Business Ethics (5th Edition) Teaching Slides PDF

Crane et al. Crane et al. Business Ethics (5th Edition) Chapter 1 © Crane et al., 2019. All rights reserved. Crane et al. Introducing Business Ethics...

Crane et al. Crane et al. Business Ethics (5th Edition) Chapter 1 © Crane et al., 2019. All rights reserved. Crane et al. Introducing Business Ethics Lecture 1 © Crane et al., 2019. All rights reserved.  Overview What is business ethics? Why is business ethics important? Globalization: a key context for business ethics? Sustainability: a key goal for business ethics? Crane et al.: Business Ethics, 5th edition  What is business ethics? Business ethics is the study of business situations, activities, and decisions where issues of right and wrong are addressed. Crane et al.: Business Ethics, 5th edition  Ethics and the law Ethics grey area Law Crane et al.: Business Ethics, 5th edition  Defining morality, ethics and ethical theory Morality is concerned with the norms, values and beliefs embedded in social processes which define right and wrong for an individual or a community. Ethics is concerned with the study of morality and the application of reason to elucidate specific rules and principles that determine right and wrong for any given situation. These rules and principles are called ethical theories. Crane et al.: Business Ethics, 5th edition  The relationship between morality, ethics and ethical theory Ethics … to rationalizes produce …that can morality … ethical be applied theory … to any Potential Morality Ethics Ethical situation. solutions to theory ethical problems Crane et al.: Business Ethics, 5th edition  Why is business ethics important? 1. Power and influence of business in society 2. Potential to provide major contribution to society 3. Potential for businesses to inflict harm on individuals, society and the environment 4. Increasing demands from stakeholders 5. Lack of business ethics education or training 6. Continued occurrence of ethical infractions 7. Businesses face a trust deficit 8. Evaluating different ways of managing business ethics 9. Interesting and rewarding Crane et al.: Business Ethics, 5th edition  Ethical Issues in Different Industries Chemical industry – competitive practices, environmental responsibility, health and safety and human rights Information and mobile technology industry – competitive practices, fair pricing, global production methods, data protection, protection of consumer from harmful materials and energy and CO2 usage Financial services – weak regulation, financial crime, responsible lending, sales practices and consumer protection, tax evasion and avoidance Adapted from Schaefer (2013) Crane et al.: Business Ethics, 5th edition  Differences across organizational types Stakeholders Large Small Civil Society Public Sector Corporations Businesses Organisations Main priorities Financial integrity, Employee, Delivery of Rule of law, in addressing employee/custom customer/commu mission to clients; conflict of interest; ethical issues er issues nity issues legitimacy and accountability accountability issues issues Approach to Formal, public Informal, Informal values Formal, managing relations and/or relationship and based bureaucratic, ethics systems-based trust based regulated Responsible Shareholders and Owners and Donors and General public, and/or other family members clients higher level accountable to stakeholders government organisations Main Shareholder Lack of Lack of resources Inertia, lack of constraints orientation; size resources, and formal transparency and complexity including time training Crane et al.: Business Ethics, 5th edition  Globalization: a key context for business ethics? Crane et al.: Business Ethics, 5th edition  What is globalization? According to Scholte (2005) globalization is not: not – ‘internationalization’ – ‘liberalization’ – ‘universalization’ – ‘westernization’ Globalization is: is a process which diminishes the necessity of a common and shared territorial basis for social, economic, and political activities, processes, and relations. – ‘deterritorialization’ Crane et al.: Business Ethics, 5th edition  Relevance of globalization for business ethics Cultural issues Legal issues Accountability issues Globalization can affect all stakeholders of the corporation Crane et al.: Business Ethics, 5th edition  Ethical impacts of globalization Stakeholders Ethical impacts of globalization Stakeholders Globalization provides potential for greater profitability, but also greater risks. Lack of regulation of capital markets, leading to additional financial risks and instability. Employees Corporations outsource production to developing countries in order to reduce costs in global marketplace - this provides jobs but also raises the potential for exploitation of employees through poor working conditions. Consumers Global products provide social benefits to consumers across the globe, but may also meet protests about cultural imperialism and