
Define ethical issues in the context of organizational ethics
•
Delineate misuse of company resources, abusive and intimidating behavior, lying, conflicts of
interest, bribery, corporate intelligence, discrimination, sexual harassment, fraud, financial
misconduct, insider trading, intellectual property rights, and privacy as business ethics issues
Chapter 02: Stakeholder Relationships, Social Responsibility, and Corporate Governance
Chapter 2 Summary
Business ethics, issues, and conflicts revolve around relationships. Customers, investors and
shareholders, employees, suppliers, government agencies, communities, and many others who have a
stake or claim in an aspect of a company’s products, operations, markets, industry, and outcomes are
known as stakeholders. Stakeholders are influenced by and have the ability to affect businesses.
Stakeholders provide both tangible and intangible resources that are critical to a firm’s long-term
success, and their relative ability to withdraw these resources gives them power. Stakeholders define
significant ethical issues in business.
Primary stakeholders are those whose continued association is absolutely necessary for a firm’s survival.
Secondary stakeholders do not typically engage in transactions with a company and are not essential to
its survival. The stakeholder interaction model suggests there are reciprocal relationships between a
firm and a host of stakeholders. The degree to which a firm understands and addresses stakeholder
demands is expressed as a stakeholder orientation and includes three sets of activities:
1. the generation of data about its stakeholder groups and the assessment of the firm’s effects on
these groups,
2. the distribution of this information throughout the company, and
3. the responsiveness of every level of the business to this intelligence.
A stakeholder orientation can be viewed as a continuum in that firms are likely to adopt the concept to
varying degrees.
Although the terms ethics and social responsibility are often used interchangeably, they have distinct
meanings. Social responsibility in business refers to an organization’s obligation to maximize its positive
impact and minimize its negative impact on society. There are four levels of social responsibility—
economic, legal, ethical, and philanthropic—and they can be viewed as a pyramid. The term corporate
citizenship is used to communicate the extent businesses strategically meet the economic, legal, ethical,
and philanthropic responsibilities placed on them by their stakeholders.
From a social responsibility perspective, business ethics embodies standards, norms, and expectations
that reflect the concerns of major stakeholders including consumers, employees, shareholders,
suppliers, competitors, and the community. Only if firms include ethical concerns in foundational values
and incorporate ethics into business strategies can social responsibility as a value be embedded in daily
decision making.
Issues in social responsibility include social issues, consumer protection issues, sustainability, and
corporate governance. Social issues are associated with the common good and include such issues as
childhood obesity and Internet privacy. Consumer protection often occurs in the form of laws passed to
protect consumers from unfair and deceptive business practices. Sustainability is the potential for the
long-term well-being of the natural environment, including all biological entities, as well as the mutually
beneficial interactions among nature and individuals, organizations, and business strategies. Corporate
governance involves the development of formal systems of accountability, oversight, and control.
Most businesses operate under the assumption that the main purpose of business is to maximize profits
for shareholders. The stakeholder model places the board of directors in the position of balancing the
interests and conflicts of various constituencies. Both directors and officers of corporations are
fiduciaries for the shareholders. Directors have a duty to avoid ethical misconduct and provide
leadership in decisions to prevent ethical misconduct in their organizations. To remove the opportunity
for employees to make unethical decisions, most companies develop formal systems of accountability,
oversight, and control known as corporate governance. Accountability refers to how closely workplace
decisions are aligned with a firm’s stated strategic direction and its compliance with ethical and legal
considerations. Oversight provides a system of checks and balances that limit employees’ and managers’
opportunities to deviate from policies and strategies intended to prevent unethical and illegal activities.
Control is the process of auditing and improving organizational decisions and actions.
There are two perceptions of corporate governance that can be viewed as a continuum. The shareholder
model is founded in classic economic precepts, including the maximization of wealth for investors and
owners. The stakeholder model adopts a broader view of the purpose of business that includes
satisfying the concerns of other stakeholders, from employees, suppliers, and government regulators to
communities and special interest groups.
Two major elements of corporate governance that relate to ethical decision making are the role of the
board of directors and executive compensation. The members of a public corporation’s board of
directors assume legal responsibility for the firm’s resources and decisions. Important issues related to
boards of directors include accountability, transparency, and independence. Boards of directors are also
responsible for appointing top executive officers and determining their compensation. Concerns about
executive pay center on the often-disproportionate relationship between executive pay and median
employee wages in the company.
An organization that develops effective corporate governance and understands the importance of
business ethics and social responsibility in achieving success should develop a process for managing
these important concerns. Although there are different approaches, steps have been identified that
have been found effective in utilizing the stakeholder framework to manage responsibility and business
ethics. These steps are
1. assessing the corporate culture,
2. identifying stakeholder groups,
3. identifying stakeholder issues,
4. assessing organizational commitment to social responsibility,
5. identifying resources and determining urgency, and
6. gaining stakeholder feedback.
Chapter 03: Emerging Business Ethics Issues - Reading
Chapter 3 Summary
Stakeholders’ concerns largely determine whether business actions and decisions are perceived as
ethical or unethical. When government, communities, and society become involved, what was merely
an ethical issue can quickly become a legal one. Shareholders can unwittingly complicate the ethical
conduct of business by demanding managers make decisions to boost short-term earnings, thus
maintaining or increasing the value of their stock.
A first step toward understanding business ethics is to develop ethical issue awareness, that is, to learn
to identify which stakeholder issues contain an ethical component. Characteristics of the job, the
corporate or local culture, and the society in which one does business can all create ethical issues.
Recognizing an ethical issue is essential to understanding business ethics and therefore to create an
effective ethics and compliance program that minimizes unethical behavior. Businesspeople must
understand the universal moral constants of honesty, fairness, and integrity. Without embracing these
concepts, running a business becomes difficult.
Fairness is the quality of being just, equitable, and impartial and overlaps with concepts of justice,
equity, and equality. The three fundamental elements that motivate people to be fair are equality,
reciprocity, and optimization. Equality relates to how wealth is distributed between employees within a
company, country, or globally; reciprocity relates to the return of favors approximately equal in value;
and integrity refers to a person’s character and is made up of two basic parts, a formal relation one has
to oneself and a person’s set of terminal, or enduring, values from which he or she does not deviate.
An ethical issue is a problem, situation, or opportunity that requires an individual, group, or organization
to choose among several actions that must be evaluated as right or wrong, ethical or unethical. By
contrast, an ethical dilemma has no right or ethical solution.
The misuse of company time and resources—especially computer resources—has become a major
ethical issue. Abusive or intimidating behavior includes physical threats, false accusations, being
annoying, profanity, insults, yelling, harshness, ignoring someone, and unreasonableness. Bribery is the
practice of offering something (usually money) in order to gain an illicit advantage. A conflict of interest
occurs when individuals must choose whether to advance their own interests, those of the organization,
or some other group. Corporate intelligence is the collection and analysis of information on markets,
technologies, customers, and competitors, as well as on socioeconomic and external political trends.
