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Twomey  Jennings
Anderson’s Business Law and the Legal Environment, Comprehensive 20e
Anderson’s Business Law and the Legal Environment, Standard 20e
Business Law: Principles for Today’s Commercial Environment 2e
Chapter 3
Business Ethics, Social
Forces, and the Law
Copyright © 2008 by West Legal Studies in Business
A Division of Thomson Learning
What is Business Ethics?
• Business ethics is the application of values and
standards to business conduct and decisions.
• When a business upholds basic ethical
standards, it will enjoy the competitive
advantage of a good reputation and, over the
long term, better earnings.
• When a business violates ethical standards,
social forces are set into motion, sometimes
leading to changes in the law.
Copyright © 2008 by West Legal Studies in Business
A Division of Thomson Learning
2
What is Business Ethics?
• Law as the Standard for
Business Ethics.
–Positive Law: if an act is legal it
is ‘moral.’
Copyright © 2008 by West Legal Studies in Business
A Division of Thomson Learning
3
What is Business Ethics?
• Universal Standards for
Business Ethics.
–Natural Law: higher standards for
ethics.
–A law can be legal but unethical.
Copyright © 2008 by West Legal Studies in Business
A Division of Thomson Learning
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What is Business Ethics?
• Situational Business Ethics or
Moral Relativism.
• Business Stakeholder Standard
of Behavior.
Copyright © 2008 by West Legal Studies in Business
A Division of Thomson Learning
5
Why is Business Ethics
Important?
• Importance of Trust.
• Business Ethics and Financial
Performance.
– Enron.
– Worldcom.
– Arthur Anderson.
• Good Reputation.
Copyright © 2008 by West Legal Studies in Business
A Division of Thomson Learning
6
Cycle of Social Interaction
Social Forces
Social
Environment
Ethics
Law
Copyright © 2008 by West Legal Studies in Business
A Division of Thomson Learning
7
Public Policy, Law, and Ethics
• Protection:
– of the state, the person, public health,
safety and morals.
– of property and personal rights.
– from exploitation, fraud, and oppression.
– of creditors and rehabilitation of debtors.
• Enforcement of individual intent.
• Furtherance of trade.
• Stability and flexibility.
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Categories of Ethical Behavior
• Integrity and Truthfulness.
• Promise-Keeping.
• Loyalty: Avoiding Conflicts of
Interest.
• Fairness.
• Doing No Harm.
• Maintaining Confidentiality.
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9
Resolving Ethical Dilemmas
• Blanchard and Peale Test.
– Is it legal?
– Is it balanced?
– How does it make me feel?
• Front-Page-of-the-Newspaper Test.
– Would I want my decision published?
Copyright © 2008 by West Legal Studies in Business
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Resolving Ethical Dilemmas
• Laura Nash Test.
– Requires examination from all perspectives.
• Wall Street Journal Model (3 C’s model).
– Is my conduct compliant with the law?
– What contribution does this action make to
others?
– What are the consequences?
Copyright © 2008 by West Legal Studies in Business
A Division of Thomson Learning
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