Description
Assigned Readings:
Chapter 3: Sustainability: Social and Ethical Dimensions
Chapter 4. The Institutionalization of Business Ethics.
Initial Postings: Read and reflect on the assigned readings for the week. Then post what you thought was the most important concept(s), method(s), term(s), and/or any other thing that you felt was worthy of your understanding in each assigned textbook chapter.Your initial post should be based upon the assigned reading for the week, so the textbook should be a source listed in your reference section and cited within the body of the text. Other sources are not required but feel free to use them if they aid in your discussion.
Also, provide a graduate-level response to each of the following questions:
Champion of the Earth: Patagonia – In this video, Patagonia vice president of environmental activism Lisa Pike Sheehy explains why Patagonia cares about sustaining the planet and the company’s efforts in sustainability. She discusses its self-imposed “Earth tax” that is donated to grassroots environmental organizations trying to make a difference. After students have watched the video, conduct an instructor-led debrief using the questions provided.
Champion of the Earth 2019 – Patagonia – YouTube
Length: 2:54
Questions:
What is Patagonia’s mission? What do you think it means?
Describe Patagonia’s sustainability efforts, including its Earth tax, environmental internship, and Worn Wear initiative.
How do you think sustainability relates to ethical decision making in the clothing industry? Do you think Patagonia is ethical?
[Your post must be substantive and demonstrate insight gained from the course material. Postings must be in the student’s own words – do not provide quotes!]
[Your initial post should be at least 450+ words and in APA format (including Times New Roman with font size 12 and double spaced). Post the actual body of your paper in the discussion thread then attach a Word version of the paper for APA review]
Unformatted Attachment Preview
Part Two
Ethical Issues and
the
Institutionalization
of Business Ethics
Chapter 4
The
Institutionalization of
Business Ethics
© 2019 Cengage. All rights reserved.
2
Learning Objectives (1 of 2)
•
•
•
•
Distinguish between the voluntary and mandated
boundaries of ethical conduct
Provide specific mandated requirements for legal
compliance in specific subject matter areas related to
competition, consumers, and safety
Specifically address the requirements of the Sarbanes–
Oxley legislation and implementation by the Securities and
Exchange Commission (SEC)
Describe the passage of the Dodd–Frank Wall Street
Reform and Consumer Protection Act along with some of
its major provisions
© 2019 Cengage. All rights reserved.
3
Learning Objectives (2 of 2)
•
•
•
Provide an overview of regulatory efforts that
provide incentives for ethical behavior
Provide an overview of the recommendations
and incentives for developing an ethical
corporate culture contained in the Federal
Sentencing Guidelines for Organizations (FSGO)
Provide an overview of highly appropriate core
practices and their relationship to social
responsibility
© 2019 Cengage. All rights reserved.
4
Figure 4.1 – Elements of an
Ethical Culture
© 2019 Cengage. All rights reserved.
5
Managing Ethical Risk through Mandated
and Voluntary Programs (1 of 2)
•
Voluntary practices: Include beliefs, values, and
voluntary contractual obligations of a business.
•
•
All businesses engage in some level of
commitment to voluntary activities to benefit both
internal and external stakeholders.
Strategic philanthropy: Giving back to
communities and causes.
© 2019 Cengage. All rights reserved.
6
Managing Ethical Risk through Mandated
and Voluntary Programs (2 of 2)
•
•
•
Voluntary boundary: A management-initiated
boundary of conduct (beliefs, values, voluntary
policies, and voluntary contractual obligations).
Core practice: Helps ensure compliance with
legal requirements, industry self-regulation, and
societal expectations.
Mandated boundary: An externally imposed
boundary of conduct (laws, rules, regulations,
and other requirements).
© 2019 Cengage. All rights reserved.
7
Mandated Requirements for Legal
Compliance
•
•
•
Laws and regulations established by governments to
set minimum standards for responsible behavior—
society’s codification of what is right and wrong.
Civil law: Defines the rights and duties of individuals
and organizations (including businesses).