The tools of corporate intelligence are many. Corporate intelligence can be a legitimate business activity
but becomes unethical if deception is used to steal another firm’s trade secrets.
Another ethical/legal issue is discrimination, which is illegal in the United States when it occurs on the
basis of race, color, religion, sex, marital status, sexual orientation, public-assistance status, disability,
age, national origin, or veteran status. Additionally, discrimination on the basis of political opinions or
affiliation with a union is defined as harassment. Sexual harassment is a form of sex discrimination. To
build workforces that reflect their customer base, many companies initiated affirmative action
programs. In general, fraud is any purposeful communication that deceives, manipulates, or conceals
facts in order to create a false impression. There are several types of fraud: accounting, marketing, and
consumer.
An insider is any officer, director, or owner of 10 percent or more of a class of a company’s securities.
There are two types of insider trading: legal and illegal. Intellectual property rights involve the legal
protection of intellectual property such as music, books, and movies. Consumer advocates continue to
warn consumers about new threats to their privacy.
Week 3 - Essential Elements of Ethical Decision-Making in Business
There are many best practices as it relates to elements of an ethical culture and ethical responsibilities,
such as to improve quality of life and make communities the places where people want to do business,
raise families, and enjoy life. Business ethics offers many insights into appropriate core practices. In this
unit you will assess several elements of specific mandated requirements for legal compliance in
business. In this unit we identify the importance of morals and values in business ethics within an
organization. As we go through week three you will be able to explore and examine several varied
elements of business ethics. The following are the core course objectives that we will accomplish during
week three.
Upon completing this unit you will be able to:
•
Distinguish between the voluntary and mandated boundaries of ethical conduct
•
Review specific mandated requirements for legal compliance in specific subject matter areas
related to competition, consumers, and safety
•
Understand an overview of regulatory efforts that provide incentives for ethical behavior
•
Examine highly appropriate core practices and their relationship to social responsibility
•
Explore the role of opportunity in ethical decision making in business
•
Examine the importance of morals and values to ethical decision-making
Chapter 04: The Institutionalization of Business Ethics & Case 19: CVS: "Fired Up" about Social
Responsibility
Chapter 4 Summary
To understand the institutionalization of business ethics, it is important to understand the voluntary and
legally mandated dimensions of organizational practices. Core practices are documented best practices,
often encouraged by legal and regulatory forces as well as by industry trade associations. The effective
organizational practice of business ethics requires three dimensions to be integrated into an ethics and
compliance program. This integration creates an ethical culture that effectively manages the risks of
misconduct. Institutionalization in business ethics relates to established laws, customs, and the
expectations of organizational ethics and compliance programs considered a requirement in establishing
reputation. Institutions reward and sanction ethical decision making by providing structure and
reinforcing societal expectations. In this way, society as a whole institutionalizes core practices and
provides organizations with the opportunity to take their own approach, only taking action if there are
violations.
Laws and regulations established by governments set minimum standards for responsible behavior—
society’s codification of what is right and wrong. Civil and criminal laws regulating business conduct are
passed because society—including consumers, interest groups, competitors, and legislators—believes
business must comply with society’s standards. Such laws regulate competition, protect consumers,
promote safety and equity in the workplace, and provide incentives for preventing misconduct.
Largely in response to widespread corporate accounting scandals, Congress passed the Sarbanes–Oxley
Act to establish a system of federal oversight of corporate accounting practices. In addition to making
fraudulent financial reporting a crime and strengthening penalties for corporate fraud, the act requires
corporations to establish codes of ethics for financial reporting and develop greater transparency in
reporting to investors and other stakeholders. The Sarbanes–Oxley Act requires corporations to take
greater responsibility for their decisions and provide leadership based on ethical principles. For instance,
the law requires top managers to certify their firms’ financial reports are complete and accurate, making
CEOs and CFOs personally accountable for the credibility and accuracy of their companies’ financial
statements. The act establishes an oversight board to oversee the audit of public companies.
The oversight board aims to protect the interests of investors and further the public interest in the
preparation of informative, accurate, and independent audit reports for companies.
Largely in response to the widespread misconduct leading to the global recession, the Dodd–Frank Wall
Street Reform and Consumer Protection Act was passed. The purpose of the act is to prevent future
misconduct in the financial sector, protect consumers from complex financial instruments, oversee
market stability, and create transparency in the financial sector. The act created three financial agencies,
the Financial Stability Oversight Council, the Office of Financial Research, and the Consumer Financial
Protection Bureau. The bureau was created to regulate and ensure consumers are protected against
overly complex and/or deceptive financial practices. Whistle-blower protection includes a bounty
program whereby those who report corporate misconduct to the SEC may receive 10 to 30 percent of
settlement money if their reports result in a conviction of more than $1 million in penalties.
Congress passed the FSGO to create an incentive for organizations to develop and implement programs
designed to foster ethical and legal compliance. Their guidelines help the U.S. Sentencing Commission
apply penalties to all felonies and class A misdemeanors committed by employees in their work. As an
incentive, organizations that have demonstrated due diligence in developing effective compliance
programs that discourage unethical and illegal conduct may be subject to reduced organizational
penalties if an employee commits a crime. Overall, the government philosophy is that legal violations
can be prevented through organizational values and a commitment to ethical conduct. A 2004
amendment to the FSGO requires a business’s governing authority be well informed about its ethics
program with respect to content, implementation, and effectiveness. This places the responsibility
squarely on the shoulders of the firm’s leadership, usually the board of directors. The board must ensure
there is a high-ranking manager accountable for the day-to-day operational oversight of the ethics
program. The board must provide adequate authority, resources, and access to the board or an
appropriate subcommittee of the board. The board must also ensure there are confidential mechanisms
available so the organization’s employees and agents report or seek guidance about potential or actual
misconduct without fear of retaliation. A 2010 amendment to the FSGO directs chief compliance officers
to make their reports to the board rather than to the general counsel.
The FSGO and the Sarbanes–Oxley Act provide incentives for developing core practices that ensure
ethical and legal compliance. Core practices move the emphasis from a focus on the individual’s moral
capability to a focus on developing structurally sound organizational core practices and integrity for both
financial and nonfinancial performance.
Voluntary responsibilities touch on businesses’ social responsibility insofar as they contribute to the
local community and society as a whole. Voluntary responsibilities provide four major benefits to
society: improving the quality of life, reducing government involvement by providing assistance to
stakeholders, developing staff leadership skills, and building staff morale. Companies contribute
significant resources to education, the arts, environmental causes, and the disadvantaged by supporting
local and national charitable organizations. Cause-related marketing ties an organization’s product(s)
directly to a social concern through a marketing program. Strategic philanthropy involves linking core
business competencies to societal and community needs. Social entrepreneurship occurs when an
entrepreneur founds an organization with the purpose of creating social value.
Chapter 05: Ethical Decision Making
Chapter 5 Summary
The key components of the ethical decision making framework include ethical awareness, ethical issue
intensity, individual factors, organizational factors, and opportunity. These factors are interrelated and
influence business ethics evaluations and intentions that result in ethical or unethical behavior.
