Business Ethics Notes

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Employment Sectors
Business, Government, and Non-Profits
Government
It authoritatively makes decisions for the country
Able to affect businesses with regulations and taxes
Non-Profit
Provides service in which there is demand that businesses and governments get involved in If profit is made, services can be expanded, reward employees with higher salaries, and hire more people Recent ethical breaches in Society

Ethic Resources Center Data
1. Observed misconduct higher in larger organizations
2. Difference in observed misconduct across sectors (29% non-profit, 31% business, 38% government Countrywide Ethical Breach
No Income In Anything- Ninja Loans
Bloggo-Governor of Illinois
Pay in play scheme
Required employees to take ethics training in the state of Illinois Violated public trust
Bernandine Healy (Red Cross)
Donations to Red Cross was used for other resources instead of going to the intended victims people were donating to Breach in Community Trust
The Decision Making Triangle
At the Top is Stakeholder
How is this decision going to affect different entities?
Next is Financial
Cannot be the only reason that the decision is made
Next is Legal
Can not lead people to say that if it isn’t illegal then its ok to do Next is Ethical
To what is right and what is morally correct

Before 1960
Agonizing phases of questions of the morality of capitalism
Passage of the 1934 Securities Exchange Act
Role of Religious Leaders
Raised issues about fair wages
Questioned whether capitalism was morally correct
Progressive Movement
Attempt to establish a livable wage for workers
Before 1960’s scandal
United Fruit scandal
Corporate attack on President of Guatemala by convincing neighboring countries that the land was the companies and not the peasants The 1960’s (Rise of Social Issues)
Anti-Business Climate
1. Military Industrial Complex
2. Inner Decay of Cities
3. Environmental Degradation
The 1962 Consumer’s Bill of Rights
The right to safety, right to be informed, right to choose, and right to be heard 1960’s Scandals
Corvair
Looked very appealing to consumers but was very dangerous. Corvair allowed the car to be manufactured

The 1970’s (Ethics As an Emerging Field)
Emergence of Corporate Social Responsibility
Passage of the 1977 Foreign Corrupt Practices Act
Prevent business from bribing government officials
Ford Pinto
Rear-end collision would ignite the car
Ford knew about the problem, allowed it to be manufactured based on cost analysis. The 1980’s (Consilidation)
Establishment of the 1986 Defense Industry Initiative
Neo-liberalism
Liberalization
Barriers and trade tariffs are dropped. Increases the number of imports and exports Deregulation
Allows for businesses to have more flexibility in their pursuit of money Privatization
Government sells state-owned assets to the public
Union Carbide Scandal
Factory in India that had pesticide gases leaked, over 8000 people died Scandal about plant safety and protocol
* The 1990’s (institutionalization of ethics): Clinton in Office The continuance of self-regulation and free trade
Passage of 1991 Federal Sentencing Guidelines for Organizations Act –based on defense industry initiative model for future legislation codified into law incentives for organizations to try to prevent misconduct organizations not liable, only individual, but eventually both liable 21st Century (A New Focus)

Inclone Scandal
“Miracle drug” didn’t work in clinical trials
Arthur Anderson’s
Involved in Enron Scandal
Shredded documents that linked it to Enron
Loss of confidence in financial reporting and corporate ethics Sunbeam Corporation
Chainsaw Al led to more gov’t regulation
Passage of the 2002 Sarbanes-Oxley Act
1. Creation of accounting oversight boards
2. Greater transparency in financial reports
3. Executives “sign off” on firms financial reports
4. Fines and jail time if execs misrepresent financial position 5. Requires executives to disclose...
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