Case for Business Ethics

 Chapter Objectives

 Explain why ethics is important in the business environment.

 Explain the nature of business ethics as an academic discipline.

 Distinguish the ethics of personal integrity from the ethics of social responsibility.

 Distinguish ethical norms and values from other business-related norms and values.

 Distinguish legal responsibilities from ethical responsibilities.

 Explain why ethical responsibilities go beyond legal compliance.

 Distinguish ethical decision-making from other practical decision situations.

 Introduction: Making the Case for Business Ethics

o Historical context: From the time of the collapse of the Enron Corporation in 2001, business ethics has seldom strayed from the front pages of the press. This chapter will introduce business ethics as a process of responsible decision-making.

o Ethical decision-making in business: not limited to the type of major corporate decisions with dramatic social consequences. At some point every worker, and certainly everyone in a managerial role, will be faced with an issue that will require ethical decision-making.

o The questions today: The questions today are less about why or should ethics be a part of business, than they are about which values and principles should guide business decisions and how ethics should be integrated within business.

o *Chapter Objective 1 Addressed Below*

o Expansion of ethically responsible business decision-making: Ethically responsible business decision-making must move beyond a narrow concern with stockholders, and consider the impact that decisions will have on a wide range of stakeholders. In a general sense, a business stakeholder will be anyone affected, for better or worse, by decisions made within the firm.

o *Reference: "Reality Check - Why Be Ethical? Because the Law Requires It"*

o Reasons to be concerned with ethical issues: Beyond specific legal obligations, contemporary business managers have many other reasons to be concerned with ethical issues.

 Unethical behavior not only creates legal risks for a business, it creates financial and marketing risks as well.

 Managing these risks requires managers and executives to remain vigilant about their company's ethics.

 A firm's ethical reputation can provide a competitive advantage, or disadvantage, in the marketplace and with customers, suppliers, and employees.

 Managing ethically can also pay significant dividends in organizational structure and efficiency.

 Trust, loyalty, commitment, creativity, and initiative are just some of the organizational benefits that are more likely to flourish within ethically stable and credible organizations

o Reasons to be concerned with ethical issues for business students: The need to study ethics should be as clear as the need to study the other sub-fields of business education. Without this background, students simply will be unprepared for a career in contemporary business.

 But, even for students not anticipating a career in business management or business administration, familiarity with business ethics is just as crucial.

o

*Reference: "Reality Check - Why Be Good?"*

o Business Ethics as Ethical Decision-making

o So what is the point of a business ethics course?

 Historical Context: On one hand, ethics refers to an academic discipline with a centuries old history and we might expect knowledge about this history to be among the primary goals of a class in ethics.

* Thus, in an ethics course, students might be expected to learn about the great ethicists of history such as Aristotle, John Stuart Mill, and Immanual Kant. As happens in many other courses, this approach to ethics would focus on the informational content of the class.

 Ethical Behavior/Normative Content: Yet, according to some observers, learning about ethical theories and gaining knowledge about the history of ethics is beside the point.

* Many people, ranging from businesses looking to hire college graduates to business students and teachers themselves, expect an ethics class to address ethical behavior, not just information and knowledge about ethics.

* After all, shouldn't an ethics class help prevent future Enrons? Ethics refers not only to an academic discipline, but to that arena of human life studied by this academic discipline, namely, how human beings properly should live their lives.

o *Chapter Objective 2 Addressed Below*

 The Role of Influence . . . Yet, there is an appropriate caution about influencing behavior within a classroom.

* Part of this hesitation involves the potential for abuse; expecting teachers to influence behavior may be viewed as permission for teachers to impose their own views on students.

* Many believe that teachers should remain value-neutral in the classroom and respect a student's own views.

* Another part of this concern is that there can be a narrow line between motivating students and manipulating students.

o There are many ways to influence someone's behavior, including threats, guilt, pressure, bullying, and intimidation.

o Some of the executives involved in the worst of the recent corporate scandals were very good at using some of these means to motivate the people who worked for them.

* Presumably, none of these approaches belong in a college classroom, and especially not in an ethical classroom. [

* But not all forms of influencing behavior raise such concerns. There is a major difference between manipulating someone and persuading someone, between threats and reasons.

* We agree with those who believe that an ethics class should strive to produce more ethical behavior among the students who enroll.

o But we believe that the only academically and ethically legitimate way to do this is through careful, and reasoned decision-making.

o Our fundamental assumption is that