Business Ethics Notes Chapter 1 and 2

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Chapter 1
Business Ethics- principles, values, and standards that guide behavior in the world of business

Principles- specific pervasive boundaries for behavior that are universal and absolute (freedom, speech, equal rights) –the basis for rules

Values- used to develop norms that are socially enforced (integrity, trust, accountability)

Development of business ethics

Before 1960’s:
-Questioning capitalism
-“living wage” income
-New Deal-blaming business for economic woes
-Individual moral issues related to business were addressed in churches. Religious leaders questioned labor wages and morality of capitalism -New deal evolved to fair deal by pres Truman-program defined civil right and environmental responsibility ethical issues that businesses had to address

The 1960’s:
-Military industrial complex
-Growth of ecological problems(pollution, toxic waste)
-Turned to causes, emergence of social issues, rise in consumerism -Pres Kennedy consumers’ bill of rights (right to safety, to be informed, to choose and to be heard)
Delivered special message on protecting the consumer interest -Nader’s unsafe at any speed criticizing automobile industry(safety belts) -Pres Johnson and Great Society (told business community the us govts. Responsibility was to provide the citizen with some degree of economic stability, equality, and social justice) -If activities destabilize economy or discriminate against class then unethical and unlawful by citizens

The 1970’s:
-Business ethics developed as an independent field of study
-Social responsibility organizations obligation to max positive impact on stakeholders an min negative impact -Major ethical issues emerged, bribery, deceptive advertising, product safety, environment -companies concerned w/ public image

-Watergate scandal stressed important of ethics in govt.
-centers dealing with issues of bus ethics were established and brought bues profs, theologians, and business people together -Pres Carter focused on personal and admin efforts to uphold ethical principles in govt. -The foreign corrupt practices act was passed making it illegal for us businesses to bribe govt official of other countries -business ethics no longer oxymoron

The 1980’s:
-Centers of business ethics established ethics committees and social policy committees -500 courses offered in colleges across country w/ 40,000+ students - Seminars, conferences
-Defense industry initiative on business ethics and conduct (DII) developed to guide corporate support for ethical conduct -Six principals of DII
(1) supports codes of conduct & wide distribution
(2) provide ethics training for employees and support in training periods
(3) create open atmosphere employees report violations w/o fear or retribution
(4) extensive internal audits, internal reporting
(5) member companies preserve integrity of defense industry
(6) adopt a philosophy of public accountability
-Regan/Bush era belief of self regulation instead of by govt. in publics best interest

1990’s:
-Federal sentencing guidelines for organizations(FSGO) ethical compliance programs based on the six DII principals making incentives to reward organizations for taking action to prevent misconduct i.e. effective internal legal and ethical compliance programs BUT if lacking and employees violate law then severe penalties are enforced -Gov’t continues support for self-regulation and free trade. FSGO provides incentives for companies to take action to prevent org misconduct - health related social issues i.e. teen smoking… restricting cig advertising, banning vending machine sales ending cig logos in sport events -clinton/levitt failed reforms possibly preventing accounting ethics scandals w/enron& worldcom

21st Century:
Sarbanes-Oxley Act- made securities fraud a criminal offense and stiffened penalties for corporate fraud and created an accounting oversight board that requires corps to establish codes of ethics for...
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