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Chapter 4 Demanding ethical and socially responsible behavior 1.Ethics is more than legality a.Ethics are legality are very different things, legality is only following laws while ethics reflects people’s proper relationships with one another (many unethical and immoral behaviors fall well within out laws, such as gossiping about neighbors or sharing a secret) b.Ethical standards are fundamental i.Ethics: society’s accepted standard of moral behavior ii.Basic moral integrity common in all books across time: integrity, respect for human life, self-control, honesty, courage, and self-sacrifice 2. Ethics begins with each of us a.Most common form of cheating in school: plagiarizing, including copying and pasting info from the internet i.To fight this practice, instructors use software lockdowns or turnitin ii.Dishonestly at school leads to dishonesty at work b.Obvious ethical solution may have personal or professional drawbacks i.Ethical dilemmas- when you are forced to choose between equally unsatisfactory alternatives (such as supervisor telling you to do something unethical and you can’t afford to get fired) ii.Ask the following questions when faced with an ethical dilemma 1.Is my proposed action legal? 2.Is it balanced? Will both parties win or will only one? 3.How will it make me feel about myself? Will my family be proud when they hear about this in the news? 3.Managing businesses ethically and responsibly a.Organizational ethics begin at the top of the pyramid, with the leaders and managers. Strong managers can help instill corporate values in employees i.Some managers believe ethics is a personal thing, you either have it or you don’t, but ethics has everything to do with an organization and its management (such as poorly designed incentive programs that reward unethical behaviors for meeting certain goals) b.Trust and cooperation between workers and managers must be based on fairness, honesty, openness, and moral integrity c.Why do businesses need to be managed ethically? i.Maintain a good reputation ii.Keep existing customers iii.Attract new customers iv.Avoid lawsuits CHAPTER 4 – DEMANDING ETHICAL BEHAVIOR AND SOCIALLY RESPONSIBLE BEHAVIOR LEARNING GOALS After you have read and studied this chapter, you should be able to: 1. Explain why obeying the law is only the first step in behaving ethically. 3. Describe management's role in setting ethical standards. six steps in setting up a corporate ethics code. responsibility in global markets. LEARNING THE LANGUAGEListed here are important terms found in this chapter. Choose the correct term for each definition and write it in the space provided.
1. Ethical standards emphasize preventing unlawful behavior by increasing control and by penalizing wrongdoers are called _____________________________. 2. A ________________ is a systematic evaluation of an organization's progress toward implementing programs that are socially responsible and responsive. 3. The dimension of social responsibility knows as a(n) _____________refers to the position a firm takes on social and political issues. 4. Standards of moral behavior, or ____________, is behavior that is accepted by society as right or wrong. 5. In a corporation, a(n) _______________________refers to ethical standards that define the organization's guiding values, create an environment that supports ethically sound behavior, and stress a shared accountability among employees. 6. ____________________________ is the dimension of social responsibility that includes charitable donations. 7. A business’s concern for the welfare of a society as a whole is called __________________________. 8. A dimension of social responsibility known as _____________________ includes everything from hiring minority workers to making safe products. 9. An unethical activity called _______________________occurs when insiders use private company information to further their own fortunes or those of their family and friends. 10. People who report illegal or unethical behavior are known as _______________________.11. Enhanced forms of corporate philanthropy called __________________________ are more directly related to the company’s competencies. ASSESSMENT CHECKLearning Goal 1 1. What are some things that could
be done to restore trust in the free market system and in corporate leaders? b. ____________________________________________________________________________ c. ____________________________________________________________________________ 2. What is the danger in simply writing new laws to correct behavior? 3. What is the difference between being “ethical” and being “legal”? 4. What is meant by the statement “Many Americans today have no moral absolutes.”? 5. The common themes from the Bible, Aristotle, Shakespeare, the Koran and Confucius are: 6. How “socially minded” are Americans in general? What information does the text cite to support that claim? 7. What is an “ethical dilemma”? Learning Goal 2 8. How did teams respond when they were asked about making ethical decisions? 9. Describe an ethical dilemma. 