Ethical Behavior

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Ethical Behavior
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Ethics Defined

• Set of moral standards for judging whether
  something is right or wrong
• Philosophical approaches
• Utilitarianism greatest good for most
• Individual rights
• Justice -- consideration of fairness

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Why Focus on Ethics?

• Customers Expect and Demand Ethics
• - Customers Repulsed and Turn From Businesses
  They View As Unethical
• - Ethics/Trust Foundation of Business
• Good Ethics Improves the Work Climate
• - Employees Know Expectations / Respect and
  Support
• Empowered Workers Need Guidelines

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Whom must we treat ethically?

• Customers
• Suppliers
• Distributors
• Investors
• Creditors
• Employees
• Public

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Traditional View of Economic Transactions

• The agent in any principal/agent relationship can
  not be trusted.
• Identifying ethical and trustworthy agents is
  extremely difficult.
• Organizations must structure themselves as if all
  agents can not be trusted.
• Thus, substitutes for trust and ethical conduct
  are necessary.

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Current Business Trends

• Total Quality Management
• Just-in-Time Inventory Systems
• Relationship Marketing
• Empowerment of Employees

• Corporate Downsizing
• International/global Organizations
• Flatter Organizational Structures

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Some Questions Regarding Ethical Conduct

• Is acting ethically altruistic or self-serving?
• What is the relationship between ethics and law?
• Can an unethical business organization be
  successful?
• If everyone could be trusted to act ethically,
  how would the role of the legal profession change?

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Ethical Behavior

• Martha Stewart/ImClone scandal alleging insider
  trading
• WorldCom investigated for financial misstatements
  over 3.8 billion
• Enron
• Arthur Anderson
• Dynergy
• Tyco
• Merrill Lynch

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Unethical Practices in Marketing

• Entertainment gift giving
• False or misleading advertising
• Misrepresentation of goods, services or corporate
  capabilities
• Falsifying information
• Exploitation of children or other groups
• Invasion of privacy
• Sex appeals in advertising
• Unsafe products
• Price discrimination

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Ethical Guidelines Corporate Social
Responsibility

• Code of ethics
• guidelines to help managers and other employees
  make better decisions
• Research findings
• 60 companies responding maintain ethics code
• 33 offer ethical behavior training
• 33 employ an ethics officer
• Corporate social responsibility

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How Ethical Are You?

• Take the ethics quiz
• http//www.worldbank.org/wbi/corpgov/eastasia/m5/m
  5selftest.htm