Csr Business Ethics Sg

• BUSINESS ETHICS STUDY GUIDE: FINAL
• EXAM 1 MATERIAL
• 3 approaches to ethics
• Consequentialist

• Focus attention on consequence of decision or outcome
• Utilitarianism: best known consequentialist theory
• Ethical decision should maximize benefits to society and minimize harm

• Principle (deontological)

• Deontological view: base decisions on broad abstract universal ethical principles; Duty
• Categorical Imperative: act as if thy maxim of thy action were to become by thy will a universal law
• Golden rule
• Veil of ignorance

• Virtue:

• Focus more on integrity of the moral actor than on the moral act itself (Aristotle)
• Moral relativism
• Disclosure rule

• Allows decision maker to rely on relevant community standards without going through the complex process of trying to decide what’s right in every situation

• Adam Smith: The Classical View

• Self interest fuels everything
• People are productive because they are acting in their own self interest
• Free market creates greatest good for greatest number
• Division of labor
• Free to engage in commerce as you please, no minimum wage, little government intervention, much privatization

• Friedman: Free Market

• Market is supposed to be efficient
• Lease amount of waste and good use of resources
• Competition forces this efficiency
• Role of business is to maximize profits limiting freedom if give away profits to charitable organizations
• Market failure creates externalities
• Laissez faire: pure free market system
• Let people do what they want, hands off
• Neighborhood effect: actions of an individual have effects on other individuals for which it is not feasible to charge or recompense them

• Negative vs. positive rights
• Politics and economics are strongly connected
• Okun: Equality and the Market

• Equality is why firms acting in own self interest don’t always have same results
• Role of government is to help even the playing field
• Believes in fairness
• Economic actors don’t come in with equal opinions
• Certain benefits go to the wealthiest
• Says there should be resource redistribution**
• There should also be a minimum standard of living
• Universal entitlements
• Non negotiable
• There should be some limits
• Justice should not be sold

• Rozeff:

• Ultimate value on freedom of individuals to do what they want
• No greater value than freedom
• Only two circumstances under which government can intervene
• When individuals can achieve benefit from government intervention
• Unanimous consent

• Transaction costs

• Classical model of CSR: pursing money ethically and legally is okay

• Interest groups: groups of public citizens that try to make a change

• Information is critical for interest groups and stakeholders to act
• Civil regulations – exit and voice

• Civil regulators: keep a company behaving in an appropriate way

• Must have an expanded definition of quality
• Quality is within how the good is produced, not just the physical product itself
• A decrease in quality → re-cooperative measures to get firm to change behavior

• For exit to begin

• Perfect information
• Perfect mobility

• Results in revenue loss
• Management’s reactions depend on elasticity of demand

• Voice:

• Firms know why customers are upset
• Must be large enough number of people to not get overlooked
• Voice is not as effective
• When exit options exist, voice becomes more powerful

• Loyalty:         

• Tends to keep customers from exiting and using voice

• Korten effect: companies overestimate the financial significance of their reputation
• Friedman: Classical View

• Only goal of business is to maximize profits within acting ethically
• Invisible hand
• Stockholders should be ones to make decisions
• Consumers must have accurate info so that they have freedom to make informed decisions and the free market can work
• When people are informed there will be market pressure to make companies do certain things (sometime go above and beyond)

• Zaddick: Civil Regulation

• Extension of pursing own enlightened self interest
• Companies should be socially responsible because it will benefit the company and society
• Consider consequences and how they will affect people
• New economy= global economy
• Expands classical view to include social and environmental goal
• TBL!!!!!

• Vogel: Public Policy Generator

• The CSR of corporations includes complying with and supporting government to make more policies
• You shouldn’t only behave ethically but encourage others to behave ethically as well
• Encourages the government to make more legislation that benefits the actions you are already engaging in

• Lindenburg: Creator of Long Term Wealth

• The creation of value that will continue to benefit members of society even if the corporation were to dissolve today
• Internalize externalities

• I.e. invest in employee training

• Heath: Market Failure Model

• Put more guidelines and regulations on ethics
• PREVENT MARKET FAILURES
• Firms should internalize costs and prevent market failure
• Firms job not to exploit market failures

