BLAW 110 Business Ethics Lecture Notes (PDF)

Legal Environment of Business BLAW 110 Lecture 10 Business Ethics  Business Ethics Business Ethics – Over time, corporations have changed its focus from profit- maximizing to an approach that favors corporate social responsibility (CSR) Corp...

Legal Environment of Business BLAW 110 Lecture 10 Business Ethics  Business Ethics Business Ethics – Over time, corporations have changed its focus from profit- maximizing to an approach that favors corporate social responsibility (CSR) Corporations now have a triple bottom line: Profits: For-profit companies create jobs, spur innovation and contribute to the overall economy by building wealth Community: Giving back to charity, using local labor, or if using foreign labor, paying fair wages Environment: Must use clean technologies and ethically source products  Not Business Ethics https://www.youtube. com/watch?v=hU9- Xskz4PU  Corporations and Society Companies employ a “stakeholder” model – responsible to the community, its suppliers, its customers and its employees Unethical decisions can lead to public relations issues, negative online reviews Companies can prevent others from making harmful statements about the company under an anti-disparagement clause, but there are issues with enforceability Recommendations for Corporate Ethics 1. Install and abide by a code of ethics 2. Have employees trained to recognize and report unethical behavior 3. Set up a disciplinary system to address employees who act unethically 4. Continue to review policies on a periodic basis and amend as needed  SBCC Code of Ethics a. Act in a manner which reflects the values of this institution b. Demonstrate effective leadership c. Promote and maintain good relations with Board members d. Promote a Healthy and Professional Relationship with Colleagues e. Violations  Businesses Behaving Badly Why do companies act unethically? Cost-benefit analysis – risk/cost of harm is less than a potential fine Moral minimum – Companies only have to comply with the law How do businesses behave badly? Economic – Using non-public information or false advertising Environmental – Violating environmental laws or agency standards Anti-Competition – Refusing to adhere to rules Technological – Mining data without consent for third party use Reputational – Going against one’s value system  Business Ethics Exercise (1) What did the corporation do that was unethical? Why was this unethical? (2) If unethical, was it illegal? (3) What happened to the corporation? (Does the corporation still exist? How did the public react?) (4) What can businesses learn from this incident?  Businesses Behaving Badly: Facebook Facebook sells your personal information to third parties, who the company refers to as “partners”. They do not pay you for the right to use your data or notify you when your data is used. In 2016, the company sold the results of a survey to a consulting company, which was then used to promote advertisements for political campaigns. The company claims that you agreed to this when you signed its terms of service. Is Facebook selling personal data unethical?  Businesses Behaving Badly: Monsanto Monsanto is a company that specializes in producing chemicals for crops and food growth. The company has been found to add various pesticides and growth hormones and genetically modify its fruits, vegetables and meat products with “PCB’s”, which have been banned since 1979. The company does this to create “perfect” foods that are bigger in size and full of color that consumers have come to expect. Consumers have been furious with Monsanto, referring to it as the most evil company on the planet. Is Monsanto’s use of pesticides and growth hormones unethical?  Businesses Behaving Badly: Enron Enron was the largest seller of natural gas in the country. With the help of its accounting firm Arthur Andersen, Enron would frequently hide billions of dollars in debt from failed deals. By doing this on the company’s financial statements, investors and shareholders would not know that the company was losing money. Is Enron’s hiding of these losses unethical?  Businesses Behaving Badly: Fyre Festival Fyre Festival was an event company which sold the idea a once-in-a-lifetime luxury music festival in the Bahamas in 2017. Founded by Billy McFarland and Ja Rule, the event was advertised by models on Instagram (who were paid to promote the festival) and featured gourmet meals and luxury villas. When 5,000 customers showed up to the Bahamas, they found that all of the bands had cancelled and there were no luxury meals or tents. Is Fyre Festival’s actions unethical? Did the Instagram models act unethically? Businesses Behaving Badly: Martha Stewart Martha Stewart was one of the largest investors in ImClone, a biotechnology company. Two days before the company reported massive losses, Martha sold her shares, making her millions of dollars in the process. Martha found out about this information before the public did and knew that the loss would lower the stock’s value once the public found out. Did Martha act unethically?  Businesses Behaving Badly: Wells Fargo Wells Fargo is one of the largest banks in California and is known for surviving the financial crisis of 2008. In 2016, clients began to notice that they were being charged extra fees and receiving additional debit or credit cards from the bank. It was determined that Wells Fargo was “cross-selling”, where employees were encouraged to order credit cards for customers without their consent. Were Wells Fargo’s actions unethical?  Businesses Behaving Badly: Houston Astros* The Houston Astros are a major league baseball (MLB) team. MLB had previously instituted rules about not using technology during a game to steal signs from the other team. Having been one of the worst teams in MLB for years, the Astros decided to ignore this rule. Players and coaches of the team were aware that the signals existed and were using them to cheat, eventually winning the 2017 World Series. Did the Houston Astros act unethically?  Businesses Behaving Badly: New England Patriots In addition, the National Football League’s (NFL’s) New England Patriots deflated footballs to give their team a competitive advantage in a 2014 playoff game. All footballs in NFL games are required to have a certain air pressure in order to be used. Did the New England Patriots act unethically?  Businesses Behaving Badly: BP BP is an oil company that regularly ships its product throughout the world. As part of its operations, it sets up drilling stations in the middle of oceans. In 2010, an oil rig exploded off of the Gulf of Mexico, sending millions of barrels of crude oil into the water. It turns out that BP cut costs to save on safety precautions when building the drilling stations, and much of the damage from this accident could have been prevented. Ten years later, the area has little wildlife, and the local fishing economy has been devastated. Has BP acted unethically?  Businesses Behaving Badly: The Ellen Show Ellen DeGeneres is a comedian with a long- running daytime talk show. Recently, employees of the Ellen Show came forward documenting mistreatment by senior producers of the show and Ellen herself. Specifically, people who had worked on the show documented incidents of racism, harassment, misconduct and creating a hostile work environment. Was the Ellen Show’s (and Ellen’s) actions unethical?