Business Ethics: Ethical Decision Making & Cases / Edition 10

Business Ethics: Ethical Decision Making & Cases / Edition 10

by O. C. Ferrell
Pub. Date:
Cengage Learning


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Business Ethics: Ethical Decision Making & Cases / Edition 10

More accessible and readable than ever with its vibrant new four-color design, Business Ethics: Ethical Decision Making and Cases, 8e gives you unparalleled insight into the complex environment in which managers confront ethical decision making. Extremely practical, this market-leading text uses a unique managerial framework packed with real-world illustrations to address the overall concepts, processes, and best practices associated with successful business ethics programs-helping you see exactly how ethics can be integrated into key strategic business decisions. The Eighth Edition's comprehensive updates reflect the latest developments in the economic crisis, as well as the ever-increasing academic and governmental attention being given to this area. In addition, the text's current, real-world examples, cases, exercises, simulations, and practice tests give you plenty of opportunities to put chapter concepts into action.

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Product Details

ISBN-13: 2901285423714
Publisher: Cengage Learning
Publication date: 01/01/2014
Edition description: Older Edition
Pages: 656
Product dimensions: 7.30(w) x 9.00(h) x 1.20(d)

About the Author

O. C. Ferrell is The James T. Pursell Sr. Eminent Scholar Chair in Ethics and Director of the Center for Ethical Organizational Cultures, Auburn University. He served as the Distinguished Professor of Leadership and Ethics at Belmont University and University Distinguished Professor of Marketing at the Anderson School of Management at University of New Mexico. He has also taught at University of Wyoming, Colorado State University, University of Memphis, Texas A&M University, Illinois State University and Southern Illinois University. He received his Ph.D. in marketing from Louisiana State University. He is past president of the Academic Council of the American Marketing Association and chaired the American Marketing Association Ethics Committee that developed the AMA Code of Ethics and the AMA Code of Ethics for Marketing on the Internet. He is also a former member of the Academy of Marketing Science Board of Governors and is a Society of Marketing Advances and Southwestern Marketing Association Fellow and an Academy of Marketing Science Distinguished Fellow. He was vice president of publications and is president-elect for the Academy of Marketing Science. He has received numerous awards, including the first recipient of the Marketing Education Innovation Award from the Marketing Management Association, a Lifetime Achievement Award from Macromarketing Society, an Southeast Doctoral Consortium award for service to doctoral students, the Harold Berkman Lifetime Service Award from the Academy of Marketing Science and the Cutco/Vector Distinguished Marketing Educator Award. Dr. Ferrell has co-authored 20 books and more than 100 articles and papers in journals such as Journal of Marketing Research, Journal of Marketing, Journal of Business Ethics, Journal of Business Research, Journal of the Academy of Marketing Science and Journal of Public Policy & Marketing.

John Fraedrich, Ph.D. received his degrees from Brigham Young and Texas A&M University and is the Jannetides Professor of Business Ethics at Southern Illinois University. He has written more than 50 books, articles, and proceedings, mostly related to the application of ethics and values, and has represented academia at the ambassador level in Washington D.C. He is considered one of the top global ethics researchers. Dr. Fraedrich has the distinction of being one of 50 marketing ethics professors selected to participate in the International Consortium on Ethics and Social Responsibility. On a global level, he has helped affect business ethics dialogue as the only ethics professor invited by a former U.S. Secretary of State to participate in an executive seminar on globalization and its implications and challenges for societies, corporate responsibility, and public policy. This seminar included ambassadors and economic ministers from Argentina, Australia, Bosnia/Herzegovina, Germany, the Republic of Georgia, Lesotho, Mexico, Peru, and Poland, as well as Fortune 100 firms such as Raytheon, Lockheed-Martin, and Sumitomo Corporation. Dr. Fraedrich has also taught for the Department of the Army at the General Officer level concerning "The Consequences of Power." His class included 13 Brigadier Generals as well as five-star generals. He is also author of an integrated application-oriented ethics software for academics and Fortune 500 corporations.