The first step in ethical decision making is to recognize that an ethical issue requires an individual or
work group to choose among several actions that will ultimately be evaluated as ethical or unethical by
various stakeholders. Ethical issue intensity is the perceived relevance or importance of an ethical issue
to an individual or workgroup. It reflects the ethical sensitivity of the individual or work group that
triggers the ethical decision making process. Other factors in our ethical decision making framework
influence this sensitivity, and therefore different individuals often perceive ethical issues differently.
Individual factors such as gender, education, nationality, age, and locus of control affect the ethical
decision making process, with some factors being more important than others. Organizational factors
such as an organization’s values often have greater influence on an individual’s decisions than that
person’s own values. In addition, decisions in business are most often made jointly, in work groups and
committees, or in conversations and discussions with coworkers. Corporate cultures and structures
operate through the ability of individual relationships among the organization’s members to influence
those members’ ethical decisions. A corporate culture is a set of values, beliefs, goals, norms, and ways
of solving problems that members (employees) of an organization share. Corporate culture involves
norms that prescribe a wide range of behavior for the organization’s members. The ethical culture of an
organization indicates whether it has an ethical conscience. Significant others—including peers,
managers, coworkers, and subordinates—who influence the work group have more daily impact on an
employee’s decisions than any other factor in the decision making framework. Obedience to authority
may explain why many business ethics issues are resolved simply by following the directives of a
superior.
Ethical opportunity results from conditions that provide rewards, whether internal or external, or limit
barriers to ethical or unethical behavior. Included in opportunity is a person’s immediate job context
that includes the motivational techniques superiors use to influence employee behavior. The
opportunity employees have for unethical behavior in an organization can be eliminated through formal
codes, policies, and rules that are adequately enforced by management.
The ethical decision making framework is not a guide for making decisions. It is intended to provide
insights and knowledge about typical ethical decision making processes in business organizations. Ethical
decision making within organizations does not rely strictly on the personal values and morals of
employees. Organizations have cultures of their own that when combined with corporate governance
mechanisms may significantly influence business ethics.
Normative approaches describe how organizational decision makers should approach an ethical issue.
Institutional theory is an important normative concept that states that organizations operate according
to taken-for-granted institutional norms and rules. Political, economic, and social institutions help
organizations determine principles and values for appropriate conduct. Principles are important in
preventing organizations from “bending the rules.” Philosopher John Rawls contributed important work
on principles, particularly principles of justice. Core values are enduring beliefs about appropriate
conduct and provide guidance for the ethical direction of the firm.
Week 4-Organizational Factors and how they Impact Culture and Relationships of Ethical DecisionMaking in Business
Business ethics offers many insights into corporate culture. Shared values, norms, and artifacts that
influence employees and determine behavior, including ways of solving problems that employees of an
organization share. In this unit you will assess several elements of corporate culture. In this unit we
identify factors in successful ethics training, program types, and goals within an organization. As we go
through week four you will be able to explore and examine several varied elements of business ethics.
The following are the core course objectives that we will accomplish during week four.
Upon completing this unit you will be able to:
•
Understand the concept of corporate culture
•
Determine how leadership, power, and motivation relate to ethical decision making in
organizations
•
Assess organizational structure and its relationship to business ethics
•
Understand why businesses need ethics programs
•
Identify the minimum requirements for an ethics program
•
Identify factors in successful ethics training, program types, and goals
•
Examine the ways ethical standards are monitored, audited, and enforced
Chapter 06: Individual Factors: Moral Philosophies and Value
Moral philosophy refers to the set of principles or rules people use to decide what is right or wrong.
These principles or rules provide guidelines for resolving conflicts and for optimizing the mutual benefit
of people living in groups. Businesspeople are guided by moral philosophies as they formulate business
strategies and resolve specific ethical issues, even if they may not realize it.
Teleological, or consequentialist, philosophies stipulate that acts are morally right or acceptable if they
produce some desired result such as the realization of self-interest or utility. Egoism defines right or
acceptable behavior in terms of the consequences for the individual. In an ethical decision making
situation, the egoist chooses the alternative that contributes most to his or her own self-interest. Egoism
can be further divided into hedonism and enlightened egoism. Utilitarianism is concerned with
maximizing total utility, or providing the greatest benefit for the greatest number of people. In making
ethical decisions, utilitarians often conduct cost–benefit analyses that consider the costs and benefits to
all affected parties. Rule utilitarians determine behavior on the basis of rules designed to promote the
greatest utility rather than by examining particular situations. Act utilitarians examine the action itself
rather than the rules governing the action, to determine it results in the greatest utility.
Deontological, or nonconsequentialist, philosophies focus on the rights of individuals and the intentions
behind an individual’s particular behavior rather than its consequences. In general, deontologists regard
the nature of moral principles as permanent and stable and believe compliance with these principles
defines ethical behavior. Deontologists believe individuals have certain absolute rights that must be
respected. Rule deontologists believe conformity to general moral principles determines ethical
behavior. Act deontologists hold that actions are the proper basis to judge morality or ethicalness and
that rules serve only as guidelines.
According to the relativist perspective, definitions of ethical behavior derive subjectively from the
experiences of individuals and groups. The relativist observes behavior within a relevant group and
attempts to determine what consensus group members reach on the issue in question.
Virtue ethics states that what is moral in a given situation is not only what is required by conventional
morality or current social definitions, however justified, but by what a person with a “good” moral
character would deem appropriate. Those who profess virtue ethics do not believe the end justifies the
means in any situation.
The concept of justice in business relates to fair treatment and due reward in accordance with ethical or
legal standards. Distributive justice is based on the evaluation of the outcome or results of a business
relationship. Procedural justice is based on the processes and activities that produce outcomes or
results. Interactional justice is based on an evaluation of the communication process in business.
The concept of a moral philosophy is not exact; moral philosophies can only be assessed on a
continuum. Individuals use different moral philosophies depending on whether they are making a
personal or a workplace decision. Moral philosophical theory rejects the good, better, best concept that
Kohlberg uses. According to Kohlberg’s model of cognitive moral development, individuals may make
different decisions in similar ethical situations because they are in a different stage of moral
development. In Kohlberg’s model, people progress through six stages of moral development:
1. punishment and obedience;
2. individual instrumental purpose and exchange;
3. mutual interpersonal expectations, relationships, and conformity;
4. social system and conscience maintenance;
5. prior rights, social contract, or utility; and
6. universal ethical principles.
Kohlberg’s six stages can be further reduced to three levels of ethical concern: immediate self-interest,
social expectations, and general ethical principles. Cognitive moral development may not explain as
much as people once believed.
White-collar crime occurs when an educated individual who is in a position of power, trust,
respectability, and responsibility commits an illegal act in relation to his or her employment, and who
abuses the trust and authority normally associated with the position for personal and/or organizational
gains. White-collar crime is not heavily researched because this type of behavior does not normally
come to mind when people think of crime; the offender (or organization) is in a position of trust and
respectability; criminology and criminal justice systems look at white-collar crime differently than
average crimes; and many researchers have not moved past the definitional issues. New developments
in technology seem to be increasing the opportunity to commit white-collar crime with less risk.