• Desjardin: Sustainability model

• Our impact on the environment should not exceed the rate at which the environment can recover
• Adds to future generations as a stakeholder group!!!!
• Sustainability

• Freeman: Stakeholder model

• Do not just consider interests of shareholders, but interest of all people who have stake in the company
• Company has duty to support all stakeholders and should do something good for them

• While it may be hard to measure benefits of CSR, it doesn’t make you worse off, so you don’t lose anything by being more ethical

• Values: desirable principle or quality
• Ethics: considering whether our actions are right or wrong, belief about what is right or wrong that comes from within us
• Ethical Dilemmas: situations concerning what is right and wrong when values we hold are in conflict
• Enlightened self-interest: a philosophy in ethics which states that persons who act to further the interests of others (or the interests of the group or groups to which they belong), ultimately serve their own self-interest
• Relativism trap: basing your ethics and virtues off of [who/where/what time period you live/ your past etc].
• The carbon footprint: a "measure of the impact that human activities have on the environment in terms of the amount of greenhouse gases produced, measured in units of carbon dioxide"
• Disclosure Rule: would you feel comfortable with you decision if it were disclosed to the public?
• Defining moment: asks us to chose between two or more ideals, which we believe in; form basis of an individual’s character over the years
• Free market: prices of g/s are set completely by mutual consent of buyers and sellers, no one is coerced, and quality increases with competition
• Laissez faire: leave market to itself with little or no government intervention
• Efficient market: resources are not wasted, resources are used well, and competition drives efficiency
• Externalities: side effects (positive or negative) of any business, they are not intended, leave an impact on every party, not only those involved in the economic transaction, occurs when a decisions causes cost or benefit to a third party—often from the use of a public good
• Market failure: allocation of g/s by a market is not efficient, self interest can cause this, externalities can be an indicator, government intervention sometimes needed
• Nonmarket failure: government intervention causes more inefficient allocations of g/s than without intervention
• Negative rights: permit or oblige inaction
• i.e. limitations on government to interfere with a citizen’s privacy
• Positive rights: permit or oblige action
• i.e. individual’s right to health and safety
• Tragedy of the commons: a social trap (often economic) that involves a conflict over finite resources between individuals and the common good
•         I.e. sheep farmers
• Internalities: internal cost imposed, long run
• Civil regulation: 1. Consumers 2. Workers, unions, employees 3. Interest groups
•         Have power to correct market failures
• Voice: communication of complaints or proposal for change, more loyal
• Exit: sends strong message, less loyal, can only work efficiently if significant number of people, there can’t be people to replace them and there must be market elasticity for alternatives
• CSR: organization considers the interest of society by taking responsibility of the impact of their activities on customers, employees, shareholders, communities and the environment in all aspects of their operations
• Veil of ignorance: hypothetical situation in which individuals do not know anything about themselves making it more likely for them to arrive at a process and decision that does not unfairly disadvantage any particular group
• Interest groups: group of public citizens trying to make a change
• Consequentialist theory: focuses attention on consequence of decisions or actions
• Utilitarianism: best know consequentialist theory; an ethical should maximize benefits to society and minimize harms.  What matters is net balance of good consequences over bad
• Deontogolical theories: “duty”; base decisions on what is right on broad abstract universal ethical principles or values such as honest, keeping promises, fairness, loyalty, rights, justice, compassion and respect for persons and property
•         - principle
• Categorical imperative: act as if thy maxim of thy action were to become by thy will a universal law
• “The golden rule”: do to others as you would have them do to you
• Virtue ethics: focuses more on the integrity of the moral actor that on the act itself; considers the actors characters and motivations
• Ethical relativism: morality is a function of what a particular society happens to believe
• Coercion: act of using force or intimidation to obtain results
• Non-market failures: bureaucratic malfunctions to remind us that government intervention is not without its own transaction costs
• Occurs when one cannot gain from further trade
• The korten effect: companies are systematically over-estimating the financial significance of reputation losses through perceptions of ethical misdemeanors
• Triple bottom line: accounting paradigm is that a corporation’s ultimate success or health can and should be measured not just by the traditional financial bottom line, but also by its social/ethical and environmental performance.  Firms cannot be successful in the long run if they consistently disregard the interests of key stakeholders
• Friedman: Free Market: property rights are voluntarily exchanged at a price arranged completely by the mutual consent of sellers and buyers. By definition, buyers and sellers do not coerce each other, in the sense that they obtain each other's property without the use of physical force, threat of physical force, or fraud, nor is the transfer coerced by a third party.
• Friedman: Classical View:  Only goal of business is to maximize profits within acting ethically
• Zaddick: Civil Regulation: Companies should be socially responsible because it will benefit the company and society; TBL
• Vogel: Public Policy Generator: The CSR of corporations includes complying with and supporting government to make more policies; company shouldn’t only act ethically, but should encourage others to act ethically as well
• Lindenburg: Creator of Long Term Wealth: The creation of value that will continue to benefit members of society even if the corporation were to dissolve today
• Heath: Market Failure Model: Firms should do everything in the name of preventing market failure, and should internalize costs
• Desjardin: CSR and sustainable Development:  Our impact on the environment should not exceed the rate at which the environment can recover; sustainability
• Freeman: Corporate Stakeholder Responsibility