Linda Ferrell, Ph.D., is professor and Chair of the Marketing Department at Auburn University. She was Distinguished Professor of Leadership and Business Ethics at Belmont University. Prior to serving at Belmont University she was a professor of marketing and Creative Enterprise Scholar with the University of New Mexico's Anderson School of Management. She co-managed two-$1.25 million grants for business ethics education through the Daniels Fund Ethics Initiative at the University of New Mexico. She earned a Ph.D. from the University of Memphis and an M.B.A. and B.S. in Fashion Merchandising from Illinois State University. She has published in Journal of the Academy of Marketing Science, AMS Review, Journal of Business Ethics, Journal of Public Policy & Marketing, Journal of Business Research, as well as others. She has co- authored numerous books including BUSINESS AND SOCIETY, MANAGEMENT, and INTRODUCTION TO BUSINESS. Professionally, Dr. Ferrell served as an advertising account executive with McDonalds' and Pizza Hut's advertising agencies in Houston, Indianapolis and Philadelphia. She was recently honored as the Innovative Marketer of the Year by the Marketing Management Association. Dr. Ferrell is on the Board of Directors of Mannatech in Dallas, a NASDAQ-listed health and wellness company. She serves on the Board of the NASBA, Center for the Public Trust. She serves on the Executive Committee, Board, and Academic Advisory Committee of the Direct Selling Education Foundation. She is on the Cutco/Vector College Advisory Board. She is immediate Past President of the Academy of Marketing Science and Past President of the Marketing Management Association. Dr. Ferrell also serves as an expert witness in ethics and legal disputes.

Table of Contents

Part 1 An Overview of Business Ethics 1

Chapter 1 The Importance of Business Ethics 2

Chapter Objectives 3

Chapter Outline 3

An Ethical Dilemma 3

Business Ethics Defined 7

Why Study Business Ethics? 8

A Crisis in Business Ethics 8

The Reasons for Studying Business Ethics 10

The Development of Business Ethics 11

Before 1960: Ethics in Business 11

The 1960s: The Rise of Social Issues in Business 12

The 1970s: Business Ethics as an Emerging Field 13

The 1980s: Consolidation 13

The 1990s: Institutionalization of Business Ethics 14

The Twenty-First Century: A New Focus on Business Ethics 15

Developing an Organizational and Global Ethical Culture 16

The Benefits of Business Ethics 17

Ethics Contribute to Employee Commitment 18

Ethics Contribute to Investor Loyalty 19

Ethics Contribute to Customer Satisfaction 20

Ethics Contribute to Profits 21

Our Framework for Studying Business Ethics 22

Summary 24

Important Terms for Review 26

Resolving Business Challenges 26

Check Your EQ 37

Chapter 2 Stakeholder Relationships Social Responsibility and Corporate Governance 28

