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This article explores the ethical behavior and social responsibility of MBA students and businesses. It highlights the need for companies to consider the welfare of all stakeholders and explains the role of managers in setting ethical standards. The article also discusses codes of ethics and the benefits of corporate social performance. Additionally, it examines international ethics and the influence of American businesses on global markets.

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  1. Demonstrating Ethical Behavior and Social Responsibility 1-1

  2. Top U.S. Ethical Issues Source: CMO Magazine, October 2004

  3. Ethics of MBA Students Percent of MBA Students Who Would: • Buy Stock on Inside Information 52% • Reveal Corp. Secrets to Spouse/Family 50% • Let a Gift Sway Purchasing Decision 26% • Pay Someone Off to Close a 13% Business Deal Source: USA Today

  4. Ways to PreventUnethical Behavior Source: CMO Magazine, Oct. 2004

  5. Social Responsibility CORPORATE SOCIAL RESPONSIBILITY (CSR) is a business’s concern for welfare of society. It is based on a company’s concern for the welfare of all its stakeholders, not just the owners. Some CRITICS of CSR believe that a manager’s sole role is to compete and win.

  6. Codes of Ethics Milton Friedman stated that the only social responsibility of business is to make money for stockholders. DEFENDERS argue that CSR makes more money for investors in the long run. One study showed a positive correlation between CORPORATE SOCIAL PERFORMANCE and CORPORATE FINANCIAL PERFORMANCE.

  7. Ethics I. ETHICS IS MORE THAN LEGALITY Learning Goal 1 Explain why legality is only the first step in behaving ethically. A. Ethical Standards Are Fundamental B. Ethics Begins with Each of Us Learning Goal 2 Ask the three questions one should answer when faced with a potentially unethical action.

  8. Ethics Check Questions: • Is It Legal? • Is It Balanced? • Is it Fair ? • How Will It Make Me Feel About • Myself?

  9. Factors InfluencingManagerial Ethics Organizational Environmental Individual • Values • Competition • Economic Conditions • Social/Cultural Institutions • Top Level Mgmt. Philosophy • The Firm’s Reward System • Job Dimensions • Work Background • Family Status • Personality

  10. Codes of Ethics • Compliance-Based • Integrity-Based

  11. Codes of Ethics COMPLIANCE-BASED ETHICS CODES are ethical standards that emphasize preventing unlawful behavior by increasing control and by penalizing wrongdoers.

  12. Codes of Ethics INTEGRITY-BASED ETHICS CODES are ethical standards that define the organization’s guiding values, create an environment that supports ethically sound behavior, and stress a shared accountability among employees.

  13. Ethics .  II. MANAGING BUSINESSES ETHICALLY AND RESPONSIBLY Learning Goal 3Describe management’s role in setting ethical standards. Setting Corporate Ethical Standards Learning Goal 4Distinguish between compliance-based and integrity-based ethics codes, and list the six steps in setting up a corporate ethics code.

  14. Ethics III. CORPORATE SOCIAL RESPONSIBILITY Learning Goal 5Define corporate social responsibility and examine corporate responsibility to various stake-holders. A. Responsibility to Customers B. Responsibility to Investors C. Responsibility to Employees D. Responsibility to Society and the Environment E. Social Auditing

  15. Codes of Ethics CORPORATE AND CRIMINAL FRAUD ACCOUNTABILITY ACT (Sarbanes-Oxley, 2002)

  16. Top management support Employees’ understanding Managers’ training Ethics Office Outsiders must be informed Enforcement of ethics code Steps to ImproveU.S. Business Ethics

  17. Social Audit • Company • Outside Groups that serve as watchdogs: • Socially-Conscious Investors • Environmentalists • Union Officials • Customers

  18. Ethics IV. INTERNATIONAL ETHICS AND SOCIAL RESPONSIBILITY Learning Goal 6Analyze the role of American businesses in influencing ethical behavior and social responsibility in global markets.

  19. International Ethicsand Social Responsibility • Ethical problems are Not Unique to the U.S. managers • Demand for Socially Responsible Behavior from Global Suppliers • Joint Initiative on Corporate Accountability and Workers’ Rights • Inter-American Convention Against Corruption

  20. Best Company Reputation • Johnson & Johnson (80.6) • Coca-Cola (79.7) • Google (79.5) • UPS (79.4) • 3M (78.8) Source: USA Today

  21. General Electric Toyota Procter & Gamble FedEx Johnson & Johnson Microsoft Dell Berkshire Hathaway Apple Computer Wal-Mart Most Admired Global Companies Source: Fortune, 2006

  22. Levels of Corporate Social Responsibility Societal Responsibility Stakeholder Responsibility Ecological Environment Customers Profit Responsibility General Public Employees Owners/Stockholders Suppliers/Distributors Public Interest Groups Source: Marketing, 5/E by Berkowitz, Kerin, Hartley, and Rudelius.

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