10. What are three questions to ask yourself when faced with an ethical dilemma? a. ____________________________________________ b. ____________________________________________ c. ____________________________________________ Learning Goal 3 11. Organizational ethics begin at ______________________________________________ People learn their standards and values from _________________________________ 12. What are the reasons to manage ethically? a. ______________________________________________________________________ b. ______________________________________________________________________ c. ______________________________________________________________________ d. ______________________________________________________________________ e. ______________________________________________________________________ f. ______________________________________________________________________ g. ______________________________________________________________________ h. ______________________________________________________________________ Learning Goal 4 13. Identify the difference between a compliance-based ethics code and an integrity-based ethics code. 14. What are six steps to follow for a long-term improvement of America's business ethics? a.___________________________________________________________________________ b.___________________________________________________________________________ c.___________________________________________________________________________ d.___________________________________________________________________________ e.___________________________________________________________________________ f.___________________________________________________________________________ 15. What is the most important factor to the success of enforcing an ethics code? What makes that person effective? Learning Goal 5 Corporate Social Responsibility16. Corporate social responsibility is based on: 17. Critics of corporate social responsibility (CSR) believe: 18. Defenders of CSR believe: 19. Identify the four dimensions of corporate social responsibility.
d. ______________________________________________________________________________ 20. Describe the USA Freedom Corps. 21. Identify three web-based volunteer services that link volunteers with nonprofit and public sector organizations. 22. What are four groups that comprise the stakeholders to whom businesses are responsible? a. _______________________________ c. _______________________________ b. _______________________________ d. _______________________________ 23 President John F. Kennedy proposed these four basic rights of consumers: a. ______________________________ c. _______________________________ b. ______________________________ d. _______________________________ 24. One of the surest ways of failing to please customers is__________________________________ 25. How does Bagel Works, a New England based chain of bagel stores, demonstrate a two-way, or dual approach to social responsibility? 26. Is it only company executives that participate in insider trading? 27. What is required by Regulation FD, adopted by the SEC in the early 2000s? 28. What responsibilities do businesses have toward employees?
29. What are “contented cow”companies, vs. “common cow” companies? 30. How does offering employees good salaries and benefits help companies?
32. Some companies feel responsible for promoting social justice and believe they have a role in giving back. What kinds of social contributions have companies made to go beyond charity? 33. What is a product’s carbon footprint? 34. What is the potential financial impact of environmental strategies? 35. Describe the impact of the green movement on the U.S. labor force. 36. A major problem of conducting a social audit is _________________________________________ ____________________________________________________________________________ 37. Many consider that a workplace audit should measure: a. ____________________________________ b. ____________________________________ c. ____________________________________ d. ____________________________________ e. ____________________________________ f. ____________________________________ g. ____________________________________ 38. How is a “net social contribution” calculated? 39. Describe the four types of “watch-dog” groups that monitor how well companies enforce ethical and social responsibility policies. a. ______________________________________________________________________________ b. ______________________________________________________________________________ c. ______________________________________________________________________________ d. _____________________________________________________________________________ Learning Goal 6 40. Are ethical problems unique to the United States? What is new about the ethical standards used to judge government leaders? 41. What are many American businesses demanding from their international suppliers in terms of social responsibility? 42. Describe the Joint Initiative on Corporate Accountability and Workers’ Rights. 43. What questions surround the issue of American ethical standards and international suppliers? 