Chapter Objectives 29

Chapter Outline 29

An Ethical Dilemma 29

Stakeholders Define Ethical Issues in Business 31

Identifying Stakeholders 33

A Stakeholder Orientation 34

Social Responsibility and the Importance of a Stakeholder Orientation 37

Social Responsibility and Ethics 38

Corporate Governance Provides Formalized Responsibility to Stakeholders 41

Views of Corporate Governance 43

The Role of Boards of Directors 44

Implementing A Stakeholder Perspective 47

Step 1 Assessing the Corporate Culture 47

Step 2 IdentifyingStakeholder Groups 47

Step 3 Identifying Stakeholder Issues 48

Step 4 Assessing Organizational Commitment to Social Responsibility 48

Step 5 Identifying Resources and Determining Urgency 49

Step 6 Gaining Stakeholder Feedback 49

Summary 49

Important Terms for Review 51

Resolving Ethical Business Challenges 51

Check your EQ 53

Part 2 Ethical Issues and the Institutionalization of Business Ethics 55

Chapter 3 Emerging Business Ethics Issues 56

Chapter Objectives 57

Chapter Outline 57

An Ethical Dilemma 57

Recognizing An Ethical Issue 60

Honesty 62

Fairness 63

Integrity 63

Ethical Issues and Dilemmas in Business 64

Abusive or Intimidating Behavior 64

Lying 67

Conflicts of Interest 68

Bribery 68

Corporate Intelligence 69

Discrimination 70

Sexual Harassment 72

Environmental Issues 74

Fraud 76

Consumer Fraud 79

Financial Misconduct 80

Insider Trading 81

Intellectual Property Rights 81

Privacy Issues 82

The Challenge of Determining an Ethical Issue in Business 84

Summary 85

Important terms for review 86

Resolving Ethical Business Challenges 87

Check your EQ 89

Chapter 4 The institutionalization of Business Ethics 90

Chapter Objectives 91

Chapter Outline 91

An Ethical Dilemma 91

Managing Ethical Risk through Mandated and Voluntary Programs 93

Mandated Requirements for Legal Compliance 95

Laws Regulating Competition 97

Laws Protecting Consumers 98

Laws Promoting Equity and Safety 101

Laws Protecting the Environment 102

Gatekeepers and Stakeholders 105

Accountants 106

Risk Assessment 106

The Sarbanes-Oxley Act 107

Public Company Accounting Oversight Board 109

Conflicts of Interest: Auditor and Analyst Independence 110

Enhanced Financial Disclosures 110

Whistle-Blower Protection 110

Corporate and Criminal Fraud Accountability 111

Cost of Compliance 111

Laws That Encourage Ethical Conduct 112

Federal Sentencing Guidelines for Organizations 113

Highly Appropriate Core Practices 116

Philanthropic Contributions 117

Strategic Philanthropy 118

Summary 119

Important terms for review 120

resolving ethical business challenges 120

Check your EQ 123

Part 3 The Decision Making Process 125

Chapter 5 Ethical Decision Making and Ethical Leadership 126

Chapter Objectives 127

Chapter Outline 127

An Ethical Dilemma 127

A Framework for Ethical Decision Making in Business 128

Ethical Issue Intensity 129

Individual Factors 130

Organizational Factors 132

Opportunity 133

Business Ethics Evaluations and Intentions 135

Using the Ethical Decision Making Framework to Improve Ethical Decisions 136

The Role of Leadership in a Corporate Culture 137

Leadership Styles Influence Ethical Decisions 138

Habits of Strong Ethical Leaders 140

Ethical Leaders Have Strong Personal Character 141

Ethical Leaders Have a Passion to Do Right 141

Ethical Leaders Are Proactive 141

Ethical Leaders Consider Stakeholders' Interests 142

Ethical Leaders Are Role Models for the Organization's Values 142

Ethical Leaders Are Transparent and Actively Involved in Organizational Decision Making 143

Ethical Leaders Are Competent Managers Who Take a Holistic View of the Firm's Ethical Culture 143

Summary 144

Important Terms for Review 145

Resolving Ethical Business Challenges 145

Check your EQ 147

Chapter 6 Individual Factors: Moral Philosophies and Values 148

Chapter Objectives 149

Chapter Outline 149

An Ethical Dilemma 149

Moral Philosophy Defined 151

Moral Philosophies 152

Goodness-Instrumental and Intrinsic 154

Teleology 155

Deontology 158

Relativist Perspective 160

Virtue Ethics 161

Justice 163

Applying Moral Philosophy to Ethical Decision Making 164

Cognitive Moral Development 166

White-Collar Crime 168

The Role of Individual Factors in Business Ethics 172

Summary 172

Important terms for review 174

Resolving Ethical Business Challenges 175

Check your EQ 177

Chapter 7 Organization Factors: The Role of Ethical Culture and Relationships 178

