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Business Ethics Workshop. 2010 Summer Entrepreneurship Institute Prof. Gonzalo Freixes. "Art, like morality, consists of drawing the line somewhere." — G.K. Chesterton, English essayist and poet (1874-1936). What is Ethics?. - PowerPoint PPT Presentation
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Business Ethics Workshop
2010 Summer Entrepreneurship InstituteProf. Gonzalo Freixes
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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)
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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)
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Theory of Moral Development(Lawrence Kohlberg)
Level One:Pre-Conventional
Morality
Stage 1: Punishment - Obedience Orientation
Stage 2: Instrumental Relativist Orientation
Level Two:Conventional
Morality
Stage 3: Good Boy - Good Girl Orientation
Stage 4: Law and Order Orientation
Level Three:Post-Conventional
Morality
Stage 5: Social Contract Orientation
Stage 6: Universal Ethical Principle Orientation
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Character Counts
Six Pillars of Character
Trustworthiness Respect Responsibility Fairness Caring Citizenship
- Michael Josephson, Josephson Institute of Ethics
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Professional Ethics Impartiality & Objectivity
Openness, Full Disclosure
Due diligence, Duty of Care
Fidelity to Professional Responsibilities
Avoiding Conflicts of Interest (Actual, Potential or Apparent)
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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.”
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7 Steps to Better Decisions An Ethical Approach to Business
1. Stop & Think2. Clarify Goals3. Determine Facts4. Develop Options5. Consider the
Consequences6. Choose Wisely7. Monitor & Modify
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Corporate Responsibility
What is the purpose of a corporation?Monotonic View vs. Pluralistic ViewCorporate Constituency StatutesDolphins & Baby Formula (the case of Star Kist & Nestle)
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Agents & Fiduciaries
Principal Agent relationship
Agent has fiduciary duties Loyalty Performance To Obey
A can be liable to P or 3rd Parties
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Fiduciary Duties - Loyalty
Stealing
Secrets
Conflicts
Commingling
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Fiduciary Duties - Performance
Care & Skill
Reputation
Disclose & Notify
Account
Stay in Scope
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Fiduciary Duties - Obey
Obey your Principal, unless…
Illegal
Immoral
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Principal’s Duties to Agent
Opportunity to Work
Compensation
Indemnity
Cooperation
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Corporate ExecutivesDuty of Care
Act as a reasonable executive would
Protected by Business Judgment Rule Informed decision Rational basis No conflict
Protected by Constituency Statutes
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Corporate ExecutivesDuty of Loyalty
1. Avoid Self Dealing
2. Avoid Common Directorships
3. Avoid seizing Corporate Opportunities
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Ethics in Global Business
Results of International Study1. Personal Standards: EU2. Interpersonal Standards (e.g. Loyalty):
Japan3. Organizational Standards: US
MNC’s deal with ethics “ad hoc” - viewed as “public relations” issue
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SARBANES-OXLEY ACT OF 2002
PUBLIC ACCOUNTING OVERSIGHT BOARD (PCAOB)
AUDITOR INDEPENDENCE
EXECUTIVE RESPONSIBILITY
FINANCIAL/ETHICAL DISCLOSURES
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