44. Is it likely that there will be a single set of international rules governing multinational corporations? Why or why not? CRITICAL THINKING EXERCISESLearning Goal 1 Your company’s policy regarding “gifts” from suppliers is not entirely clear. Tangible gifts with a value over $50 are not to be accepted. Other things such as dinners, and other intangibles, are to be evaluated on a case-by-case basis, and acceptance is left up to the discretion of the employee. Any employee who violates the policy could face severe penalties, including dismissal. Is this an ethical dilemma? Why or why not? What ethical issues are involved? Is there a question of “legal versus ethical”? What would you do? Learning Goals 1, 2 Daryl, the general supervisor of a marketing department of a mid-sized Midwestern corporation, is an ambitious young man. He is writing a book that he hopes will make a name for himself in the business community. Because the typing for the actual text is very time-consuming, Daryl is using the secretary he shares with 2 other managers, as well as some of his market research interns to both do research and to type the book while they're at work. Because they are often busy doing his book, people from the other departments are finding they can't get their work-related business done. The secretary and interns feel they have to do what Daryl says because he is their direct supervisor. You are Daryl's peer in another department and you also have outside work you need to have typed. You're annoyed at Daryl's actions, but would rather not inform your boss, (who is also Daryl's boss) about what's going on because you want to maintain a friendly working relationship with Daryl. Besides, you never know how "the boss" is going to react. Sometimes you begin to think that if Daryl can get away with using company equipment, personnel, and time for his personal projects, why can't you? Discuss what you believe are the ethical issues in this situation, and determine how you would handle this situation. Learning Goals 2, 3 Learning Goal 4 Read the following examples of corporate behavior, and determine which kind of ethical code the company may be using. a. ____________ At Mary's Flowers employees are encouraged to be active in community affairs, and to be aware of their obligation to society. The company stresses honesty, provides seminars on making ethical choices, and has a commitment to hire an ethnically diverse workforce. b. ____________ At Pro-Tec, management has developed and distributed a code of ethics for employees. It defines what is acceptable behavior, and states that "behavior deemed to be unethical will not be tolerated." The policy does not define behavior that would be considered unethical, but does say that if there is a question a manager should be consulted.
Learning Goal 5 MUMC is a successful medium-sized firm that supplies parts for electric motors. a. In keeping with the idea of social audits and socially responsible business activities, is Mr. Furlong running the business in a socially responsible manner? b. Who are Mr. Furlong’s stakeholders? c. What suggestions can you make to improve MUMC’s social responsibility position? 7. Who are four stakeholders to whom businesses are responsible? What does “being responsible” to each of these groups require? Learning Goal 6 PRACTICE TESTMULTIPLE CHOICE – Circle the best answer Learning Goal 1
2. The difference between ethics and legality is that: 3. A survey revealed that:
Learning Goal 2
5. Sometimes an obvious choice from an ethical standpoint has personal or professional drawbacks. An example might be when a supervisor asks you to do something unethical, and you face negative consequences if you refuse. When you are in such a situation you are faced with: 6. Which of the following is not included as one of the questions we must ask when faced with an ethical dilemma? 7. The most basic step in an ethics based management system is asking the question: Learning Goal 3
9. Organizational ethics begin Learning Goal 4 11. According to the text, which of the following actions is probably most critical In establishing an effective ethics program?
Learning Goal 5 13. Defenders of corporate social responsibility (CSR) believe: 14. Being energy conscious, ensuring that employees have a safe working environment, and monitoring corporate hiring policies to prevent discrimination is part of: 15. In terms of
social responsibility, many people believe that 16. In terms of social responsibility, the “contented cow” idea states that 17.
Maria Hernandez is a secretary at Big Bud’s Brewery a major U.S. brewer of specialty beers. Maria was at lunch with her friend Olga, who is the Administrative Assistant to the president of the Brewery, January Flower. Olga mentioned that she overheard her boss talking to a potential buyer of Big Bud’s Brewery. Maria began thinking that perhaps she should buy some extra stock in the company, as the price was most likely to go up if the company was going to be sold. If
Maria does buy the stock before the sale of Big Bud’s is publicly announced, she: 18. Which of the following is not one of the watchdog groups that evaluate how well companies enforce their ethical and social responsibility policies?
