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Introduction
Businesses should be careful to do more
than comply with the laws.
Consumers and shareholders are requiring
companies to do what is ethical which
sometimes may impose additional duties
required by law.
Historically, law and ethics were
synonymous-today they may not be.
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Conflicting Duties
Directors and Officers owe a complex set of
ethical duties to the company, shareholders,
customers, community, employees, and
suppliers.
When these duties conflict, ethical
dilemmas are created.
Case 4.1: Varity v. Howe (1996).
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2: Approaches to
Ethical Reasoning
Duty-Based Ethicsderived from religious
and philosophical principles:
Religious Ethical Standards.
Kantian Ethics.
Rights Principles.
Kantian Ethics
Premised on the belief that general guiding
principles for moral behavior can be derived
from human nature.
The categorical imperative is a central
postulate of Kantian ethics.
The rightness or wrongness of an action is
judged by estimating the consequences that
would follow if everyone in a society
performed the act under consideration.
Rights Principle
This principle derives from the belief that
every duty gives rise to a corresponding
right.
The belief in fundamental rights is a deeply
embedded feature of Western culture.
The ethicality of an action is judged by how
the consequences of the action will affect
the rights of others.
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Utilitarianism
An action is ethical based on whether it
produces the greatest good for the greatest
number of people.
A cost-benefit analysis must be performed
to determine the effects of competing
alternatives on the persons affected.
The best alternative is the one that produces
the greatest good for the greatest number.
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Corporate Compliance
A number of contexts, within the employeremployee relationship, are fraught with
ethical considerations, such as:
Having a system in place to detect, prevent,
eliminate, and punish behavior of a harassing
nature toward employees.
Avoiding wrongful discharge, either actual or
constructive.
Adhering to ethical principles during corporate
restructuring and downsizing.
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Codes Of Ethics
Adopted by business entities as a way to:
Provide standard guidance to executives and
managers.
Take into account the duties owed by the
business to its various stakeholders.
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4: Maximum vs.
Optimum Profits
Ethical priorities of the executives institution
will have an effect on whether she chooses
maximum profits versus optimum profits.
The sacrifice of some profitability resulting
from adherence to an institutions ethical and
legal priorities produces what business
ethicists refer to as optimum profits.
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5: The Ever-Changing
Ethical Landscape
What causes a societies ethics to change?
Seventy-five years ago a corporations ethical duty
was only to its shareholders and maximize profits.
Only two questions were asked: is it legal? Is it
profitable?
The globalization of business impacts US
companies, suppliers, wages of foreign workers and
consumers.
Foreign Corrupt Practices Act (1977).
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Focus on Ethics
How can an executive know what is
ethical in a particular business decision?
Obstacles to ethical business behavior.
Ethics and the Corporate Environment.
Corporate Social Responsibility.
Does it pay to be Ethical today?
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