CHEAPTER 1

The Defense Industry Initiative on Business Ethics and Conduct (DII)

It was developed to guide corporate support for ethical conduct in the 1980s.

It includes six principles:

-the DII supports codes of conduct and their widespread

-member companies are expected to provide ethics training for their employees as well as continues
support between training period.

-defense contractors must create an open atmosphere in which employees to perform extensive internal
audits and develop effective internal reporting and voluntary disclosure plans .

- companies need to perform extensive internal audits and develop effective internal reporting and
voluntary disclosure plans.

-the DII insists that member companies preserve the integrity of the defense industry.

-member companies must adopt a philosophy of public accountability.

Federal Sentencing Guidelines for Organization

The guidelines, which were based on the six principles of the DII, broke new ground by codifying into
law incentives to reward organizations for taking action to prevent misconduct, such as developing
effective internal legal and ethical compliance programs.

Misconduct in ethics refers to behavior that violates ethical principles or standards. Ethics is the study of
what is morally right, and wrong, and ethical misconduct occurs when individuals or organizations
engage in actions that are considered unethical. This can involve actions that are dishonest, unfair, or
violate accepted codes of conduct.

Misconduct: Suistimal

THE STUDY OF BUSINESS ETHICS

The study of business ethics encompasses a range of topics and considerations, including individual
behavior, organizational practices, and the relationship between business and society.

• -Ethical decision making

• -Corporate Social Responsibilities
• -Stakeholder Management
• -Corporate Governance
• -Ethical Leadership
• -Regulatory Compliance
• -Ethics in Marketing and advertising
• -Global Business Ethics
Society judges it to be unethical or wrong, new legislation usually follows. Whether correct or not, that
judgment directly affects a company’s ability to achieve its business goals.

Many people with limited business experience suddenly find themselves making decisions about
product quality, advertising, pricing, sales techniques, hiring practices, and pollution control.

The study of business ethics in North America has evolved through five distinct stages

(1) before 1960

(2) the 1960s

(3) the 1970s

(4) the 1980s,

(5) the 1990s and continues to evolve in the twenty-first century

♦ Insider trading is considered an ethical issue because it involves the abuse of confidential
information for personal gain, resulting in an unfair advantage in the financial markets.

-İçeriden bilgi sahibi kişilerin hisse senetleri veya diğer finansal araçları alıp satmalarına "insider trading"
denir

♦ Accounting fraud is a serious ethical issue that involves the deliberate manipulation or
misrepresentation of financial statements with the intention to deceive stakeholders about a
company's financial health.

- Muhasebe dolandırıcılığı, finansal tabloların kasıtlı olarak manipüle edilmesi veya çarpıtılması anlamına
gelen ciddi bir etik meseledir.

♦ Deceptive advertising refers to the use of misleading or false statements, graphics, or other
means to promote a product or service. It involves presenting information in a way that may
lead consumers to have a false or inaccurate perception of the product or service being
advertised.

- Hileli reklam, bir ürün veya hizmeti tanıtmak için yanıltıcı veya yanlış ifadeler, grafikler veya diğer
araçların kullanılması anlamına gelir. Bu, tüketicilerin reklamı yapılan ürün veya hizmet hakkında yanlış
veya yanıltıcı bir algıya sahip olmalarına yol açabilecek şekilde bilgi sunmayı içerir.

♦ Employee theft refers to the act of employees taking or misappropriating company property,
assets, or funds for their personal gain without proper authorization.
- Çalışan hırsızlık, çalışanların şirket malını, varlığını veya fonlarını izinsiz bir şekilde kişisel kazançları için
kullanmalarını ifade eder.

Business ethics began to take shape as a distinct area of study in the 1970s. Business professors
started to delve into the study of business ethics, teaching and writing about the ethical dimensions of
business decision-making. One key concept is “Coporate Social Responsibility”

Corporate Social responsibility refers to an organization’s acknowledgment of its obligations to not only
shareholders but also to a broader range of stakeholders, including employees, customers,
communities, and the environment.