Criminal law: Prohibits specific actions (fraud, theft,
or securities trading violations) and imposes fines or
imprisonment as punishment for breaking the law.
© 2019 Cengage. All rights reserved.
8
TABLE 4-2 Laws Regulating
Competition (1 of 2)
Sherman Antitrust Act, 1890
Prohibits monopolies
Clayton Act, 1914
Prohibits price discrimination, exclusive dealing, and other efforts
to restrict competition
Federal Trade Commission Act, 1914
Created the Federal Trade Commission (FTC) to help enforce
antitrust laws
Robinson–Patman Act, 1936
Bans price discrimination between retailers and wholesalers
Wheeler–Lea Act, 1938
Prohibits unfair and deceptive acts regardless of whether
competition is injured
Lanham Act, 1946
Protects and regulates brand names, brand marks, trade names,
and trademarks
Celler–Kefauver Act, 1950
Prohibits one corporation from controlling another where the
effect is to lessen competition
Consumer Goods Pricing Act, 1975
Prohibits price maintenance agreements among manufacturers
and resellers in interstate commerce
FTC Improvement Act, 1975
Gives the FTC more power to prohibit unfair industry practices
Antitrust Improvements Act, 1976
Strengthens earlier antitrust laws; gives Justice Department more
investigative authority
© 2019 Cengage. All rights reserved.
9
TABLE 4-2 Laws Regulating
Competition (2 of 2)
Foreign Corrupt Practices Act, 1977
Makes it illegal to pay foreign government officials to facilitate business or to use
third parties such as agents and consultants to provide bribes to such officials
Trademark Counterfeiting Act, 1980
Provides penalties for individuals dealing in counterfeit goods
Trademark Law Revision Act, 1988
Amends the Lanham Act to allow brands not yet introduced to be protected through
patent and trademark registration
Federal Trademark Dilution Act, 1995
Gives trademark owners the right to protect trademarks and requires them to
relinquish those that match or parallel existing trademarks
Digital Millennium Copyright Act, 1998
Refines copyright laws to protect digital versions of copyrighted materials, including
music and movies
Controlling the Assault of NonSolicited Pornography and Marketing
Act (CAN-SPAM), 2003
Bans fraudulent or deceptive unsolicited commercial email and requires senders to
provide information on how recipients can opt out of receiving additional messages
Fraud Enforcement and Recovery Act,
2009
Strengthens provisions to improve the criminal enforcement of fraud laws, including
mortgage fraud, securities fraud, financial institutions’ fraud, commodities fraud,
and fraud related to the federal assistance and relief program
Dodd–Frank Wall Street Reform and
Consumer Protection Act, 2010
Overhaul of the U.S. financial regulatory system
© 2019 Cengage. All rights reserved.
10
TABLE 4-3 Laws Protecting
Consumers (1 of 3)
Federal Hazardous Substances
Labeling Act, 1960
Controls the labeling of hazardous substances for household use
Truth in Lending Act, 1968
Requires full disclosure of credit terms to purchasers
Consumer Product Safety Act, 1972
Created the Consumer Product Safety Commission to establish
safety standards and regulations for consumer products
Fair Credit Billing Act, 1974
Requires accurate, up-to-date consumer credit records
Consumer Goods Pricing Act, 1975
Prohibits price maintenance agreements
Consumer Leasing Act, 1976
Requires accurate disclosure of leasing terms to consumers
Fair Debt Collection Practices Act, 1978
Defines permissible debt collection practices
Toy Safety Act, 1984
Gives the government the power to recall dangerous toys quickly
Nutritional Labeling and Education Act, 1990
Prohibits exaggerated health claims and requires all processed
foods to have labels showing nutritional information
Telephone Consumer Protection Act, 1991
Establishes procedures for avoiding unwanted telephone
solicitations
© 2019 Cengage. All rights reserved.
