scoresvideos
Intro to Business
Table of Contents
Unit 2 Overview: Ethical Decisions in Business Management
2.1 Understanding Business Ethics
2.2 How Organizations Influence Ethical Conduct
2.3 Managing a Socially Responsible Business
2.4 Responsibilities to Stakeholders
2.5 Trends in Ethics and Corporate Social Responsibility

💼intro to business review

2.2 How Organizations Influence Ethical Conduct

Citation:

Ethical conduct in organizations is shaped by leadership, corporate codes, and decision-making approaches. Leaders set the tone, while ethics codes guide behavior. Training programs and clear communication reinforce ethical standards, fostering a culture of integrity and responsibility.

Ethical decision-making frameworks help navigate complex situations. Approaches like utilitarianism, rights-based thinking, and fairness considerations offer different perspectives. Organizations also emphasize values, compliance, and social responsibility to build trust and sustainability in their operations.

Organizational Influence on Ethical Conduct

Leadership for ethical behavior

  • Leadership sets the tone for ethical behavior within an organization (ethical leadership)
    • Leaders serve as role models for employees through their actions and decisions
    • Consistent ethical behavior from leadership reinforces the importance of ethics and integrity
    • Leaders should communicate the organization's ethical standards and expectations clearly and frequently
  • Training programs help employees understand and apply ethical principles in their work
    • Ethics training educates employees on the organization's ethical standards, policies, and procedures
    • Scenario-based training allows employees to practice making ethical decisions in realistic situations (ethical dilemmas)
    • Regular training reinforces the importance of ethical behavior and helps maintain an ethical culture over time

Purpose of corporate ethics codes

  • Corporate codes of ethics serve as a formal guide for employee behavior and decision-making
    • Codes outline the organization's values, principles, and expectations for ethical conduct in the workplace
    • They provide a framework for decision-making and help employees navigate ethical dilemmas and gray areas
    • Codes of ethics promote consistency in ethical behavior across the organization, regardless of position or level
  • Corporate codes of ethics have a significant impact on organizational culture and reputation
    • They demonstrate the organization's commitment to ethical practices and social responsibility
    • Codes help foster trust among employees, customers, and stakeholders by setting clear expectations
    • Having a well-communicated code of ethics can improve the organization's reputation and attract ethical employees and customers

Approaches to ethical decision-making

  • Utilitarian approach: Focuses on the consequences of actions and decisions
    • Considers the greatest good for the greatest number of people affected by the decision
    • Key question: Which action will produce the best overall outcome for all stakeholders?
  • Rights-based approach: Emphasizes the protection of individual rights and freedoms
    • Ensures that decisions respect the fundamental rights of all stakeholders (privacy, safety, free speech)
    • Key question: Does the decision violate any individual's rights or infringe upon their autonomy?
  • Fairness or justice approach: Stresses the importance of treating people equally and impartially
    • Decisions should be made impartially and without discrimination based on factors like race, gender, or age
    • Key question: Is the decision fair and equitable to all parties involved, without favoritism or bias?
  • Common good approach: Focuses on the well-being of the community as a whole, beyond individual interests
    • Considers the impact of decisions on society and the environment, both short-term and long-term
    • Key question: Does the decision benefit the common good and contribute to a better society for all?
  • When making ethical business decisions, consider the following steps:
    1. Identify the ethical issue and gather relevant information from multiple sources
    2. Evaluate the decision using multiple ethical approaches to consider different perspectives
    3. Consider the potential consequences and impact on all stakeholders, both positive and negative
    4. Consult with others and seek guidance from the organization's code of ethics and values
    5. Make a decision that aligns with personal and organizational values and can be justified to others
    • These steps form an ethical decision-making framework that can guide employees through complex ethical situations

Organizational Ethics and Responsibility

  • Organizational values shape the ethical culture and guide decision-making
    • These values are often reflected in the company's mission statement and code of ethics
    • They provide a foundation for ethical behavior and help align individual actions with organizational goals
  • Compliance programs ensure adherence to legal and ethical standards
    • These programs involve policies, procedures, and monitoring systems to prevent and detect unethical behavior
    • Regular audits and reporting mechanisms help maintain accountability and transparency
  • Corporate social responsibility (CSR) extends ethical considerations beyond legal requirements
    • CSR initiatives focus on creating positive social and environmental impact alongside business objectives
    • This approach helps build trust with stakeholders and contributes to long-term sustainability

