Week 02 - Business & Ethics 商业伦理
WEEK 2: BENEFITS OF ETHICS
OBJECTIVES:
?Understand how ethics benefits business
KEY VOCABULARY:
Case Method Legal Loyalty Close Call Good Citizen Fallacy Misconduct Commitment Goodwill Ethical Climate Investors Reputation Fallacy
LECTURE SUMMARY:
?Wrap-up history lesson from previous week (if needed)
Activity – A Decline in values
?Background facts
?Why study misconduct in business?
o Importance of business to society
o Good citizen fallacy
o Legal vs. ethical
o Close calls
o Identify issues
Activity – identify good and bad companies (in your opinion) – why?
?Benefits of ethical behaviour in business
?Relationship between ethics and reputation
o Employee Commitment
o Investor loyalty
o Customer Satisfaction
Profits
QUESTIONS:
1.Why is the study of ethics useful for business?
2.What benefits does ethical behavior have for business?
3.What is the difference between something being legal and something being ethical?
4.What is a close call? Why is this idea important to business ethics?
5.Are businesses and business people becoming more or less ethical? Explain.
6.When you make a decision about ethics, who decides if you made the correct choice? Ex-
plain.
LECTURE NOTES
?Have social values and standards of business leaders been improving or declining over the past 20 years in China? Globally? Why or why not?
?(2004) 57% of Americans feel that business becoming less ethical
?(2008) 84% percent of executives felt important for business to be socially responsible
?Ethics (re)defined
o How do we know what is right or wrong –certainly judgment matters, but…
?Is a balance between profits, laws & responsibility
?How common is the problem of poor ethical performance?
?30-40% admit to seeing misconduct in their firm (in US)
Activity – identify good and bad companies (in your opinion) – why?
?Historically, numerous ethical problems have arisen in business
?Business is important to society and the world
o Business’ effect on the world is large, important and increasing
?Good citizen fallacy
o Good people often do bad things
o And, even if all of your employees are good people they will still encounter difficult or unclear situations
?Legal vs. ethical - these ideas, while related, are different
o Legal requirements can often be considered s ociety’s a minimum requirements for acceptable behaviour
o Ethical requirements are more similar to the preferred or best possible behaviour or action
?Close calls & unusual circumstances
o One of the biggest problems in ethics is that many ethical problems are complex, dif-ficult or the best choice is unclear
?Depth of knowledge
o The better prepared you are to analyse and understand problems, the more likely you will be able to effectively handle problems you encounter once you are in the
workforce
?Twenty-five years research show ethics and profits are connected – long-term
?Relationship between ethics & reputation
o Having ethical problems is not necessarily bad if the company has a good reputation for handling ethical problems
o Actions matter!
?Employee Commitment
o Importance of ethics in working for employer (79% feel it is important)
o Motivation, loyalty, sacrifices
o Trust & goodwill (greater honesty between staff, openness, efficient decision-making)
o Improved recruitment & retention(up to 6x more turnover)
?Investor loyalty
o Risk & trust matter for accounting, financial & legal reasons
o Attracting and retaining investors: ethical business generally have a higher level of return to investors over 3 years (101% vs 69%). Fewer instances of fines or penalties o Ethical investors are becoming important to the market (including some institutional investors)
?Customer Satisfaction
o Happy customer is a repeat customer – unhappy customers want revenge (or at least won’t come back)
o Buy from companies that share the same ethical standards (GAP, Nike – sweatshops) o Ethical companies are more focused on and in tune with customer interests
?Profits
o Higher return on assets for firms that emphasise ethical behaviour – long-term (as seen in top 500 firms over last 25 years)
o Better understanding of customers’ interests
o Higher staff performance
o Not just being ethical, but how you handle ethics problems
o Short term profits not correlated with ethics (we know that unethical behaviour is often very profitable in the short-t erm; after all, that’s a major reason for unethical
behaviour in business)
o Now being seen as a source of competitive advantage rather than just a compliance program