d. Employees Learning Goal 6 20. American businesses are: Learning Goal 1 2. _____ Ethics and legality are basically the same thing. Learning Goal 2 4. _____ In an organization, ethics begin at the top. Learning Goal
3 Learning Goal 4 7. _____ One step to the success of enforcing an ethics code is the selection of an ethics officer. 8. _____ It’s not important for employees to be given a specific ethics code. They should be aware of what constitutes ethical behavior without being told. 9. _____ Whistleblowers are individuals who report unethical or illegal behavior in an organization. Learning Goal 5 11. _____ In reality, it appears that even people who want to be socially responsible can’t define what being socially responsible means. 12. _____ One of the best ways to please customers is to hide product defects from them. 13. _____ Insider trading involves employees buying and selling the stock of the company by which they are employed. 14. _____ Businesses have a responsibility to employees to create jobs. 15. _____ A carbon footprint can be defined as the amount of carbon
released during the production, distribution, consumption and disposal of a product. 17. _____ Nike has been accused of treating workers in some parts of the world unfairly, and has begun an effort to improve its reputation. You Can Find It On the Net Go to the Ben and Jerry’s website www.benjerry.com and find the company’s mission statement. What three areas are included in their mission statement? What is Ben and Jerry’s social mission? What campaigns and causes does Ben and Jerry’s support? What is the purpose of the Ben and Jerry’s Foundation? Check out the most recent Social and Environmental Assessment. In this document the company reports their activities in a number of areas, regarding their social responsibility behavior. What has Ben and Jerry’s been up to? ANSWERS LEARNING THE LANGUAGE
ASSESSMENT CHECK Learning Goal 1 1. In order to restore trust in the free market system and in corporate leaders, we need to 2. The danger in writing new laws to correct behavior is that people may begin to think that any behavior that is within the law is also acceptable. When people consider only what is illegal, and not what is ethical, a society gets into trouble. 3. Ethics and legality are very different things. Being legal means following the laws written to protect ourselves from fraud, theft and violent acts. It is narrower than ethical behavior. Ethical behavior requires more than simply following the law and looks at behavior in terms of people’s relations with one another. 4. This statement means that many Americans decide whether it’s o.k. to steal, lie, or drink and drive based on the situation. He or she thinks that what is right is whatever works best for the individual, and that each person has to work out for himself or herself the difference between right and wrong. 5. The common themes from the Bible, Aristotle, Shakespeare, the Koran and Confucius are basic moral values such as integrity, respect for human life, self-control, honesty, courage, and self-sacrifice are right; cheating, cowardice and cruelty are wrong. 6. A recent study revealed that a majority of the American population reported never giving any time to their community. One third reported never giving to a charity. Business managers and workers cited low managerial ethics as a major cause of competitive woes for American businesses. Employees report violating safety standards and many students report cheating on exams. In other words, Americans are not especially “socially minded.” The text cites examples from college classrooms and from corporate leaders’ behavior as examples. 7. An ethical dilemma is a situation in which you must choose between equally unsatisfactory alternatives when making a decision. Learning Goal 2 8. Most teens said they were prepared to make ethical decision in the workforce, but 38% felt lying, cheating, plagiarizing, or behaving violently is sometimes necessary. 9. An ethical dilemma is a situation in which a person must choose between two equally unsatisfactory alternatives. 10. Three questions to ask are: Learning Goal 3 11. Organizational ethics begin at the top. People learn their standards and values from observing what others do. 12. Reasons to manage ethically are: Learning Goal 4 13. Compliance based ethics codes emphasize preventing unlawful behavior by increasing control and by penalizing wrongdoers. This type of ethics code is based on avoiding legal punishment. Integrity based ethics codes define the organization’s guiding values, create an environment that supports ethically sound behavior, and stress a shared accountability among employees. 14. a. Top management must adopt and support an explicit code of conduct. 15. An important factor to the success of enforcing an ethics code is to select an ethics officer. The effective ethics officer will set a positive tone, communicate effectively, and relate well with employees at every level. It is important the ethics officers have strong communications skills. Learning Goal 5Corporate Social Responsibility16. Corporate social responsibility is based on a company’s concern for the welfare of all its stakeholders, not just owners and on a commitment to the principles of integrity, fairness, and respect. 17. Critics of corporate social responsibility believe a manager’s role is to compete and win in the marketplace. Some believe managers who pursue CSR are doing so with other people’s money, which they invest to make more money, not to improve society. 18. Defenders of CSR believe businesses owe their existence to the societies they serve. Firms have access to society’s labor pool and natural resources, in which every member of society has a stake. 19. a. Corporate philanthropy includes charitable donations to nonprofit groups. 20. The USA Freedom Corps was established to oversee Citizen Corps, a program designed to strengthen homeland security efforts through the use of volunteers. Volunteers handle administrative work at local police departments and spread antiterrorism information as part of expanded Neighborhood Watch programs. 21. NetworkforGood.org 22.