Key Terms to Review (50)

Intel: Intel is a multinational corporation and technology company, primarily known for designing and manufacturing semiconductor chips that serve as the brain of computers, servers, and other devices. As a leader in corporate responsibility, Intel integrates ethical decision-making and social responsibility into its business operations, affecting how it manages stakeholder relationships, innovation in entrepreneurship, motivation theory application, resource planning, product development, and promotion strategies.
Accenture: Accenture is a global professional services company specializing in IT services and consulting, helping clients improve their performance by delivering innovative solutions that address complex business challenges. The company emphasizes ethical conduct and corporate social responsibility as part of its core values, serving as a model for integrating ethical decision-making into business strategies.
Cisco Systems: Cisco Systems is a multinational technology conglomerate headquartered in San Jose, California, that develops, manufactures, and sells networking hardware, telecommunications equipment, and other high-technology services and products. It plays a significant role in facilitating global trade and competition by enabling secure and efficient data exchange across the internet.
Hasbro Introduction, Introduction, Introduction, Introduction, Introduction, Introduction, Introduction, Introduction, Introduction, Introduction,: In the realm of business ethics and social responsibility, the "Hasbro Introduction" exemplifies how a company can embed ethical practices and social responsibility into its corporate strategy. Hasbro, a global play and entertainment company, has implemented various initiatives aimed at promoting ethical conduct, sustainability, and community engagement among its stakeholders.
Plum Organics: Plum Organics is a company that produces organic baby foods, snacks, and products aimed at delivering nutritional health benefits while adhering to ethical business practices. It represents an example of a socially responsible business that prioritizes the well-being of its consumers, especially children, in its operations and product offerings.
Ben & Jerry’s: Ben & Jerry's is an American company known for its ethical business practices and commitment to social responsibility, including environmental sustainability, fair trade sourcing, and supporting various social causes. It integrates ethical decision-making into its business operations and engages stakeholders by aligning its corporate policies with broader societal values.
Garden Fresh Gourmet: Garden Fresh Gourmet is a brand that signifies the commitment of a business to ethical sourcing, production, and distribution practices, often emphasizing natural or organic products. It symbolizes how businesses can maintain social responsibility in their operations by ensuring products are produced in an environmentally friendly and socially conscious manner.
Altria Group, Inc.: Altria Group, Inc. is a conglomerate primarily operating in the tobacco industry, known for its ownership of Philip Morris USA and stakes in various companies focused on smokeless products and wine. It engages in efforts to align with ethical guidelines and social responsibility amid the scrutiny of health impacts associated with tobacco products.
Hormel Foods: Hormel Foods is a global food company known for its production of meat and food products, including brands like Spam and Dinty Moore stews. In the context of making ethical decisions and managing a socially responsible business, Hormel Foods actively engages in sustainability practices, community involvement, and maintaining high standards for animal welfare.
Ecolab: Ecolab generally refers to a global corporation known for its commitment to environmental sustainability and ethical business practices. In the context of making ethical decisions and managing a socially responsible business, Ecolab exemplifies how organizations can influence ethical conduct through sustainable operations and leadership in environmental stewardship.
Wells Fargo: Wells Fargo is a multinational financial services company that has been involved in various controversies, highlighting the importance of ethical decision-making and corporate social responsibility in business. It serves as an example of how unethical practices can lead to significant legal, financial, and reputational consequences for businesses.
Campbell Soup Company: The Campbell Soup Company is a global food company known for its iconic soups, snacks, and meals that prioritize ethical conduct and social responsibility in business operations. It serves as an example of how organizations can implement practices that promote sustainability, community engagement, and ethical labor standards.
Port Authority of New York: The Port Authority of New York and New Jersey is a bi-state agency that operates and maintains critical transportation infrastructure, including bridges, tunnels, airports, and seaports in the New York-New Jersey metropolitan area. It plays a crucial role in facilitating commerce and ensuring the efficient movement of goods and people.
Costco: Costco is a multinational corporation that operates a chain of membership-only warehouse clubs, offering a wide variety of products at bulk prices to its members. It emphasizes ethical business practices, social responsibility, and efficient human resources management to ensure stakeholder satisfaction and high performance.