Individual factors such as religion, moral intensity, and a person’s professional affiliations can influence
an employee’s decision making process. The impacts of ethical awareness, biases, conflict, personality
type, and intelligence on ethical behavior remain unclear. One thing we do know is that the
interrelationships among moral philosophies, values, and business are extremely complex.
Chapter 07: Organizational Factors: The Role of Ethical Culture and Relationships
Corporate culture refers to the set of values, beliefs, goals, norms, and ways of solving problems that
members (employees) of an organization share. These shared values may be formally expressed or
unspoken. Corporate cultures can be classified in several ways, and a cultural audit identifies an
organization’s culture. If an organization’s culture rewards unethical behavior, people within the
company are more likely to act unethically. A company’s failure to monitor or manage its culture may
foster questionable behavior.
Leadership has a significant impact on the ethical decision making process because leaders have the
power to motivate others and enforce both the organizations rules and policies and their own
viewpoints. A leader must not only gain the respect of his or her followers but also provide a standard of
ethical conduct. Leaders exert power to influence the behaviors and decisions of subordinates. There
are five power bases from which a leader may influence ethical behavior: reward power, coercive
power, legitimate power, expert power, and referent power. Leaders attempt to motivate subordinates;
motivation is an internal force that focuses an individual’s behavior toward achieving a goal. It can be
created by the incentives an organization offers employees.
The structure of an organization may create opportunities to engage in unethical behavior. In a
centralized organization, decision making authority is concentrated in the hands of top managers, and
little authority is delegated to lower levels. In a decentralized organization, decision making authority is
delegated as far down the chain of command as possible. Centralized organizations tend to be more
ethical than decentralized ones because they enforce more rigid controls, such as codes of ethics and
corporate policies, on ethical practices. However, unethical conduct can occur in both types of
structures.
In addition to the values and customs that represent the culture of an organization, individual groups
within the organization often adopt their own rules and values and even create subcultures. The main
types of groups are formal groups—which include committees, work groups, and teams—and informal
groups. Informal groups often feed an informal channel of communication called the grapevine. Group
norms are standards of behavior groups expect of their members. They help define acceptable and
unacceptable behavior within a group and especially the limits on deviating from group expectations.
Sometimes group norms conflict with the values and rules prescribed by the organization’s culture.
Sometimes an employee’s personal ethical standards conflict with what is expected of him or her as a
member of an organization and its corporate culture. This is especially true given that an organization’s
ethical decisions are often resolved by committees, formal groups, and informal groups rather than by
individuals. When such ethical conflict is severe, the individual may have to decide whether to leave the
organization.
Chapter 08: Developing an Effective Ethics Program
Chapter 8 Summary
Ethics programs help sensitize employees to potential legal and ethical issues within their work
environments. To promote ethical and legal conduct, organizations should develop ethics programs,
establishing, communicating, and monitoring ethical values and legal requirements that characterize the
firms’ history, culture, industry, and operating environment. Without such programs and uniform
standards and policies of conduct, it is difficult for employees to determine what behaviors a company
deems acceptable.
A company must have an effective ethics program to ensure employees understand its values and
comply with its policies and codes of conduct. An ethics program should help reduce the possibility of
legally enforced penalties and negative public reaction to misconduct. The main objective of the Federal
Sentencing Guidelines for Organizations is to encourage companies to assess risk and then self-monitor
and aggressively work to deter unethical acts and punish unethical employees. Ethics programs are
organizational control systems that create predictability in employee behavior. These control systems
may have a compliance orientation, which uses legal terms, statutes, and contracts that teach
employees the rules and the penalties for noncompliance, or a values orientation that consists of
developing shared values.
Most companies begin the process of establishing organizational ethics programs by developing codes of
conduct, or formal statements that describe what an organization expects of its employees. Codes of
conduct include a company’s code of ethics and/or its statement of values. A code of ethics must be
developed as part of senior management’s desire to ensure the company complies with values, rules,
and policies that support an ethical culture. Without uniform policies and standards, employees have
difficulty determining what qualifies as acceptable behavior in the company.
Having a high-level manager or committee responsible for an ethical compliance program can
significantly enhance its administration and oversight. Such ethics officers are usually responsible for
assessing the needs and risks to be addressed in an organization-wide ethics program, developing and
distributing a code of conduct or ethics, conducting training programs for employees, establishing and
maintaining a confidential service to answer questions about ethical issues, making sure the company is
complying with government regulations, monitoring and auditing ethical conduct, taking action on
possible violations of the company’s code, and reviewing and updating the code.
Successful ethics training is important in helping employees identify ethical issues and in providing them
with the means to address and resolve such issues. Training can educate employees about the firm’s
policies and expectations, available resources, support systems, and designated ethics personnel, as well
as relevant laws and regulations and general social standards. Top executives must communicate with
managers at the operations level and enforce overall ethical standards within the organization.
An effective ethics program employs a variety of resources to monitor ethical conduct and measure the
program’s effectiveness. Compliance with the company’s ethical code and standards can be assessed by
observing employees, performing internal audits and surveys, instituting reporting systems, and
conducting investigations, as well as through external audits and review, as needed. Corrective action
involves rewarding employees who comply with company policies and standards and punishing those
who do not. Consistent enforcement and disciplinary action are necessary for a functioning ethical
compliance program.
Ethical compliance can be ensured by designing activities that achieve organizational objectives using
available resources and given existing constraints. A firm’s ability to plan and implement ethical business
standards depends in part on its ability to structure resources and activities to achieve its objectives
effectively and efficiently.
In implementing ethics and compliance programs many firms make common mistakes, including failing
to answer fundamental questions about the goals of such programs, not setting realistic and measurable
program objectives, failing to have senior management take ownership of the ethics program,
developing program materials that do not address the needs of the average employee, transferring an
“American” program to a firm’s international operations, and designing an ethics program that is little
more than a series of lectures. Although an ethics program should help reduce the possibility of
penalties and negative public reaction to misconduct, a company must want to be a good corporate
citizen and recognize the importance of ethics to successful business activities.
Week 5 - Managing and Controlling Ethics Programs in Business
Business ethics offers many insights into the identification of risks and problems in ongoing activities
and plan the necessary steps to adjust, correct, or eliminate ethical concerns. In this unit you will assess
several elements of the benefits and limitations of ethics auditing. In this unit we identify the stages of
the ethics-auditing process within an organization. As we go through week five you will be able to
explore and examine several varied elements of business ethics. The following are the core course
objectives that we will accomplish during week five.
