Chapter 3: Conducting Business Ethically and Responsibly
Ethics in the Workplace
•Ethics: individual standards or moral values regarding what is right and wrong or good and
•Ethical Behavior: behavior that conforms to individual beliefs and social norms about what
is right and good.
•Unethical: behavior that individual beliefs and social norms define as wrong and bad.
•Business ethics: ethical or unethical behavior by a manager or employee of an organization.
•Ethics are personal and societal beliefs
oVary from person to person, society to society, culture to culture.
•Societies may adopt formal laws that reflect prevailing ethical standards or social norms.
•Standards of behavior that guide individual managers in their work.
•3 broad types of behavior
1. Behavior Towards employees:
a. Hiring, firing, wages, working conditions, privacy, and respect.
b. Manager cannot discriminate people based on race.
c.However, manager is allowed to hire a friend or family.
d. Wages and working conditions are somewhat covered by law, but the
manager has power to decide.
2. Behavior Toward the Organization:
a.Ethical issues in conflict of interest, confidentiality, and honesty.
b. Conflict of Interest: Occurs when an activity benefits an individual at
the expense of the employer.
3. Behavior Toward Other Economical Agents
a.Includes behaviors towards suppliers, competitors, stockholders, dealers,
Assessing Ethical Behavior
•3 steps for applying ethical judgments to situations
1. Gather the relevant factual information
2. Determine the most appropriate moral values
3. Make an ethical judgment based on the rightness or wrongness of the proposed
activity or policy.
•4 Broad Ethical Norms
1. Utility: Does the act optimize what is best for those who are affected by it?
2. Rights: Does it respect the rights of the individuals involved?
3. Justice: Is it consistent with what we regard as fair?
4. Caring: Is it consistent with people’s responsibilities to each other?
Company Practices and Business Ethics
•Established codes of conducts give clear ethical positions on how the firms and its employees
•Increase in technology are creating new problems:
•2 most common approaches of creating an ethical and committed firm:
1. Adopting Written Codes:
a.Codes of Ethics: Formal, written acknowledgement of a company’s intent
to do business in an ethical manner.
i.Increase public relations
1. Purpose: what a firm resolves to do.
2. Vision: a firm’s picture of the future and where they want
3. Mission: What type of business, who they serve and how.
4. Values: influence how the firms acts with its workers and
ii.Aid in self-regulation
iii.Improve internal operations
2. Instituting Ethics Program:
a.Firms conduct workshops on ethics
•Corporate Social Responsibility (CSR): refers to the way in which a business tries to
balance its commitments to organizational stakeholders.
•Organizational Stakeholders: that are directly affect by the practices of an organization
and that therefore have a stake in its performance.
•Managerial capitalism: a company’s only responsibility is to make as much money as possible
for its shareholders, as long as it doesn’t break any laws.
oHowever in recent years, people include customers, employees, investors, suppliers
and local communities as part of the stakeholders.
Contemporary Social Consciousness
•Green Revolution /Environmentally Friendly
Areas of Social Responsibility
•Firms confront 4 areas of concern
Pollution: the injection of harmful substances into the environment.
Air Pollution: when several factors converge to lower air quality.