The fundamental idea: business should strive to maximize their positive impact on society while
minimizing any negative consequences of their operations.

In textbook said: an organization’s obligation to maximize its positive impact on stakeholders and
minimize its negative impact.

The Foreign Corrupt Practices Act (FCPA) is a United States federal law that addresses the issue of
bribery and corruption involving officials and business. In 1977.

- yabancı yetkililer ve işletmelerle ilgili rüşvet ve yolsuzluk sorunlarına karşı önlem

The Sarbanes-Oxley Act, often abbreviated as SOX, is a United States federal law enacted in 2002 in
response to a series of corporate scandals that shook public confidence in financial markets.

The Sarbanes-Oxley Act was designed

-to enhance corporate governance,

-financial transparency

- the accuracy of financial reporting to protect investors and the public from accounting fraud

- corporate misconduct.

→ Globally, businesses are working closely together to establish standards of acceptable

behavior. We are already seeing collaborative efforts by a range of organizations to establish
goals and mandate minimum levels of ethical behavior, from
• the European Union,
• the North American Free Trade Agreement (NAFTA),
• the Southern Common Market (MERCOSUR),
• the World Trade Organization (WTO)
• the Council on Economic Priorities’ Social Accountability 8000 (SA 8000),
• the Ethical Trading Initiative,
• the U.S. Apparel Industry Partnership,
• ISO 19600
 → Living Wage, in the 1920s, the progressive movement attempted to provide citizens with a
living wage. It is defined as income sufficient for education, recreation, health, and retirement.

→ The 1980s ushered in the Reagan–Bush era, with the accompanying belief that self-regulation,
rather than regulation by government, was in the public’s interest. Many tariffs and trade
barriers were lifted and businesses merged and divested within an increasingly global
atmosphere. Thus, while business schools were offering courses in business ethics, the rules of
business were changing at a phenomenal rate because of less regulation.

Benefits of being more ethical and socially responsible in business:

• increased efficiency in daily operations,

• greater employee commitment,
• increased investor willingness to entrust funds,
• improved customer trust and satisfaction,
• better financial performance

CHEAPTER 2
→ Stakeholders provide resources critical to a firm’s long-term success. These resources may be
tangible and intangible.

In a spirit of reciprocity, stakeholders are anticipated to be fair, loyal, and treat the corporation in a
responsible way.

Stakeholders’ abilities to withdraw these needed resources gives them power over businesses.

Stakeholders have a claim in some aspect of a firm’s products, operations, markets, industry and
outcomes.

• Stakeholders play a major role in fostering responsible decision making. They apply their values
and standards to diverse issues including working conditions, consumer rights, environmental
conversation, product safety and proper information disclosure that may not directly affect
individual stakeholders' own welfare.
• To be assessed the level of social responsibility an organization bears by scrutinizing its effects
on the issues of concern to its primary and secondary stakeholders.

Two types of Stakeholders.

- Primary stakeholders: They are those whose continued association and resources are absolutely
necessary for a firm’s survival. They are employees, customers, and shareholders/investors,
suppliers, communities.
- Secondary Stakeholders: They do not typically engage directly in transactions with a company
and are therefore not essential to its survival. They are the media, trade associations and special
interest groups, competitors,

Stakeholder interaction model, there are reciprocal relationships between the firm and a host of stakeholders.
Reciprocal = karşılıklı

• The fundamental input of investors, employees, and suppliers, this approach recognizes other stakeholders and
explicitly acknowledges that dialogue exists between a firm’s internal and external environment.
• The Stakeholder Interaction Model is a framework or concept used by organizations to understand, analyze, and
manage their relationships with various stakeholders. This model helps in identifying, prioritizing, and engaging
stakeholders based on their interests, influence, and impact on the organization.

A Stakeholders Orientation: The degree to which a firm understands and addresses stakeholder
demand can be referred to as a “stakeholder orientation”.

A stakeholders orientation involves “activities and processes within a system of social institutions that
facilitate and maintain value through exchange relationship with multiple stakeholders.