Lending Club: Lending Club is an online financial community that connects borrowers seeking loans with investors looking to fund loans and earn returns, operating as a peer-to-peer lending platform. It exemplifies the application of ethical business practices by emphasizing transparency, fairness, and accountability in its operations.
Lockheed Martin: Lockheed Martin is a global aerospace, defense, security, and advanced technologies company with worldwide interests. It is notably involved in the research, design, development, manufacture, integration, and sustainment of advanced technology systems, products, and services.
American Express: American Express is a global financial services corporation known for its credit card, charge card, and traveler's cheque businesses. It plays a significant role in influencing ethical conduct and managing socially responsible business practices within the financial industry.
Madoff: Bernard Madoff was a former stockbroker, investment advisor, and financier who is best known for operating the largest Ponzi scheme in history, amounting to about $65 billion. His fraudulent activities highlighted significant ethical breaches and regulatory oversights in the financial industry.
Bolthouse Farms: Bolthouse Farms is a vertically integrated farm company specializing in refrigerated beverages, dressings, and carrots. The company emphasizes sustainability and ethical practices in its operations, aligning with broader corporate social responsibility (CSR) goals.
Board of directors: A board of directors is a group of individuals elected to represent shareholders and oversee the activities and strategic direction of a corporation. This body makes key decisions on policy, strategy, and the overall governance of the corporation.
Ethics Resource Center: The Ethics Resource Center (ERC) is an organization that focuses on advancing high ethical standards and practices in public and private institutions. It provides research, resources, and guidance to businesses on how to foster ethical cultures within their organizations.
Code of ethics: A code of ethics is a set of principles and guidelines that a business adopts to ensure its employees and management conduct business affairs with integrity and responsibility. It serves as a framework for ethical decision-making within the organization.
Utilitarianism: Utilitarianism is a principle in ethics that suggests the best action is the one that maximizes overall happiness or well-being for the greatest number of people. It emphasizes outcomes and consequences of actions in determining their moral worth.
Corporate culture: Corporate culture encompasses the shared values, beliefs, and practices that characterize an organization and influence its employees' behaviors. It shapes the work environment and guides how employees interact with each other and make decisions.
United Airlines: United Airlines is a major American airline, headquartered in Chicago, Illinois, known for its global route network. In the context of making ethical decisions and managing a socially responsible business, it serves as an example of how large organizations implement policies and practices to promote ethical conduct and social responsibility.
Corporate Social Responsibility: Corporate social responsibility (CSR) refers to a company's commitment to operate in an economically, socially, and environmentally sustainable manner, while considering the interests of various stakeholders. It encompasses a business's ethical obligations and voluntary actions to contribute to the well-being of its employees, community, and the environment.
Stakeholders: Stakeholders are individuals or groups that have an interest or concern in an organization's activities, decisions, and performance. They can directly or indirectly influence or be influenced by the organization's actions. Stakeholders are a crucial consideration across various aspects of business, from understanding the environment and ethical conduct to management and public relations.
Virtue Ethics: Virtue ethics is a normative ethical theory that emphasizes the virtues or moral character, rather than duties or rules (deontology) or the consequences of actions (consequentialism). It focuses on the kind of person one should be, rather than the rightness or wrongness of specific actions.
Ethical Leadership: Ethical leadership is the practice of demonstrating and promoting values, principles, and behaviors that are morally upright and beneficial to both the organization and its stakeholders. It involves making decisions and taking actions that are consistent with ethical standards and the greater good, while also inspiring and guiding others to do the same.
Ethical Conduct: Ethical conduct refers to the principles, values, and behaviors that guide individuals and organizations to make decisions and take actions that are morally right and socially responsible. It encompasses the ethical standards and practices that shape the culture and decision-making processes within an organization.
Whistleblowing: Whistleblowing refers to the act of an employee or member of an organization disclosing information about illegal, unethical, or harmful practices within that organization to an external authority or the public. It is a critical mechanism for promoting corporate accountability and ethical conduct.
Milton Friedman: Milton Friedman was an American economist who was a prominent advocate for free-market capitalism and limited government intervention. His ideas had a significant impact on the way organizations approach ethical conduct and social responsibility in business.