11
TABLE 4-3 Laws Protecting
Consumers (2 of 3)
Children’s Online Privacy Protection Act, 1998
Requires the FTC to formulate rules for collecting online
information from children under age 13
Do Not Call Implementation Act, 2003
Directs the FCC and the FTC to coordinate so that their rules are
consistent regarding telemarketing call practices including the Do
Not Call Registry and other lists, as well as call abandonment
Credit Card Accountability Responsibility and
Disclosure Act, 2009
Implemented strict rules on credit card companies regarding
topics such as issuing credit to youth, terms disclosure, interest
rates, and fees
Dodd–Frank Wall Street Reform and
Consumer Protection Act, 2010
Promotes financial reform to increase accountability and
transparency in the financial industry, protects consumers from
deceptive financial practices, and establishes the Bureau of
Consumer Financial Protection
Reverse Mortgage Stabilization Act, 2013
Established more requirements to improve the fiscal safety and
soundness of the reverse mortgage program to consumers
Supervisory Privilege Parity Act, 2014
Amended the Consumer Financial Protection Act of 2010 to
specify that privilege and confidentiality are maintained when
information is shared by certain nondepository covered persons
with federal and state financial regulators, and for other purposes
© 2019 Cengage. All rights reserved.
12
TABLE 4-3 Laws Protecting
Consumers (3 of 3)
E-Warranty Act, 2015
Allows manufacturers to meet warranty and labeling requirements for
consumer products by displaying the terms of warranties on websites, and
for other purposes
Federal Cybersecurity Enhancement
Act, 2015
To improve federal network security and authorize and enhance an
existing intrusion detection and prevention system for civilian federal
networks
Consumer Review Fairness Act,
2016
Prohibits the use of certain clauses in form contracts that restrict the
ability of a consumer to communicate regarding the goods or services
offered in interstate commerce that were the subject of the contract, and
for other purposes
© 2019 Cengage. All rights reserved.
13
TABLE 4-4 U.S. Laws Promoting
Equity and Safety (1 of 2)
Equal Pay Act of 1963 (amended)
Prohibits sex-based discrimination in the rate of pay to men and
women doing the same or similar jobs
Title VII of the Civil Rights Act of 1964
(amended in 1972)
Prohibits discrimination in employment on the basis of race, color,
sex, religion, or national origin
Occupational Safety and Health Act, 1970
Designed to ensure healthful and safe working conditions for all
employees
Title IX of Education Amendments of 1972
Prohibits discrimination based on sex in education programs or
activities that receive federal financial assistance
Pension Reform Act, 1974
Designed to prevent abuses in employee retirement, profitsharing, thrift, and savings plans
Equal Credit Opportunity Act, 1974
Prohibits discrimination in credit on the basis of sex or marital
status
Age Discrimination Act, 1975
Prohibits discrimination on the basis of age in federally assisted
programs
Pregnancy Discrimination Act, 1978
Prohibits discrimination on the basis of pregnancy, childbirth, or
related medical conditions
© 2019 Cengage. All rights reserved.
14
TABLE 4-4 U.S. Laws Promoting
Equity and Safety (2 of 2)
Immigration Reform and Control Act, 1986
Prohibits employers from knowingly hiring a person who is an
unauthorized alien
Americans with Disabilities Act, 1990
Prohibits discrimination against people with disabilities and
requires that they be given the same opportunities as people
without disabilities
Civil Rights Act, 1991
Provides monetary damages in cases of intentional employment
discrimination
Don’t Ask, Don’t Tell Repeal Act, 2011
Act banned discrimination on the basis of sexual orientation in the
military
© 2019 Cengage. All rights reserved.
15
The Sarbanes–Oxley (SOX) Act
(1 of 4)
•
•
•
•
•
Oversight of corporate accounting practices.
Makes fraudulent financial reporting a crime.
Strengthens fraud penalties.
Requires corporations to establish codes of
ethics for financial reporting.
Must demonstrate greater transparency in
financial reporting to investors and other
stakeholders.
© 2019 Cengage. All rights reserved.
16
The Sarbanes–Oxley (SOX) Act
(2 of 4)
•
Public Company Accounting Oversight Board
•
•
•
•
Monitors/establishes standards and rules for auditors.
Has investigatory and disciplinary power over auditors
and securities analysts.