This orientation comprises three sets of activities:

- The organization-wide generation of data about stakeholder groups and assessment of the
firm’s effects on these groups,
- The distribution of this information throughout the firm
- The responsiveness of the organization to this information

1.Generating data about stakeholders begins with identifying the stakeholders relevant to the firm.

• Relevant stakeholder groups should be analyzed on the basis of the power each enjoys, as well
as by the ties between them and the company.

2. The firm should identify the concerns about the business that are relevant to each stakeholder group.

• This information is derived from formal research, including surveys, focus group, Internet
research and press reviews.

3.Companies should evaluate their impact on the issue of importance to the various stakeholders they
identify.

• Companies should use these activities to communicate the company’s code of conduct to
employees.
• A stakeholder orientation is not complete without including activities that address stakeholder
issues.

When unethical acts are discovered in organizations, in most instances cooperations or complicity
facilitate the acceptance and perpetuation of unethical conduct.

To improve corporate accountability and transparency suggest that stakeholders, including regulatory
agencies, local communities, attorneys, and public accounting firms, play a major role in fostering
responsible decision making.

Stakeholders provide resources critical to a firm’s long-term success. These may be tangible and
intangible.
as an example

• Shareholders: Supply capital; suppliers offer material resources or intangible knowledge

• Employees and managers gran expertise, leadership and commitment
• Customers generate revenue and provide loyalty with word-of-mouth promotion
• Local communities provide infrastructure
• The media transmits positive corporate images.
•

Milton Friedman:

The basic mission of business is to produce goods and services at a profit, and in doing this, business is
making maximum contribution to society and in fact being socially responsible.

"Friedman Doctrine," revolves around the notion that the primary responsibility of a corporation is to
maximize profits for its shareholders.

Adam Smith:

-” Invisible hand”

- Smith's idea of the invisible hand has been foundational in advocating for free-market capitalism
and has influenced economic thought for centuries.

- the unseen forces of market competition, self-interest, and individual decision-making that
collectively shape the functioning of markets.
-to explain that the “common good is associated with six psychological motives and that everyone
must produce for the common good, with values such as Propriety, Prudence, Reason,
Sentiment and promoting the happiness of mankind. (uygunluk, sağduyu, duygusallık insanlığın
mutluluğunu teşvik etmek)

Theodore Levitt:

Profits are required for business as eating is required for living, profit is not the primary pupose of
business.

Norman Bowie:

A business also cares about the well being of stakeholders, it earns trust and cooperation that ultimately
reduce costs and increase productivity.

According to Carroll, steps of social responsibility

-Economic: Maximizing stakeholders wealth and value

-Legal: abiding by all laws and government regulations

-Ethical: Following standards of acceptable behavior as judged by stakeholders.

-Philanthropic: “giving back” to society.

The International Organization for Standardization has developed

ISO 19600 (ethical compliance systems),

ISO 14000 (sustainability), and

ISO 26000 (social responsibility),

ISO 1400

-Companies with an effective environmental management system certified by ISO 1400

-An international environmental management standard.

ISO 26000

- It provides guidance on social responsibility. It aims to assist organizations—regardless of their size,

type, or location—in understanding and implementing socially responsible practices.

→ Corporate Citizenship is used to communicate the extent business strategically meets the
economic, legal, ethical and philanthropic responsibilities placed on them by their stakeholders.

The stakeholder model places the board of directors in the position of balancing the interests and
conflicts of various constituencies.

Corporate governance involves the development of formal systems of accountability, oversight, and
control.

• Accountability refers to how closely workplace decisions are aligned with a firm’s stated
strategic direction and its compliance with ethical and legal considerations.
• Oversight provides a system of checks and balances that limit employees’ and managers’
opportunities to deviate from policies and strategies intended to prevent unethical and illegal
activities.
• Control is the process of auditing and improving organizational decisions and actions.

One of the biggest issues corporate boards of directors face is executive compensation.

