STRAMA CHAPTER 10

Business Ethics

principles of conduct within organizations that guide decision making and behavior

Social Responsibility

actions an organization takes beyond what is legally required to protect or enhance the well-being of living things

Sustainability

the extent that an organization’s operations and actions protect, mend, and preserve rather than harm or destroy the natural environment

(Principle of Admirable Business Ethics) Be trustworthy

no individual or business wants to engage in business with an organization it does not trust

(Principle of Admirable Business Ethics) Be open-minded

continually asking for “ethics-related feedback” from all internal and external stakeholders

(Principle of Admirable Business Ethics) Honor

Honor all commitments and obligations

(Principle of Admirable Business Ethics) Avoid

Avoid misrepresenting, exaggerating, or misleading with print materials, actions, or words

(Principle of Admirable Business Ethics) Visibly

Visibly be a responsible community citizen

(Principle of Admirable Business Ethics) Accounting Practices

Use your accounting practices to identify and eliminate questionable activities

(Principle of Admirable Business Ethics) Follow the Golden Rule

“Do unto others as you would have them do unto you.”

Code of Business Ethics

to ensure that the code of ethics is read, understood, believed, and remembered, periodic ethics workshops are needed to sensitize people to workplace circumstances in which ethics issues may arise

Whistle-blowing, bribery, workplace romance

Business Ethics Topics That Have Become Important

Whistle-blowing

refers to employees reporting any unethical violations they discover or see in the firm

Bribery

• offering, giving, receiving, or soliciting of any item of value to influence the actions of an official or other person in discharge of a public or legal duty

• crime in most countries of the world, including the United States

Workplace Romance

can be detrimental to morale and productivity

• favoritism complaints can arise

• confidentiality of records can be breached

• reduced quality and quantity of work could result

• personal arguments can lead to work arguments

• whispering secrets can lead to tensions

• sexual harassment charges may ensue

• conflicts of interest could arise

Environmental Sustainability

• Employees, consumers, governments, and society are especially resentful of firms that harm rather than protect the natural environment

• Conversely, people today are especially appreciative of firms that conduct operations in a way that mends, conserves, and preserves the natural environment

Sustainability Reports

• reveals how a firm’s operations impact the natural environment

• discloses to shareholders information about the firm’s labor practices, product sourcing, energy efficiency, environmental impact, and business ethics practices

ISO 14000

family of standards concerns the extent to which a firm minimizes harmful effects on the environment caused by its activities and continually monitors and improves its own environmental performance

ISO 14001

• a set of standards adopted by thousands of firms worldwide to certify to their constituencies that they are conducting business in an environmentally friendly manner

• Results in an EMS (Environmental Management System)

Corporate Social Responsibility (Ralph Nader)

proclaims that organizations have tremenous social obligations

Corporate Social Responsibility (Milton Friedman)

asserts that organizations have no obligation to do any more for society than is legally required

Corporate Social Responsibility and Performance

• A u-shaped relationship between CSR and corporate financial performance, whereby firms with the greatest CSR are generally also the firms with the highest financial performance; firms with the lowest CSR tend to have higher performance than those with moderate social responsibility

• important to know that no social need can be met if the firm fails

Food Suppliers and Livestock Welfare

• consumers expect humane treatment of animals

• consumers are flocking to organic products

Wildlife Welfare

consumers globally are becoming increasingly intolerant of any business or nation that directly or indirectly destroys wildlife, especially endangered wildlife, such as tigers, elephants, whales, songbirds, and coral reefs