• Moral muteness: the unwillingness of practitioners to acknowledge and discuss ethical problems
• Moral myopia: the inability even to see clearly ethical issues when they arise.
• Quid pro quo: A person in authority demands sexual favors of a subordinate as a condition of getting or keeping a job benefit
• Hostile work environment: arises when a co-worker or supervisor, engaging in unwelcome  and inappropriate sexually based behavior, renders the workplace atmosphere intimidating, hostile, or offensive.
• Greenwashing: the perception of consumers that they are being misled by a company regarding the environmental practices of the company or the environmental benefits of a product or service
• Sustainability, in a general sense, is the capacity to maintain a certain process or state indefinitely.
• Impact = population * affluence * technology
• NATURAL CAPITALISM: every output of manufacturing should be either composted into natural nutrients of remanufactured into technical nutrients, that is, it should be returned to the ecosystem or recycled for further production.”
• Culture can be defined as the specific collection of values and norms that are shared by people and groups in an organization and that control the way they interact with each other and with stakeholders outside the organization.
• Moral courage: the quality of mind and spirit that enables one to face up to ethical challenges firmly and confidently without flinching or retreating
• Whistle blower: One who reveals wrongdoing within an organization to the public or to those in positions of authority
• Business roundtable: politically conservative group of CEO’s of major U.S. corporations formed to promote pro- business public policy.
• Goodpastor: no matter how much legislation, if the values aren’t there companies will still be full of shit.
• Product stewardship: environmental protection centers around the product itself, and everyone involved in the lifespan of the product is called upon to take up responsibility to reduce its environmental impact.[1] For manufacturers, this includes planning for, and if necessary, paying for the recycling or disposal of the product at the end of its useful life
• Contract view: bi-laterally voluntary and conscious decision
• The Due Care view: managers have a duty to make sure  consumers are not harmed by their products
• Social Cost Strict Liability View: manufacturers should pay costs of injuries due to defect in products foreseen or unforeseen

Creative capitalism: uses market forces to address poor county’s needs that are being neglected

Invisible hand: a metaphor demonstrating that individuals pursing their own self-interest tend to promote the good of the community

• EXAM 2 MATERIAL
• STAKEHOLDERS: CORPORATE GOVERNANCE  (10/16/2008)
• 1.What are the Legal Requirements in Dealing with this Stakeholder Group?
• 2.What is the Moral Obligations You Have in Dealing with this Stakeholder Group?
• 3.What Impact or Influence Has this Stakeholder Group Had on Business?
• Business roundtable: politically conservative group of CEOs of major U.S. corporations formed to promote pro- business public policy.

