Chapter 4 Conscious Capitalism – Business Ethics case study analysis

  

Read: The case study, Conscious Capitalism: What is it? Why Do We Need it? Does It Work? And analyze of the article. Please find the case study in the textbook, Chapter 4, Pg #230.
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B U S I N E S S E TH I C S
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BUSINESS E THICS
A Stakeholder and Issues
Management Approach
SIXTH EDITION
Joseph W. Weiss
Business Ethics
Copyright © 2014 by Joseph W. Weiss
All rights reserved. No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in
the case of brief quotations embodied in critical reviews and certain other noncommercial
uses permitted by copyright law. For permission requests, write to the publisher,
addressed “Attention: Permissions Coordinator,” at the address below.
Berrett-Koehler Publishers, Inc.
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San Francisco, California 94104-2916
Tel: (415) 288-0260, Fax: (415) 362-2512
www.bkconnection.com
Ordering information for print editions
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Publishers, Inc.
Sixth Edition
Paperback print edition ISBN 978-1-62656-140-3
PDF e-book ISBN 978-1-62656-141-0
IDPF e-book ISBN 978-1-62656-142-7
2014-1
Book produced by: Westchester Publishing Services
Cover design: Dan Tesser / pemastudio
Interior illustration: Westchester Publishing Services
Indexer: Robert Swanson
Brief Contents
Chapter 1
Business Ethics, the Changing Environment, and
Stakeholder Management 1
Chapter 2
Ethical Principles, Quick Tests, and Decision-Making
Guidelines 53
Chapter 3
Stakeholder and Issues Management Approaches
114
Chapter 4
The Corporation and External Stakeholders: Corporate
Governance: From the Boardroom to the Marketplace 183
Chapter 5
Corporate Responsibilities, Consumer Stakeholders,
and the Environment 269
Chapter 6
The Corporation and Internal Stakeholders: Values- Based
Moral Leadership, Culture, Strategy, and Self-Regulation 348
Chapter 7
Employee Stakeholders and the Corporation
424
Chapter 8
Business Ethics and Stakeholder Management in
the Global Environment 508
v
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Contents
Preface
xix
Acknowledgments
xxv
Case Authorship xxvii
Chapter 1
Business Ethics, the Changing Environment, and Stakeholder
Management 1
1.1 Business Ethics and the Changing Environment
Seeing the “Big Picture”
Point/CounterPoint
3
6
7
Environmental Forces and Stakeholders
Stakeholder Management Approach
10
12
1.2 What Is Business Ethics? Why Does It Matter? 14
What Is Ethics and What Are the Areas of Ethical Theory?
Unethical Business Practices and Employees
Ethics and Compliance Programs
1.3 Levels of Business Ethics
Asking Key Questions
Ethical Insight 1.1
15
16
Why Does Ethics Matter in Business?
