Download Chapter 04

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CHAPTER
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Demonstrating
Ethical
Behavior
and Social
Responsibility
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Nickels
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McGraw-Hill/Irwin
Understanding Business, 8e
McHugh
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McHugh
1-1
4-1
© 2008 The McGraw-Hill Companies, Inc., All Rights Reserved.
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Ethics
• More Than Legality
• Standards are
Fundamental
• Ethics begins with each
of us
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Top U.S. Ethical Issues
Improper Accounting Practices
Deceptive Sales/Marketing Practices
Conflicts of Interest
Lying on Reports/Falsifying Records
Dishonesty with Customers
Lack of Public Trust in Corporate America
Bribes and Kickbacks
Unfair Treatment of Employees/Customers
Securities and/or Bank Fraud
Discrimination
Producing Low-quality or Unsafe Products
0%
Source: CMO Magazine, October 2004
10%
20%
30%
40%
50%
60%
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Ways to Prevent
Unethical Behavior
Increasing Penalties
for Offenders
Employee Education
Programs
Publicity About Those
Being Punished
A Code of Conduct
Adding Ethics Classes
to College Programs
New Laws
0%
Source: CMO Magazine, Oct. 2004
10%
20%
30%
40%
50%
60%
70%
80%
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Privacy Protectors
Based on a Privacy Trust Score (PTS):
• Health care providers scored the highest
• Grocery Stores and Department of
Homeland Security (DHS) scored the
lowest
• Democrats have higher PTS than all
other political affiliations
• 81% of the respondents feel privacy is
important or very important
Source: www.darwinmag.com, November 2003
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Ethics of MBA Students
Percent of MBA Students Who Would:
• Buy Stock on Inside Information
52%
• Reveal Corp. Secrets to Spouse/Family
50%
• Let a Gift Sway Purchasing Decision
26%
• Pay Someone Off to Close a
13%
Business Deal
Source: USA Today
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Most Popular Ways to
Monitor Employees
• Internet (74%)
• Background Exams (62%)
• Store and Review Email (43%)
• Store and Review Computer Files (31%)
• Videotape Employees (18%)
Source: USA Today
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Ethics Check Questions:
• Is It Legal?
• Is It Balanced?
• How Will It Make Me Feel About
Myself?
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Why Don’t We
Trust Corporations?
Unethical Business Practices by Accounting Firms
Misappropriation and Underfunding of Pension and
401(k) Funds
Misleading Communications
Underperforming Board of Directors
Excessive Compensation for Executives
Source: USA Today
56% 58% 60% 62% 64% 66%
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Factors Influencing
Managerial Ethics
Individual
• Values
• Work
Background
Organizational
Environmental
• Top Level Mgmt.
Philosophy
• Competition
• Family Status
• The Firm’s
Reward System
• Personality
• Job Dimensions
• Economic
Conditions
• Social/Cultural
Institutions
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Codes of Ethics
• Compliance-Based
• Integrity-Based
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Steps to Improve
U.S. Business Ethics
1. Top management support
2. Employees’ understanding
3. Managers’ training
4. Ethics Office
5. Outsiders must be informed
6. Enforcement of ethics code
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Levels of Corporate
Social Responsibility
Societal Responsibility
Stakeholder Responsibility
Ecological
General
Customers Profit Responsibility
Environment
Owners/Stockholders Employees
Public
Suppliers/Distributors
Public Interest Groups
Source: Marketing, 5/E by Berkowitz, Kerin, Hartley, and Rudelius.
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Corporate Responsibility
(Percent of country’s top 100 companies that publish
separate CR reports)
Japan
UK
France
Germany
US
Italy
Spain
0%
Source: Financial Times, June 15, 2005
10%
20%
30%
40%
50%
60%
70%
80%
90%
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Social Audit
• Company
• Outside Groups that serve
as watchdogs:
• Socially-Conscious
Investors
• Environmentalists
• Union Officials
• Customers
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International Ethics
and Social Responsibility
• Ethical problems are Not Unique to
the U.S. managers
• Demand for Socially Responsible
Behavior from Global Suppliers
• Joint Initiative on Corporate
Accountability and Workers’ Rights
• Inter-American Convention Against
Corruption
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Best Company Reputation
• Johnson & Johnson (80.6)
• Coca-Cola (79.7)
• Google (79.5)
• UPS (79.4)
• 3M (78.8)
Source: USA Today
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Most Admired
Global Companies
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1.
General Electric
6. Microsoft
2.
Toyota
7. Dell
3.
Procter & Gamble
8. Berkshire Hathaway
4.
FedEx
9. Apple Computer
5.
Johnson & Johnson
10. Wal-Mart
Source: Fortune, 2006
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