Chapter 2 Notes.docx

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Northeastern University
Business Administration
BUSN 1101
William Shimer

Chapter 2: Business Ethics and Social Responsibility 2.1 Misgoverning Corporations Ethical. To know right from wrong and to know when you’re practicing one instead of the other Business ethics. Application of ethical behavior in a business context, personal view to do what is right even if it is difficult or personally disadvantageous . Obey laws and regulations . Being honest . Doing no harm to others . Competing fairly . Decline to put your own interests above those of your company, its owners and workers Corporate Social Responsibility: Deals with actions that affects a variety of parties in a company’s environment, show concern for stakeholders Stakeholders: Aperson, group or organization that has interest or concern in an organization, can be affected by actions of a business as a whole Recognizing an Ethical Organization • Treating employees, customers, investors, and the public fairly • Making fairness a top priority • Holding every member personally accountable for his or her action • Communicating core values and principles to all members • Demanding and Rewarding integrity from all members in all situations Recognize if you employee is unethical 2.2 The IndividualApproach to Ethics Ethical Dilemma: morally problematic situation “Right-versus-right” decision Morally Problematic Situation: Picking between two or more acceptable but often opposing alternatives that are important to different groups. How to face an ethical dilemma? 1. Define the problem and collect relevant facts 2. Identify feasible options 3. Asses the effect of each option on stakeholders 4. Establish criteria for determining the most appropriate action 5. Pick the best option based on the criteria Ethical decision: situation in which there is a right ethical choice and wrong unethical/illegal choice “right-versus-right” Ethical Lapse: when you have made a decision that’s unethical or illegal How to avoid an Ethical Lapse? Ask yourself? 1. Is this action illegal? 2. Is it unfair to some parties? 3. If I take it will I feel badly about it? 4. Will I be ashamed to tell my family, friends, coworkers, or boss? 5. Will I be embarrassed if my action is written up in the local newspaper? 2.3: Identifying Ethical Issues Categories Bribes vs. Gifts: fine line between a gift and bribe, the cost of item, the timing of the gift, type of gift, connection between giver and receiver. It is a good idea to refuse overly generous gifts, or gifts given with the purpose of influencing your decision. Conflicts of Interests : occur when individuals must choose between taking actions that promote their personal interests over the interests of others or taking actions that don’t. Also an employee shouldn’t use private information about an employer for personal financial benefit. Conflicts of Loyalty: Sometimes you find yourself in a bind between being loyal either to your employer or to a friend or family member. In business, as in all aspects of your life, you should act with honesty and integrity. HOW TO MAINTAIN HONESTYAND INTERGRETY? Whistle-blower: an individual who exposes illegal or unethical behavior in an organization. Despite all the good arguments in favor of doing the right thing, some businesspeople still act unethically (at least at times). Sometimes they use one of the following rationalizations to justify their conduct: • The behavior isn’t really illegal or immoral. • The action is in everyone’s best interests. • No one will find out what I’ve done. • The company will condone my action and protect me 2.4 The OrganizationalApproach to Ethics . Ethics is more than a matter of individual behavior; it’s also about organizational behavior. Employees’ actions aren’t based solely on personal values; they’re also influenced by other members of the organization. Ways to create and sustain an ethical company? Ethical Leadership: Organizations have unique cultures—ways of doing things that evolve through shared values and beliefs. For example an organization’s culture is strongly influenced by senior executives, who tell members of the organization what’s considered acceptable behavior and what happens if it’s violated. Exercising Ethical Leadership: Leaders should be in touch with subordinated about ethical policies and expectations, be available to help employees identify and solve ethical issues. They should be like role models, if managers behave ethically, subordinates will probably do the same. Tighten the Rules: Take steps to encourage employees to behave according to specific standards and to report wrongdoing Code of Conduct: Many organizations have a formal code of conduct that describes the principles and guidelines that all members must follow in the course of job-related activities. 2.5 Corporate Social Responsibility Ccorporate social responsibility: The approach that an organization takes in balancing its responsibilities toward different stakeholders when making legal, economic, ethical and social decisions Ways in which companies can be socially responsible-: 1.Owners: Invest money in companies in return the people who run a company has responsibility to increase the value of owners investments through profitable operations. Mangers are responsible to provide owners and other stakeholders with accurate reliable financial information. 2.Fi
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