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Fraedrich Ferrell Ferrell

E thical D

ecision M aking For B

usiness

Ethical Decision Making For Business

Fraedrich Ferrell Ferrell

8th edition

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AN ETHICAL DILEMMA* John Peters had just arrived at the Memphis branch offi ces of Bull Steins (BS) brokerage fi rm. BS is one of the top 50 fi rms in the industry with a wide range of fi nancial products. Five years prior, John graduated from Midwest State University and went to Marell and Pew Brokerage. While there, he learned that in fi nance one must follow the letter and spirit of the law. BS started courting John after working at Marell for four years because he had a good reputation and an investment portfolio worth approximately $100 million with some 400 investors.

A hard worker, John acquired his clients through various networking avenues, including family, the country club, cocktail parties, and serving on boards of charitable organizations. He called one client group the Sharks. These were investors who took risks, made multiple transactions every month, and looked for short-term, high-yield investments. The second group he called Cessnas, because most of them owned twin-engine planes. This group was primarily employed in the medical fi eld, but included a few bankers and lawyers. He called the fi nal group the Turtles because they wanted stability and security. This group would normally trade only a few times a year.

John was highly trained and was not only comfortable discussing numbers with bankers and medical billing with physicians, but also had the people skills to convey complex fi nancial products and solutions in understandable terms to his Turtles, who were primarily older and semiretired. This was one of the main reasons Al Dryer had wanted to hire him. “You’ve got charisma, John, and you know your way around people and fi nancial products,” Dryer explained.

At Marell and Pew, Skyler was John’s trainer. Skyler had been in the business for 15 years and had worked for three of the top brokerage fi rms in the world. She had chosen to stay at Marell and Pew for so many years because of her family. Skyler quickly taught John some complicated tricks of the trade. For example, “Your big clients (Sharks and Cessnas) will like IPOs (initial public off erings) but you have to be careful about picking the right ones,” Skyler said. “Before suggesting one, look at who is on their board of directors, cross-reference them to other IPO boards in the last 5–7 years. Next, cross-check everyone to see where the connections are, especially if they have good ties to the SEC

CHAPTER OBJECTIVES • To explore conceptualizations of

business ethics from an organizational perspective

• To examine the historical foundations and evolution of business ethics

• To provide evidence that ethical value systems support business performance

• To gain insight into the extent of ethical misconduct in the workplace and the pressures for unethical behavior

CHAPTER OUTLINE Business Ethics Defined Why Study Business Ethics?

A Crisis in Business Ethics

The Reasons for Studying Business Ethics

The Development of Business Ethics Before 1960: Ethics in Business

The 1960s: The Rise of Social Issues in Business

The 1970s: Business Ethics as an Emerging Field

The 1980s: Consolidation

The 1990s: Institutionalization of Business Ethics

The Twenty-First Century: A New Focus on Business Ethics

Developing an Organizational and Global Ethical Culture The Benefits of Business Ethics

“Ethics Contribute” to Employee Commitment

Ethics Contribute to Investor Loyalty

Ethics Contribute to Customer Satisfaction

Ethics Contribute to Profits

Our Framework for Studying Business Ethics

*This case is strictly hypothetical; any resemblance to real persons, companies, or situations is coincidental.

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(Securities and Exchange Commission). Finally, you want to check these people and the companies they have been associated with. Check every IPO these people were involved in and what Moody’s ratings were prior to the IPO. As you know, Moody’s is one of two IPO rating companies in the United States and they’re hurting for revenue because of the fi nancial downturn. If you see a bias in how they rate because of personal relations to the IPO people, you’ve got a winner,” Skyler smiled.

During his fi ve years at the company, Skyler had taught John about shorting, naked shorting, and churning. She explained shorting by using an example. “If I own 1,000 shares at $100/share and you think the stock is going to tank (go down), you ‘borrow’ my shares at $100/share, sell them, and the next week the stock goes down to $80/ share. You call your broker and buy back the 1,000 shares at $80 and give me my 1,000 shares at $80/ share. Do you see what happened?” Skyler asked. “You borrowed my shares and sold them for $100,000. The following week, when the company stock fell to $80, you repurchased those 1,000 shares for $80,000 and gave them back to me. In the meantime, you pocketed the diff erence of $20,000.” Skyler went on, “Naked short selling is the same as shorting but you don’t pay any money for the stock,” explained Skyler. “There is a three- day grace period between buying and selling. That means you have at least three days of FREE MONEY!”

Al Dryer instructed John to wait to resign until late on Friday so that BS could send out packets to each of his accounts about switching companies. John thought about this, but was told by others this was standard practice. “But what about the noncompete clause I signed? It says I can’t do that,” said John to a few brokers not associated with either fi rm. Their response was, “It’s done all the time.” On Friday John did what BS asked and nothing happened. Six months went by and John’s portfolio had increased to $150 million. Other brokers began imitating John’s strategy. For example, for his Sharks, John would buy and sell at BS and call some of his buddies to do the same thing using money from his SHARKS. Another tactic involved selling futures contracts without

providing evidence that he held the shares sold (naked shorting). While much of what he was doing was risky, John had become so successful that he guaranteed his Turtles against any loss.

Several years later John was buying and selling derivatives, a form of futures contract that gets its value from assets such as commodities, equities (stocks), bonds, interest rates, exchange rates, or even an index of weather conditions. While his risk-taking Shark group had expanded threefold, John’s Cessna pool had all but dried up. However, his Turtles had grown dramatically to an average worth of $500,000. The portfolio he managed had topped $750 million, a lot more than he had when he started at BS ($500 million in Sharks and $250 million for Turtles).

