1. Some managers think ethics is a personal matter—that they are not responsible for an individual’s misdeeds.
2. Individuals do not usually act alone—they need the implied, if not the direct, cooperation of others to behave unethically in a corporation.
3. After the disastrous 1992 experience of Sears Automotive Services, Sears replaced 23,000 pages of policies and procedures with a simple booklet called "Freedoms & Obligations."

Describe management’s role in setting ethical standards.

1. People learn their standards and values from OBSERVING WHAT OTHERS DO, not what they say.
2. Corporate values are INSTILLED BY THE LEADERSHIP and example of strong top managers.
3. In companies such as IBM and Xerox a high value system has become pervasive, and employees feel part of a corporate mission that is socially beneficial.
4. However, in some corporations, such as Sears in the example above, corporate standards may work the other way.
5. There are many REASONS WHY A BUSINESS SHOULD BE MANAGED ETHICALLY:
1. To maintain a good reputation, keep existing customers, attract new customers, or avoid lawsuits.
2. To reduce turnover or avoid government intervention.
3. To please customers, employees, and society.
4. Because it is the right thing to do.

1. TOP MANAGEMENT must adopt and unconditionally support an explicit corporate code of conduct.
2. EMPLOYEES must understand that expectations for ethical behavior begin at the top and that senior management expects all employees to act accordingly.
3. MANAGERS and others must be trained to consider the ethical implications of all business decisions.
4. AN ETHICS OFFICE MUST BE SET UP— phone lines should be established so that employees who don’t want to be seen with an ethics officer can inquire about ethical matters anonymously.
5. OUTSIDERS such as suppliers, subcontractors, distributors, and customers must be told about the ethics program.
1. Often pressure to put aside ethical considerations comes from the outside.
2. It helps employees resist such pressure when everyone knows what the ethical standards are.
6. THE ETHICS CODE MUST BE ENFORCED.
1. If rules are broken, CONSEQUENCES should follow quickly.
2. This will communicate to employees that the code is serious and cannot be broken.

1. Many people get a one-sided view of the impact that companies have on society.
2. Few people see the positive impacts, such as the commitments of many companies to volunteerism, such as Xerox’s Social Service Leave program.
3. In a recent survey, two-thirds of the MBA students surveyed said that they would take a lower salary to work for a socially responsible company.
4. Social responsibility is seen differently through the eyes of various stakeholders to whom businesses are responsible.

1. Business is responsible to satisfy customers with goods and services of real value.
2. Pleasing the customer is not as easy as it seems.
3. Three out of five new businesses fail—perhaps because their owners failed to please their customers.
4. The text discusses the contrasting ways in which two car companies—Suzuki and Daimler-Benz—handled defects.
5. The payoff for socially conscious behavior could result in new business.
1. All else being equal, a socially conscious company is likely to be viewed more favorably than less socially responsible companies.
2. Customers prefer to do business with companies they trust.

1. Milton Friedman has said that corporate social responsibility means MAKING MONEY FOR STOCKHOLDERS.
2. Some believe that before you can do good you must do well; others believe that by doing good, you can also do well.
3. Many people believe that it makes financial as well as moral sense to invest in companies that are planning ahead to create a better environment.
4. Another ethical concern is INSIDER TRADING.
1. INSIDER TRADING involves insiders using private company information to further their own fortunes or those of their family and friends.
2. The text uses the example of an IBM secretary who benefitted from advance knowledge of the Lotus merger.
3. Companies can misuse information for their own benefit at investors’ expense as well, as in the case of McKesson HBO & Co.

1. Responsibilities of business:
1. Businesses have a responsibility to CREATE JOBS.
2. Business has an obligation to see to it that HARD WORK AND TALENT ARE FAIRLY REWARDED.
3. Business also has a responsibility to MAINTAIN JOB SECURITY or, if layoffs are impossible to avoid, give employees warning.
2. Studies have shown that the factor that most influences a company’s effectiveness is human resource management.
3. If a company treats employees with respect, they will respect the company.
4. When employees feel they’ve been treated unfairly, they strike back.

1. A major responsibility of business to society is to CREATE NEW WEALTH.
1. Most nonprofits own shares of publicly-held companies.
2. As those share prices increase, funds are available to benefit society.
2. Businesses are responsible for PROMOTING SOCIAL JUSTICE.
1. For its own well-being, business depends on its employees being active in civil society such as politics, law, churches, arts and charities.
2. Many companies use group volunteer projects to encourage team building while improving their communities.
3. Business is responsible for CONTRIBUTING TO MAKING ITS OWN ENVIRONMENT A BETTER PLACE.
4. Not all environmental efforts are financially successful, as was the case for StarKist’s "tuna-safe" initiative.
5. Many corporations are publishing reports that document their net social contribution.

1. How can you know how well organizations are making social responsiveness an integral part of top management’s decision making?
2. A SOCIAL AUDIT is a systematic evaluation of an organization’s progress toward implementing programs that are socially responsible and responsive.
3. PROBLEMS related to social auditing:
1. It is DIFFICULT TO DEFINE what "socially responsible and responsive."
2. Business activities and their effects on society are DIFFICULT TO MEASURE.
4. Some suggest that positive actions be added up and NEGATIVE EFFECTS SUBTRACTED to get a NET SOCIAL CONTRIBUTION.
5. FOUR GROUPS serve as "watchdogs" regarding how well companies enforce their ethical and social responsibility policies:
1. SOCIALLY CONSCIOUS INVESTORS, who insist that companies extent the company’s own high standards to all their suppliers.
2. ENVIRONMENTALISTS, who apply pressure by naming names of companies that don’t abide by the environmentalists’ standards.
3. UNION OFFICIALS, who hunt down violations and force companies to comply to avoid negative publicity.
4. CUSTOMERS, who take their business elsewhere if a company demonstrates socially irresponsible practices.

1. The text gives the examples of recent "influence peddling" in Japan, South Korea, and China.
2. What is new is that LEADERS ARE BEING HELD TO NEW, HIGHER STANDARDS.

1. They make sure their suppliers do not violate U.S. human rights and environmental standards.
2. In contrast there are companies such Nike that have often been criticized for the low pay and long hours of factory workers in Asia.
3. Should international suppliers be required to adhere to American ethical standards? What about countries where child labor is an accepted part of society? What about multi-national corporations?
1. None of these questions are easy to answer.
2. They show how complex social responsibility issues are in international markets.
3. It isn’t enough for a company to be right when it comes to ethics and social responsibility—it also has to convince its customers it’s right.
4. International organizations, such as the Organization of American States, have adopted CONVENTIONS AGAINST CORRUPTION.