Kinh tế học - Chapter 7: Business ethics fundamentals

© 2015 Cengage Learning1Chapter 7Business EthicsFundamentals© 2015 Cengage Learning2Learning OutcomesDescribe how the public regards business ethics.Define business ethics and appreciate the complexities of making ethical judgments.Explain the conventional approach to business ethics. Differentiate it from the principles approach and ethical tests approach. Analyze economic, legal, and ethical aspects of a decision by using a Venn Model.Identify and explain three models of management ethics. Give examples of each. Describe and discuss Kohlberg’s three levels of developing moral judgment.Identify and discuss the elements of moral judgment.© 2015 Cengage Learning3Chapter OutlineThe Public’s Opinion of Business Ethics Business Ethics: Meaning, Types, ApproachesEthics, Economics and Law - A Venn ModelThree Models of Management Ethics?Making Moral Management ActionableDeveloping Moral JudgmentElements of Moral JudgmentSummary© 2015 Cengage Learning4Business Ethics ScandalsThe public’s interest in business ethics is at an all-time high, spurred by scandals.The Enron scandal impacted business so greatly it is called “The Enron Effect.” But then followed more scandals: Worldcom, Tyco, Arthur AndersenAnd then the Wall Street financial scandals: AIG, Bear Stearns, Lehman Bros, Fannie Mae, Freddie Mac, and Bernie MadoffBusiness will never be the same.© 2015 Cengage Learning5© 2015 Cengage Learning6The Public’s Opinion of Business Ethics (1 of 2)The public’s view of business ethics has never been very high. Anecdotal evidence suggests that many people see business ethics as an oxymoron, and think that there’s only a fine line between a business executive and a crook.A Gallup poll taken in December, 2012, revealed that only 21 % of the public thought business executives had high or very high ethics. © 2015 Cengage Learning7The Public’s Opinion of Business Ethics (2 of 2)National Business Ethics Survey Findings - Observed ethical misconduct at work has decreased slightly, from 49% to 45%.Reporting bad behavior (whistle-blowing) is on the rise. from 63% to 65%.Retaliation against those who report misconduct has increased sharply, to 22% experienced retaliation.Pressure to compromise is near the all-time high. Weak ethical cultures – the percentage of companies with weak ethics cultures increased to almost record levels. © 2015 Cengage Learning8Are the Media Reporting Business Ethics More Vigorously?It is sometimes difficult to tell whether business ethics have really deteriorated or whether the media is doing a more thorough job of reporting ethics violations.There is no doubt that news media outlets are reporting ethical problems more frequently and fervently.The media had a field day with the Bernie Madoff Ponzi scheme which defrauded thousands of investors out of $50 billion. Investigate reporting on ethics has been shown on 60 Minutes, 20/20, Dateline NBC, Rock Center and Frontline. © 2015 Cengage Learning9Is Society Changing?Former U.S. Treasury Secretary, Michael Blumenthal- “People in business have not suddenly become immoral. What has changed are the contexts in which corporate decisions are made, the demands that are being made on business, and the nature of what is considered proper corporate conduct.” History shows that a good number of what are now called unethical practices were at one time considered acceptable.Or it may be that those practices never were acceptable to the public, but because they were not known, it seemed they were tolerated. © 2015 Cengage Learning10Business Ethics Today versus Earlier Periods11Ethical ProblemEthical ProblemSociety’s Expectations of Business EthicsActual Business Ethics1960s2010TimeExpected and Actual Levels of Business Ethics© 2015 Cengage LearningBusiness Ethics: Meaning, Types, Approaches (1 of 2)Ethics – is the discipline that deals with moral duty and obligation.Moral Conduct - relates to principles of right, wrong, and fairness in behavior.Business Ethics - Is concerned with morality and fairness in behavior, actions, and practices that take place within a business context.Is the study of practices in organizations and is a quest to determine whether these practices are acceptable or not.© 2015 Cengage Learning12Business Ethics: Meaning, Types, Approaches (2 of 2)Descriptive Ethics -Involves describing, characterizing, and studying morality.Focuses on what is occurring.Normative Ethics -Focuses on what ought or should be occurring.Demands a more meaningful moral anchor than just “everyone is doing it.”Normative Ethics is our primary concern in this text© 2015 Cengage Learning13Three Major Approaches to Business EthicsConventional Approach -Based on how the average person views business ethics, and on common sense.Principles Approach -Based on the use of ethics principles to justify and direct behavior, actions, and policies.Ethical Tests Approach -Based on short, practical questions to guide ethical decision making and behavior and practices.© 2015 Cengage Learning14The Conventional Approach to Business Ethics The conventional approach to business ethics involves a comparison of a decision or practice to prevailing societal norms.Ethical Egoism -An ethical principle based on the idea that the individual should seek to maximize his or her own self interests as a legitimate factor.© 2015 Cengage Learning15Sources of Ethical Norms16© 2015 Cengage LearningEthics and the LawThe law and ethics can overlap in many respects.The law is a reflection of what society thinks are minimal standards of conduct and behavior.Research of illegal corporate behavior focuses on two questions:What leads firms to behave illegally?What are the consequences of engaging in illegal behavior?© 2015 Cengage Learning17Making Ethical Judgments18© 2015 Cengage LearningThe Danger of Ethical RelativismA serious danger of using the conventional approach to business ethics is: Ethical Relativism - One picks and chooses which source of norms one wishes to use based on what will justify current actions or maximize freedom.