“This year is going to be better than last year,” said John to some of the brokers at BS. But expenses had been rising fast. John’s expense account included country club memberships, sports tickets, trips for clients, etc. Instead of charging the fi rm, John would always pay them from his own pocket. By indirectly letting his clients know it was his money he was spending on them, his clients were grateful for his largess and those who would have grumbled about delays in the delivery of securities purchased were less apt to do so. John saw a great opportunity to make his heavy hitters happy with him. Unbeknownst to them, he would buy and sell stocks for these clients and later surprise them with the profi ts.

By this time, John was training new hires at BS, which would have taken away a lot of his personal and professional time if he had done it right. But John had a lot of other things on his mind. He had decided to get married and adopt children. His soon-to-be wife, Leslie, quit her job to be a full- time mom and was designing their new 18,000- square-foot home. With all these activities going on at once, John was not paying attention to the four new brokers and their training. Because John was a senior partner, he had to sign off on every trade they made. It became so time consuming to manage everything that he spent an hour a day just signing the four other brokers’ trades.

Then one Monday morning John received a call from the SEC asking about some trades made

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The ability to recognize and deal with complex business ethics issues has become a significant priority in twenty-first-century companies. In recent years, a number of well-publicized scandals resulted in public outrage about deception and fraud in business and a demand for improved business ethics and greater corporate responsibility. The publicity and debate surrounding highly visible legal and ethical lapses at a number of well-known firms, including AIG, Countrywide Financial, and Fannie Mae, highlight the need for businesses to integrate ethics and responsibility into all business decisions. The global financial crisis took a toll on consumer trust of financial services companies. A study of 650 U.S. consumers by Lightspeed Research and Cohn & Wolfe revealed that 66 percent of respondents did not feel that the financial services industry would help them to regain the wealth that they lost during the recession. Words used to describe this industry included greedy, impersonal, opportunistic, and distant. Table 1–1 summarizes the survey results.1

Largely in response to this crisis, business decisions and activities have come under greater scrutiny by many different constituents, including consumers, employees, investors, government regulators, and special interest groups. Additionally, new legislation and regulations designed to encourage higher ethical standards in business have been put in place.

The field of business ethics deals with questions about whether specific business practices are acceptable. For example, should a salesperson omit facts about a product’s poor safety record in a sales presentation to a client? Should an accountant report inaccuracies that he or she discovered in an audit of a client, knowing the auditing company will probably be fired by the client for doing so? Should an automobile tire manufacturer intentionally conceal safety concerns to avoid a massive and costly tire recall? Regardless of their legality, others will certainly judge the actions taken in such situations as right or wrong, ethical or unethical. By its very nature, the field of business ethics is controversial, and there is no universally accepted approach for resolving its issues.

by the four new brokers. “It appears to us there may be some nonpublic information your brokers have concerning several IPOs,” the agent said. “If they do have such information, this could be considered insider information. John, I’m calling you because we go way back to our college days, but I have to know,” said the agent. John thanked him and went straight to the new brokers and asked them about the IPO. One of the new brokers replied, “John, you told us that in order to excel in this business, you need to be an expert on knowing exactly where things become legal and illegal. You said trust me, I’ve been doing this for 15 years, and I’ve never had a problem. We just did what you’ve taught us.”

John knew that if they did have insider information, he’d probably be found partially responsible because he was supposed to be training them. At the very minimum, the SEC would start checking his trades over the past several years. He also knew that, when subjected to scrutiny, some of his past trades might be deemed questionable as well.

What should John do?

QUESTIONS • EXERCISES 1. What is/are John’s ethical issues? 2. Are there any legal considerations for John? 3. Discuss the implications of each decision

John has made and will make.

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6 Part : An Overview of Business Ethics

A Junior Achievement/Deloitte survey of teens showed that 71 percent feel prepared to make ethical decisions in the workplace. However, of those surveyed, 38 percent feel it is sometimes necessary to lie, cheat, plagiarize, or engage in violence to succeed. One- fourth think cheating on a test is acceptable and most can justify it saying that their desire to succeed is grounds for the behavior.2 If today’s students are tomorrow’s leaders, there is likely to be a correlation between acceptable behavior today and tomorrow, adding to the argument that the leaders of today must be prepared for the ethical risks associated with this downward trend. According to another poll by Deloitte and Touche of teenagers aged 13 to 18 years old, when asked if people who practice good business ethics are more successful than those who don’t, 69 percent of teenagers agreed.3 On the other hand, another survey indicated that many students do not define copying answers from another student’s paper or downloading copyrighted music or content for classroom work as cheating.4

Before we get started, it is important to state our philosophies regarding this book. First, we do not moralize by telling you what is right or wrong in a specific situation. Second, although we provide an overview of group and individual decision making processes, we do not prescribe any one philosophy or process as best or most ethical. Third, by itself, this book will not make you more ethical, nor will it tell you how to judge the ethical behavior of others. Rather, its goal is to help you understand and use your current values and convictions when making business decisions so that you think about the effects of those decisions on business and society. In addition, this book will help you understand what businesses are doing to improve their ethical conduct. To this end, we aim to help you learn to recognize and resolve ethical issues within business organizations. As a manager, you will be responsible for your decisions and the ethical conduct of the employees you supervise. The framework we develop in this book therefore focuses on how organizational ethical decisions are made and on ways companies can improve their ethical conduct.

TABLE 11 American Distrust of the Financial Services Industry

Negative Responses Related to the Industry %

Greedy 32

Impersonal 32

Opportunistic 26

Distant from me 22

Positive Responses Related to the Industry %

Trustworthy 13

Honest 10

Ethical 5

Transparent 3

Sympathetic 3

Source: “New US Consumer Survey Shows High Distrust of Financial Services Companies,” Business Wire, January 20, 2009, http://findarticles.com/p/ articles/mi_m0EIN/is_2009_Jan_20/ai_n31202849/ (accessed May 27, 2009).