Working for the Best Companies
14
17
18
19
20
21
1.4 Five Myths about Business Ethics
22
Myth 1: Ethics Is a Personal, Individual Affair, Not a Public
or Debatable Matter 22
Myth 2: Business and Ethics Do Not Mix
Myth 3: Ethics in Business Is Relative
24
24
Myth 4: Good Business Means Good Ethics
25
Myth 5: Information and Computing Are Amoral
1.5 Why Use Ethical Reasoning in Business?
26
26
1.6 Can Business Ethics Be Taught and Trained?
27
vii
viii
Contents
1.7 Plan of the Book
28
Chapter Summary 29
Questions
30
Exercises 31
Real-Time Ethical Dilemma
Cases
32
33
1. Bernard L. Madoff Investment Securities LLC: Wall Street
Trading Firm 33
2. Cyberbullying: Who’s to Blame and What Can Be
Done? 42
Notes
50
Chapter 2
Ethical Principles, Quick Tests, and Decision-Making
Guidelines 53
2.1 Ethical Reasoning and Moral Decision Making
Three Criteria in Ethical Reasoning
Moral Responsibility Criteria
54
55
2.2 Ethical Principles and Decision Making
Ethical Insight 2.1
54
56
58
Utilitarianism: A Consequentialist (Results-Based)
Approach 58
Universalism: A Deontological (Duty-Based) Approach 61
Rights: A Moral and Legal Entitlement-Based Approach 62
Justice: Procedures, Compensation, and Retribution
64
Virtue Ethics: Character-Based Virtues 66
The Common Good
67
Ethical Relativism: A Self-Interest Approach
Immoral, Amoral, and Moral Management
2.3 Four Social Responsibility Roles
68
71
72
2.4 Levels of Ethical Reasoning and Moral Decision Making
Personal Level
75
Organizational Level 78
Industry Level
79
Societal, International, and Global Levels
79
75
Contents
2.5 Identifying and Addressing Ethical Dilemmas
Ethical Insight 2.2
Moral Creativity
79
81
81
Ethical Dilemma Problem Solving
12 Questions to Get Started
82
82
2.6 Individual Ethical Decision-Making Styles
84
Communicating and Negotiating across Ethical Styles
2.7 Quick Ethical Tests
85
85
2.8 Concluding Comments 86
Back to Louise Simms . . .
86
Chapter Summary 87
Questions
88
Exercises 89
Real-Time Ethical Dilemma
Cases
90
91
3. Ford’s Pinto Fires: The Retrospective View of Ford’s Field
Recall Coordinator 91
4. Jerome Kerviel: Rogue Trader or Misguided Employee?
What Really Happened at the Société Générale? 98
5. Samuel Waksal at ImClone
Notes
107
111
Chapter 3
Stakeholder and Issues Management Approaches
114
3.1 Stakeholder Theory and the Stakeholder Management Approach
Defined 116
Stakeholders 118
Stakes
118
3.2 Why Use a Stakeholder Management Approach for
Business Ethics? 119
Stakeholder Theory: Criticisms and Responses
3.3 How to Execute a Stakeholder Analysis
119
121
Taking a Third-Party Objective Observer Perspective
Role of the CEO in Stakeholder Analysis
Summary of Stakeholder Analysis
130
121
121
ix
x
Contents
3.4 Negotiation Methods: Resolving Stakeholder Disputes
Stakeholder Dispute Resolution Methods
130
131
3.5 Stakeholder Management Approach: Using Ethical Principles
and Reasoning 133
3.6 Moral Responsibilities of Cross-Functional Area Professionals
134
Marketing and Sales Professionals and Managers as
Stakeholders 134
R&D, Engineering Professionals, and Managers as
Stakeholders 136
Accounting and Finance Professionals and Managers
as Stakeholders 137
Public Relations Managers as Stakeholders
137
Human Resource Managers as Stakeholders
138
Summary of Managerial Moral Responsibilities
138
3.7 Issues Management, Integrating a Stakeholder Framework
138
What Is an Issue? 139
Ethical Insight 3.1
139
Other Types of Issues
140
Stakeholder and Issues Management: “Connecting
the Dots” 141
Moral Dimensions of Stakeholder and Issues Management
Types of Issues Management Frameworks 142
3.8 Managing Crises 147
How Executives Have Responded to Crises
Crisis Management Recommendations
149
151
Chapter Summary 152
Questions
153
Exercises 154
Real-Time Ethical Dilemma
Cases
156
158
6. The BP Deepwater Horizon Explosion and Oil Spill:
Crisis and Aftermath 158
7. Mattel Toy Recalls
164
8. Genetic Discrimination 171
Notes 178
141
Contents
xi
Chapter 4
The Corporation and External Stakeholders:
Corporate Governance: From the Boardroom to
the Marketplace 183
4.1 Managing Corporate Social Responsibility in the Marketplace
Ethical Insight 4.1
185
187
Free-Market Theory and Corporate Social Responsibility
Problems with the Free-Market Theory
189
Intermediaries: Bridging the Disclosure Gap
Point/CounterPoint
188
190
191
4.2 Managing Corporate Responsibility with External Stakeholders
The Corporation as Social and Economic Stakeholder
The Social Contract: Dead or Desperately Needed?
