1 Business Ethics Workshop 2010 Summer Entrepreneurship Institute Prof. Gonzalo Freixes 2 What is Ethics? Art, like morality, consists of drawing the line somewhere. G.K. Chesterton, English essayist and poet (1874-1936) Ethics is a
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1 Business Ethics Workshop 2010 Summer Entrepreneurship Institute
Prof. Gonzalo Freixes<br>
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2 What is Ethics? "Art, like morality, consists of drawing the line somewhere." — G.K. Chesterton, English essayist and poet (1874-1936) “Ethics is a code of values which guide our choices and actions and determine the purpose and course of our lives.” — Ayn Rand, Russian-American novelist/philosopher (1905-1982)<br>
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3 Who is an Ethical Person? "A moral being is one who is capable of comparing his past and future actions or motives, and of approving or disapproving of them." — Charles Darwin,
English biologist (1809-1882)<br>
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4 Theory of Moral Development (Lawrence Kohlberg)<br>
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5 Character Counts Six Pillars of Character
Trustworthiness
Respect
Responsibility
Fairness
Caring
Citizenship - Michael Josephson, Josephson Institute of Ethics<br>
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6 Professional Ethics Impartiality & Objectivity
Openness, Full Disclosure
Due diligence, Duty of Care
Fidelity to Professional Responsibilities
Avoiding Conflicts of Interest (Actual, Potential or Apparent)<br>
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7 All the Wrong Reasons “Everybody does it.” “If we don’t, someone else will.” “The only thing that matters is the bottom line!” “We’ll wait until the lawyers tell us it’s wrong.” “It doesn’t really hurt anyone.” “I was just following orders.”<br>
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8 7 Steps to Better Decisions An Ethical Approach to Business Stop & Think
Clarify Goals
Determine Facts
Develop Options
Consider the Consequences
Choose Wisely
Monitor & Modify<br>
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9 Corporate Responsibility What is the purpose of a corporation?
Monotonic View vs. Pluralistic View
Corporate Constituency Statutes
Dolphins & Baby Formula
(the case of Star Kist & Nestle)<br>
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10 Agents & Fiduciaries Principal Agent relationship
Agent has fiduciary duties
Loyalty
Performance
To Obey
A can be liable to P or 3rd Parties<br>
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11 Fiduciary Duties - Loyalty Stealing
Secrets
Conflicts
Commingling<br>
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12 Fiduciary Duties - Performance Care & Skill
Reputation
Disclose & Notify
Account
Stay in Scope<br>
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13 Fiduciary Duties - Obey Obey your Principal, unless…
Illegal
Immoral<br>
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14 Principal’s Duties to Agent Opportunity to Work
Compensation
Indemnity
Cooperation<br>
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15 Corporate Executives Duty of Care Act as a reasonable executive would
Protected by Business Judgment Rule
Informed decision
Rational basis
No conflict
Protected by Constituency Statutes<br>
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16 Corporate Executives Duty of Loyalty Avoid Self Dealing
Avoid Common Directorships
Avoid seizing Corporate Opportunities<br>
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17 Ethics in Global Business Results of International Study
1. Personal Standards: EU
2. Interpersonal Standards (e.g. Loyalty): Japan
3. Organizational Standards: US
MNC’s deal with ethics “ad hoc” - viewed as “public relations” issue<br>
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18 SARBANES-OXLEY ACT OF 2002 PUBLIC ACCOUNTING OVERSIGHT BOARD (PCAOB)