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Chapter 1: The Importance of Business Ethics 7

In this chapter, we first develop a definition of business ethics and discuss why it has become an important topic in business education. We also discuss why studying business ethics can be beneficial. Next, we examine the evolution of business ethics in North America. Then we explore the performance benefits of ethical decision making for businesses. Finally, we provide a brief overview of the framework we use for examining business ethics in this text.

BUSINESS ETHICS DEFINED The term ethics has many nuances. It has been defined as “inquiry into the nature and grounds of morality where the term morality is taken to mean moral judgments, standards and rules of conduct.”5 Ethics has also been called the study and philosophy of human conduct, with an emphasis on determining right and wrong. The American Heritage Dictionary offers these definitions of ethics: “The study of the general nature of morals and of specific moral choices; moral philosophy; and the rules or standards governing the conduct of the members of a profession.”6 One difference between an ordinary decision and an ethical one lies in “the point where the accepted rules no longer serve, and the decision maker is faced with the responsibility for weighing values and reaching a judgment in a situation which is not quite the same as any he or she has faced before.”7 Another difference relates to the amount of emphasis that decision makers place on their own values and accepted practices within their company. Consequently, values and judgments play a critical role when we make ethical decisions.

Building on these definitions, we can begin to develop a concept of business ethics. Most people would agree that high ethical standards require both businesses and individuals to conform to sound moral principles. However, some special aspects must be considered when applying ethics to business. First, to survive, businesses must earn a profit. If profits are realized through misconduct, however, the life of the organization may be shortened. Many firms, including Lehman Brothers and Enron, that made headlines due to wrongdoing and scandal ultimately went bankrupt or failed because of the legal and financial repercussions of their misconduct. Second, businesses must balance their desires for profits against the needs and desires of society. Maintaining this balance often requires compromises or trade-offs. To address these unique aspects of the business world, society has developed rules—both legal and implicit—to guide businesses in their efforts to earn profits in ways that do not harm individuals or society as a whole.

Most definitions of business ethics relate to rules, standards, and moral principles regarding what is right or wrong in specific situations. For our purposes, business ethics comprises the principles, values, and standards that guide behavior in the world of business. Principles are specific and pervasive boundaries for behavior that are universal and absolute. Principles often become the basis for rules. Some examples of principles include freedom of speech, fundamentals of justice, and equal rights to civil liberties. Values are used to develop norms that are socially enforced. Integrity, accountability, and trust are examples of values. Investors, employees, customers, interest groups, the legal system, and the community often determine whether a specific action is right or wrong, ethical or unethical. Although these groups are not necessarily “right,” their judgments influence society’s acceptance or rejection of a business and its activities.

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8 Part : An Overview of Business Ethics

WHY STUDY BUSINESS ETHICS?

A Crisis in Business Ethics As we’ve already mentioned, ethical misconduct has become a major concern in business today. The Ethics Resource Center conducted the National Business Ethics Survey (NBES) of about 3,000 U.S. employees to gather reliable data on key ethics and compliance outcomes and to help identify and better understand the ethics issues that are important to employees. The NBES found that observed misconduct is higher in large organizations—those with more than 500 employees—than in smaller ones and that there are also differences in observed misconduct across employee levels. Reporting of misconduct is most likely to come from upper-level management, as compared to lower-level supervisors and nonmanagement employees. Employees in lower-level positions have more of a tendency to not understand misconduct or be complacent about what misconduct they observe. Figure 1–1 shows the percentage of respondents who say that they trust a variety of business categories. Notice that the levels of consumer trust in most industries is declining. Among senior managers, 77 percent of employees report observed misconduct, while among nonmanagement, only 48 percent of employees report observed misconduct.8

Specific Issues Abusive behavior, harassment, accounting fraud, conflicts of interest, defective products, bribery, and employee theft are all problems cited as evidence of declining ethical standards. For example, Satyam Computer Services, an outsourcing firm in India, worked with more than one-third of the Fortune 500 companies. The chairman of the company disclosed that $1.04 billion in cash and assets did not exist and that earnings and assets were inflated for years. The scandal was compared to Enron.9 A survey by Harris Interactive shows that corporate reputation is at its lowest point in the past decade of their annual “Reputation Quotient” polls. Eighty-eight percent rated the reputation of corporate America today as “not good” or “terrible.” Among the least admired companies

13 (3% decline)

19 (3% decline)

22 (4% decline)

26 (no change)

24 (3% decline)

33 (1% decline)

31 (6% decline)

41 (5% decline)

42 (6% decline)

55 (4% decline)

59 (6% decline from 2007 survey)

23 (2% increase)

Auto Dealers Real Estate Brokers

Cell Phones and Wireless Service Furniture Stores

Gas Stations Healthcare Insurers Auto Repair Shops

Contractors/Plumbers/Electricians/Roofers Electronics/Appliance Stores

Department Stores Home Improvement

Banks and Financial Institutions Grocery Stores and Supermarkets

Pharmacies and Drug Stores

20 40

Percent 60 80 100

FIGURE 11 Americans’ Trust in Business (% of respondents who say they trust the following business categories a great deal or quite a lot)

Source: Better Business Bureau/Gallup Trust in Business Index, April 2008, http://www.bbb.org/us/sitepage.aspx?id =f36f50cc-8cb7-4507-9cfc- 2f2d7aa2c3fc (accessed January 13, 2009).

