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The Importance of Business Ethics

Chapter 1

The Importance of Business Ethics

· Chapter Introduction

· 1-1 Business Ethics Defined

· 1-2 Why Study Business Ethics?

· 1-2a A Crisis in Business Ethics

· 1-2b Specific Issues

· 1-2c The Reasons for Studying Business Ethics

· 1-3 The Development of Business Ethics

· 1-3a Before 1960: Ethics in Business

· 1-3b The 1960s: The Rise of Social Issues in Business

· 1-3c The 1970s: Business Ethics as an Emerging Field

· 1-3d The 1980s: Business Ethics Reaches Maturity

· 1-3e The 1990s: Institutionalization of Business Ethics

· 1-3f The Twenty-First Century of Business Ethics

· 1-4 Developing Organizational and Global Ethical Cultures

· 1-5 The Benefits of Business Ethics

· 1-5a Ethics Contributes to Employee Commitment

· 1-5b Ethics Contributes to Investor Loyalty

· 1-5c Ethics Contributes to Customer Satisfaction

· 1-5d Ethics Contributes to Profits

· 1-6 Our Framework for Studying Business Ethics

· 1-7 Chapter Review

· 1-7a Summary

· 1-7b Important Terms for Review

· 1-7c Resolving Ethical Business Challenges

· 1-7d Check Your EQ

 

Chapter Introduction

The Importance of Business Ethics

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Chapter Objectives

· Explore conceptualizations of business ethics from an organizational perspective

· Examine the historical foundations and evolution of business ethics

· Provide evidence that ethical value systems support business performance

· Gain insight into the extent of ethical misconduct in the workplace and the pressures for unethical behavior

An Ethical Dilemma

Sophie just completed a sales training course with one of the firm’s most productive sales representatives, Emma. At the end of the first week, Sophie and Emma sat in a motel room filling out their expense vouchers for the week. Sophie casually remarked to Emma that the training course stressed the importance of accurately filling out expense vouchers.

Emma replied, “I’m glad you brought that up, Sophie. The company expense vouchers don’t list the categories we need. I tried many times to explain to the accountants that there are more expenses than they have boxes for. The biggest complaint we, the salespeople, have is that there is no place to enter expenses for tipping waitresses, waiters, cab drivers, bell hops, airport baggage handlers, and the like. Even the government assumes tipping and taxes them as if they were getting an 18 percent tip. That’s how service people actually survive on the lousy pay they get from their bosses. I tell you, it is embarrassing not to tip. One time I was at the airport and the skycap took my bags from me, so I didn’t have the hassle of checking them. He did all the paperwork and after he was through, I said thank you. He looked at me in disbelief because he knew I was in sales. It took me a week to get that bag back.”

“After that incident I went to the accounting department, and every week for five months I told them they needed to change the forms. I showed them the approximate amount the average salesperson pays in tips per week. Some of them were shocked at the amount. But would they change it or at least talk to the supervisor? No! So I went directly to him, and do you know what he said to me?”

“No, what?” asked Sophie.

“He told me that this is the way it has always been done, and it would stay that way. He also told me if I tried to go above him on this, I’d be looking for another job. I can’t chance that now, especially in this economy. Then he had the nerve to tell me that salespeople are paid too much, and that’s why we could eat the added expenses. We’re the only ones who actually generate revenue and he tells me that I’m overpaid!”

“So what did you do?” inquired Sophie.

“I do what my supervisor told me years ago. I pad my account each week. For me, I tip 20 percent, so I make sure I write down when I tip and add that to my overall expense report.”

“But that goes against company policy. Besides, how do you do it?” asked Sophie.

“It’s easy. Every cab driver will give you blank receipts for cab fares. I usually put the added expenses there. We all do it,” said Emma. “I don’t use Uber or Lyft even though it is cheaper on business trips because there is an electronic record of the fare. As long as everyone cooperates, the vice president of sales doesn’t question the expense vouchers. I imagine she even did it when she was a lowly salesperson.”

“What if people don’t go along with this arrangement?” asked Sophie.