- most boards spend more time- deciding how much to compensate top-executives than they do
ensuring the integrity of the company’s financial reporting systems.
- Compensation: tazminat

• J.P. Morgan implemented a policy limiting the pay of top managers in the businesses he
owned to no more than 20 times the pay of any other employee. The ethics issue relates to
executives taking advantage of their positions of power and influencing the board of directors to
provide excessive compensation
Implementing a Stakeholder Perspective

• Step 1: Assessing the Corporate Culture

• Step 2: Identifying Stakeholder Groups
• Step 3: Identifying Stakeholder Issues
• Step 4: Assessing Organizational Commitment to Stakeholders and Social Responsibility
• Step 5: Identifying Resources and Determining Urgency
• Step 6: Gaining Stakeholder Feedback

Identifying Resources and Determining Urgency

The prioritization of stakeholders and issues and the assessment of past performance lead to the
allocation of resources.

Two main criteria can be considered:

• the level of financial and organizational investments required by different actions

• the urgency when prioritizing social responsibility challenge.

CORPORATE GOVERNENCE: kurumsal Yönetim

The Board of directors: Yönetim kurulları

Two major approaches to corporate governance:

→ The shareholder model: It is founded in classic economic precepts, including the goal of
maximizing wealth for investors and owners.
→ The stakeholder model: It adopts a broader view of the purpose of business. Although a company
certainly has a responsibility for economic success and viability to satisfy its stockholders.

CHEAPTER 3
→ An ethical issue is a problem, situation, or opportunity that requires an individual, group, or
organization to choose among several actions that must be evaluated as right or wrong, ethical
or unethical.

The major concerns are ethical issues in business,

• stakeholder relationships,
• social responsibility and corporate governance,
• emerging business ethics issues,
• the institutionalization of business ethics, understanding the ethical decision-making process,
• moral philosophies and cognitive moral development,
• corporate culture,
• organizational relationships and conflicts,
 • developing an effective ethics program,
• implementing and auditing the ethics program,
• global business ethics
• ethical leadership,
• Sustainability

Issues related to honesty also arise because business is sometimes regarded as a game governed by its
own rules rather than those of society as a whole.

- Honesty refers to truthfulness or trustworthiness.

A conflict of interest exists when an individual must choose whether to advance his or her own interests,
those of the organization, or those of some other group.

The three major bond rating agencies

- Moody’s,
- Standard & Poor’s,
- and Fitch Ratings

Bribery is the practice of offering something (often money) in order to gain an illicit advantage from
someone in authority. Gifts, entertainment, and travel can also be used as bribes.

Intellectual property rights involve the legal protection of intellectual property such as music, books, and
movies.

Fraud is any purposeful communication that deceives, manipulates, or conceals facts in order to create a
false impression.

There are several types of fraud: accounting, marketing, and consumer

Consumer fraud involves intentional deception to derive an unfair economic advantage by an individual
or group over an organization.

Fraudulent activities include shoplifting, collusion or duplicity, and guile.

Duplicity may involve a consumer staging an accident in a grocery store and then seeking damages against
the store for its lack of attention to safety.

Duplicity: ikiyüzlülük

Collusion typically involves an employee who assists the consumer in fraud.

Collusion: gizli anlaşma

Fraud: sahtekarlık

Puffery can be defined as exaggerated advertising, blustering, and boasting upon which no reasonable
buyer would rely upon and is not actionable under the Lanham Act.
Puffery: şişirme

The fastest-growing area of fraudulent activity is in direct marketing, which uses the telephone and
digital media to communicate information to customers

An activity approved by most members of an organization, if it is also customary in the industry, is

probably ethical. An issue, activity, or situation that can withstand open discussion between many
stakeholders, both inside and outside the organization, probably does not pose ethical problems.

People make decisions and then recognize that a particular issue or situation has an ethical component;
therefore, a first step toward understanding business ethics is to develop ethical issue awareness.

The first step in ethical decision making is to recognize that an ethical issue exists, requiring an individual
or work group to choose among several actions that various stakeholders will ultimately evaluate as right
or wrong.