• Focuses on long-term shareholder value
• Come up with best business practices
• Not all about ethics, but about running a company efficiently
• Find ways to minimize executives pursing self-interest ahead of the corporations interest

• Shareholders: Issue of Executive Pay, Shareholders’ Impact, and Consumers: Product Liability (10/21/2008)
• SHAREHOLDERS: ISSUE OF EXECUTIVE PAY
• EXECUTIVE PAY AMOUNTS
• CEO pay may be very high but small on a shareholder basis
• EVALUATING AMOUNT OF EXECUTIVE PAY

• CEO’s are paid well to take risks, but when the risks go sour, they usually don’t have to pay
• Many feel that executives are overpaid because they are paid dramatically more than the workers, but some feel that they aren’t overpaid because executives play and critical role in the organization and the shareholders get value for their money
• High pay attracts the best leaders
• Board could cap CEO pay as multiple of worker pay

• WHY BOARDS DONT CONTROL EXEC PAY

• Government should get involved
• Con: would leave CEO compensation up to government and drive executives to work for private companies
• Lack of checks and balances: tight knit group of friends help each other out
• Those hired to decide compensation must please the CEO’s or they will not get the job
• Romanticizing the CEO role- rock star
• Excessive narcissism and entitlement: CEO’s are accustom to much attention
• Notion of the public corporation: purpose of corporation is to serve shareholders

• DOES SHARHOLDER ACTIVISM MAKE A DIFFERENCE?

• Shareholders can combine exit and voice
• Vogel: socially responsible investing doesn’t make a difference
• Shareholders don’t have much influence on CEO pay

• WHAT CAN THE BOARD DO?

• they can be much more independent
• incent executive to focus more on long term results
• cap CEO pay as a multiple of worker pay
• prohibit guaranteed severance

• PRODUCT SAFETY OUTLINE
• Who Says How Far A Manufacturer Must Go: The Consumer Product Safety Act

• mandatory uniform safety standards for products
• bans unsafe products
• label requirements

• How Far Should Manufacturers Go to Protect Consumers from Harm?

• make sure consumers understand risk
• use design changes that eliminate as much risk as possible or provide protection or warning labels and instructions

• Three views of product safety

• Contract view: bi-laterally voluntary and conscious decision

• Contract arises from customer purchasing a product with certain characteristics
• Manufacturer liable if contract is not fulfilled

• The Due Care view: managers have a duty to make sure  consumers are not harmed by their products

• Protect customers from their ignorance
• More responsibility on manufacturer

• Social Cost Strict Liability View: manufacturers should pay costs of injuries due to defect in products foreseen or unforeseen

• Most efficient allocation of societal costs
• Motivates company to make products safer
• Injuries are an externality and should be internalized by the corporation

• CONSUMERS: ADVERTISING ETHICS AND IMPACT
• EMPLOYEE: DISCRIMINATION (10/23/2008 – 10/28/2008)
• Legal Constraints on the Advertising Function

• The First Amendment: cannot be misleading or sell illegal products
• Deception: advertiser cannot misrepresent products or mislead consumers
• Puffery: exaggeration reasonable people wouldn’t believe

• “ The greatest show on earth”

• Unfairness: not regulated by FTC
• Self-Regulation
• Advertising to Children

•  
• FOUR LIMITS OF FREE SPEECH: VIEW ON ADVERTISING

• misleading or illegal products
• Substantial government interest
• Regulating advances government interest
• Regulation tailored to government interest

• I. Introduction: Two Real Cases (Reynolds and Texaco)

• Margaret Reynolds vs Atlantic City Convention center

• crude language being used, offensive names, refusal to work with her
• sued the employer
• court found that she was not being discriminated against
• did not affect seriously her well being, nor was it unwelcome behavior because she participated as well
• on the surface it seems obvious that she was discriminated against, but you have to look deeper

• Texaco Jelly Bean Fiasco

• Texaco % of minorities was lower than others in petroleum facility
• Class action Case was brought against them because they were being discriminated, compared African Americans to jelly beans

• Enlightened Self Interest and Discrimination Suits

• Milton Friedman: it is in your enlightened self-interest to not discriminate because it limits your talent pool

• Title VII of the Civil Rights Act

• prohibits discrimination on the basis of race, color, religion, sex, disability and national origin
• Disparate treatment: overt action
• Adverse impact: want only female accountants, so only advertise in Cosmo
• Conduct must be unwelcome, offensive and sever to be illegal

• TWO TYPES OF SEXUAL HARASSEMENT:

• Quid pro quo: A person in authority demands sexual favors of a subordinate as a condition of getting or keeping a job benefit
• Hostile work environment: arises when a co-worker or supervisor, engaging in unwelcome  and inappropriate sexually based behavior, renders the workplace atmosphere intimidating, hostile, or offensive.

