Page 54 - Business Principles and Management

Chapter 2 • Social and Ethical Environment of Business

2.3 Ethical Issues

Goals Terms
• Describe how ethics relates to • ethics • stakeholders
business practice. • business ethics • nongovernmental
• Suggest ways in which businesses • code of ethics organizations
can be socially responsible. • social responsibility (NGOs)

aws provide a minimum standard of behavior for people and businesses to
follow. However, many behaviors are neither allowed nor disallowed by
Llaw. The guide that then comes into play is ethics. Ethics refers to standards
of moral conduct that individuals and groups set for themselves, defining what
behavior they value as right or wrong.
Ethical behavior is closely linked to personal values—underlying beliefs and
attitudes that individuals or groups possess. To decide whether a particular action
is ethical or not, we have to ask questions such as: Is the action right or is it
wrong, regardless of what the laws state? Therefore, ethical conduct goes beyond
state and federal laws.

Business Ethics

A collection of principles and rules that define right and wrong conduct for an
organization is called business ethics. Any action that does not conform to these
moral principles is unethical behavior. Not all firms have the same rules of eth-
ical conduct, however. Notions of right and wrong vary from manager to man-
ager, business to business, and country to country. Generally, moral conduct that
is favorable to the largest number of people is considered ethically desirable.
The business scandals at companies such as Tyco International, Enron, and MCI
have placed considerable importance on business ethics. This has led some compa-
nies to hire chief ethics officers. Their job is to ensure that workers are trained in
how to comply with a company’s ethics policies. Many businesses have created codes
of ethics to guide managers and workers in their behavior. A code of ethics is a for-
mal, published collection of values and rules that reflect the firm’s philosophy and
goals. Having such a code removes or reduces opportunities for unethical conduct.
These codes deal with such issues as accepting business gifts, respecting employee
privacy, using company property for personal use, and maintaining confidentiality.
Business confidentiality means keeping sensitive company information secret.
Ethical codes are communicated to employees through memos, newsletters,
posters, and employee manuals. Organizations establish procedures to handle
situations that arise when employees violate the codes. To be effective, codes of
ethics must have the full support of the organization’s top-level managers. Codes
are ineffective if they are not enforced.

ETHICAL DILEMMAS
The issue of ethics often arises when it is not clear whether a particular action
is legal or illegal. As the opening story illustrated, the supervisor, Rayshawn Clark,

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