westernization. Globalization can bring cheaper prices to customers, but vulnerable consumers in developing countries may also face the possibility of exploitation by MNCs. Suppliers & Suppliers in developing countries face regulation from MNCs through supply chain management. Small scale indigenous competitors exposed to global players. Competitors Civil Society Global activities brings the company in direct interaction to local communities with possibility for erosion of traditional life; globally active pressure groups emerge with aim to “police“ the corporation where (e.g. NGO’s) governments are weak and tolerant. Government & Globalization weakens governments and increases the corporate responsibility for jobs, welfare, maintenance of ethical standards, etc. Globalization also confronts governments with corporations from Regulation different cultural expectations about issues such as bribery, corruption, taxation, and philanthropy. Crane et al.: Business Ethics, 5th edition  International perspectives on business ethics Crane et al.: Business Ethics, 5th edition  Different approaches to business ethics Who is responsible for ethical conduct in business? Who is the key actor in business ethics? What are the key ethical guidelines for ethical behaviour? What are the key issues in business ethics? What is the most dominant stakeholder management approach? Crane et al.: Business Ethics, 5th edition  Regional differences: Europe, North America, Asia Europe North America Asia Who is responsible for Social control by the The Individual Top Management ethical conduct in collective business? Who is the key actor in Government, trade unions, The Corporation Government, corporations business ethics? corporate associations What are the key Negotiated legal framework of Corporate codes of ethics Managerial discretion guidelines for ethical business behaviour? What are the key issues Social issues in organizing Misconduct and immorality in Corporate governance and in business ethics? the framework of business single decision situations accountability What is the dominant Formalised multiple Focus on shareholder value Implicit multiple stakeholder stakeholder stakeholder approach approach, benign managerialism management approach? Crane et al.: Business Ethics, 5th edition  Sustainability: a key goal for business ethics? Crane et al.: Business Ethics, 5th edition  Defining sustainability Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs. (World Commission on Environment and Development 1987) Sustainability refers to the long-term maintenance of systems according to environmental, economic and social considerations Crane et al.: Business Ethics, 5th edition  The three components of sustainability Economic Social Environmental Crane et al.: Business Ethics, 5th edition  Triple bottom line Coined by John Elkington Bottom line thinking suggests sustainability as a goal Three dimensions: – Environmental perspectives – Economic perspectives – Social perspectives Crane et al.: Business Ethics, 5th edition  Corporate commitments to sustainability Company Sustainability Commitment/Policy Source The Volkswagen Group The Volkswagen Group has made a commitment to sustainable, https://www.volkswagenag.c transparent and responsible management. In line with the om/en/sustainability/policy.h recommendations of the German Corporate Governance Code, we tml practice Group-wide sustainability coordination and forward-looking (2019) risk management and ensure a clear framework for the future-oriented handling of environmental issues, responsibility towards our employees and social engagement by our brands and in the various regions. Shell Sustainability at Shell means providing energy in a responsible https://www.shell.com/sustaina manner, respecting people, their safety and the environment. bility/our-approach/sustainabilit y-at-shell.html (2019) Marks and Spencer's Plan A is our way to help build a sustainable future by being a https://corporate.marksandspe business that enables our customers to have a positive impact on ncer.com/plan-a wellbeing, communities and the planet through all that we do. (2019) Alibaba Group At Alibaba, we believe acting in a socially responsible way is part of https://www.alibabagroup.com/ our business model. Since our founding, we have been highly en/about/sustainability committed to supporting and participating in charitable and socially (2019) responsible projects that align with our core values and mission, and to establishing a technology-driven charitable ecosystem to extend the benefits of our technological capabilities to the community at large. Crane et al.: Business Ethics, 5th edition  Summary Definition of business ethics Business ethics is vital for business in contemporary capitalism Global view is essential to understand ethical issues Different regions have distinctly different perspective on business ethics issues Sustainability is an important goal for business ethics Crane et al.: Business Ethics, 5th edition