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Chapter 1: The Importance of Business Ethics 9

are AIG, Halliburton, General Motors, Chrysler, Washington Mutual, Citigroup, Merrill Lynch, ExxonMobil, and Ford Motor Company. There remain companies that are admired by respondents, including Johnson & Johnson, Google, Sony, Coca-Cola, Kraft Foods, Amazon.com, Microsoft, General Mills, 3M, and Toyota Motor. The economic lapses associated with the recession have damaged the “emotional appeal” of many companies, which is often the strongest driver of reputation.10

Insider trading remains a serious issue in business and in ethics. Eugene Plotkin, a former Goldman Sachs executive, was sentenced to almost five years in prison for a case of insider trading that yielded about $6.7 million. The Harvard graduate worked with a former Merrill Lynch analyst, a New Jersey postal worker, and two workers at a Business Week printing press. The former Merrill Lynch employee provided tips to Plotkin at Goldman on mergers and acquisitions. Another angle involved getting prepublication copies of Business Week and trading on that information. The third element involved working with a New Jersey postal worker who served on the Bristol-Myers Squibb grand jury investigation and shared inside information with Plotkin.11

Inflating earnings involves attempting to embellish or enhance a firm’s profitability in a manner that is inconsistent with past practice, common regulatory guidelines, or industry practice. Many companies maintain a focus on making short-term profits and know that analysts and investors critique the company according to its ability to “make the numbers.” PricewaterhouseCoopers (PWC) was forced to pay $97.5 million to settle a class action lawsuit for involvement with AIG in overstating their earnings. This settlement is a small part of a larger case against both AIG and its former CEO, Hank Greenberg. AIG’s improper accounting for reinsurance and other dealings led to a restatement of earnings in the amount of $3.9 billion. The lawsuit normally proceeds against the company and personnel first, with the related firms (such as PWC) paying a percentage of that settlement.12 Highly publicized cases such as this one strengthen the perception that ethical standards in business need to be raised.

Ethics play an important role in the public sector as well. In government, several politicians and some high-ranking officials have experienced significant negative publicity and some have had to resign in disgrace over ethical indiscretions. Alaskan Senator Ted Stevens was convicted of 7 felony counts of corruption weeks before the election of President Barack Obama. He was charged with hiding $250,000 in gifts he had allegedly received from oil companies. The U.S. Department of Justice filed a motion to have the case dismissed against Stevens due to mishandled evidence, and the case was officially dropped. However, the impact of the negative publicity on the senator was significant and most likely contributed to his losing his bid for reelection.13

Irv Lewis “Scooter” Libby, a White House advisor, was indicted on five counts of criminal charges: one count of obstruction of justice, two counts of perjury, and two counts of making false statements.14 Each count carries a $250,000 fine and maximum prison term of 30 years.

Several scientists have been accused of falsifying research data, which could invalidate later research based on their data and jeopardize trust in all scientific research. Bell Labs, for example, fired a scientist for falsifying experiments on superconductivity and molecular electronics and for misrepresenting data in scientific publications. Jan Hendrik Schon’s work on creating tiny, powerful microprocessors seemed poised to significantly advance microprocessor technology and potentially bring yet another Nobel Prize in physics to the award-winning laboratory, a subsidiary of Lucent Technologies.15 Hwang Woo-Suk was found to have faked some of his famous stem cell research in which he claimed to have created 30

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10 Part : An Overview of Business Ethics

cloned human embryos and made stem cell lines from skin cells of 11 people, as well as producing the world’s first cloned dog. He also apologized for using eggs from his own female researchers, which was in breach of guidelines, but still denies fabricating his research.16

Even sports can be subject to ethical lapses. Manny Ramirez was suspended for 50 games from the Los Angeles Dodgers for violating the league’s drug policy. Ramirez tested positive for a female fertility drug that has been taken by steroid users to increase testosterone levels. The ban on playing cost Ramirez $7.7 million of his $25 million annual salary. Ramirez

stated that he was under a doctor’s care for a “personal health issue” and indicated that he thought the medication was allowed. Baseball players are encouraged to check a hotline that identifies legal and illegal substances and encourages players to seek “therapeutic use exemptions” for legitimate use of banned substances.17

Whether made in business, politics, science, or sports, most decisions are judged as either right or wrong, ethical or unethical. Regardless of what an individual believes about a particular action, if society judges it to be unethical or wrong, whether correctly or not, that judgment directly affects the organization’s ability to achieve its business goals. For this reason alone, it is important to understand business ethics and recognize ethical issues.

The Reasons for Studying Business Ethics Studying business ethics is valuable for several reasons. Business ethics is not merely an extension of an individual’s own personal ethics. Many people believe that if a company hires good people with strong ethical values, then it will be a “good citizen” organization. But as we show throughout this text, an individual’s personal values and moral philosophies are only one factor in the ethical decision making process. True, moral rules can be applied to a variety of situations in life, and some people do not distinguish everyday ethical issues from business ones. Our concern, however, is with the application of principles and standards in the business context. Many important ethical issues do not arise very often in the business context, although they remain complex moral dilemmas in one’s own personal life. For example, although abortion and the possibility of human cloning are moral issues in many people’s lives, they are usually not an issue in most business organizations.

Professionals in any field, including business, must deal with individuals’ personal moral dilemmas because these issues affect everyone’s ability to function on the job. Normally, a business does not establish rules or policies on personal ethical issues such as sex or the use of alcohol outside the workplace; indeed, in some cases, such policies would be illegal. Only when a person’s preferences or values influence his or her performance on the job do an individual’s ethics play a major role in the evaluation of business decisions.

Just being a good person and, in your own view, having sound personal ethics may not be sufficient to enable you to handle the ethical issues that arise in a business organization. It is important to recognize the relationship between legal and ethical decisions. Although abstract virtues linked to the high moral ground of truthfulness, honesty, fairness, and openness are often assumed to be self-evident and accepted by all employees, business- strategy decisions involve complex and detailed discussions. For example, there is considerable debate over what constitutes antitrust, deceptive advertising, and violations of the Foreign Corrupt Practices Act. A high level of personal moral development may

Regardless of what an individual

believes about a particular

action, if society judges it to be unethical or

wrong, whether correctly or not, that judgment

directly aff ects the

organization’s ability to

achieve its business goals.

