Chapter 1: Why Ethics matters

Morality: social practices defining right or wrong transmitted within cultures and institutions

Ethical theory and moral philosophy: reflection on the nature and justification of right actions introducing clarity, substance, and precision of argument

Behavioral business ethics: understanding why individuals, groups, and organizations behave in certain ways

Eigene Notizen:

• Legal but unethical: for example working in military companies

• Illegal but ethical: getting food from containers

• Mc Donald’s deceptive advertising  legal but unethical?

—> it is not always clear

Business Ethics: study of business situations, activities and decisions where issues of MORALLY right or wrong are addressed (Crane and Matten, 2008)

Values: desirable, trans-situational goals, varying in importance, that serve as guiding principles in people’s lives (Schwartz, 1996)

= the responsibility of enterprises for their impacts on society

EU Comission (2011)

Respect for applicable legislation, and for collective agreements between social partners, is a prerequisite for meeting that responsibility.

To fully meet their corporate social responsibility, enterprises should have in place a process to integrate social, environmental, ethical, human rights and consumer concerns into their business operations and core strategy in close collaboration with their stakeholders, with the aim of

• identifying, preventing and mitigating their possible adverse impacts

• maximizing the creation of shared value for their owners/shareholders and for their other stakeholders and society at large

1. Business, like gambling, is expected to be deceptive (Albert Carr, Harvard Business Review (1968))

• Falsehood ceases to be falsehood when it is understood on all sides that the truth is not expected to be spoken

1. Corporate financial scandals

• Enron’s communication

• Madoff’s contributions to philanthropy

1. Company’s own interests in CSR actions

• The “keep the bed linen” program in hotels

1. Only individuals have a moral responsibility, not firms

• “The only business of business is business” (Milton Friedman, 1970)

1. Business has huge power within society, with potential for huge contributions

1. Business malpractice has the potential to inflict enormous harm

1. The demands to be ethical by various stakeholders are becoming more complex and challenging

1. Employees face significant pressure to compromise ethical standards

• A survey of 500 financial services professionals in the UK and the US found that more than one in four had observed wrongdoing in the workplace

• A quarter of respondents agreed that financial services professionals might need to engage in unethical or illegal conduct to be successful

1. Businesses face a trust deficit

• Only 18% of the global population trusts business leaders to tell the truth