Four stakeholder groups are: 23. President John F. Kennedy proposed these four basic rights of consumers: 24. One of the surest ways of failing to please customers is not being totally honest with them. 25. Bagel Works approach to social responsibility focuses on the well being of the planet in addition to profits. Each store employs environmentally protective practices, and donates to community causes. 26. Insider trading isn’t limited to company executives. An IBM secretary told her husband about a takeover of Lotus Development before it was publicly known. Her husband told two co-workers, who told friends, relatives, business associates, and others. In all, 25 people traded illegally on this tip. These people ended up with significant fines as a result. 27. Regulation FD (for fair disclosure) requires that companies which release any information share it with everyone, not just a few select people. If companies tell anyone, they must tell everyone, at the same time. 28. Business’ responsibility to employees includes: 29. “Contented cow” companies are companies with contented employees. These companies outgrew and out earned their “common cow” companies by a significant amount. The difference in performance is attributed to the commitment and caring the outstanding companies demonstrated for their employees. 30. Offering good salaries and benefits reduces employee turnover. This saves the company money, so retaining workers is good for morale and is good for business. 31. When employees feel they have been treated unfairly they will strike back, and get even in such ways as:
32. When companies play a role in building a community, their contributions can include cleaning up the environment, providing computer lessons, supporting the elderly and children from low-income families, and building community facilities. 33. A product’s carbon footprint is the amount of carbon released during production, distribution, consumption and disposal. This can include such items as the carbon released by the fertilizer used to grow agricultural products, including the carbon in the fertilizer itself, the gas used to run farm equipment and to transport the agricultural product, electricity and so on. 34. Some environmental efforts can allow a company to charge higher prices or to increase market share. Other times the efforts fail, when customers aren’t willing to pay a premium for products which are environmentally responsible. 35. The green movement has had a positive impact on the U.S. labor force. Emerging renewable-energy and energy-efficient industries account for 8.5 million jobs and by 2030 will create as many as 40 million more in a variety of industries. 36. A major problem of conducting a social audit is establishing procedures for measuring 37. Many consider that a workplace audit should measure: 38. A “net social contribution” is calculated by adding all positive social actions, and then subtracting negative effects such as layoffs and pollution. 39. Four watchdog groups are: Learning Goal 6 40. No, ethical problems are not unique to the U.S. What is new about the moral and ethical standards by which government leaders are being judged is that the standards are much stricter now. In other words, government leaders are now being held to a higher standard than in the past. 41. Many American businesses are demanding socially responsible behavior from their international suppliers by making sure their suppliers do not violate U.S. human rights and environmental standards. 42 The Joint Initiative on Corporate Accountability and Workers’ Rights is a project that is designed to create a single set of labor standards with a common factory inspection system. The goal is to replace the current system of multiple approaches with something that is easier and cheaper to use.If it works, one of the outcomes is that the common guidelines will keep companies from undercutting one another on labor standards. A major issue is what constitutes a living wage in different areas of the world. 43. Examples of the questions surrounding the issues of international ethics are: To what country’s standards should multinational companies adhere?44. It is unlikely that there will be a single set of international rules governing multinational corporations in the near future. There are too many differing opinions about what is ethical and socially responsible. Most standards set by various international bodies are advisory only. CRITICAL THINKING EXERCISESLearning Goal 1 Learning Goals 1, 2 Learning Goals 2, 3 Learning Goal 4 5. As a company’s Ethics Officer, the first step you would probably take is to set up a meeting with the company’s top executives to ensure their support of any actions you want to take regarding setting up a code of conduct. The unconditional support of top management is vital to the success of a corporate ethics code. The next step most likely is to develop a set of standards of acceptable behavior, and to make sure that employees understand the expectations of those standards. Employees must be trained to consider the ethical implications of their decisions, so there must be explicit standards and guidelines to follow. Further, as the Ethics Officer, your office must set up a system so that employees can report