Attempts to eliminate conflicts of interest by prohibiting
accounting firms from providing both auditing and
consulting services to the same client companies
without special permission from the client firm’s audit
committee.
Limits the length of time lead auditors can serve a
particular client.
© 2019 Cengage. All rights reserved.
17
The Sarbanes–Oxley (SOX) Act
(3 of 4)
•
Auditor and Analyst Independence
•
•
•
Section 201 prohibits registered public accounting
firms from providing both non-audit and audit services
to a public company.
All material off-balance-sheet transactions and other
relationships with unconsolidated entities that affect
current or future financial conditions of a public
company must be disclosed in each annual and
quarterly financial report.
Public companies must report “on a rapid and current
basis” material changes in their financial condition or
operations.
© 2019 Cengage. All rights reserved.
18
The Sarbanes–Oxley (SOX) Act
(4 of 4)
•
Whistle-Blower Protection
•
•
Granted special damages and attorneys’ fees.
Cost of Compliance
•
•
Section 404 requires companies to document
both the results of financial transactions and the
processes they used to generate them.
Compliance costs were high shortly after
Sarbanes–Oxley was passed; they have declined
over the years.
© 2019 Cengage. All rights reserved.
19
Dodd–Frank Wall Street Reform
and Consumer Protection Act (1 of 4)
•
•
Charged with improving the quality of financial
data available to government officials and
creating a better system of analysis for the
financial industry.
The Financial Stability Oversight Council
(FSOC)
•
Responsible for maintaining the stability of the
financial system in the U.S. through monitoring
the market, identifying threats, promoting market
discipline among the public, and responding to
major risks that threaten stability.
© 2019 Cengage. All rights reserved.
20
Dodd–Frank Wall Street Reform
and Consumer Protection Act (2 of 4)
•
The Financial Stability Oversight Council
(FSOC)
•
Has the authority to limit or closely supervise
financial risks, create stricter standards for
banking and nonbanking financial institutions, and
disband financial institutions that present a
serious risk to market stability
© 2019 Cengage. All rights reserved.
21
Dodd–Frank Wall Street Reform
and Consumer Protection Act (3 of 4)
•
Consumer Financial Protection Bureau
(CFPB)
•
•
Independent agency within the Federal Reserve
System that “regulate(s) the offering and provision
of consumer financial products or services under
the Federal consumer financial laws.”
Power over credit markets as well as authority to
monitor lenders and ensure they are in
compliance with the law.
© 2019 Cengage. All rights reserved.
22
Dodd–Frank Wall Street Reform
and Consumer Protection Act (4 of 4)
•
Consumer Financial Protection Bureau (CFPB)
•
•
Curtail unfair lending and credit card practices, enforce
consumer financial laws, and check the safety of
financial products before their launch into the market.
Whistle-Blower Bounty Program
•
Whistle-blowers are eligible to receive 10 to 30
percent of fines and settlements if their reports result
in convictions of more than $1 million in penalties.
© 2019 Cengage. All rights reserved.
23
Laws That Encourage Ethical
Conduct (1 of 2)
1991
Law: U.S. Sentencing Guidelines for Organizations created for federal prosecutions of
organizations. These guidelines provide for just punishment, adequate deterrence, and
incentives for organizations to prevent, detect, and report misconduct. Organizations need to
have an effective ethics and compliance program to receive incentives in the case of misconduct.
2004
Amendments: The definition of an effective ethics program now includes the development of an
ethical organizational culture. Executives and board members must assume the responsibility of
identifying areas of risk, providing ethics training, creating reporting mechanisms, and
designating an individual to oversee ethics programs.
2007-2008
Additional definition of a compliance and ethics program: Firms should focus on due diligence to
detect and prevent misconduct and promote an organizational culture that encourages ethical
conduct. More details are provided, encouraging the assessment of risk and outlining appropriate
steps in designing, implementing, and modifying ethics programs and training that will include all
employees, top management, and the board or governing authority. These modifications
continue to reinforce the importance of an ethical culture in preventing misconduct.
