Ch 4 Business Ethics and Social

Responsibility
Sections 1-3
 Learning Objectives
• 4-1 Explain ethics and universal ethical
standards

• 4-2 Describe business ethics and ethical

dilemmas

• 4-3 Discuss how ethics relates to both the

individual and the organization
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4-1 Ethics and Social Responsibility
• Ethics and Social Responsibility
– Closely related, but not the same thing
• Ethics
– Beliefs about what is right and wrong
– Good and bad
• Business Ethics
– application of these in the workplace

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 Ethics and Social Responsibility
• Social Responsibility
– Obligation of business to contribute to society
– Socially responsible firms feature proactive
policies
• Focus on meeting needs of ALL
stakeholders
• Not just investors
• Employees, customers, broader
community, environment
– Stance sets tone for organization
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 4-1a Defining Ethics : Murkier Than You’d
Think
• Ethics – refers to set of beliefs about right and
wrong, good and bad
• Individual ethics
– Who you are as a human being
– Your family
– Your social group
– Your culture
• In United States, people come from diverse
backgrounds
– Establishing broad agreement can be difficult
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 Defining Ethics
• Function of Law
– Establish and enforce ethical norms
• Apply to everyone
• Whole society
– Basic standards of behavior
– Goes beyond the basics
– Actions can be legal, yet unethical
– Completely illegal action, yet ethical

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Exhibit 4.1

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 Defining Ethics
• Some decisions fall within realm of free choice
– No direct link to right and wrong, good and bad
– Ex. What color of shirt to wear?
– Ex. What sunglasses you want to purchase?

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 4-1b Universal Ethical Standards
• Too many people view ethics as “relative”
• Ethical standards shift depending on the
situation
– “It’s not okay to steal paper from an office supply
store”……..
• But it is okay to “borrow” supplies from a storage closet
at work for home use
• Why???? Company “owes” me bigger salary

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 Universal Ethical Standards
• “It’s wrong to lie”
– It’s okay to call in sick when I have personal
business to take care of
– Why??? I don’t want to burn through vacation
days
• Two-faced thinking is dangerous
– Helps people rationalize
– Bigger and bigger ethical deviations

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 Universal Ethical Standards
• Identifying universal ethical standards that
apply to everyone across a broad spectrum of
situations
• Six Core Values identified
– These transcend political, religious, class and ethic
divisions

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Exhibit 4.2

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 4-2 Business Ethics: Not an Oxymoron
• Business Ethics is the application of right and
wrong, good and bad, in a business setting
– isn’t always straightforward
• Ethical Dilemmas – the most challenging
business decisions are
when values are in conflict
– Negative consequences either way
– Choose among bad options
– Different from ethical lapse (misconduct)
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 Ethical Dilemma Examples
• You did a great job on a recent project at your
company
• Boss - Vocal about acknowledging work
– You should earn bonus of 10%
– Company politics took away bonus
– You can submit inflated expense report
– Pocket the extra cash

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 Who Should Die? Who Should Decide?
Example
• Robotic Driver Car blows a tire
• Driving down a mountain road
• One side – oncoming traffic
• Other side – very steep cliff
• Which way should car swerve?
– Save your life, kill others
– Spare others, kill you
• Authentic Dilemma – how to program car?
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 4-3 Ethics Multiple Touchpoints
• All people must make their own ethical
choices

• Organization can have significant influence on

quality of those decisions

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 4-3a Ethics and The Individual
• Ethical choices begin with ethical individuals
– Personal needs
– Family
– Culture
– Religion
• Personality Traits
– Self-esteem
– Self-confidence
– Independence
– Sense of humor
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 Ethics and the Individual
• Personal empathy
– Strong predictor of ethical leadership
– Identification with, and understanding of
another’s situation, feelings, and motives
– Highest empathy = highest levels of ethical
leadership

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 Ethics and the Individual
• Key Principles of most decision guides
– Do you understand the full dimension of the
problem?
– Who would benefit? Who would suffer?
– Are the alternative solutions legal? Fair?
– Does decision feel right at “gut feel” level?
– Could you defend your decision on the nightly
news?
– Have you considered and reconsidered your
responses to each question?
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 4-3b Ethics and the Organization
• Organization can influence individual’s actions
• Influence starts at the top
– Actions matter over words
• President of Ethics Resource Center
– “CEOs in particular must communicate their
personal commitment to high ethical standards and
consistently drive the message down to employees
through their actions”
– Shaky ethics deeply damage company’s ethical
climate
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 Ethics Example
• High Flyers: CEOs of General Motors, Fiat
Chrysler, Ford Motor Company
– went to Washington to request $25 billion bailout
(Great Recession)
– Flew in 3 separate corporate jets
• $20k per round trip
– In-line with company policies for travel
• Didn’t look right!!
– Lawmaker asked “couldn’t you have downgraded……it
would have at least sent a message that you do get it”

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 4-3c Creating and Maintaining an Ethical
Organization
• Ethics and Compliance Initiative Research in 2019
– 20% of workers worldwide felt pressure to break rules
• Culture has more influence than any other
variable on ethical conduct of individuals
• Employee pressure to bend rules
– 49% of those perceiving leaders as weak commitment
to organization values
vs.
– 13% those perceive leaders as strong commitment

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 Creating and Maintaining an Ethical
Organization
• Bend rules
– 48% of those with weak supervisor leadership
vs.
– 18% with strong direct supervisor leadership
• Employees identifying as top management
– 2 times more likely to bend
– (30% vs 17%)

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 Creating and Maintaining an Ethical
Organization
• Association of Certified Fraud Examiners
– Organizations lose roughly 5% of revenue each
year to fraud
– Executives commit only 20% of total occupational
fraud
• Largest losses by far on a dollar basis

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 Creating and Maintaining an Ethical
Organization
• Ethics Resource Center
– Supports needs for senior management
commitment
– Employees see commitment, more likely to be
fully engaged
• Less likely to behave badly
• Likely to report others who do
• Lowers risk for company

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 Creating and Maintaining an Ethical
Organization
• Code of Ethics – cornerstone of any formal
ethics program
– Purpose to give employees info needed to make
ethical decisions
– More important for international companies
– Worthless if it doesn’t reflect living principles
• Specific codes vary greatly among companies

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 Integrated Approach to Ethics
• Executive buy-in and commitment
– Top managers
• Establish expectations for ethical behavior at all
levels of organization
– CEO to cleaning crew
• Integrate ethics into mandatory staff training
– New-employee orientation to ongoing training
• Ensure code of ethics is both global and local
– Employees in every country should understand
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 Integrated Approach to Ethics
• Build and maintain a clear, trusted reporting structure
for ethical concerns
– Allows employees anonymous guidance
– Report concerns
• Protection for whistle blowers (people who report)
– No retaliation
• Enforce the code of ethics
– People violate, company responds
– Respond publicly when necessary
– Retain employee trust
– Without enforcement, meaningless
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 Canvas Assignments
• Please complete the guided notes for Ch 4,
Sections 1-3. This is a 5 point assignment

• Complete the Quizizz at the link here.

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