Balance between Ethical Motivation and Compliance
Covenantal Ethic
193
193
194
195
196
The Moral Basis and Social Power of Corporations as
Stakeholders 196
Corporate Philanthropy
197
Managing Stakeholders Profitably and Responsibly:
Reputation Counts 198
Ethical Insight 4.2
198
4.3 Managing and Balancing Corporate Governance, Compliance,
and Regulation 201
Ethical Insight 4.3
202
Best Corporate Board Governance Practices
Sarbanes-Oxley Act
204
204
Pros and Cons of Implementing the Sarbanes- Oxley Act
The Federal Sentencing Guidelines for Organizations:
Compliance Incentive 208
4.4 The Role of Law and Regulatory Agencies and Corporate
Compliance 211
Why Regulation? 214
Laws and U.S. Regulatory Agencies
Laws Protecting Consumers
215
215
Laws Protecting the Environment
216
206
xii
Contents
4.5 Managing External Issues and Crises: Lessons from the Past
(Back to the Future?) 218
Chapter Summary 226
Questions
227
Exercises 228
Real-Time Ethical Dilemma
Cases
229
230
9. Conscious Capitalism: What Is It? Why Do We Need It?
Does It Work? 230
10. Goldman Sachs: Hedging a Bet and Defrauding
Investors 246
11. Google Books 252
Notes
262
Chapter 5
Corporate Responsibilities, Consumer Stakeholders,
and the Environment 269
5.1 Corporate Responsibility toward Consumer Stakeholders 271
Corporate Responsibilities and Consumer Rights
Consumer Protection Agencies and Law
5.2 Corporate Responsibility in Advertising
Ethics and Advertising
274
275
276
The Federal Trade Commission and Advertising
Pros and Cons of Advertising
Ethical Insight 5.1
272
277
277
278
Advertising and Free Speech
280
Paternalism, Manipulation, or Free Choice?