© 2015 Cengage Learning19Ethics, Economics, and Law – A Venn Model20© 2015 Cengage LearningThree Models of Management EthicsImmoral Management - An approach devoid of ethical principles and an active opposition to what is ethical.The operating strategy of immoral management is focused on exploiting opportunities for corporate or personal gain.Moral Management - Conforms to highest standards of ethical behavior or professional standards of conduct.Amoral Management –Different in nature from the others, it has two kinds:Intentional: Does not consider ethical factors.Unintentional: Casual or careless about ethical factors.© 2015 Cengage Learning21Characteristics of Immoral Managers-These Managers:Intentionally do wrongAre Self-centered and self-absorbedCare only about self or organization’s profits or successActively oppose what is right, fair, or justExhibit no concern for stakeholdersAre the “bad guys”An ethics course probably would not help them© 2015 Cengage Learning22Examples of Immoral Management -Stealing petty cashCheating on expense reportsTaking credit for another’s accomplishmentsLying on time sheetsComing into work hungoverTelling a demeaning jokeTaking office supplies for personal useShowing preferential treatment toward certain employeesRewarding employees who display wrong behaviorsHarassing a fellow employee© 2015 Cengage Learning23Characteristics of Moral ManagersThese Managers: Conform to the highest standards of ethical behavior or professional standards of conduct. Ethical Leadership is commonplace.Their goal is to succeed within the confines of sound ethical preceptsDemonstrate high integrity in thinking, speaking and doing.Follow both the letter and the spirit of the lawPossess an acute moral sense and moral maturityMoral managers are the “good guys”© 2015 Cengage Learning24Habits of Moral Leaders -They have a passion to do right.They are morally proactive.They consider all stakeholders.They have a strong ethical character.They have an obsession with fairness.They undertake principled decision- making.They integrate ethics wisdom with management wisdom.© 2015 Cengage Learning25Positive Ethical Behaviorsof Moral Leaders -Giving proper credit where it is dueBeing straightforward and honest with other employeesTreating all employees equallyBeing a responsible steward of company assetsResisting pressure to act unethicallyRecognizing and rewarding ethical behavior of othersTalking about the importance of ethics and compliance on a regular basis© 2015 Cengage Learning26Characteristics of Amoral Managers- Intentionally Amoral Managers Don’t think ethics and business should “mix.”Business and ethics exist in separate spheres.A vanishing breed.Unintentionally Amoral ManagersDon’t consider the ethical dimension of decision- making.Don’t “think ethically.”Have no “ethics buds.”Well-intentioned, but morally casual or unconscious.Ethical gears are in neutral.© 2015 Cengage Learning27© 2015 Cengage Learning28Two Hypotheses Regarding Moral Management ModelsPopulation hypothesisThe distribution of the three models approximate a normal curve, with the amoral group occupying the large middle part of the curve and the moral and immoral categories occupying the tails.Individual hypothesisWithin the individual manager, these three models may operate at various times and under various circumstances.© 2015 Cengage Learning29Three Models of Management Morality and Emphases on CSR30© 2015 Cengage LearningMoral Management Models And Acceptance or Rejection of Stakeholder Thinking31© 2015 Cengage LearningMaking Moral Management Actionable - The characteristics of immoral, moral and amoral management provide benchmarks for managerial self-analysis, and help managers recognize the need to move from the immoral or amoral ethic to the moral ethic. Amoral management is a morally vacuous condition that can easily be disguised as an innocent, practical, bottom-line philosophy. But it is the bane of the management profession. Most managers are not “bad guys,” but managerial decision-making cannot be ethically neutral. Both immoral and amoral management must be discarded and the process of developing moral judgment begun. © 2015 Cengage Learning32Kohlberg’s Model of Moral Development33© 2015 Cengage LearningWhy Managers and Employees Behave Ethically© 2015 Cengage Learning34Ethics of Care asAlternative to Kohlberg35Recognize their own needs and needs of othersEstablish connections and participate in social lifeSelf is Sole Object of ConcernLevel 1Level 2Level 3© 2015 Cengage LearningExternal Sources of a Person’s Values36© 2015 Cengage LearningSources Internal to the OrganizationNorms prevalent in business include -Respect for the authority structureLoyalty to bosses and the organization Conformity to principles and practicesPerformance counts above all elseResults count above all else© 2015 Cengage Learning37Elements of Moral Judgment -Moral imaginationMoral identification and orderingMoral evaluationTolerance of moral disagreement and ambiguityIntegration of managerial and moral competenceA sense of moral obligation© 2015 Cengage Learning38bottom-line mentalityBusiness ethicsCompliance strategyConventional approach to business ethicsConventional level of moral developmentDescriptive ethicsEthical egoismElements of moral judgmentEthical relativismEthical tests approach to business ethicsImmoral managementIndividual hypothesisIntegrity strategyIntentional amoral managementKohlberg’s levels of moral developmentMoral developmentmoralityMoral managementNormative ethicsPopulation hypothesisPreconventional level of moral developmentPrinciples approach to business ethicsPostconventional, autonomous, principled level of moral developmentUnintentional amoral management© 2015 Cengage Learning39Key Terms