Upon completing this unit you will be able to;
•
Define ethics auditing
•
Identify the benefits and limitations of ethics auditing
•
Examine the challenges of measuring nonfinancial performance
•
Explore the stages of the ethics-auditing process
•
Understand the strategic role of the ethics audit
Chapter 09: Managing and Controlling Ethics Programs
Chapter 9 Summary
Viewing a business ethics program as a part of strategic planning and management activities is critical to
the success of any firm. However, for such programs to be successful, firms must put controls and
systems in place to ensure they are being executed effectively. Controls include input, output, and
process controls. Input controls are concerned with providing necessary tools and resources to the
organization, such as good employees and effective ethics training and structural systems. Process
controls include managerial commitment to an ethics program and the methods or system for the
evaluation of ethics. Output controls involve comparing standards with actual behavior. One of the most
popular methods of evaluating ethical performance is an ethics audit.
An ethics audit is a systematic evaluation of an organizations ethics program and/or its ethical
performance. Such audits provide an opportunity to measure conformity with the firm’s desired ethical
standards. The concept of ethics auditing emerged from the movement toward auditing and reporting
on companies’ broader social responsibility initiatives. Social auditing is the process of assessing and
reporting a business’s performance in fulfilling the economic, legal, ethical, and philanthropic social
responsibilities expected of it by its stakeholders. An ethics audit may be conducted as a component of a
social audit. Auditing is a tool companies can use to identify and measure their ethical commitment to
stakeholders and demonstrate their commitment to improving strategic planning, including their
compliance with legal, ethical, and social responsibility standards.
The auditing process can highlight trends, improve organizational learning, and facilitate communication
and working relationships. Audits help companies assess the effectiveness of their programs and
policies, identify potential risks and liabilities, improve compliance with the law, and demonstrate
progress in areas of previous noncompliance. One of the greatest benefits of these audits is improved
relationships with stakeholders. Ethics auditing may help prevent public relations crises associated with
ethical or legal misconduct. Although ethics audits provide benefits for companies and their
stakeholders, they have the potential to expose risks; the process of auditing cannot guarantee a firm
will not face challenges. Additionally, there are few common standards for judging disclosure and
effectiveness or for making comparisons within an industry.
An ethics audit should be unique to each company based on its size, industry, corporate culture,
identified risks, and the regulatory environment in which it operates. This chapter offers a framework
for conducting an ethics audit that can also be used for a broader social audit.
The first step in conducting an audit is securing the commitment of the firm’s top management and/or
its board of directors. The push for an ethics audit may come directly from the board of directors in
response to specific stakeholder concerns, corporate governance reforms, or top managers looking for
ways to track and improve ethical performance. Whatever the source of the audit, its success hinges on
the full support of top management.
The second step is establishing a committee or team to oversee the audit process. Ideally the board of
directors’ financial audit committee would oversee the ethics audit, but in most firms, managers or
ethics officers conduct auditing. This committee recruits an individual from within the firm or hires an
outside consultant to coordinate the audit and report the results.
The third step is establishing the scope of the audit, which depends on the type of business, the risks
faced by the firm, and available opportunities to manage ethics. This step includes defining the key
subject matter or risk areas important to the ethics audit.
The fourth step is a review of the firm’s mission, values, goals, and policies. This step includes an
examination of formal documents that make explicit commitments with regard to ethical, legal, or social
responsibility issues, and informal documents including marketing materials, workplace policies, ethics
policies, and standards for suppliers or vendors. During this step, the firm should define its ethical
priorities and articulate them as a set of parameters or performance indicators that can be objectively
and quantitatively assessed.
The fifth step is identifying the tools or methods used to measure the firm’s progress, and collecting and
analyzing the relevant information. Evidence-collection techniques include examining internal and
external documents, observing the data-collection process (such as discussions with stakeholders), and
confirming the information in the organization’s accounting records. During this step, a company’s
stakeholders need to be defined and interviewed to understand how they perceive the company. This is
accomplished through standardized surveys, interviews, and focus groups. Once information is
collected, it should be analyzed and summarized. Analysis should include an examination of how other
organizations in the industry are performing in the designated subject matter areas.
The sixth step is having an independent party—such as a social/ethics audit consultant, a financial
accounting firm that offers social auditing services, or a nonprofit special interest group with auditing
experience—verify the results of the data analysis. Verification is an independent assessment of the
quality, accuracy, and completeness of a company’s audit process. Such verification gives stakeholders
confidence in a company’s ethics audit and lends the audit report credibility and objectivity. The
verification of the results of an audit should involve standard procedures that control the reliability and
validity of the information.
The final step in the audit process is reporting the audit findings to the board of directors and top
executives and, if approved, to external stakeholders. The report should spell out the purpose and scope
of the audit, methods used in the audit process (evidence gathering and evaluation), the role of the
(preferably independent) auditor, any auditing guidelines followed by the auditor, and any reporting
guidelines followed by the company.
Although the concept of auditing implies an official examination of ethical performance, many
organizations audit informally. Ethics audits should be conducted regularly. Although social auditing may
present problems, it can also generate many benefits. Through the auditing process, a firm can
demonstrate the positive impact of ethical conduct and social responsibility initiatives on its bottom
line, which may convince stakeholders of the value of adopting more ethical and socially responsible
business practices.
Week 6 - Globalization of Ethical Decision-Making in Business
Business ethics offers many insights into the economic foundations and concepts within business ethics.
In this unit you will assess several elements of global values, goals, and business practices within ethics
related to business. In this unit we identify risk compartmentalization, which is when profit centers
within corporations are unaware of the overall consequences of their actions within an organization. As
we go through week six you will be able to explore and examine several varied elements of business
ethics. The following are the core course objectives that we will accomplish during week six
Upon completing this unit you will be able to:
•
Assess global values, goals, and business practices within ethics
•
Examine the role of multinational corporations in business ethics
•
Explore and discuss common global business practices
•
Gain awareness of global ethical issues
Chapter 10 Summary
In this chapter we tried to sensitize you to the important topic of ethical decision making in an
international context. We began by looking at values and culture. A country’s values are influenced by
ethnic groups, social organizations, and other cultural aspects. Hofstede identified four cultural
dimensions that can have a profound impact on the business environment: individualism/collectivism,
power distance, uncertainty avoidance, and masculinity/femininity. The self-reference criterion is the
unconscious reference to one’s own cultural values, experiences, and knowledge and is a common
stumbling block for organizations. Another approach organizations tend to take is that of cultural
relativism, or the idea that morality varies from one culture to another and business practices are
defined as right or wrong differently.
Risk compartmentalization is an important ethical issue and occurs when various profit centers within
corporations become unaware of the overall consequences of their actions on the firm as a whole. The
last financial meltdown was in part the result of risk compartmentalization. Understanding rational
economics and systems is an important foundation for understanding business ethics. Rational
economics assumes people make decisions rationally based upon utility, value, profit maximization, and
relevant information. Capitalism bases its models on these assumptions. Behavioral economics, by
contrast, argues that humans may not act in a rational way as a result of genetics, learned behavior,
emotions, framing, and heuristics, or rules of thumb. Social democracy, a form of socialism, allows
private ownership of property and features a large government equipped to offer services such as
education and health care to its citizens. Sweden, Denmark, and Finland are social democracies.
