Chapter 2 Contemporary Issues in Business Ethics

1. Chapter 2Contemporary Issues in Business Ethics Understanding Business Ethics Stanwick and Stanwick 2nd Edition Understanding Business Ethics 2nd Edition @ 2012 Sage Publications, Inc.

2. 1 Bono: I Still Haven’t Found the Tax Rate That I’m Looking For • Promogroup helps individuals and companies with high levels of income to “shelter” the tax exposure of their income • Clients include the three members of the Rolling Stones, CKX (American Idol) and Elvis Presley’s estate and Bono, and the rest of U2 • Promogroup was able to reduce the total tax paid by the three Rolling Stones members to an aggregate tax rate of 1.5 percent

3. 2 Bono: I Still Haven’t Found the Tax Rate That I’m Looking For • The tax shelter established by Promogroup is based on the simple flow of royalties that go into and leave the Netherlands. • A Dutch holding company is established for Promogroup’s clients and revenue sent to the holding company is exempt from taxes. • The Dutch tax shelters are viable only to artists who are not U.S. citizens.

4. 3 History of Business Ethics • Discovery of ethics began with discussions by Aristotle, Socrates, and Plato • As long as there has been commerce, there have been ethical issues about how business is conducted

5. 4 History of Business Ethics • 1960’s: • Period of social unrest • Issues about the environment and drug use among employees were dilemmas for employers • This era show the birth of corporate social responsibility movement

6. 5 History of Business Ethics • 1970’s: • Economy suffered a recession • Human rights issues and environmental issues were major focal point of corporations • Companies began to cover up their wrongdoings rather than deal with the issues head-on

7. 6 History of Business Ethics • 1980’s: • Financial fraud surfaced • Loyalty to employers decreased dramatically • The Ethics Resource Center helped for the first business ethics office at General Dynamics in 1985

8. 7 History of Business Ethics • 1990’s: • Outgrowth of global opportunities for companies • Unsafe work practices, child labor issues and environmental issues • Rise of financial mismanagement

9. 8 History of Business Ethics • 2000’s: • Financial mismanagement problems • Intellectual property theft, cybercrime, and personal privacy issues • Passage of Sarbanes-Oxley Act in 2002 was the most significant event in the United States

10. 9 The Role of Integrity • Defined as a firm adherence to a code of especially moral or artistic values • Integrity is based on employees’ continuous efforts to balance their personal values with the requirements to perform their jobs effectively throughout their careers.

11. 10 Integrity Heuristics • Publicity test • Trusted friend test • Reciprocity test • Universality test • Obituary test

12. 11 Behaviors of High Integrity • Possess Humility • Maintain Concern for the Greater Good • Be Truthful • Fulfill Commitments • Strive for Fairness • Take Responsibility • Have Respect for the Individual • Celebrate the Good Fortune of Others • Develop Others • Reproach Unjust Acts • Be forgiving • Extend Self for Others

13. 12 Ethical Managers are Able to Make Their Own Rules • Managers have the ability to establish their own rules pertaining to acceptable and unacceptable behaviors within the organization • Cadbury Limited in the United Kingdom example • Realistic evaluation of ethical conduct is based on what is done in everyday actions

14. 13 Is Everyone Unethical? • Unintentional unethical behavior can take place, in part, due to the illusion of objectivity • Four avenues along which unintentional unethical behavior may be developed • Implicit prejudice • In-group favoritism • Claiming credit for others’ actions • Conflicts of interest

15. 14 The Cheating Culture • In a global study measuring different components of cheating, it was discovered that the cheating culture is a worldwide phenomenon. • Cheating occurred regardless of the level of corruption within the country. • Also found that corruption within countries will lead to more corruption by the citizens of that country • Female respondents were less likely to support cheating behavior compared with male respondents.

16. 15 The Cheating Culture • Case Examples • I’ll Take Cheating for $200 • But, I Did Graduate . . . Or Did I? • Cheating and the Job Market

17. 16 Generational Differences Pertaining to Ethics • INSERT TABLE 2-1

18. 17 Generational Differences Pertaining to Ethics

19. 18 The Role of Trust in Ethical Conduct • Trust is an important component in the ability for cooperation to be supported throughout the organization • Trust allows employees to believe he or she will be able to blow the whistle on other employees who are performing unethical acts without prejudice

20. 19 Questions for Thought • Why do you think that Bono fails to see the inconsistencies of his actions? • Do you agree with the argument that corporations are more powerful than government? • Do you think how people view what is ethical has changed over time? • Do you believe we live in a cheating culture? Explain.