2010
Amendments for reporting to the board: Chief compliance officers are directed to make their
reports to their firm’s board rather than to the general counsel. Companies are encouraged to
create hotlines, perform self-audit programs, and adopt controls to detect misconduct
internally. More specific language has been added to the word prompt in regard to what it means
to promptly report misconduct. The amendment also extends operational responsibility to all
personnel within a company’s ethics and compliance program.
© 2019 Cengage. All rights reserved.
24
Laws That Encourage Ethical
Conduct (2 of 2)
2014
The commission investigated how the sentencing guidelines could be used by regulatory and
law enforcement agencies to recommend effective ethics and compliance programs. The
commission assessed its efforts to encourage corporations, nonprofits, government agencies,
and other organizations to form institutional cultures that discourage misconduct.
2015
The commission continued to emphasize the importance of the organizational culture and that
there should be standards and procedures in place to prevent and detect misconduct. In
addition, when there is misconduct, community service may be ordered if it is designed to
remedy the misconduct.
Source: “U.S. Sentencing Guidelines Change? Become Effective November 1,” FCPA Compliance and Ethics
Blog, November 2, 2010, https://
www.lexisnexis.com/legalnewsroom/securities/b/securities/archive/2010/11/02/us-sentencing-guidelines-changesbecome-effective-november-1. aspx?Redirected=true (accessed February 25, 2015); United States Sentencing
Commission, Amendments to the Sentencing Guidelines, April 30, 2012,
http://www.ussc.gov/sites/default/files/pdf/amendment-process/reader-friendlyamendments/20120430_RF_Amendments.pdf (accessed April 15, 2017); Paula Desio, Deputy General Counsel,
An Overview of the Organizational Guidelines,
http://www.ussc.gov/sites/default/files/pdf/training/organizationalguidelines/ ORGOVERVIEW.pdf (accessed
February 25, 2015).
© 2019 Cengage. All rights reserved.
25
Federal Sentencing Guidelines for
Organizations (FSGO) (1 of 4)
•
•
Seeks to improve financial regulation, increase oversight
of the industry, and prevent the types of risk-taking,
deceptive practices, and lack of oversight that led to the
2008–2009 financial crisis.
Contains 16 provisions that include increasing the
accountability and transparency of financial institutions,
creating a bureau to educate consumers in financial
literacy and protect them from deceptive financial
practices, implementing additional incentives for whistleblowers, increasing oversight of the financial industry, and
regulating the use of complex derivatives.
© 2019 Cengage. All rights reserved.
26
Federal Sentencing Guidelines for
Organizations (FSGO) (2 of 4)
•
FSGO Steps
1. A firm must develop and disseminate a code of conduct that
communicates required standards and identifies key risk
areas for the organization.
2. High-ranking personnel in the organization who are known
to abide by the legal and ethical standards of the industry
(ethics officer, vice president of human resources, general
counsel, etc.) must have oversight over the program.
3. No one with a known propensity to engage in misconduct
should be put in a position of authority.
4. A communications system for disseminating standards and
procedures (ethics training) must also be put into place.
© 2019 Cengage. All rights reserved.
27
Federal Sentencing Guidelines for
Organizations (FSGO) (3 of 4)
•
FSGO Steps
5. Organizational communications should include a way for
employees to report misconduct without fearing retaliation,
such as an anonymous toll-free hotline or an ombudsman.
Monitoring and auditing systems designed to detect
misconduct are also required.
6. If misconduct is detected, the firm must take appropriate
and fair disciplinary action. Individuals both directly and
indirectly responsible for the offense should be disciplined.
In addition, the sanctions should be appropriate for the
offense.
© 2019 Cengage. All rights reserved.
28
Federal Sentencing Guidelines for
Organizations (FSGO) (4 of 4)
•
FSGO Steps
7. After misconduct has been discovered, the organization
must take steps to prevent similar offenses in the future.
This usually involves making modifications to the ethical
compliance program, conducting additional employee
training, and issuing communications about specific types of
conduct.
© 2019 Cengage. All rights reserved.