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not prevent an individual from violating the law in a complicated organizational context where even experienced lawyers debate the exact meaning of the law. Some approaches to business ethics assume that ethics training is for people whose personal moral development is unacceptable, but that is not the case. Because organizations are culturally diverse and personal values must be respected, ensuring collective agreement on organizational ethics (that is, codes reasonably capable of preventing misconduct) is as vital as any other effort an organization’s management may undertake.

Many people who have limited business experience suddenly find themselves making decisions about product quality, advertising, pricing, sales techniques, hiring practices, and pollution control. The values they learned from family, religion, and school may not provide specific guidelines for these complex business decisions. In other words, a person’s experiences and decisions at home, in school, and in the community may be quite different from his or her experiences and decisions at work. Many business ethics decisions are close calls. In addition, managerial responsibility for the conduct of others requires knowledge of ethics and compliance processes and systems. Years of experience in a particular industry may be required to know what is acceptable. For example, Caraco Pharmaceutical Laboratories, a generic drug manufacturer, voluntarily recalled all tablets of its digoxin drug used by patients with heart failure and abnormal heart rhythms. The drug was recalled because of variation in sizing, which could impact the actual dosage received by a patient. The recall was designed to protect those who were using the drug and the company had to carefully assess the product and the potential harm it could cause in its more inconsistent form. Significant medical expertise and testing resulted in the recall.18

Studying business ethics will help you begin to identify ethical issues when they arise and recognize the approaches available for resolving them. You will also learn more about the ethical decision making process and about ways to promote ethical behavior within your organization. By studying business ethics, you may begin to understand how to cope with conflicts between your own personal values and those of the organization in which you work.

THE DEVELOPMENT OF BUSINESS ETHICS 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, and (5) the 1990s—and continues to evolve in the twenty-first century (see Table 1–2).

Before 1960: Ethics in Business Prior to 1960, the United States went through several agonizing phases of questioning the concept of capitalism. In the 1920s, the progressive movement attempted to provide citizens with a “living wage,” defined as income sufficient for education, recreation, health, and retirement. Businesses were asked to check unwarranted price increases and any other practices that would hurt a family’s “living wage.” In the 1930s came the New Deal, which specifically blamed business for the country’s economic woes. Business was asked to work more closely with the government to raise family income. By the 1950s, the New Deal had evolved into the Fair Deal by President Harry S. Truman; this program defined such matters as civil rights and environmental responsibility as ethical issues that businesses had to address.

Until 1960 ethical issues related to business were often discussed within the domain of theology or philosophy. Individual moral issues related to business were addressed in

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churches, synagogues, and mosques. Religious leaders raised questions about fair wages, labor practices, and the morality of capitalism. For example, Catholic social ethics, which were expressed in a series of papal encyclicals, included concern for morality in business, workers’ rights, and living wages; for humanistic values rather than materialistic ones; and for improving the conditions of the poor. Some Catholic colleges and universities began to offer courses in social ethics. Protestants also developed ethics courses in their seminaries and schools of theology and addressed issues concerning morality and ethics in business. The Protestant work ethic encouraged individuals to be frugal, work hard, and attain success in the capitalistic system. Such religious traditions provided a foundation for the future field of business ethics. Each religion applied its moral concepts not only to business but also to government, politics, the family, personal life, and all other aspects of life.

The 1960s: The Rise of Social Issues in Business During the 1960s, American society turned to causes. An antibusiness attitude developed as many critics attacked the vested interests that controlled the economic and political sides of society—the so-called military-industrial complex. The 1960s saw the decay of inner cities and the growth of ecological problems such as pollution and the disposal of toxic and nuclear wastes. This period also witnessed the rise of consumerism—activities undertaken by independent individuals, groups, and organizations to protect their rights as consumers. In 1962 President John F. Kennedy delivered a “Special Message on Protecting the Consumer Interest” in which he outlined four basic consumer rights: the right to safety, the right to be informed, the right to choose, and the right to be heard. These came to be known as the Consumers’ Bill of Rights.

The modern consumer movement is generally considered to have begun in 1965 with the publication of Ralph Nader’s Unsafe at Any Speed, which criticized the auto industry

TABLE 12 A Timeline of Ethical and Socially Responsible Concerns

1960s 1970s 1980s 1990s 2000s

Environmental issues

Employee militancy Bribes and illegal contracting practices

Sweatshops and unsafe working conditions in third- world countries

Cybercrime

Civil rights issues Human rights issues Infl uence peddling Rising corporate liability for personal damages (for example, cigarette companies)

Financial misconduct

Increased employee– employer tension

Covering up rather than correcting issues

Deceptive advertising

Financial mismanagement and fraud

Global issues, Chinese product safety

Changing work ethic Disadvantaged consumer

Financial fraud (for example, savings and loan scandal)

Organizational ethical misconduct

Sustainability

Rising drug use Transparency issues Intellectual property theft

Source: Adapted from “Business Ethics Timeline,” Ethics Resource Center, http://www.ethics.org/resources/business-ethics-timeline.asp (accessed May 27, 2009). Copyright © 2006, Ethics Resource Center (ERC). Used with permission of the ERC, 1747 Pennsylvania Ave., N.W., Suite 400, Washington, DC 2006, www.ethics.org.

