Contemporary Business Law

ByRichard A. Mann&Barry S. RobertsBusiness Law and the Regulation of Business, 11th ed. Chapter 2: Business Ethics 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.1Topics Covered in this ChapterA.Law versus EthicsB.Ethical TheoriesC.Ethical Standards in BusinessD.Ethical Responsibilities of Business 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.2Law versus EthicsLegal ActionsMoral Actions 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.Ethical Theories Ethical Fundamentalism individuals look to a central authority or set of rules to guide them in ethical decision makingEthical Relativism actions must be judged by what individuals subjectively feel is right or wrong for themselvesSituational Ethics one must judge a person's actions by first putting oneself in the actor's situation 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.4Ethical TheoriesUtilitarianism moral actions are those that produce the greatest net pleasure compared with net painAct Utilitarianism assesses each act according to whether it maximizes pleasure over painRule Utilitarianism supports rules that on balance produce the greatest pleasure for societyCost-Benefit Analysis quantifies the benefits and costs of alternativesDeontology actions must be judged by their motives and means as well as their results

2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.5Social Ethics TheoriesFocus is on a person's obligations to other members in society and also on the individual's rights and obligations within societySocial Egalitarians believe that society should provide all its members with equal amounts of goods and services regardless of their relative contributionsDistributive Justice stresses equality of opportunity rather than resultsLibertarians stress market outcomes as the basis for distributing society's rewards 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.6Other TheoriesIntuitionism a rational person possesses inherent power to assess the correctness of actionsGood Person individuals should seek out and emulate good role models

2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.7Ethical Standards in Business Choosing an Ethical System Kohlberg's stages of moral development is a widely accepted modelCorporations as Moral Agents because a corporation is a statutorily created entity, it is not clear whether it should be held morally responsible

2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.8Kohlbergs Stages of Moral DevelopmentLevelsPerspectiveJustificationPreconventional (Childhood)SelfPunishment/RewardConventional (Adolescent)GroupGroup NormsPostconventional (Adult)UniversalMoral PrinciplesLevelsPerspectiveJustificationPreconventionalSelfPunishment/RewardConventional (Adolescent)GroupGroup NormsPostconventional (Adult)UniversalMoral Principles (Childhood) 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.9Corporations as Moral AgentsCan a corporation be held morally accountable?Corporations are artificial entitiesPeople within corporations make decisionsThough not human, corporations have a responsibility when they engage in behavior that can be judged by moral standardsExperts are divided What do YOU think? 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.10Ethical Responsibilities of BusinessRegulation of Business governmental regulation has been necessary because all the conditions for perfect competition have not been satisfied and free competition cannot by itself achieve other societal objectivesCorporate Governance vast amounts of wealth and power have become concentrated in a small number of corporations, which are in turn controlled by a small group of corporate officers

2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.11Arguments against Social ResponsibilityProfitability because corporations are artificial entities established for profit-making activities, their only social obligation should be to return as much money as possible to shareholdersUnfairness whenever corporations engage in social activities such as supporting the arts or education, they divert funds rightfully belonging to shareholders and/or employees to unrelated third parties 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.12Arguments against Social ResponsibilityAccountability a corporation is subject to less public accountability than public bodiesExpertise although a corporation may have a high level of expertise in selling its goods and services, there is no guarantee that promotion of social activities will be carried on with the same competence

2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.13Arguments in Favor of Social ResponsibilityThe Social Contract society allows for the creation of corporations and gives them special rights, including a grant of limited liability, so corporations are responsible to our societyLess Government Regulation by taking a proactive role, corporations create a climate of trust and respect that has the effect of reducing government regulationLong-Run Profits corporate involvement in social causes creates goodwill, which simply makes good business sense

2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.14The Stakeholder ModelManagersEmployeesCommunityStockholdersSuppliersCustomersCorporation Responsible To: 2014 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.15