29
Core or Best Practices:
Voluntary Responsibilities
1. Improve quality of life and make communities the
places where people want to do business, raise
families, and enjoy life. Makes it easier to attract and
retain employees and customers.
2. Reduce government involvement by providing
assistance to stakeholders.
3. Develop employee leadership skills.
4. Create an ethical culture and values that act as a
buffer to organizational misconduct.
© 2019 Cengage. All rights reserved.
30
Core or Best Practices: CauseRelated Marketing
•
•
•
Ties an organizations product(s) directly to a
social concern through a marketing program.
Affects buying patterns.
Often of short duration, so consumers may not
adequately associate the business with a
particular cause.
© 2019 Cengage. All rights reserved.
31
Core or Best Practices:
Strategic Philanthropy
•
•
•
Synergistic and mutually beneficial use of an
organization’s core competencies and resources
to deal with key stakeholders so as to bring about
organizational and societal benefits.
Argues that philanthropy must have a long-term
positive impact.
Should pertain to the mission and operations of
the company. Must also have strong support from
top managers.
© 2019 Cengage. All rights reserved.
32
Core or Best Practices: Social
Entrepreneurship (1 of 2)
•
•
•
•
When an entrepreneur founds an organization
with the purpose of creating social value.
Can be for-profit, nonprofit, government-based,
or hybrids.
Many social entrepreneurs choose to organize
their enterprises as nonprofits.
The major difference between a social enterprise
and a nonprofit is the use of entrepreneurial
principles and business-led strategies to create
social change.
© 2019 Cengage. All rights reserved.
33
Core or Best Practices: Social
Entrepreneurship (2 of 2)
•
•
Companies engaged in strategic philanthropy will
often outsource their philanthropic programs
and/or partner with other organizations.
Directly implement their programs and are
organized around achieving social objectives.
© 2019 Cengage. All rights reserved.
34
Importance of Institutionalization
in Business Ethics
•
•
•
Institutionalization helps implant values, norms,
and artifacts in organizations, industries, and
society.
Failure to understand core practices provides the
opportunity for unethical conduct.
Institutionalization of business ethics has
advanced rapidly in recent years as stakeholders
recognized the need to improve business ethics.
© 2019 Cengage. All rights reserved.
Part Two
Ethical Issues and
the
Institutionalization
of Business Ethics
Chapter 3
Emerging
Business Ethics
Issues
© 2019 Cengage. All rights reserved.
2
Learning Objectives
•
Define ethical issues in the context of organizational ethics
•
Examine ethical issues as they relate to the basic values
of honesty, fairness, and integrity
•
Delineate misuse of company resources, abusive and
intimidating behavior, lying, conflicts of interest, bribery,
corporate intelligence, discrimination, sexual harassment,
fraud, financial misconduct, insider trading, intellectual
property rights, and privacy as business ethics issues
•
Examine the challenge of determining an ethical issue in
business
© 2019 Cengage. All rights reserved.
3
Ethical Awareness
•
•
People make ethical decisions when they find an
ethical component in a particular issue or
situation.
Failure to acknowledge or be aware of ethical
issues is hazardous to an organization.
•
Ethical issues involve a group, a problem, or an
opportunity that requires introspection and
investigation before a decision can be made.
© 2019 Cengage. All rights reserved.
4
Foundational Values for
Identifying Ethical Issues (1 of 3)
•
•
Integrity: Element of virtue, an unimpaired
condition. Integrity relates to product quality,
open communication, transparency, and
relationships.
Honesty: Truthfulness or trustworthiness. To tell
the truth to the best of your knowledge without
hiding anything.
•
Confucius defined an honest person as junzi, or
one who has the virtue ren.
© 2019 Cengage. All rights reserved.
5
Foundational Values for
Identifying Ethical Issues (2 of 3)
•
Honesty
•
•
•
•
Ren: One who has humanity.
Yi: What one should do according to the
relationships with others.
Li: Good manners or respect.
Zhi: Whether a person knows what to say and
what to do as it relates to honesty.
© 2019 Cengage. All rights reserved.