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Chapter 1: The Importance of Business Ethics 13

as a whole, and General Motors Corporation (GM) in particular, for putting profit and style ahead of lives and safety. GM’s Corvair was the main target of Nader’s criticism. His consumer protection organization, popularly known as Nader’s Raiders, fought successfully for legislation that required automobile makers to equip cars with safety belts, padded dashboards, stronger door latches, head restraints, shatterproof windshields, and collapsible steering columns. Consumer activists also helped secure passage of several consumer protection laws such as the Wholesome Meat Act of 1967, the Radiation Control for Health and Safety Act of 1968, the Clean Water Act of 1972, and the Toxic Substance Act of 1976.19

After Kennedy came President Lyndon B. Johnson and the Great Society, which extended national capitalism and told the business community that the U.S. government’s responsibility was to provide the citizen with some degree of economic stability, equality, and social justice. Activities that could destabilize the economy or discriminate against any class of citizens began to be viewed as unethical and unlawful.

The 1970s: Business Ethics as an Emerging Field Business ethics began to develop as a field of study in the 1970s. Theologians and philosophers had laid the groundwork by suggesting that certain principles could be applied to business activities. Using this foundation, business professors began to teach and write about corporate social responsibility, an organization’s obligation to maximize its positive impact on stakeholders and to minimize its negative impact. Philosophers increased their involvement, applying ethical theory and philosophical analysis to structure the discipline of business ethics. Companies became more concerned with their public images, and as social demands grew, many businesses realized that they had to address ethical issues more directly. The Nixon administration’s Watergate scandal focused public interest on the importance of ethics in government. Conferences were held to discuss the social responsibilities and ethical issues of business. Centers dealing with issues of business ethics were established. Interdisciplinary meetings brought business professors, theologians, philosophers, and businesspeople together. President Jimmy Carter attempted to focus on personal and administrative efforts to uphold ethical principles in government. The Foreign Corrupt Practices Act was passed during his administration, making it illegal for U.S. businesses to bribe government officials of other countries.

By the end of the 1970s, a number of major ethical issues had emerged, such as bribery, deceptive advertising, price collusion, product safety, and the environment. Business ethics became a common expression and was no longer considered an oxymoron. Academic researchers sought to identify ethical issues and describe how businesspeople might choose to act in particular situations. However, only limited efforts were made to describe how the ethical decision making process worked and to identify the many variables that influence this process in organizations.

The 1980s: Consolidation In the 1980s, business academics and practitioners acknowledged business ethics as a field of study. A growing and varied group of institutions with diverse interests promoted its study. Business ethics organizations grew to include thousands of members. Five hundred courses in business ethics were offered at colleges across the country, with more than 40,000 students enrolled. Centers for business ethics provided publications, courses, conferences, and seminars. Business ethics was also a prominent concern within such leading companies

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as General Electric, Chase Manhattan, General Motors, Atlantic Richfield, Caterpillar, and S. C. Johnson & Son, Inc. Many of these firms established ethics and social policy committees to address ethical issues.

In the 1980s, the Defense Industry Initiative on Business Ethics and Conduct (DII) was developed to guide corporate support for ethical conduct. In 1986 eighteen defense contractors drafted principles for guiding business ethics and conduct.20 The organization has since grown to nearly 50 members. This effort established a method for discussing best practices and working tactics to link organizational practice and policy to successful ethical compliance. The DII includes six principles. First, DII supports codes of conduct and their widespread distribution. These codes of conduct must be understandable and provide details on more substantive areas. Second, member companies are expected to provide ethics training for their employees as well as continuous support between training periods. Third, defense contractors must create an open atmosphere in which employees feel comfortable reporting violations without fear of retribution. Fourth, companies need to perform extensive internal audits and develop effective internal reporting and voluntary disclosure plans. Fifth, DII insists that member companies preserve the integrity of the defense industry. Finally, member companies must adopt a philosophy of public accountability.21

The 1980s ushered in the Reagan–Bush eras, 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. Corporations that once were nationally based began operating internationally and found themselves mired in value structures where accepted rules of business behavior no longer applied.

The 1990s: Institutionalization of Business Ethics The administration of President Bill Clinton continued to support self-regulation and free trade. However, it also took unprecedented government action to deal with health-related social issues such as teenage smoking. Its proposals included restricting cigarette advertising, banning vending machine sales, and ending the use of cigarette logos in connection with sports events.22 Clinton also appointed Arthur Levitt as chairman of the Securities and Exchange Commission in 1993. Levitt unsuccessfully pushed for many reforms that could have prevented the accounting ethics scandals exemplified by Enron and WorldCom.23

The Federal Sentencing Guidelines for Organizations (FSGO), approved by Congress in November 1991, set the tone for organizational ethical compliance programs in the 1990s. The guidelines, which were based on the six principles of the DII,24 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.25 Provisions in the guidelines mitigate penalties for businesses that strive to root out misconduct and establish high ethical and legal standards.26 On the other hand, under FSGO, if a company lacks an effective ethical compliance program and its employees violate the law, it can incur severe penalties. The guidelines focus on firms taking action to prevent and detect business misconduct in cooperation with government regulation. At the heart of the FSGO is the carrot-and-stick approach: By taking preventive action against misconduct, a company may avoid onerous penalties should a violation occur. A mechanical approach using legalistic logic will not suffice to avert serious penalties. The company must develop corporate values, enforce its own code of ethics, and strive to prevent misconduct.

