Specific Issues

 Misuse of company resources

 Abusive behavior
 Harassment
 Accounting fraud
 Conflicts of interest
 Defective products
 Bribery
 Employee theft

© 2013 Cengage Learning. All Rights Reserved. 1

 The 1970s: Business Ethics as an Emerging
Field
Business professors began to write about
social responsibility
 An organization’s obligation to maximize positive
impact and minimize negative impact on
stakeholders
• Philosophers involved
• Businesses concerned with public image
• Conferences held and centers developed
• Issues:
Bribery Deceptive advertising
Price collusion Product safety
Environment
© 2013 Cengage Learning. All Rights Reserved 2
 Specific Types of Observed Misconduct

© 2013 Cengage Learning. All Rights Reserved. 3

 Misuse of Company Resources

The leading form of observed misconduct

 Can range from unauthorized use of
equipment and computers to embezzling
company funds
 Time theft costs organizations hundreds of
billions in lost productivity annually

© 2013 Cengage Learning. All Rights Reserved. 4

 Abusive or Intimidating Behavior

One of the most common ethical problems

 Can be physical threats, false accusations,
profanity, insults, harshness, ignoring
someone, or unreasonableness
 Intent is important in determining abuse

Bullying is a growing problem

• Is associated with a hostile workplace

© 2013 Cengage Learning. All Rights Reserved. 5

 Actions Associated with Bullies

© 2013 Cengage Learning. All Rights Reserved. 6

 Lying

Three types of lies

 Joking without malice
 Commission lying is creating a false perception
with words that deceive the receiver
 Creating noise

 Omission lying is intentionally not informing

channel members of problems relating to a
product that affects awareness, intention, or
behavior

© 2013 Cengage Learning. All Rights Reserved. 7

 Conflicts of Interest

Exist when an individual must choose whether to advance

his/her personal interests, those of the organization, or
some other group
 Individuals must separate personal interests
from business dealings

© 2013 Cengage Learning. All Rights Reserved. 8

 Bribery

The practice of offering something in order to gain an illicit

advantage
 Different types of bribery
 Active bribery: The person who promises or gives
the bribe commits the offense
 Passive bribery: An offense committed by the
official who receives the bribe
Facilitation payments: Legal as long as they
are small

© 2013 Cengage Learning. All Rights Reserved. 9

 Corporate Intelligence
 Hacking
 System hacking
 Remote hacking
 Physical hacking
 Social engineering
 Shoulder surfing
 Password guessing
 Dumpster diving
 Whacking
 Phone eavesdropping
© 2013 Cengage Learning. All Rights Reserved. 10
 Discrimination

Is illegal in the U.S.

 A company can be sued for discrimination if it
 Refuses to hire an individual for discriminatory
reasons
 Unreasonably excludes an individual from
employment
 Unreasonably discharges an individual
 Discriminates against an individual with respect to
hiring, employment terms, promotion, or privileges

© 2013 Cengage Learning. All Rights Reserved. 11

 Discrimination (continued)

 Equal Employment Opportunity Commission

(EEOC)
 The Age Discrimination in Employment Act
 Affirmative Action Programs
 Efforts to recruit, hire, train, and promote qualified
individuals from groups that have traditionally
been discriminated against

© 2013 Cengage Learning. All Rights Reserved. 12

 Sexual Harassment

A repeated, unwanted behavior of a sexual nature

perpetrated upon an individual by another
 Hostile work environment
 The conduct was unwelcome
 The conduct was severe, pervasive, and regarded
by claimant as hostile/offensive
 The conduct was such that a reasonable person
would find it hostile or offensive

© 2013 Cengage Learning. All Rights Reserved. 13

 Dual Relationship

A personal, loving, and/or sexual relationship with

someone with whom you share professional
responsibilities
 A key ethical issue in sexual harassment

Unethical dual relationship: The

relationship causes a conflict of interest or
impairment of professional judgment

© 2013 Cengage Learning. All Rights Reserved. 14

 Fraud

Any purposeful communication that deceives,

manipulates, or conceals facts in order to create a false
impression
 Accounting fraud
 Misrepresentation of company’s financial reports
 Dramatic changes in accounting field
 Increased competition and pressures to perform
can create opportunities for misconduct
 Accountants should abide by a strict code of ethics

© 2013 Cengage Learning. All Rights Reserved. 15

 Marketing Fraud
The process of dishonestly creating, distributing,
promoting, and pricing products
 Puffery: Exaggerated advertising claims,
blustering, and boasting
 Can be difficult to distinguish from fraud
 Implied falsity: An advertising message that
misleads, confuses, or deceives the public
 Literally false: Claims can be divided into tests
prove and bald assertions (non-establishment
claims)

© 2013 Cengage Learning. All Rights Reserved. 16

 Consumer Fraud

 When consumers attempt to deceive

businesses for personal gain
 Price tag switching, item switching, or lying to
obtain discounts
 Collusion involves an employee who helps a
consumer commit fraud
 Duplicity involves a consumer duping a store
 Guile is associated with a person who uses
tricks to obtain an unfair advantage

© 2013 Cengage Learning. All Rights Reserved. 17

 Insider Trading

 Two types of insider trading

 Legal insider trading: Involves legally buying
and selling stock in an insider’s own company,
but not all the time
 Illegal insider trading: The buying or selling of
stocks by insiders who possess material that is
not public

© 2013 Cengage Learning. All Rights Reserved. 18