6
Foundational Values for
Identifying Ethical Issues (3 of 3)
•
Honesty
•
The Confucian version of Kant’s Golden Rule is to
treat your inferiors as you would want your superiors
to treat you.
•
•
Virtues such as familial honor and reputation for honesty
are paramount.
Lying: (1) Untruthful statements that result in damage
or harm; (2) “white lies,” which do not cause damage
but instead function as excuses or a means of
benefitting others; and (3) statements obviously meant
to engage or entertain without malice.
© 2019 Cengage. All rights reserved.
7
Foundational Values Continued
•
•
Fairness: Just, equitable, and impartial.
Three fundamental elements that motivate
people to be fair:
1. Equality: The distribution of benefits and
resources.
2. Reciprocity: An interchange of giving and
receiving in social relationships.
3. Optimization: Trade-off between equity (equality)
and efficiency (maximum productivity).
© 2019 Cengage. All rights reserved.
8
Ethical Issues in Business (1 of 19)
•
•
Misuse of Company Time and Resources
Abusive or Intimidating Behavior: Actions such
as physical threats, false accusations, and
yelling. Meaning differs from person to person.
•
Bullying: Creates hostile environment.
Workplace bullying is strongly associated with
sleep disturbances, as well as depression,
fatigue, increased sick days, and stomach
problems.
© 2019 Cengage. All rights reserved.
9
Ethical Issues in Business (2 of 19)
•
Lying
1. Joking without malice.
2. Commission lying: Creating a perception or belief
by words that intentionally deceive the receiver of
the message.
3. Omission lying: Intentionally not informing others
of any differences, problems, safety warnings, or
negative issues relating to the product or
company that significantly affect awareness,
intention, or behavior.
© 2019 Cengage. All rights reserved.
10
Ethical Issues in Business (3 of 19)
•
•
Conflicts of Interest: Individual chooses either
to advance his or her own interests, those of the
organization, or those of some other group.
Bribery: Offering something (often money) in
order to gain an illicit advantage from someone in
authority.
•
Active bribery: The person who promises or
gives the bribe commits the offense.
© 2019 Cengage. All rights reserved.
11
Ethical Issues in Business (4 of 19)
•
Bribery
•
Passive bribery: Offense committed by an official
who receives the bribe.
•
Not an offense if the advantage was permitted or
required by the written law or regulation of the
foreign public official’s country, including case law.
© 2019 Cengage. All rights reserved.
12
Ethical Issues in Business (5 of 19)
•
Bribery
•
Small facilitation payments: Payments made to
obtain or retain business or other improper
advantages—do not constitute bribery payments
for U.S. companies in some situations.
•
•
Often made to induce public officials to perform
their functions.
Illegal in the United Kingdom.
© 2019 Cengage. All rights reserved.
13
Ethical Issues in Business (6 of 19)
•
•
Corporate Intelligence: Collection and analysis
of information on markets, technologies,
customers, and competitors, as well as on
socioeconomic and external political trends.
Three types:
•
•
•
Passive monitoring system for early warning.
Tactical field support.
Support dedicated to top-management strategy.
© 2019 Cengage. All rights reserved.
14
Ethical Issues in Business (7 of 19)
•
Discrimination: On the basis of race, color,
religion, sex, marital status, sexual orientation,
public assistance status, disability, age, national
origin, or veteran status is illegal in the United
States.
•
Discrimination on the basis of political opinions or
affiliation with a union is defined as harassment.
© 2019 Cengage. All rights reserved.
15
Ethical Issues in Business (8 of 19)
•
Discrimination
•
•
•
Equal Employment Opportunity Commission
Age Discrimination in Employment Act: Illegal to
discriminate against people 40 years of age or older,
as well as those that require employees to retire
before the age of 70.
Affirmative Action Programs: Involve efforts to
recruit, hire, train, and promote qualified individuals
from groups that have traditionally been discriminated
against on the basis of race, gender, or other
characteristics.
© 2019 Cengage. All rights reserved.
16
Ethical Issues in Business (9 of 19)
•
Affirmative Action Programs and Supreme
Court Standards
1. There must be a strong reason for developing an
affirmative action program.