Multinational corporations are public companies that operate on a global scale without significant ties
to any one nation or region. MNCs contributed to the growth of global economies but are by no means
immune to criticism. The International Monetary Fund makes short-term loans to member countries
that have deficits and provides foreign currencies for its members. The UN Global Compact is a set of 10
principles that promote human rights, sustainability, and the eradication of corruption, while the World
Trade Organization administers its own trade agreements, facilitates trade negotiations, settles trade
disputes, and monitors the trade policies of member nations.
There are several critical ethics issues of which global businesses should be aware. Global risks create
ethical issues for global companies to manage. Bribery is a major ethical issue, prompting legislation
such as the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act. Antitrust activities are illegal in
most industrialized countries and are pursued even more ardently in the European Union than in the
United States. Internet security is an ethical issue, and hacking and privacy violations are on the rise. The
United Nations codified human rights as a function of inherent human dignity and includes equal and
inalienable rights such as the foundation of freedom, justice, and peace in the world. Health care and
labor issues are important ethical issues but tend to vary by country. Wage issues such as a living wage
and executive compensation are controversial topics that affect a variety of global stakeholders.
Consumerism is the belief that the interests of consumers should dictate the economic structure of a
society, rather than the interests of producers; it refers to the theory that an increasing consumption of
goods is economically desirable, and equates personal happiness with the purchase and consumption of
material possessions.
Week 7 - Leadership and Social Responsibility in Business Ethics
Chapter 11: Ethical Leadership & Case 11: Zappos: Taking Steps towards Maximizing Stakeholder
Satisfaction
Chapter 11 Summary
Leadership is the ability or authority to guide and direct others toward a goal. Ethical decisions should
be one dimension of leadership. Ethical leadership has a significant impact on ethical decision making
because leaders have the power to motivate others and enforce the organizations norms and policies.
Ethical leadership skills are developed through years of training, experience, and learning from other
best practices of leadership. Ethical leadership involves modeling organizational values, placing what is
best for the organization over the leader’s own interests, training and developing employees throughout
their careers, establishing reporting mechanisms, understanding employee values and perceptions, and
recognizing the limits of organizational rules and values. Ethical leaders have strong personal characters,
a passion to do what is right, are proactive, consider all stakeholders’ interests, are role models for the
organizations values, are transparent and actively involved in decision making, and take a holistic view
of the firm’s ethical culture.
There are many benefits to ethical leadership. Ethical leadership encourages employees to act in an
ethical manner in their daily work environment. Ethical leadership can also lead to higher employee
satisfaction and employee commitment. Customers are often willing to pay higher prices for products
from ethical companies. Ethical leadership can also impact the long-term market valuation of the firm.
Finally, companies that demonstrate they have strong ethics programs are more likely to see their fines
reduced if misconduct should occur.
Ethical leaders generally adopt one of two approaches to leadership: a compliance-based approach or
an integrity-based approach. A compliance approach is more focused upon risks, while an integrity
approach views ethics more as an opportunity. Leaders can be classified as unethical leaders, apathetic
leaders, and ethical leaders. The unethical leader is usually egocentric and will often do whatever it
takes to achieve personal and organizational objectives. A small proportion may even be classified as
psychopathic, in which they have no conscience and little or no empathy toward others. This type of
leader does not try to learn about best practices for ethics and compliance. Apathetic leaders are not
necessarily unethical, but they care little for ethics within the company. Ethical leaders include ethics at
every operational level and stage of the decision making process.
Ethical leaders are skilled at conflict management. Ethical business conflicts occur when there are two or
more positions on a decision that conflicts with organizational goals. Sometimes ethical conflicts emerge
because employees feel uncomfortable about their own or their coworkers’ decisions. There are five
types of conflict management styles: competitive, avoiding, accommodating, compromising, and
collaborating. However, an ethical leader should be able to adapt his or her style depending on the
situation. Additionally, ethical leaders are often skilled at recognizing the conflict management styles of
others and adapting their styles accordingly.
While we tend to focus on top managers when discussing ethical leadership, ethical leadership is not
limited to managers or supervisors. Employee empowerment is an essential component of a valuesbased organizational culture. Employees can contribute to the firm’s ethical culture by reporting
questionable activities, providing suggestions to improve the firm’s culture, and modeling the firm’s
values to new employees. A firm’s ethical culture relies not simply on documents such as a code of
ethics, but on how employees embody the principles of integrity the organization values.
Communication is an important part of ethical leadership. Four types of communication include
interpersonal communication, small group communication, nonverbal communication, and listening.
Communication is essential for reducing leader isolation and creating leader–follower congruence.
Leader–follower congruence occurs when leaders and followers share the same vision, ethical
expectations, and objectives for the company. An important way of communicating ethical values to
employees is through codes of ethics and training on how to make ethical decisions. Minimizing power
differences and workplace politics and encouraging feedback from employees are also ways to create
leader–follower congruence to support an ethical organizational culture.
As teams become increasingly important, particularly in organizations requiring complex problem
solving, knowing how to manage teams has taken on a significant role for organizational leaders. Ethical
leaders can increase the effectiveness of teams by supporting the team’s ability to make decisions,
initiating the structure of the team, and assigning tasks if needed. Team members should be trained in
effective team building skills to help them arrive at more ethical decisions while avoiding common
pitfalls such as groupthink.
Leadership styles influence many aspects of organizational behavior, including employees’ acceptance of
and adherence to organizational values. The most effective ethical leaders possess the ability to manage
themselves and their relationships with others effectively, a skill known as emotional intelligence.
Resonant leaders are emotionally intelligent leaders who demonstrate mindfulness of themselves and
their own emotions, a belief that goals can be met, and a caring attitude toward others within the
organization. Transactional leaders attempt to create employee satisfaction through negotiating, or
“bartering,” for desired behaviors or levels of performance. Transformational leaders strive to raise
employees’ level of commitment and to foster trust and motivation. Another leadership style gaining
attention is authentic leadership. Authentic leaders are passionate about the company, live out
corporate values daily in their behavior in the workplace, and form long-term relationships with
employees.
The RADAR model stands for Recognize, Avoid, Discover, Answer, and Recover. An ethical leader can use
this model to identify ethical risk areas, respond to ethical issues, and, if necessary, help the
organization recover from ethical mishaps. First, an ethical leader must be able to identify or recognize
issues having an ethical component. Next, the leader should seek to avoid having the ethical risk areas
turn into ethical disasters by putting systems and controls in place to limit the opportunity for
misconduct. Discovery involves proactively uncovering ethical risk areas that could lead to misconduct.
Ethical audits are a good discovery tool. When an ethical issue or a misconduct disaster occurs,
answering involves responding to the discovery of an ethical dilemma through communication both
internally and externally. Finally, recovery involves fixing any weaknesses in the ethics program and
developing improved ways of detecting misconduct.