There are two dimensions to consumer privacy:

• consumer awareness of information collection and

• a growing lack of consumer control over how companies use the personal information they collect

Accountants must abide by a strict code of ethics that defines their responsibilities to their clients and to
the public interest.

To help build workforces that reflect their customer base, many companies have initiated affirmative
action programs, which involve efforts to recruit, hire, train, and promote qualified individuals from
groups that have traditionally been discriminated against on the basis of race, gender, or other
characteristics.

Bullying is associated with a hostile workplace where someone (or a group) considered a target is
threatened, harassed, belittled, verbally abused, or overly criticized.

- Bullying also occurs between companies that are in intense competition

Bullying: zorbalık hostile: düşmanca

The KYOTO PROTOCOL: One attempt at addressing global warming

This international treaty was meant to curb global greenhouse gas emissions by having countries
voluntarily reduce national output.

Remote Hacking: involves attempting to remotely penetrate a system across the Internet. “Obtaining
trade secrets”

Another form of discrimination involves discriminating against individuals on the basis of age. The Age
Discrimination in Employment Act specifically outlaws hiring practices that discriminate against people
40 years of age or older, as well as those that require employees to retire before the age of 70.
Noise can be defined as technical explanations the communicator knows the receiver does not
understand.

- iletişimcinin bildiği, alıcının anlamadığı teknik açıklamalar olarak tanımlanabilir.

The point at which a lie becomes unethical in business is based on the context of the statement and its
intent to distort the truth.

Shoulder surfing: Someone simply looks over an employee’s shoulder while he or she types a password.

CHEAPTER 4
Laws have been passed to prevent the establishment of monopolies, inequitable pricing practices, and
other practices that reduce or restrict competition among businesses.

These laws are sometimes called procompetitive legislation because they were enacted to encourage
competition and prevent activities that restrain trade. The Sherman Antitrust Act of 1890,

procompetitive legislation: rekabeti artırıcı mevzuat

the McCarran–Ferguson Act of 1944, Congress exempted the insurance industry from antitrust laws.

Antitrust: tekelcilik karşıtı

The Jungle describes, among other things, the atrocities and unsanitary conditions of the meatpacking
industry in turn-of-the-century Chicago.

The outraged public response to this book and other exposes of the industry resulted in the passage of
the Pure Food and Drug Act 1906.

Laws Regulating Competition

The issue surrounding the impact of competition on businesses’ social responsibility arises from the rivalry
among businesses for customers and profits.

Rivalry: rakabet

- Size
- Intense competition: It leads companies to resort to corporate espionage.

Corporate espionage is the act of illegally taking information from a corporation through computer
hacking, theft, intimidation, sorting through trash, and impersonation of organizational members.
Corporate espionage: kurumsal casusluk

Title VII of the Civil Rights Act

- Laws promoting equity and safety in workplace.

- it is the most important to business
- Title VII specifically prohibits discrimination in employment on the basis of race, sex, religion,
color, or national origin.

Laws are categorized as either civil and criminal:

- Civil Law defines the rights and duties of individuals and organizations.
- The primary method of resolving conflicts and serious business ethics disputes is through civil
lawsuits.
- Criminal Law not only prohibits specific actions but also imposes fines or imprisonment as
punishment for breaking the law.
- Criminal and civil laws are derived from four sources:
→ The U.S. Constitution (constitutional law),
→ Precedents established by judges (common law),
→ Federal and state laws or statutes (statutory law),
→ Federal and state administrative agencies (administrative law).
- The primary difference between criminal and civil law is the state or nation enforces criminal
laws, whereas individuals (generally, in court) enforce civil laws.

Strategic philanthropy

• It is more holistic, as it ties the company’s philanthropic giving to its overall strategy and
objectives.

Philanthropic: hayırsever

• Strategic philanthropy is the synergistic and mutually beneficial use of an organization’s core
competencies and resources to deal with key stakeholders so as to bring about organizational and
societal benefits.
• It uses, as all do, the profit motive but argues that philanthropy must have a long-term positive
impact.
• Strategic philanthropy can help organizations stand out from similar firms to give it a competitive
advantage

The primary objective of U.S. antitrust laws is to distinguish competitive strategies that enhance
consumer welfare from those that reduce it.