• EMPLOYEES: DISCRIMINATION AND LAY OFFS (10/30/2008)

• Affirmative action: positive steps taken to increase the representation of women and minorities in areas of employment, education, and business from which they have been historically excluded.
• When those steps involve preferential selection—selection on the basis of race, gender, or ethnicity—affirmative action generates intense controversy.

• 1.Should the firm’s employment decisions be solely determined by those individuals who end up at the firm’s gate? That is, let the free market decide who gets jobs, receives promotions, etc.?
• 2. Should the firm take steps to enlarge the applicant pool and mentor women and people of color?
• 3. Should a firm allow for race or gender (or other measures of diversity) as a “plus” in a hiring or promotion decisions regarding otherwise equally qualified candidates?
• EMPLOYEES: LAYOFFS
• Legal Constraints on Downsizing
• What is the relationship between downsizing and firm performance?

• It is usually good for the company and its stock price because expenses will be reduced significantly and quickly. This should help increase earnings right away. It is not always a major warning sign; it could just be a reaction to a slower economy. It is one of the quickest ways a company can cut expenses if sales have not been meeting expectations.”

• Legal Constraints on Downsizing

• WARN: 60 days notice for big lay off
• COBRA: laid off workers receive health care coverage for 18 months at group rate
• Non-Discrimination Laws: race, religion, sex, age

• The Ethics of Downsizing and Creative Alternatives

• Law offers little guidance
• Your view of CSR
• Creative alternatives

• THREE DOWNSIZING TECNIQUES

• Eliminate Headcount
• Organizational Redesign: cut costs, streamlines process
• Systemic Change: change performance appraisal system

• THE ENVIRONMENT: CSR AND THE GLOBAL ENVIRONMENT (11/06/2008)
• Green and Sustainable Businesses: A Convergence between Principles and Pragmatism

• Being environmentally conscious is not only morally right but it is profitable
• Current green awakening is affected by: increased oil prices, global warming and a sense that chemical cause harm

• What is Sustainability?  

• The ability to meet the needs of the present without compromising the ability of future generations to meet their own needs.
• An economic state where the demands placed upon the environment by people and commerce can be met without reducing the capacity of the environment to provide for future generations.
• Would make positive contributions to long-term economic, ecological and ethical sustainability.
• Leave the world better than you found it, take no more than you need, try not to harm life of the environment, make amends if you do.
• Eliminate the concept of waste through closed loop systems, change your business model to deliver value and not products, reinvest in natural capital, increase productivity of natural resources (reduce waste)

• Product stewardship-design a product so that once its at the ends of its life it can be reused or recycled
• Going Beyond the Legal Minimum: Approaches to Sustainability
•         A. Pollution Abatement or Prevention Activities
•         B.  Increase in the Productivity of Natural Resources
•         C.  Product Stewardship or Design for Environment
•         D.  Clean Technology
•         E.  Changing the Business Model
•         F.  Reinvest in Natural Resources
• The Future of Sustainability: Demand Matters!
• SIX SINS OF GREENWASHING
• 1.Sin of the hidden tradeoff (most common)

• companies highlight one eco-friendly attribute, and ignore their product's other (potentially more significant) environmental concerns.

• Ex: a company uses wind power but flies its CEO around on private jets

• 2.Sin of no proof

• Cannot be supported by fact

• 3.Sin of vagueness

• terms like "chemical-free," or "non-toxic," which are both universally true, and universally false depending on your interpretation.

• 4.Sin of irrelevance

• when companies make claims that -- while true -- are unhelpful (like "CFC-free," when CFCs have been banned for almost 30 years).

• 5.Sin of fibbing
• 6.Sin of lesser of two evils

• like "green" herbicides, which ignores the fact that herbicides in any form aren't good for the environment.