Chapter 12-Sustainability: Ethical and Social Responsibility Dimensions & Case 12: Lululemon: Turning
Lemons into Lemonade
Chapter 12 Summary
Sustainability from a strategic business perspective is the potential for the long-term well-being of the
natural environment, including all biological entities, as well as the mutually beneficial interactions
among nature and individuals, organizations, and business strategies. Sustainable development involves
meeting the needs of the present without compromising the ability of future generations to meet their
own needs. Sustainability includes the assessment and improvement of business strategies, economic
sectors, work practices, technologies, and lifestyles while maintaining the natural environment.
Sustainability falls into the social responsibility domain of maximizing positive and minimizing negative
impacts on stakeholders.
The protection of air, water, land, biodiversity, and renewable natural resources emerged as a major
issue in the twentieth century in the face of increasing evidence that mankind was putting pressure on
the long-term sustainability of these resources. Global sustainability topics include atmospheric issues,
including air pollution, acid rain, and global warming; water issues, including water pollution and water
depletion; and land issues, including land pollution, waste management, deforestation, urban sprawl,
biodiversity, and genetically modified organisms. By being proactive in addressing these issues,
companies can reduce their environmental impact and generate a reputation as an eco-responsible
company.
The most influential regulatory agency that deals with environmental issues and enforces environmental
legislation in the United States is the Environmental Protection Agency (EPA). The EPA was created in
1970 to coordinate environmental agencies involved in conducting environmental research, providing
assistance in reducing pollution, and enforcing the nations’ environmental laws. A significant number of
laws were promulgated to address both general and specific environmental issues, including public
health, threatened species, toxic substances, clean air and water, and natural resources. Some of the
most important environmental laws include the Clean Air Act, the Endangered Species Act, the Toxic
Substances Control Act, the Clean Water Act, the Pollution Prevention Act, the Food Quality Protection
Act, and the Energy Policy Act. LEED is a certification program that recognizes sustainable building
practices and strategies. Alternative energy sources also have a major impact on many stakeholders.
Some of the major alternative forms of energy include wind, geothermal, solar, nuclear, biofuels, and
hydropower.
Better environmental performance can increase revenue in three ways: through better access to certain
markets, differentiation of products, and the sale of pollution-control technology. Good environmental
performance also reduces costs by improving risk management and stakeholder relationships, reducing
the amount of materials and energy used, and reducing capital and labor costs.
Green marketing is a strategic process involving stakeholder assessment to create meaningful long-term
relationships with customers while maintaining, supporting, and enhancing the natural environment.
However, some companies desire to obtain the benefits of green marketing without the investment.
Greenwashing involves misleading a consumer into thinking a good or service is more environmentally
friendly than it really is. While it might seem to be helpful to a firm, companies discovered engaging in
greenwashing may suffer reputational damage.
Businesses have responded to the opportunities and threats created by environmental issues with
varying levels of commitment. Those firms proactive in anticipating risks and environmental issues
develop strategic management programs that view the environment as an opportunity for advancing
organizational interests. Many organizations engage in recycling, the reprocessing of materials,
especially steel, aluminum, paper, glass, rubber, and some plastics, for reuse. Additionally, stakeholder
assessment, risk analysis, and the strategic environmental audit are important parts of a highcommitment approach to environmental issues. Stakeholder assessment is a process that acknowledges
and actively monitors the environmental concerns of all legitimate stakeholders. Through risk analysis, it
is possible to assess the environmental risks associated with business decisions. Organizations highly
committed to environmental responsibility may conduct an audit of their efforts using standards such as
ISO 14000 and report the results to all interested stakeholders.
Week 8 - A Review On: The Importance of Business Ethics and Your Personal Impact
Business ethics offers many insights into the ability to perceive whether a situation or decision has an
ethical dimension in the eyes of the individual, work group, and organization. Ethical frameworks and
evaluations of corporate culture have two basic dimensions in an organization’s culture; a concern for
people and a concern for performance. In this unit you will assess several elements of the role of
opportunity in ethical decision-making in business. In this unit we identify how ethical leadership
impacts organizational culture within an organization. As we go through week eight you will be able to
explore and examine several varied elements of business ethics. The following are the core course
objectives that we will accomplish during week eight.
Upon completing this unit you will be able to:
•
Explore conceptualizations of business ethics from an organizational perspective
•
Delineate misuse of company resources, abusive and intimidating behavior, lying, conflicts of
interest, bribery, corporate intelligence, discrimination, sexual harassment, fraud, financial
misconduct, insider trading, intellectual property rights, and privacy as business ethics issues
•
Examine highly appropriate core practices and their relationship to social responsibility
•
Explore the role of opportunity in ethical decision making in business
•
Understand the concept of corporate culture
•
Determine how leadership, power, and motivation relate to ethical decision making in
organizations
•
Explore the stages of the ethics-auditing process
•
Explore and discuss common global business practices
•
Gain awareness of global ethical issues
•
Understand how ethical leadership impacts organizational culture
•
Examine leadership styles and how they influence ethical leadership
1
Article Analysis
Sarah B. Howard
Grantham University
ETH560: Business Ethics
Dr. Maja Zelihic
26 January 2021
2
Article analysis
Reconciling Different Views on Responsible Leadership: A Rationality-Based Approach
Leadership and ethical decisions are two things that depend on each other to deliver quality
service to the audience. Leadership means being able to guide the audience to reach a certain goal. A
successful leadership should involve the creation and implementation of moral leadership (Macauley,
2018). Leaders who practice moral leadership usually make decisions that motivate others to implement
all organizations' policies and norms.
Over the years, people take a lot of time to develop ethical leadership skills by learning from other
leadership types. This kind of development involves a leader placing the interest of the organization ahead
of personal values. Moral leaders have strong characters and are considered from consultations (Miska,
2013). They always do what is right, regardless of the situation. These leaders set role models among
other employees in the organization. Ethical leaders use transparency as a core value of decision making.
On the other side, there are several benefits that organization with ethical leadership enjoys. Improved
business ethics in the workplace. Employees are delighted and committed to work (Perry, 2018). If the
organization’s leadership and processes are ethically modified, the company’s revenue may increase.
The two approaches in implementing ethical leadership; integrity-based or compliance-based
approach. Compliance-based methods focus on risk analysis, while integrity-based strategies are more
interested in opportunities. In both approaches, ethical leaders possess skills on how to handle conflicts.
Business environment, conflicts can be either a soft or hard one. Soft conflicts may occur in the decisionmaking process, and hard conflicts may occur when employees try to adapt to other people's ideologies.
In terms of management methods, conflicts can be avoidance, competition, compromise and
collaboration (Thanh & Quang, 2020). As a moral leader, one should adapt or adapt to another ideology
without causing conflict.
3
In other words, leadership style affects almost all sectors of the organization. This includes how
employees accept upcoming ideas. Ethical leaders use RADAR model to identify the risks around a
business venture and respond to the threats and risk round business organization (Trong Tuan, 2012).