Voluntary Responsibilities/ philanthropy

- Business that address their voluntary responsibilities provide four major benefits to society;
1. Improve quality of life and make communities the places
 2. Reduce government involvement by providing assistance to stakeholders
3. Develop employee leadership skills.
4. Create an ethical culture and values
- The most common way businesses demonstrate their voluntary responsibilities is through
donations to local and national charitable organizations.

The U.S. Sentencing Commission

- Congress passed the FSGO in 1991 to create an incentive for organizations to develop and
implement programs designed to foster ethical and legal compliance. These guidelines, developed
by the U.S. Sentencing Commission.
- The commission delineated seven steps companies must implement to demonstrate due
diligence:
1. The firm develop and disseminate a code of conduct
2. Oversight by high-ranking personnel
3. To engage in misconduct put in a position authority.
4. A communications system for disseminating standards and procedures.
5. Monitoring and auditing systems designed to detect miscount.
6. Appropriate and fair disciplinary
7. Steps to prevent similar offenses in the future.

Public Company Accounting Oversight Board (PCAOB).

- One of the results of Sarbanes-Oxley was the establishment of the PCAOB.

- This nonprofit organization oversees the audits of public companies.
- The intent of the PCAOB is to protect investors and ensure that the public is receiving accurate
audit reports.

Environmental Regulations – Laws Protecting the Environment

- Clean Air Act

- National Environmental Policy Act
- Coastal Zone Management Act
- Federal Water Pollution Control Act
- Noise Pollution Control Act
- Federal Insecticide, Fungicide and Rodenticide Act
- Safe Drinking Water Act
- Energy Policy and conservation Act
- Toxic Substances Control Act
- Resources Conservation and Recovery Act
- Comprehensive Environmental Response, Compensation, and Liability Act, 1980
- Emergency Planning and Community Right-to-Know Act
- Oil Pollution Act
- Pollution Prevention Act
- Food Quality Protection Act
- Energy Policy Act
- Energy Independence and Security Act
 - Frank R. Lautenberg Chemical Safety for the 21st Century Act

The Public Company Accounting Oversight Board

- It monitors accounting firms auditing public corporations and establishes standards and rules for
auditors in accounting firms
- The law attempts to eliminate conflicts of interest by prohibiting accounting firms from providing
both auditing and consulting services to the same client companies without special permission
from the client firm’s audit committee

The focus of core or best practices is on integrity in developing structurally sound organizational practices
and integrity for financial and nonfinancial performance measures, rather than on an individual’s moral.

The majority of executives and board members want to measure nonfinancial performance, but no
standards currently exist

GATEKEEPER

- It is an important part of core practices.,

- Gatekeepers include accountants, lawyers, financial rating agencies, and financial reporting
services.

CHEAPTER 5
The first step in ethical decision making is to recognize that an issue exists, requiring an individual or
work group to choose among several actions that various stakeholders will ultimately evaluate as right
or wrong.

Ethical issue intensity can be defined as the relevance or importance of an event or decision in the eyes
of the individual, work group, and/or organization.

Ethical issue intensity reflects the ethical sensitivity of the individual and/or work group facing the ethical
decision-making process.

Research suggests that individuals are subject to six “spheres of influence” when confronted with ethical
choices.

- The workplace
- Family
- Religion
- Legal system
- Community
- Profession
Six leaderhips styles that are based on emotional intelligence - Daniel Goleman.

- The coercive leader demands instantaneous obedience and focuses on achievement, initiative,
and self-control.
- The authoritative leader inspires employees to follow a vision, facilitates change, and creates a
strongly positive performance climate.
- The affiliative leader values people, their emotions, and their needs and relies on friendship and
trust to promote flexibility, innovation, and risk taking.
- The democratic leader relies on participation and teamwork to reach collaborative decisions.
Communication and creates a positive climate
- The pacesetting leader has high standards that leader sets. It can be a negative climate.
- The coaching leader builds a positive climate by developing skills to foster long-terms success,
delegating responsibility, and skillfully issuing challenging assignments.

