Anderson 19th Ed. 2005

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Chapter 3BUSINESS ETHICS, SOCIAL FORCES THE
LAW
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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.

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What is Business Ethics?

• Law as the Standard for Business Ethics.
• Positive Law if an act is legal it is moral.
• Universal Standards for Business Ethics.
• Natural Law higher standards for ethics.
• A law can be legal but unethical.
• Situational Business Ethics/Moral Relativism.
• Business Stakeholder Standard of Behavior.

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Why is Business Ethics Important?

• Importance of Trust.
• Relationship to Financial Performance.
• Ford and Firestone.
• Johns-Manville.
• Good Reputation.

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Cycle of Social Interaction
Social Forces
Social Environment
Ethics
Law
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Public Policy, Law, 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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How to Analyze Ethical Dilemmas

• Define the problem.
• Identify who could be injured.
• Define the problem from opposing viewpoint.
• Would you be willing to tell your family about
  your decision?
• Would you be willing to tell the community?
• Reach a decision.

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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?
• Laura Nash Test.
• Requires examination from all perspectives.
• Wall Street Journal Model (3 Cs model).
• Is my conduct compliant with the law?
• What contribution does this action make to
  others?
• What are the consequences?