RADAR model involves recognizing the problem, and then how to avoid the possible risks. The next steps
are discovering how to mitigate risks, answers or solutions to the risks. And finally, how to recover from
such risks – by fixing any weaknesses in the ethics by implementing other methods of detecting future
threats and risks (Ferrell, et al., 2019). I realize that there are many types of effective leadership and not
all leadership types work for every organization in the same manner. We all as leaders should establish a
leadership style that is effective to the success of your business. Most leaders develop their style base on
their morals, values and culture.
4
References
Ferrell, O.C., Fraedrich, J. & Ferrell, L. (2019). Business ethics: Ethical decision making and cases.
Cengage.
Macauley, R. C. (2018). Overview of ethical approaches. Oxford Business
Online. https://doi.org/10.1093/med/9780199313945.003.0002
Miska, C., Hilbe, C., & Mayer, S. (2013). Reconciling different views on responsible leadership: A
rationality-based approach. Journal of Business Ethics, 125(2), 349360. https://doi.org/10.1007/s10551-013-1923-8
Perry, A. (2018). Ethics, leadership, and ethical leadership. Biblical Theology for Ethical Leadership, 2343. https://doi.org/10.1007/978-3-319-75043-9_2
Thanh, N. H., & Quang, N. V. (2020). Requirements for developing ethical leadership. International
Journal of Research in Counseling and Education, 4(2),
82. https://doi.org/10.24036/00167za0002
Trong Tuan, L. (2012). The linkages among leadership, trust, and business ethics. Social Responsibility
Journal, 8(1), 133-148. https://doi.org/10.1108/17471111211196629
1
Analysis of Discussion Comments
Sarah B. Howard
Grantham University
ETH560: Business Ethics
Dr. Maja Zelihic
19 January 2021
2
Analysis of Discussion
Privacy is related to many issues that evolve into the technological world. For instance, Google
has conflicted with many countries because of data sharing with other businesses for profit. Many
companies depend on Google for storage and flexibility of their operations (Google cloud) as they lack
alternatives to shield their privacy (Ferrell, 2018). This issue means that their data privacy is questionable.
There is no assurance when data is shared with a third party that its confidentiality will be honored. This
is because Google earns revenue through advertising, meaning that it uses browsers to earn revenue. In
order to create a target of ads, personal data is manipulated. Google uses a lot of techniques to
manipulate personal data for revenue benefits. Including tracking browser activities and other devices,
android devices are the major provider of personal data. In conclusion, keeping his data secure means not
sharing it with a third party no matter what promise is dictated (Ballor, 2020). As long as data is reliable
and profitable, a third party will sell it.
Corporations that span across multiple countries like Google are not regulated in terms of ethics
This is because there are no common policy or guidelines to guard personal privacy. Many technology
companies have the biggest misunderstandings about ethical behavior in personal data. These companies
keep track of personal things and other concerns of prominent people. For example, Facebook and Twitter
are part of these technological companies. They create legislation to protect what they say or write. These
platforms are business oriented. If content said or written is deemed incorrect or misleading, they remove
or censor it regardless of the third party or owners’ consent. Business ethics are subject to freedom of
speech with or without political biases (Simon, 2018).
In conclusion, Multinational Corporations such as Google, Twitter, and Facebook control a lot of
influence in the international market. Therefore, antitrust and international laws are not enough to
control all processes that do. It’s a role to every nation to control these MNCs before they grow so much
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to unregulated levels. Ethical standards as well as values differ greatly from culture and it could ultimately
affect business relationships. My knowledge in international and business negotiations has increased my
ethical self-awareness when it comes to personal privacy. I now realize that not all countries abide by the
same privacy rules, but there are countries that share some of the same common value such as integrity
and honesty. These are two of my most important values that shows high ethics.
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References
Ballor, G.A., Yildirim A.B. (2020) Multinational Corporations and the Politics of International Trade in
Multidisciplinary Perspective. Business and Politics. 22(4): 573–586
Ferrell, L, Ferrell, O.C., & Fraedrich, J. (2018). Business Ethics: Ethical Decision Making and Cases (12th
ed.). Cengage.
Simon, M. (2018). Google Privacy Checkup FAQ: How to limit tracking and still use the apps you
love. PCWorld, 36(10), 87–93.
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Analysis: Impact of BP Deepwater Horizon Oil Spill on Customer Behavior
Sarah B. Howard
Grantham University
ETH560: Business Ethics
Dr. Maja Zelihic
12 January 2021
2
Analysis: Impact of BP Deepwater Horizon Oil Spill on Customer Behavior
The article Measuring the Impact of BP Deepwater Horizon Oil Spill on Customer Behavior by
Morgan et al., (2016), summarizes the data of customer behavior before and after the oil spill that
contaminated seafood and reduced demand for products. BP had to make great efforts toward
improving its relations with customers after the incident (Thorne, D. 2010). Businesses thrive in an
environment where the welfare of employees and consumers are prioritized. Organizations should be
accountable for all actions that threaten human health. In the article, oil spillage occurred for three
months, which affected human and aquatic life. From the article, I have learned that integrity is key to
business performance. Managers should be on the front line to curb and eliminate all factors that affect
human life without being forced by the law to create a conducive work environment and maximize
sales. According to Morgan et al., (2016) a study conducted shows that customer demand for BP oil
reduced drastically due to the pollution caused by the company in the Gulf of Mexico. The reason why
the evaluation result is obtained when resisting products related to my sacrifice is because people make
sacrifices in order to resist products to build awareness and protect the environment from future
pollution. If a company dares to repeat the same mistake, the punishment will be severe, and it will end
up losing its loyal customers.
According to Morgan et al., (2016), the consumers expressed their long-term and short-term
effects of the oil spill on their lives. The results reflect my low fairness assessment analysis. Despite
being a problem that continued for three months, the people suffered in the hands of their government,
and which resulted in loosing seafood and being infected by bacteria linked to oil spillage in water. The
article has helped me realize that the self-awareness assessment scores are contributed to factors that
affect our lives either directly or indirectly. For instance, after the spillage, people lost their truthfulness
with the companies that offer oysters because they thought it would be the same mollusks obtained
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from the contaminated water. Notably, this fact has a correlation with my truthfulness result from the
assessment because my rating was high. I value telling the truth along with being honest regardless of
the outcome. Truthfulness enables trust within an organization and creates a good ethical climate as
well as transparency.
The article proves that organizations should conduct a well-structured study to capture
customer responses after an incident that can impact their business friendship. BP conducted an
analysis to identify its short term and long-term customer behavior following the spillage. It was evident
that the confidence level of the customers reduced drastically, and their demand for consuming oysters
was negatively impacted.
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References
Morgan, O. A., Whitehead, J. C., Huth, W. L., Martin, G. S., & Sjolander, R. (2016). Measuring the
impact of the BP Deepwater Horizon oil spill on consumer behavior. Land
Economics, 92(1), 82-95. Taken from
http://web.b.ebscohost.com/ehost/pdfviewer/pdfviewer?vid=3&sid=2f846b25-8894485f-83ae-a816ca51e240%40pdc-v-sessmgr05
Thorne, D. (2010). Business and Society: A Strategic Approach to Social Responsibility and
Ethics. Cengage
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