281
5.3 Controversial Issues in Advertising: The Internet, Children,
Tobacco, and Alcohol 282
Advertising and the Internet
282
The Thin Line between Deceptive Advertising, Spyware, and
Spam 283
Advertising to Children 285
Protecting Children 286
Tobacco Advertising
287
The Tobacco Controversy Continues
288
Contents
Alcohol Advertising
Ethical Insight 5.2
288
289
5.4 Managing Product Safety and Liability Responsibly
290
How Safe Is Safe? The Ethics of Product Safety
Ethical Insight 5.3
xiii
290
292
Product Liability Doctrines
294
Legal and Moral Limits of Product Liability
Product Safety and the Road Ahead
295
296
5.5 Corporate Responsibility and the Environment
297
The Most Significant Environmental Problems
Causes of Environmental Pollution
300
Enforcement of Environmental Laws
The Ethics of Ecology
297
300
301
Green Marketing, Environmental Justice, and
Industrial Ecology 302
Rights of Future Generations and Right to a
Livable Environment 303
Recommendations to Managers
304
Chapter Summary 305
Questions
306
Exercises 306
Real-Time Ethical Dilemma
Cases
308
309
12. For-Profit Universities: Opportunities, Issues,
and Promises 309
13. Fracking: Drilling for Disaster?
14. Neuromarketing
314
321
15. Wal-Mart: Challenges with Gender Discrimination
327
16. Vioxx, Dodge Ball: Did Merck Try to Avoid the Truth?
Notes
333
341
Chapter 6
The Corporation and Internal Stakeholders: Values- Based Moral
Leadership, Culture, Strategy, and Self-Regulation 348
6.1 Leadership and Stakeholder Management
Defining Purpose, Mission, and Values
350
351
xiv
Contents
Ethical Insight 6.1
357
Leadership Stakeholder Competencies 358
Example of Companies Using Stakeholder Relationship
Management 362
Ethical Insight 6.2
363
Spiritual Values, Practices, and Moral Courage in Leading
Failure of Ethical Leadership
367
Ethical Dimensions of Leadership Styles
368
How Should CEOs as Leaders Be Evaluated
and Rewarded? 371
6.2 Organizational Culture, Compliance, and Stakeholder
Management 373
Organizational Culture Defined
High-Ethics Companies
374
376
Weak Cultures 377
6.3 Leading and Managing Strategy and Structure
Organizational Structure and Ethics
379
380
Boundaryless and Networked Organizations
382
6.4 Leading Internal Stakeholder Values in
the Organization 383
6.5 Corporate Self-Regulation and Ethics Programs: Challenges
and Issues 385
Ethical Insight 6.3
386
Organizations and Leaders as Moral Agents
Ethics Codes
387
387
Codes of Conduct
388
Problems with Ethics and Conduct Codes
Ombuds and Peer-Review Programs
389
390
Is the Organization Ready to Implement a Values-Based
Stakeholder Approach? A Readiness Checklist 392
Chapter Summary 393
Questions
395
Exercises 396
Real-Time Ethical Dilemmas
Cases
402
397
364
Contents
17. Kaiser Permanente: A Crisis of Communication, Values, and
Systems Failure 402
18. Social Networking and Social Responsibility
Notes
410
418
Chapter 7
Employee Stakeholders and the Corporation
424
7.1 Employee Stakeholders in the Changing Workforce
The Aging Workforce
426
427
Generational Differences in the Workplace
427
Steps for Integrating a Multigenerational Workforce
Ethical Insight 7.1
430
432
Women in the Workforce
433
Same-Sex Marriages, Civil Unions, Domestic Partnerships,
and Workforce Rights 435
The Increasing Cultural Mix: Minorities Are Becoming
the Majority 436
Educational Weaknesses and Gaps
Point/CounterPoint
437
438
Mainstreaming Disabled Workers 440
Balancing Work and Life in Families
441
7.2 The Changing Social Contract between Corporations
and Employees 442
Good Faith Principle Exception
443
Public Policy Principle Exception
Implied Contract Exception
444
444
7.3 Employee and Employer Rights and Responsibilities
Moral Foundation of Employee Rights
445
446
The Principle of Balance in the Employee and Employer Social
Contract and the Reality of Competitive Change 446
Rights from Government Legislation
447
Employer Responsibilities to Employees
448
Employee Rights and Responsibilities to Employers
Employee Rights in the Workplace
451
Other Employee Rights and Obligations to Employers
Ethical Insight 7.2
455
450
454
xv
xvi
Contents
7.4 Discrimination, Equal Employment Opportunity, and
Affirmative Action 462
Discrimination 463
Equal Employment Opportunity and the Civil
Rights Act 463
Age and Discrimination in the Workplace
Comparable Worth and Equal Pay
Affirmative Action
464
465
465
Ethics and Affirmative Action
466
Reverse Discrimination: Arguments against
Affirmative Action 467
Ethical Insight 7.3
468
7.5 Sexual Harassment in the Workplace
What Is Sexual Harassment?
Who Is Liable?