Corporate Culture: Corporate culture refers to the shared values, beliefs, attitudes, and behaviors that characterize an organization and guide the actions of its members. It is the unique personality and environment of a company that shapes how employees interact, make decisions, and approach their work.
Utilitarianism: Utilitarianism is an ethical theory that holds that the most ethical choice is the one that maximizes overall happiness or well-being for all people affected by the decision. It focuses on the consequences of actions rather than the intentions or the inherent nature of the act itself.
Board of Directors: The board of directors is the governing body of a corporation, responsible for overseeing the company's operations, making major decisions, and ensuring the organization's compliance with laws and regulations. It serves as the link between the company's management and its shareholders, balancing the interests of various stakeholders.
Justice Approach: The justice approach is a moral framework that evaluates the ethics of an action based on its adherence to principles of fairness, equality, and individual rights. It focuses on ensuring that all people are treated justly and that no one is unfairly disadvantaged or discriminated against.
Kantian Ethics: Kantian ethics is a deontological moral philosophy developed by the German philosopher Immanuel Kant. It emphasizes the importance of duty, reason, and the inherent dignity of all human beings as the foundation for ethical decision-making, rather than focusing on the consequences of actions.
Transparency: Transparency refers to the open and clear communication of information, policies, and decision-making processes within an organization or business. It involves being accountable, accessible, and honest in sharing relevant details with stakeholders, employees, and the public.
Relativism: Relativism is the philosophical view that all ethical, cultural, and knowledge-based standards and norms are relative to the individual, society, or culture in which they exist. It holds that there are no universal, absolute, or objective truths, and that all beliefs, values, and morals are shaped by the context in which they are formed.
Organizational Values: Organizational values are the fundamental beliefs and principles that guide an organization's conduct and decision-making. They serve as the moral compass for the organization, shaping its culture, policies, and actions.
Corporate Codes of Ethics: Corporate codes of ethics are formal statements that outline an organization's core values, ethical principles, and behavioral expectations for its employees. These codes serve as a framework to guide decision-making and promote ethical conduct within the company, influencing the organization's culture and ethical climate.
Rights-Based Approach: A rights-based approach is a conceptual framework that focuses on promoting and protecting the human rights of individuals or groups. It emphasizes the inherent dignity and worth of all people and aims to empower them to claim their rights and hold decision-makers accountable.
Post-Enron Era: The post-Enron era refers to the period following the collapse of the Enron Corporation in 2001, which exposed widespread corporate fraud and unethical practices. This era has been marked by increased scrutiny, regulations, and a heightened focus on corporate governance and ethical conduct within organizations.
Ethical Dilemmas: Ethical dilemmas are situations where there is no clear right or wrong answer, and an individual or organization must make a difficult choice between competing moral principles or values. These dilemmas often arise when there are conflicting obligations, responsibilities, or consequences that must be weighed against one another.
Utilitarian Approach: The utilitarian approach is an ethical framework that evaluates the morality of an action based on its consequences, specifically the overall happiness or well-being it produces. It focuses on maximizing the greatest good for the greatest number of people affected by a decision or action.
Fairness Approach: The fairness approach is a framework that organizations use to influence ethical conduct by emphasizing the importance of fairness, justice, and equitable treatment of all stakeholders. It focuses on ensuring that decisions, policies, and actions are perceived as fair and unbiased, promoting a sense of trust and accountability within the organization.
Compliance: Compliance refers to the act of adhering to rules, regulations, policies, or requirements set forth by an organization, industry, or governing body. It involves the willingness and ability of individuals or entities to conform to these established standards and expectations.
Common Good Approach: The common good approach is an ethical framework that emphasizes the well-being of the entire community or society, rather than just individual interests. It holds that organizations should make decisions and take actions that promote the greater good, rather than prioritizing their own self-interests.
Deontological Ethics: Deontological ethics is a normative ethical theory that judges the morality of an action based on the action's adherence to a rule or rules. It is concerned with the rightness or wrongness of an action itself, rather than the consequences of the action.
Ethical Decision-Making Framework: An ethical decision-making framework is a structured approach that guides individuals or organizations in navigating complex moral dilemmas and making decisions that align with ethical principles and values. It provides a systematic process for identifying, analyzing, and resolving ethical issues.