• ROOT OF ENVIRONMENTAL PROBLEMS:

• I=PAT
• Impact = population * affluence * technology
• Double the population → double impact
• Increased affluence → increased demand for resources
• Technology can decrease impact

• I.e. hybrid cars → less need for petroleum → less need for resources

• World’s population and affluence are growing much faster than technology can offset them

• FOUR AREAS OF RESPONSIBLE ENVIRONMENTAL POLICY

• 1. Wastes and pollution – minimize or eliminate;

• By reducing waste, you reduce the cost to dispose of waste

• 2. Natural resources – conserve. Rely on renewable sources (those that minimize disruption of ecosystems) over nonrenewable; use nonrenewable sources efficiently and justly.
• 3. Environmentally sensitive areas – preserve
• 4. Biodiversity – preserve

• Environmental awareness is a luxury good that most countries cannot afford

• Natural Capitalism: every output of manufacturing should be either composted into natural nutrients of remanufactured into technical nutrients, that is, it should be returned to the ecosystem or recycled for further production.”

• Cradle to grave: be responsible to disposing or recycling of a good after it is done being used

• THE GLOBAL ENVIRONMENT (11/11/2008)
• Climate change
• The Nature of the Problem

• What has caused increases in concentrations of carbon dioxide, methane and nitrous dioxide (GHG) in our atmosphere?
• Impact = Population x Affluence x Technology
• CO2 emissions = (Population) x (GDP per capita) x (emissions per GDP)

• The Technology term is then decomposed using

• Technology =  Energy Intensity  x  Carbon Intensity
• Energy Intensity is the amount of energy we produce per unit of economic output
• Carbon Intensity is the amount of CO2 emitted per unit of energy production

• 82% of GHG come from fossil fuel production

• Governmental Attempts to Address Climate Change

• Mitigation: Reduction of net greenhouse gas emissions. This includes CCS (carbon capture and storage) and ocean fertilization.
• Adaptation: Making social systems less sensitive to climate change in order to reduce impacts.
• Geoengineering: Deliberate modification of the Earth’s short-wave radiation budget to reduce the magnitude of climate change. (Also referred to as Solar Radiation Management – SRM.)
• It is generally believed that both mitigation and adaptation are necessary. It is possible that geoengineering may also be necessary – in addition to mitigation and adaptation, rather than as a replacement for either.

• Business Approaches

• The inevitability of climate change legislation

• Caring about climate change has “enlightened” business to jump on the bandwagon

• Economic opportunities
• Business fears a patchwork of state regulation
• Principled business accept some moral responsibility
• Potential legislation

• Impact of Environmental Stakeholders

• Ground swell of support for regulation among diverse groups driving climate change policy
• Threat of government regulation and litigation
• Potential for cost savings

• THE LOCAL COMMUNITY AS A STAKEHOLDER (11/13/2008)
• Spectrum of business of options or opportunity
• Inactive—Reactive—Proactive
• OPTIONS TO CLIMATE CHANGE

• Deny the findings: challenge the science or solutions
• Do nothing: until you are asked by government or required by regulation
• Create a business advantage: by being green, washing or really
• Lobby to have regulations: that favor you as business or society in general
• Act proactively
• act sustainably
• educate consumers on reducing consumption that leads to increased fossil fuel emissions.
• Change your production processes to limit that consumption
• Invest in renewable
• Just be a natural capitalist and follow any of the strategies!

• THE LOCAL COMMUNITY
•  How have businesses conceived of their basic responsibility to the community?

• Businesses must abide by community laws
• Min wage, taxes, labor laws
• If a business doesn’t live up to their responsibility it will harm their reputation

• What are the arguments for business to become involved in the community at a level that exceeds legal mandates?

• To show that they are more productive
• More efficient
• Minimize costs on society
• Enlightened self-interest
• Long term wealth
• Increased employee moral
• Avoid some government regulations
• Increased sales

• What are the concerns raised about or the costs associated with becoming involved in the community?

• The more a company changes its policies, the more likely it is to be targeted
• Increased public scrutiny

• THE GLOBAL COMMUNITY AS A STAKEHOLDER (11/18/2008)
• What is the impact of globalization?

• Dramatic increase in trade

• To what extent are MNC’s responsible for working conditions in their supply chain, for human rights in developing countries, and environmental effects of their operations in the countries which they do business?

• Must meet host countries legal requirements
• What have some companies done with respect to taking responsibility for working/living conditions in their supply chains?