469
469
470
Tangible Employment Action and Vicarious Liability
471
Sexual Harassment and Foreign Firms in the
United States 473
7.6 Whistle-Blowing versus Organizational Loyalty 473
When Whistle-Blowers Should Not Be Protected
Factors to Consider before Blowing the Whistle
477
478
Managerial Steps to Prevent External Whistle-Blowing 479
Chapter Summary 479
Questions
480
Exercises 481
Real-Time Ethical Dilemma
Cases
483
484
19. Preemployment Screening and Facebook: Ethical
Considerations 484
20. Women on Wall Street: Fighting for Equality in a
Male-Dominated Industry 491
Notes
499
Contents
xvii
Chapter 8
Business Ethics and Stakeholder Management in the Global
Environment 508
8.1 The Connected Global Economy and Globalization
Ethical Insight 8.1
509
510
Globalization and the Forces of Change
511
8.2 Managing and Working in a “Flat World”: Professional Competencies
and Ethical Issues 515
Shared Leadership in Teams’ Competency
Ethical Insight 8.2
519
520
Global Ethical Values and Principles
521
Know Your Own Cultural and Core Values, Your Organization’s,
and Those with Whom You Are Working 523
Cross-Cultural Business Ethical Issues Professionals May
Experience 525
8.3 Societal Issues and Globalization: The Dark Side
International Crime and Corruption
533
Economic Poverty and Child Slave Labor
The Global Digital Divide
535
535
Westernization (Americanization) of Cultures
Loss of Nation-State Sovereignty
536
537
8.4 Multinational Enterprises as Stakeholders
Power of MNEs
533
538
539
8.5 Triple Bottom Line, Social Entrepreneurship, and
Microfinancing 545
The Triple Bottom Line
545
Social Entrepreneurs and Social Enterprises
Microfinancing
546
546
8.6 MNEs: Stakeholder Values, Guidelines, and Codes for Managing
Ethically 547
Employment Practices and Policies
548
Consumer Protection 548
Environmental Protection
548
Political Payments and Involvement
549
Basic Human Rights and Fundamental Freedoms
549
xviii
Contents
8.7 Cross-Cultural Ethical Decision Making and Negotiation
Methods 550
External Corporate Monitoring Groups
550
Individual Stakeholder Methods for Ethical Decision Making
551
Four Typical Styles of International Ethical Decision Making
555
Hypernorms, Local Norms, and Creative Ethical Navigation
556
Chapter Summary 557
Questions
559
Exercises 560
Real-Time Ethical Dilemmas
Cases
562
564
21. Google in China: Still “Doing No Evil”?
564
22. Sweatshops: Not Only a Global Issue 570
23. The U.S. Industrial Food System
Notes
582
Index
589
About the Author 615
575
Preface
The sixth edition of Business Ethics: A Stakeholder and Issues Management Approach
continues the mission of providing a practical, easy-to-read, engaging and
contemporary text with detailed real-time contemporary and classic cases for
students. This text updates the previous edition, adding fourteen new cases
in addition to other new features discussed below.
We continue our quest to assist colleagues and students in understanding
the changing environment from combined stakeholder and issues management
approaches, based on the theory and practice that firms depend on stakeholders as well as stockholders for their survival and success. Acting morally while
doing business is no longer a joking or even questionable topic of discussion.
With the near shutdowns of the U.S. government, the subprime lending crisis,
global climate changes, the fading middle class in America and other countries, China’s continuing economic expansion, and India’s inroads into the
global economy, the stakes for the global economy are not trivial. Ethical
behaviors are required, not optional, for this and future generations. Learning
to think and reason ethically is the fi rst step.
Business ethics is concerned with doing what is right over what is wrong,
while acting in helpful over harmful ways, and with seeking the common
good as well as our own welfare. This text addresses this foundational way of
thinking by asking why does the modern corporation exist in the fi rst place?
What is its raison d’être? How does it treat its stakeholders? Business ethics
engages these essential questions, and it is also about the purpose, values, and
transactions of and between individuals, groups, and companies and their
global alliances. Stakeholder theory and management, in par ticu lar, are what
concern nonfi nancial as well as the fi nancial aspects of business behavior,
policies, and actions. A stakeholder view of the fi rm complements the stockholder view and includes all parties and participants who have an interest— a
stake—in the environment and society in which business operates.
Students and professionals need straightforward frameworks to thoughtfully and objectively analyze and then sort through complex issues in order
to make decisions that matter— ethically, econom ical ly, socially, legally, and
spiritually. The United States and indeed the whole world are different after
the 9/11 attacks. Terrorism is a threat to everyone, everywhere, as the Boston
bombings showed. Also threatening are the ongoing corporate scandals, the
consequences of the Arab Spring, security issues worldwide, immigration problems, the inequalities in income distribution and wealth, the decay of the middle
classes— all of these affect graduating students and those who wish to attend a
university or college but cannot afford to …
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