Another way to consider leadership styles is to classify them as transactional or transformational

- Transactional leaders attempt to create employee satisfaction through negotiating, or

“bartering,” for desired behaviors or levels of performance.
- Transformational leaders strive to raise employees’ level of commitment and foster trust and
motivation.
- transformational ethical leadership is best suited for organizations that have higher levels of
ethical commitment among employees and strong stakeholder support for an ethical culture
- Both transformational and transactional leaders can positively influence the corporate culture

According to textbook, women are generally more ethical than men. “More ethical” we mean women
seem to be more sensitive to ethical scenarios and less tolerant of unethical actions.

The absence of punishment essentially provides an opportunity for unethical behavior because it allows
individuals to engage in such behavior without fear of consequences.

Obedience to authority is another aspect of the influence significant others can exercise and helps
explain why many employees resolve business ethics issues by simply following the directives of a
superior.

For some employees, business ethical issues may not reach critical awareness if managers fail to identify
and educate them about specific problem areas.

Pay raises, bonuses, and public recognition act as carrots, or positive reinforcements,

Demotions (rütbe indirgemeleri), firings (işten çıkarmalar), reprimands(kınamalar), and pay penalties
(ceza ödemesi) act as sticks, or negative reinforcements.

The key components of the ethical decision-making framework include

- ethical awareness,
- ethical issue intensity,
- individual factors,
- organizational factors,
 - and opportunity.

Numerous studies conducted over the years confirm that significant others within an organization may
have more impact on a worker’s decisions on a daily basis than any other factor.

Opportunity

Opportunity describes the conditions in an organization that limit or permit ethical or unethical behavior.
Opportunity results from conditions that either provide rewards whether internal or external, or fail to
erect barriers against unethical behavior.

- Internal rewards include feelings of goodness and personal worth generated by performing
altruistic or ethical acts.
- External rewards refer to what an individual expects to receive from others in the social
environment in terms of overt social approval, status and esteem.

Immediate job context:

• they work, whom they work with, and the nature of the work.
• Opportunity relates to individuals
• It includes the motivational “carrots and sticks” superiors use to influence employee behavior.

When intentions and behavior are inconsistent with their ethical judgment, people may feel guilty.

Intentions: niyetler guilty: suçlu inconsistent: tutarsız

Guilt or uneasiness is the first sign an unethical decision may have occurred.

LOCUS OF CONTROL

It relates to individual differences in relation to a generalized belief about how one is affected by internal
versus external events or reinforcements.

- Those who believe in external control (externals) see themselves as going with the flow because
that is all they can do. They believe the events in their lives are due to uncontrollable forces. They
consider the results or outcomes depend on luck, chance, and powerful people in their company.
- - to control their lives by their own actions and efforts is low
- those who believe in internal control (internals) believe they control the events in their lives by
their own effort and skill, viewing themselves as masters of their destinies and trusting in their
capacity to influence their environment.
- internals were positively correlated whereas externals were negatively correlated with ethical
decisions.2

SIGNIFICANT FACTORS IN ETHICAL DECISION-MAKING PROCESS

Research regarding individual factors that affect ethical awareness, judgment, intent, and behavior
include

- gender,
- education,
- work experience,
 - nationality, how nationality affects ethics is somewhat hard to interpret.
- age, employees with more experience have greater knowledge to deal with complex industry-
specific ethical issue
- locus of control.
-

who begin the value shift, the following are the usual justifications that reduce and finally eliminate guilt:

1. I need the paycheck and can’t afford to quit right now.

2. Those around me are doing it, so why shouldn’t I? They believe it’s okay.
3. If I don’t do this, I might not be able to get a good reference from my boss or company when I
leave.
4. This is not such a big deal, given the potential benefits.
5. Business is business with a different set of rules.
6. If not me, someone else would do it and get rewarded

CHEAPTER 6
Moral philosophy refers to the specific principles or values people use to decide what is right and wrong.