Chapter Objectives 179

Chapter Outline 179

An Ethical Dilemma 179

Defining Corporate Culture 181

The Role of Corporate Culture in Ethical Decision Making 183

Ethical Frameworks and Evaluations of Corporate Culture 184

Ethics as a Component of Corporate Culture 186

Compliance versus Value-based Ethical Cultures 188

Differential Association 190

Whistle-Blowing 191

Leaders Influence Corporate Culture 194

Reward Power 194

Coercive Power 195

Legitimate Power 195

Expert Power 196

Referent Power 196

Motivating Ethical Behavior 197

Organizational Structure and Business Ethics 198

Group Dimensions of Corporate Structure and Culture 201

Types of Groups 201

Group Norms 204

Variation in Employee Conduct 204

Can People Control Their Own Actions Within a Corporate Culture? 206

Summary 208

Important terms for review 209

Resolving Ethical Business Challenges 210

Check year EQ 211

Part 4 Implementing Business Ethics in a Global Economy 213

Chapter 8 Developing an Effective Ethics Program 214

Chapter Objectives 215

Chapter Outline 215

An Ethical Dilemma 215

The Responsibility of the Corporation as a Moral Agent 217

The Need for Organizational Ethics Programs 219

An Effective Ethics Program 221

An Ethics Program Can Help Avoid Legal Problems 222

Values versus Compliance Programs 224

Codes of Conduct 224

Ethics Officers 227

Ethics Training and Communication 228

Systems to Monitor and Enforce Ethical Standards 230

Continuous Improvement of the Ethics Program 232

Common Mistakes in Designing and Implementing an Ethics Program 233

Summary 235

Important Terms for Review 236

resolving ethical Business Challenges 237

Check your EQ 239

Chapter 9 Implementing and Auditing Ethics Programs 240

Chapter Objectives 241

Chapter Outline 241

An Ethical Dilemma 241

The Ethics Audit 243

Benefits of Ethics Auditing 244

Ethical Crisis Management and Recovery 246

Challenges of Measuring Nonfinancial Performance 248

Risks and Requirements in Ethics Auditing 251

The Auditing Process 252

Secure Commitment of Top Managers and Board of Directors 253

Establish a Committee to Oversee the Ethics Audit 254

Define the Scope of the Audit Process 255

Review Organizational Mission, Values, Goals and Policies and Define Ethical Priorities 255

Collect and Analyze Relevant Information 257

Verify the Results 261

Report the Findings 262

The Strategic Importance of Ethics Auditing 262

Summary 265

Important Terms for Review 267

Resolving Ethical Business Challenges 267

Check your EQ 269

Chapter 10 Globalization of Ethical Decision Making 270

Chapter Objectives 271

Chapter Outline 271

An Ethical Dilemma 271

Capitalism, Economics and Business Ethics 273

Common Values Goals and Business Practices 278

Global Business Practices 281

Consumerism 284

Human Rights 286

Health Care 288

Labor 288

Sustainable Development 290

International Monetary Fund (IMF) 291

World Trade Organization (WTO) 292

The Multinational Corporation (MNC) 293

Summary 296

Important Terms for Review 297

Resolving Ethical Business Challenges 297

Check your EQ 290

Part 5 Cases 300

Case 1 Monsanto Attempts to Balance Stakeholder Interests 302

Case 2 Wal-Mart: The Future is Sustainability 314

Case 3 The American Red Cross 327

Case 4 Countrywide Financial: The Subprime Meltdown 338

Case 5 Arthur Andersen: Questionable Accounting Practices 348

Case 6 Coping with Financial and Ethical Risks at American International Group (AIG) 357

Case 7 Starbucks' Mission: Social Responsibility and Brand Strength 367

Case 8 The Fraud of the Century: The Case of Bernard Madoff 375

Case 9 NIKE: Managing Ethical Missteps-Sweatshops to Leadership in Employment Practices 386

Case 10 Banking Industry Meltdown: The Ethical and Financial Risks of Derivatives 397

Case 11 The Coca-Cola Company Struggles with Ethical Crises 407

Case 12 Enron: Questionable Accounting Leads to Collapse 419

Case 13 BP (Beyond Petroleum) Focuses on Sustainability 431

Case 14 Tyco International: Leadership Crisis 440

Case 15 Responds to Ethical Challenges 448

Case 16 PETCO Develops Successful Stakeholder Relationships 458

Case 17 Home Depot Implements Stakeholder Orientation 466

Case 18 New Belgium Brewing: Ethical and Environmental Responsibility 476

Notes 486

Index 501

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