Presentation on Ethics in Business and Society

Ethics: Whats the Fuss?

When evaluating ones goals and objectives, a vital question must be asked: What is your highest aspiration? A. Wealth B. Fame C. Knowledge D. Popularity E. Integrity

If integrity is second to any of the alternatives, then it is subject to sacrifice in situations where a choice must be made. Such situations will inevitably occur in every persons life.

Why talk about ethics?

Why talk about ethics? In the aftermath of major corporate failures and questionable accounting practices, American Accounting Association President G. Peter Wilson said that in the classroom, educators need to increasingly emphasize the value of integrity, what has long been a mainstay of accountants reputation

In a recent Wall Street Journal article, Psychology professor Steven Davis says that cheating by high school students has increased from about 20 percent in the 1940s to 75 percent today. Students say cheating in high school is for grades, cheating in college is for a career.

If students lack ethics in high school and college, then there should be little surprise that they lack ethics in their careers. Greed and over-reaching ambition often end in disastrous personal consequences. Convicted inside trader, Dennis Levine, in a Fortune magazine article wrote:
I have painful memories of Sarah learning to walk in a prison visiting room, and of Adam pleading with a guard who wouldnt let him bring in a Mickey Mouse coloring book.

Many institutions of higher education have instituted policies regarding ethics education. For example, the Faculty Handbook of the Mays Business School at Texas A&M University includes the following statement: Therefore, faculty and staff have a responsibility for creating an academic environment that promotes honest academic inquiry and teaches students ethical behavior in the process.

Educational Institutions have established ethics codes for their students, e.g. the U.S. Air Force Academy:

"We Will Not Lie, Steal Or Cheat, Nor

Tolerate Among Us Anyone Who Does"

-- Which do you think is the harder part:

Line 1 or Line 2? Why?

What do profs think?

In a survey of college faculty, 187 professors responded to several statements about teaching ethics:
1. The importance of ethics and personal integrity should be stressed in the courses I teach. 4.75 2. The basis for ethics and personal integrity should be discussed (e.g. benefit to society as a whole, moral and religious foundations of society, etc.) Note: Scores are based on a scale from 1: Strongly Disagree to 5: Strongly Agree

4.11

American Institute of CPAs Code of Professional Conduct, Principles

Article I:
In carrying out their responsibilities as professionals, members should exercise sensitive professional and moral judgments in all their activities.

Is there an ethics crisis in America?

One recent national election day poll indicated that 56 percent of voters thought that Americas problems are primarily moral and social. Only 36 percent thought that the nations problems were primarily economic.

Can ethics be taught? Teddy Roosevelt said, To educate a person in mind and not in morals is to educate a menace to society.

In his best-seller, The Closing of the American Mind, Allan Bloom says that the eternal conflict between good and evil has been replaced with Im okay, youre okay. Students unthinkingly embrace a blind tolerance in which they consider it moral never to think they are right because that mean someone else is wrong.
[Allan Bloom, The Closing of the American Mind, New York, Simon and Schuster, Inc. 1987]

More than 200 years ago, Professor Alexander Tyler wrote of the Athenian Republic, which had fallen 2,000 years earlier: A democracy cannot exist as a permanent form of government The average age of the worlds greatest civilizations has been 200 years. These nations have progressed through this sequence: From bondage to spiritual faith, to great courage, to abundance, to selfishness, to complacency, to apathy, to dependency, and back again to bondage.

In the quest for educational reform, we would do well to turn not only to the great books, but the great exemplars of wisdom with which our country is blessed. To help reclaim our destiny as human beings and citizens, we need to rediscover the generation that really can claim to be the best and the brightest in American history, at least from the moral and political point of view: the founders of the American Republic.
--Professor C.R. Kesler

Whereas it is the duty of all nations to acknowledge the providence of Almighty God, to obey His will, to be grateful for His benefits, and humbly to implore His protection and favor. George Washingtons Thanksgiving Proclamation of 1789

Of all the dispositions and habits which lead to political prosperity, religion and morality are indispensable supports Reason and experience both forbid us to expect that national morality can prevail in the exclusion of religious principle.
George Washingtons Farewell Address, September 17, 1796

Ethics is essential to the functioning of a free society: 2nd U.S. President John Adams observed: We have no government armed with power capable of contending with human passions unbridled by morality and religion. Our Constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other.

God who gave us life gave us liberty. Can the liberties of a nation be secure when we have removed a conviction that these liberties are the gift of God?

Indeed I tremble for my country when I reflect that God is just, that His justice cannot sleep forever.
Thomas Jefferson

U.S. Declaration of Independence

The second paragraph of America's founding document states: "We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable rights, that among these are life, liberty and the pursuit of happiness."

Where Do We Start?

Upon What Can We Agree?

Whether we derive a code of ethics from religious beliefs, a study of history and literature, or personal experience and observation: We can all agree upon some basic values.