Several types of moral philosophy:

- teleology,
- deontology,
- the relativist perspective,
- virtue ethics,
- justice

Obligation theories emphasize the means and motives by which actions are justified and are divided into
the categories of teleology and deontology.

A comparison of the Philosophies used in Business decision

Teleology: It refers to moral philosophies in which an act is considered morally right or acceptable if it
produces some desired result, such as pleasure, knowledge, career growth, the realization of self-interest,
utility, wealth, or even fame.

It assesses the moral worth of a behavior by looking at its consequences.

Two important teleological philosophies that often guide decision making in individual business decisions:

• Egoism defines right or acceptable behavior in terms of its consequences for the individual.
- Egoists believe they should make decisions that maximize their own self-interest, which is defined
differently by each individual.
- Enlightened egoism: Enlightened egoists take a long-range perspective and allow for the well-
being of others although their own self-interest remains paramount.
 • Utilitarianism is concerned with consequences, but unlike egoists, the utilitarian seeks the
greatest good for the greatest number of people.
- The rule utilitarians determine behavior on the basis of principles or rules designed to promote
the greatest utility, rather than on individual examinations of each situation they encounter.
- The act utilitarians examine specific actions, rather than the general rules governing them, to
assess whether they will result in the greatest utility

Deontology refers to moral philosophies that focus on the rights of individuals and the intentions
associated with particular behavior rather than consequences.

It is based on the premise that equal respect must be given to all persons.

Kant’s categorical imperative and the Golden Rule are example of Deontology

sometimes referred to as Non consequentialism, a system of ethics based on respect for persons.

• Rule deontologists believe conformity to general moral principles determines ethical behavior.
• Act deontologists hold that actions are the proper basis to judge morality or ethicalness and that
rules serve only as guidelines. An action on the basis of the equity, fairness and impartiality of the
action.

Deontologists believe individuals have certain absolute rights, including

• freedom of conscience,
• freedom of consent,
• freedom of privacy,
• freedom of speech,
• due process.

Relatives Perspective

Its definitions of ethical behavior are derived subjectively from the experience of individuals and groups.

Relativists use themselves or the people around them as their basis for defining ethical standards, and the
various forms of relativism include

• descriptive,
• meta-ethical,
• Normative.

Kohlberg’s model:

According to Kohlberg’s model of cognitive moral development, individuals may make different decisions
in similar ethical situations because they are in a different stage of moral development.

In Kohlberg’s model, people progress through six stages of moral development:

 1. punishment and obedience; right as literal obedience to rules and authority
2. individual instrumental purpose and exchange: right as what serves his or her own needs - the
stage of reciprocity because from a practical standpoint
3. mutual interpersonal expectations, relationships, and conformity; the interests of others rather
than simply those of themselves
4. social system and conscience maintenance; what is right by considering their duty to society,
5. prior rights, social contract, or utility; individuals are concerned with upholding the basic rights,
values, and legal contracts of society
6. universal ethical principles: rights are determined by universal ethical principles everyone should
follow. Cognitive moral development.

Kohlberg’s six stages can be further reduced to three levels of ethical concern:

• immediate self-interest
• social expectations
• general ethical principles.

Virtue Ethics: argues that ethical behavior involves not only adhering to conventional moral standards but
also considering what mature person with a good moral character would deem appropriate in a given
situation. The moral minimum for the beginning of virtue.

The problem of virtue ethics comes in its implementation within and between cultures.

Justice

It is fair treatment and due reward in accordance with ethical or legal standards, including the disposition
to deal with perceived injustices of others.

• Distributive justice is based on the evaluation of the outcomes or results of a business

relationship.
• Interactional justice is based on the relationships between organizational members, including the
way employees and management treat one another. There is linked to fairness within member
interactions
• Procedural justice considers the processes and activities that produce a particular outcome or
results.

CHEAPTER 7