and discuss ethical issues anonymously, and whistleblowers must feel protected. Your office must also inform outsiders such as suppliers, subcontractors, distributors, and customers of the ethics code. This can be done easily on your company’s web site. Lastly, the ethics code must be enforced by taking timely action when a violation has occurred. Learning Goal 5 7. Businesses are responsible to four general stakeholder groups: customers, investors, employees, and society in general. Being responsible to customers means offering them goods and services of real value. This includes being honest with customers about problems with products, and committing resources to solve the problems. Responsibility to investors means making money for stockholders. This includes financial ethical behavior. Many believe that it makes financial as well as moral sense to invest in companies that are planning ahead to create a better environment. Responsibility to employees means creating jobs, making sure that hard work and talent are fairly rewarded, and demonstrating respect for employees by treating them fairly. This includes giving employees salaries and benefits that help them reach their personal financial goals. Responsibility to society means creating wealth, promoting social justice, giving back to communities, and helping to make the environment a better place. Learning Goal 6 The justness of requiring international suppliers to adhere to American ethical standards is not clear-cut. There are questions such as: Is it always ethical for companies to demand compliance with the standards of their own countries? What about countries where child labor is an accepted part of the society and families depend on the children’s earnings for survival? Should foreign companies doing business in the United States expect American companies to comply with their ethical standards? To which society’s standards should multinational companies conform? None of these questions have easy answers, but demonstrate the complexity of social responsibility issues in international markets. PRACTICE TEST1. c
11. c 1. T
9. T Source: http://highered.mheducation.com/sites/dl/free/007352459x/941320/Nickels10_SG_ch04.doc If you are the author of the text above and you not agree to share your knowledge for teaching, research, scholarship (for fair use as indicated in the United States copyrigh low) please send us an e-mail and we will remove your text quickly. Fair use is a limitation and exception to the exclusive right granted by copyright law to the author of a creative work. In United States copyright law, fair use is a doctrine that permits limited use of copyrighted material without acquiring permission from the rights holders. Examples of fair use include commentary, search engines, criticism, news reporting, research, teaching, library archiving and scholarship. It provides for the legal, unlicensed citation or incorporation of copyrighted material in another author's work under a four-factor balancing test. (source: http://en.wikipedia.org/wiki/Fair_use) The information of medicine and health contained in the site are of a general nature and purpose which is purely informative and for this reason may not replace in any case, the council of a doctor or a qualified entity legally to the profession. The following texts are the property of their respective authors and we thank them for giving us the opportunity to share for free to students, teachers and users of the Web their texts will used only for illustrative educational and scientific purposes only. The information of medicine and health contained in the site are of a general nature and purpose which is purely informative and for this reason may not replace in any case, the council of a doctor or a qualified entity legally to the profession. What is ethics and social responsibility in international business?The goal of ethics in international business is to ensure the company gains a reputation for ethical and responsible business practices in its home country and overseas. The result is a more equitable, principled marketplace, strengthened by partnerships between businesses that share high ethical standards.
What is the concern that businesses have for the welfare of society?Corporate social responsibility is the concern of businesses for the welfare of society as a whole. It consists of obligations beyond just making a profit and goes beyond what is required by law or union contract.
What is the best strategy to improve US business ethics?Here are our Top Tips for raising the bar and creating a more ethical workplace:. Create a code. ... . Engage with your employees and customers. ... . Reinforce the benefits of the code. ... . Be a good role model. ... . Train your employees. ... . Promote your ethical behaviour. ... . Reward ethical behaviour. ... . Learn from your mistakes.. What are two characteristics of businesses that practice corporate social responsibility?Some ways that a company can embrace CSR include being environmentally friendly and eco-conscious; promoting equality, diversity, and inclusion in the workplace; treating employees with respect; giving back to the community; and ensuring business decisions are ethical.
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