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The Twenty-First Century: A New Focus on Business Ethics Although business ethics appeared to become more institutionalized in the 1990s, new evidence emerged in the early 2000s that more than a few business executives and managers had not fully embraced the public’s desire for high ethical standards. For example, Bruce Bent, Sr. and his son Bruce Bent II were accused of engaging in fraud in misleading investors, ratings firms, and trustees when the assets of their Reserve Primary Fund fell. The accused reassured investors that the company had ample resources to support the broader declines in the financial market when, in fact, they did not. The Fund had $785 million in Lehman commercial paper, which ultimately became worthless.27

Arthur Andersen, a “Big Five” accounting firm, was convicted of obstructing justice after shredding documents related to its role as Enron’s auditor.28 The reputation of the once venerable accounting firm disappeared overnight, along with most of its clients, and the firm ultimately went out of business. Later the Supreme Court overruled the Arthur Andersen obstruction-of-justice conviction, but it was too late for the firm to recover. In addition to problems with its auditing of Enron, Arthur Andersen also faced questions surrounding its audits of other companies that were charged with employing questionable accounting practices, including Halliburton, WorldCom, Global Crossing, Dynegy, Qwest, and Sunbeam.29 These accounting scandals made it evident that falsifying financial reports and reaping questionable benefits had become part of the culture of many companies. Firms outside the United States, such as Royal Ahold in the Netherlands and Parmalat in Italy, became major examples of accounting misconduct from a global perspective.

Such abuses increased public and political demands to improve ethical standards in business. In a survey of 20,000 people across 20 countries, trust in global companies had declined significantly.30 To address the loss of confidence in financial reporting and corporate ethics, Congress in 2002 passed the Sarbanes–Oxley Act, the most far-reaching change in organizational control and accounting regulations since the Securities and Exchange Act of 1934. The new law made securities fraud a criminal offense and stiffened penalties for corporate fraud. It also created an accounting oversight board that requires corporations to establish codes of ethics for financial reporting and to develop greater transparency in financial reports to investors and other interested parties. Additionally, the law requires top executives to sign off on their firms’ financial reports, and they risk fines and long prison sentences if they misrepresent their companies’ financial position. The legislation further requires company executives to disclose stock sales immediately and prohibits companies from giving loans to top managers.31

The 2004 amendment to the FSGO requires that a business’s governing authority be well informed about its ethics program with respect to content, implementation, and effectiveness. This places the responsibility squarely on the shoulders of the firm’s leadership, usually the board of directors. The board is required to oversee the discovery of risks and to design, implement, and modify approaches to deal with those risks.

The Sarbanes–Oxley Act and the FSGO have institutionalized the need to discover and address ethical and legal risk. Top management and the board of directors of a corporation are accountable for discovering risk associated with ethical conduct. Such specific industries as the public sector, energy and chemicals, health care, insurance, and retail have to discover the

Th e company must develop corporate values, enforce its own code of ethics,

and strive to prevent misconduct.

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unique risk associated with their operations and develop an ethics program to prevent ethical misconduct before it creates a crisis. Most firms are developing formal and informal mechanisms to have interactive communication and transparency about issues associated with the risk of misconduct. Business leaders should view that their greatest danger is not discovering serious misconduct or illegal activities somewhere in the organization. Unfortunately, most managers do not view the risk of an ethical disaster as important as the risk associated with fires, natural disasters, or technology failure. Ethical disasters can be significantly more damaging to a company’s reputation than risks that are managed through insurance and other methods. The great investor Warren Buffett has stated that it is impossible to eradicate all wrongdoing in a large organization and that one can only hope that the misconduct is small and is caught in time. Buffett’s fears came true in 2008 when the financial system collapsed because of pervasive, systemic use of instruments such as credit default swaps, risky debt such as subprime lending, and corruption in major corporations. The government was forced to step in and bail out many financial companies. Later, because of the weak financial system and reduced consumption, the government also had to step in to help major automotive companies GM and Chrysler. The U.S. government is now a majority shareholder in GM, an unprecedented move. Not since the Great Depression and President Franklin Delano Roosevelt has the United States seen such widespread government intervention and regulation—something that most deem necessary, but which is nevertheless worrisome to free market capitalists.

The basic assumptions of capitalism are under debate as countries around the world work to stabilize markets and question those that managed the money of individual corporations and nonprofits. The financial crisis caused many to question government institutions that provide oversight and regulation. As changes are made, there is a need to address issues related to law, ethics, and the required level of compliance necessary for government and business to serve the public interest.

In the KPMG Forensic Integrity Survey, employees were asked whether they had “personally seen” or had “firsthand knowledge of” misconduct within their organizations over the prior 12-month period. Roughly three-quarters of employees— 76 percent— reported that they had observed misconduct in the prior 12-month period.32

Figure 1–2 shows the results of misconduct by industry; there are generally high levels of observed misconduct across all industries. Employees in highly regulated financial industries, such as banking, finance, and insurance, reported relatively lower rates of misconduct within their organizations compared with others. While employees working in the public sector, which has not been subject to many of the new regulatory mandates placed on its private- sector counterparts, reported relatively higher rates of misconduct compared with others.

DEVELOPING AN ORGANIZATIONAL AND GLOBAL ETHICAL CULTURE

The current trend is away from legally based compliance initiatives in organizations to cultural initiatives that make ethics a part of core organizational values. To develop more ethical corporate cultures, many businesses are communicating core values to their employees by creating ethics programs and appointing ethics officers to oversee them. The ethical component of a corporate culture relates to the values, beliefs, and established and enforced patterns of conduct that employees use to identify and respond to ethical issues. The term ethical culture can be viewed as the character or decision making process that employees

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use to determine whether their responses to ethical issues are right or wrong. Ethical culture is used to describe the component of corporate culture that captures the values and norms that an organization defines as appropriate conduct. The goal of an ethical culture is to minimize the need for enforced compliance of rules and maximize the use of principles that contribute to ethical reasoning in difficult or new situations. An ethical culture creates shared values and support for ethical decisions and is driven by top management.

Globally, businesses are working more 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 Common Market of the Southern Cone (MERCOSUR), and the World Trade Organization (WTO) to, more recently, the Council on Economic Priorities’ Social Accountability 8000 (SA 8000), the Ethical Trading Initiative, and the U.S. Apparel Industry Partnership. Some companies will not do business with organizations that do not support and abide by these standards. The development of global codes of ethics, such as the Caux Round Table, highlights common ethical concerns for global firms. The Caux Round Table (www.cauxroundtable.org) is a group of businesses, political leaders, and concerned interest groups that desire responsible behavior in the global community.