• STANDARDS OF WORKER TREATMENT IN DEVELOPING COUNTRIES

• 1.US Standards

• No point in outsourcing, unrealistic
• Raising standard might sway firms away from producing in that country
• We should engage instead of set minimum wage
• Requiring minimum wage in over populated, developing countries is harmful because it limits foreign investment

• 2. “Living Wage” Standard

• Provides a decent way of life

• 3. Donaldson’s Standard

• Do the people in that country believe the working conditions and wages are acceptable?

• 4. Market/Classical Liberalism Standard

• Working conditions and wages established by market

• Foreign Corrupt Practices Act

• Prevents US firms from bribing other firms for business
• Even if other firms in country are bribing each other
• Enacted to save financial integrity of corporations

• What is the importance of auditing and disclosure?

• Companies must audit to make sure suppliers are producing products ethically

• Have these efforts made a difference?

• MNC don’t think people will be willing to pay more for CSR
• MNC may be competing against other competitors that aren’t held to the same standards

• THE GLOBAL ENVIRONMENT AND VALUES
• The Universality of our Concerns
• Acting on Your Principles: Enter Moral Courage
• Whistle blowing: The Most Courageous Act?
• Whistle blowing in the International Context
• Finding a Fit between our Values and Employment
• MOST COMMONLY CITED VALUES
• •Honesty
• •Fairness
• •Respect
• •Responsibility
• •Compassion
• HUMAN VALUES FALL INTO BROAD PARADIGMS

• Truth versus loyalty
• Individual versus community
• Short-term versus long-term
• Justice versus mercy

• DONALDSONS RECOMMENDATIONS

• Show respect for core human values (show respect for human dignity, basic rights, and good citizenship—the right to good health, economic advancement, and an improved standard of living). This is the minimum ethical standard for all companies.
• Show respect for local traditions (which doesn’t mean you are getting back to cultural relativism, as some practices are clearly wrong)
• Manifest the belief that context matters when deciding what is right and wrong.

• HOW DO WE CHANGE THIS TREND
• Take responsibility for what’s going on in our firm…. Our world

• Exercise moral courage
• Avoid Moral Courage Inhibitors
• Overconfident Cultures – Tolerate unethical acts
• Compromises - In order to be liked
• Foolhardiness – Don’t properly asses risk
• Timidity – Flee situations demanding boldness
• Raw Courage – Ignores moral courage
• Tepid Ethics – Lacking sufficient intensity
• Overreflection – Rationalize your way out
• Bystander Apathy – No one else is being courageous
• Groupthink – Defends a bad group decision
• Normalized Deviancy – Redefine bad behavior a
• Altruism – Manipulative generosity
• Cultural Differences – My moral concerns don’t apply to those different than me

• VALUES REVISTED (12/2/2008)
• Moral courage: the quality of mind and spirit that enables one to face up to ethical challenges firmly and confidently without flinching or retreating
• Whistle blowing must be used strategically
• Why do people blow the whistle?

• Professional Obligation
• Moral Imperative
• Rewards
• Sanctions for failing to come forward
• Compelling Evidence
• Feel Safe in Doing So (can be anonymous, trust others, or work in a supportive culture)
• Can take the risk: fall back position

• Why people don’t whistle blow?

• Not enough time
• Loyalty
• FEAR
• Exhausted and desensitized
• Lack of certainty

• Barriers to whistle blowing:

• Organizational
• Local (supervisor)
• Personal

• Over coming whistle blowing

• Involve management
• Clear code of ethics
• Communicate policies
• Tailor communication to culture

• BUILDING AN ETHICAL CULTURE (12/04/2008)
•         
• Culture can be defined as the specific collection of values and norms that are shared by people and groups in an organization and that control the way they interact with each other and with stakeholders outside the organization.
• THE VALUES OF ARTHUR ANDERSON

• Integrity and Honesty- Think straight, talk straight values that ensured the auditor’s duty to protect the public.
• One Firm, One Voice Partnership Model
• Training to a Shared Method- to create a uniform and predictable workforce that could be trusted to do as they were taught

• ANDERSONS CONSULTING VALUES
• •Quality client service
• •One firm under Andersen Worldwide
• •Stewardship
• •Best people
• •Respect for Individuals
• • Integrity
• An individual can radically change and organization