In an issue of Management Accounting, James Brackner stated: The universities are responding with an increased emphasis on ethical training for decision making. For the most part, however, they ignore the teaching of values. For moral or ethical education to have meaning there must be agreement on the values that are considered right.

Be sure you are right, then go ahead.

Davy Crockett

1786-1836

A nation or a culture cannot endure for long unless it is undergirded by common values such as valor, public spiritedness, respect for others and for the law; It cannot stand unless it is populated by people who will act on the motives superior to their own immediate interest.
Chuck Colson, Against the Night

When the situation needs improvement, Gandhi offers guidance: You must be the change you wish to see in the world.

Michael Josephson, in Chapter 1 of Ethical Issues in the Practice of Accounting, describes the Ten Universal Values: Honesty, integrity, promise keeping, fidelity, fairness, caring, respect for others, responsible citizenship, pursuit of excellence, and accountability.

Until about 50 years ago, it was commonly accepted that universities were to provide students not only with knowledge and skills, but also moral guidance based on the essentials of the Western tradition.
Business Prof Geoffrey Lantos

If we want to produce people who share the values of a democratic culture, they must be taught those values and not be left to acquire them by chance.
Cal Thomas, The

Death of Ethics in America

Can you make a difference?

To sin by silence when they should protest makes cowards of men. Abraham Lincoln

Do you think this relates to line 2 of the U.S.A.F. Academy Code of Honor?

To see what is right and not to do it is want of courage. (Confucius)

The right way is not always the popular and easy way. Standing for right when it is unpopular is a true test of moral character. - Margaret Chase Smith, first woman elected to both houses of the U.S. Congress

Leadership is a potent combination of strategy and character. But if you must be without one, be without strategy. General H. Norman Schwarzkopf

The reputation of a thousand years may be determined by the conduct of one hour.
Japanese proverb

At a Congressional Hearing on Accounting and Business Ethics, distinguished entrepreneur, Truett Cathy, the Founder of Chick-Fil-A, quoted Solomon "A good name is more desirable than great riches; to be esteemed is better than silver or gold."
The truth is that fame and fortune are nothing compared to personal honor.

President Lincoln said: Honor is better than honors.

Ethics in International Business

Ethics in International Business

Objectives
Source of ethical challenges in IB Effect of ethical challenges on decisions in IB Causes of poor ethical decisions in IB Different conceptual underpinnings for ethical decisions in IB What managers can do to
Promote an awareness of ethical issues throughout the organization Ensure that ethical considerations enter into decision making

Ethical Issues in International Business

Arise when a manager makes decisions consistent with differing national environments
Political systems Legal systems Economic development levels Culture

What is ethical and normal in one environment may not be so in another

Ethical Issues in International Business

Arise most often in the context of:
Employment practices Human rights Environmental policy Corruption An MNCs perceived moral obligations to society

Employment Practices
What standards should be applied?
Home nations Host nations Other

Should the MNC adapt its policies? Standardize? Hiring practices, labor relations, diversity issues, employment conditions are some specific issues that require careful thought

Human Rights
A manager can assume as universal her/his views on freedom of:
Association Speech Assembly Movement Political repression

What is the responsibility of an MNC to uphold different standards of human rights?

Repressive Regimes
Is it ethical for MNCs to operate in countries with repressive regimes?
Is inward investment an agent for change?

What is the limit beyond which inward investment would not be justified under all circumstances? What if competitors from other nations invest and you dont?

Environmental Policies
Locally mandated environmental standards may be inferior to those an MNC knows it can achieve Tragedy of the commons: a resource held in common by all, but owned by no one, is overused by some, resulting in degradation.

If a decision is legal but unethical, should it be

taken?

Corruption
Government officials may ask for bribes for an MNC to get things done Is an MNCs manager who agrees a corrupt manager?

Should an MNC ever accede to bribery demands?

Foreign corrupt practices act (USA) Convention on Combating Bribery of Foreign Officials in International Business Transactions (OECD)

MNC Power and Moral Decisions

MNCs have power over a host country
They can move production away Along with power arise obligations (?)

Power is morally neutral

How it is used is what matters Perceptions of how it should be used and of its impact vary
Company view Host country view

MNC and Social Responsibility

Social responsibility: business decisions should be made after consideration of social consequences of economic actions Noblesse oblige: honorable and benevolent behavior is the responsibility of those in power Benevolent behavior responsibility of only successful business?

Determinants of Ethical Behavior

Organization culture Personal ethics Decision making processes Leadership

Unrealistic / realistic performance goals

Philosophical Approaches to Ethics

Straw men: often adopted, offer inappropriate guidelines for MNC behavior
Friedman doctrine Righteous moralist Nave immoralist

Utilitarian and Kantian Ethics Rights theories Justice theories

Ethical Decision Making

Hiring and promotion Organization culture and leadership Decision-making processes
Stakeholder perspectives

Ethics officers
Codes of ethics

Moral courage: walk away from profitable and unethical decision