2. Affirmative Action Programs must apply only to
qualified candidates.
3. Affirmative Action Programs must be limited and
temporary and therefore cannot include “rigid and
inflexible quotas.”
© 2019 Cengage. All rights reserved.
17
Ethical Issues in Business (10 of 19)
•
Sexual Harassment: Any repeated, unwanted
behavior of a sexual nature perpetrated upon
one individual by another.
•
•
•
May be verbal, visual, written, or physical.
Can occur between people of different genders or
those of the same gender.
The law is primarily concerned with the impact of
the behavior and not its intent (Title VII of the Civil
Rights Act of 1964).
© 2019 Cengage. All rights reserved.
18
Ethical Issues in Business (11 of 19)
•
Sexual Harassment
•
Hostile work environment—three criteria must
be met. The conduct was:
1. Unwelcome.
2. Severe, pervasive, and regarded by the claimant
as so hostile or offensive as to alter his or her
conditions of employment.
3. Such that a reasonable person would find it hostile
or offensive.
© 2019 Cengage. All rights reserved.
19
Ethical Issues in Business (12 of 19)
•
Sexual Harassment
•
Hostile work environment
•
•
Employee need not prove the harassment
seriously affected his or her psychological wellbeing or that it caused an injury.
Decisive issue is whether the conduct interfered
with the claimant’s work performance.
© 2019 Cengage. All rights reserved.
20
Ethical Issues in Business (13 of 19)
•
Sexual Harassment
•
Dual relationship: A personal, loving, and/or
sexual relationship with someone with whom you
share professional responsibilities.
•
•
If the sexual advances in any form are considered
mutual, then consent is created.
Unless the employee or employer gets something
in writing before the romantic action begins,
consent can always be questioned.
© 2019 Cengage. All rights reserved.
21
Ways to Avoid Sexual
Misconduct (1 of 2)
1.
2.
3.
Establish a statement of policy naming someone in the
company as ultimately responsible for preventing
harassment at the company.
Establish a definition of sexual harassment that includes
unwelcome advances, requests for sexual favors, and
any other verbal, visual, or physical conduct of a sexual
nature; that provides examples of each; and reminds
employees the list of examples is not all-inclusive.
Establish a non-retaliation policy that protects
complainants and witnesses.
© 2019 Cengage. All rights reserved.
22
Ways to Avoid Sexual
Misconduct (2 of 2)
4.
5.
6.
7.
Establish specific procedures for prevention of such
practices at early stages. If in writing, they are expected
by law to train employees in accordance with them,
measure their effects, and ensure the policies are
enforced.
Establish, enforce, and encourage victims of sexual
harassment to report the behavior to authorized
individuals.
Establish a reporting procedure.
Make sure the firm has timely reporting requirements to
the proper authorities.
© 2019 Cengage. All rights reserved.
23
Ethical Issues in Business (14 of 19)
•
Fraud: Any purposeful communication that
deceives, manipulates, or conceals facts in order
to harm others. Can be a crime; convictions may
result in fines, imprisonment, or both.
•
•
•
Accounting fraud: Usually involves a
corporations’ financial reports.
Fraud triangle: Pressure, opportunity, and
rationalization.
Marketing fraud: Dishonestly creating,
distributing, promoting, and pricing products.
© 2019 Cengage. All rights reserved.
24
Ethical Issues in Business (15 of 19)
•
Fraud
•
•
Puffery: Exaggerated advertising, blustering, and
boasting upon which no reasonable buyer would
rely upon and is not actionable under the Lanham
Act.
Implied falsity: The message has a tendency to
mislead, confuse, or deceive the public.
•
Literally true but imply a false message.
© 2019 Cengage. All rights reserved.
25
Ethical Issues in Business (16 of 19)
•
Fraud
•
Literally false
•
•
•
Tests prove (establishment claims): Advertisement
cites a study or test that establishes the claim.
Bald assertions (nonestablishment claims):
Advertisement makes a claim that cannot be
subst