THE BENEFITS OF BUSINESS ETHICS The field of business ethics continues to change rapidly as more firms recognize the benefits of improving ethical conduct and the link between business ethics and financial performance. Both research and examples from the business world demonstrate that

0 10 20 30 40

Percent

In du

st ry

50 60 70 80

Automotive

Government & Public Sector

Consumer Markets

Chemicals & Diversified Industrials

Communications & Media

Real Estate & Construction

Aerospace & Defense

Healthcare

Pharmaceuticals & Life Sciences

Energy & Natural Resources

Electronics, Software & Services

Insurance

Banking & Finance

FIGURE 12 Prevalence of Misconduct by Industry During the Prior 12 Months

Source: KPMG LLP (U.S.) 2008, http://www.kpmg.com.br/publicacoes/forensic/Integrity_Survey_2008_2009.pdf (accessed August 4, 2009).

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building an ethical reputation among employees, customers, and the general public pays off. Figure 1–3 provides an overview of the relationship between business ethics and organizational performance. Although we believe there are many practical benefits to being ethical, many businesspeople make decisions because they believe a particular course of action is simply the right thing to do as a responsible member of society. Ricoh’s Chairman, Masamitsu Sakurai, one of Ethisphere’s 100 Most Influential People in Business Ethics, states that a foundational commitment to the environment creates a financial advantage. Ricoh transitioned to a flexible, cell-based production system that reduced carbon dioxide emissions and increased productivity, implemented additional emission reductions and waste reduction plans, and selectively placed clean ventilation points along the production line. These activities, as well as others, managed to cut carbon dioxide emissions by 85 percent and cut production costs in half.33 Among the rewards for being more ethical and socially responsible in business are increased efficiency in daily operations, greater employee commitment, increased investor willingness to entrust funds, improved customer trust and satisfaction, and better financial performance. The reputation of a company has a major effect on its relationships with employees, investors, customers, and many other parties.

Ethics Contribute to Employee Commitment Employee commitment comes from employees who believe their future is tied to that of the organization and their willingness to make personal sacrifices for the organization.34 The more a company is dedicated to taking care of its employees, the more likely it is that the employees will take care of the organization. The NBES survey indicates that 79 percent of employees agree that ethics is important in continuing to work for their employer. It is also interesting to note that approximately 20 percent of employees are not concerned about the ethical environment of their organization.35 This group is very complacent and has the potential for misconduct without guidance and ethical leadership. Issues that may foster the development of an ethical culture for employees include the absence of abusive behavior, a safe work environment, competitive salaries, and the fulfillment of all

Ethical Culture

Employee Commitment

and Trust

Investor Loyalty

and Trust Prof its

Customer Satisfaction

and Trust

FIGURE 13 The Role of Organizational Ethics in Performance

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contractual obligations toward employees. An ethics and compliance program can support values and appropriate conduct. Social programs that may improve the ethical culture range from work–family programs and stock ownership plans to community service. Home Depot associates, for example, participate in disaster-relief efforts after hurricanes and tornadoes by rebuilding roofs, repairing water damage, planting trees, and clearing roads in their communities. Because employees spend a considerable amount of their waking time at work, a commitment by the organization to goodwill and respect for its employees usually increases the employees’ loyalty to the organization and their support of its objectives. After years of bad publicity regarding environmental damage and its poor treatment of workers, Wal-Mart appears to have realized the importance of corporate social responsibility to a company’s bottom line. Over 92 percent of Wal-Mart associates now have health insurance, and Wal-Mart has been working hard to improve diversity as well. In 2008 alone, Wal-Mart received 37 separate awards and distinctions for its diversity efforts. The company has taken strides toward being more sustainable as well—by doing everything from introducing low-emissions vehicles to its shipping fleet and installing solar panels on store rooftops. Wal-Mart has even stated a goal to be zero-waste.36

Employees’ perception that their firm has an ethical culture leads to performance- enhancing outcomes within the organization.37 For the sake of both productivity and teamwork, it is essential that employees both within and between departments throughout the organization share a common vision of trust. The influence of higher levels of trust is greatest on relationships within departments or work groups, but trust is a significant factor in relationships between departments as well. Consequently, programs that create a work environment that is trustworthy make individuals more willing to rely and act on the decisions and actions of their coworkers. In such a work environment, employees can reasonably expect to be treated with full respect and consideration by their coworkers and superiors. Trusting relationships between upper management and managers and their subordinates contribute to greater decision making efficiencies. One survey found that when employees see values such as honesty, respect, and trust applied frequently in the workplace, they feel less pressure to compromise ethical standards, observe less misconduct, are more satisfied with their organizations overall, and feel more valued as employees.38

The ethical culture of a company seems to matter to employees. According to a report on employee loyalty and work practices, companies viewed as highly ethical by their employees were six times more likely to keep their workers.39 Also, employees who view their company as having a strong community involvement feel more loyal to their employers and feel positive about themselves.

Ethics Contribute to Investor Loyalty Ethical conduct results in shareholder loyalty and can contribute to success that supports even broader social causes and concerns. Former Wal-Mart CEO Lee Scott has stated that “As businesses, we have a responsibility to society. We also have an extraordinary opportunity. Let me be clear about this point, there is no conflict between delivering value to shareholders and helping solve bigger societal problems. In fact, they can build upon each other when developed, aligned, and executed right.”40

Investors today are increasingly concerned about the ethics, social responsibility, and reputation of companies in which they invest, and various socially responsible mutual funds and asset management firms can help investors purchase stock in ethical companies.

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Investors are also recognizing that an ethical culture provides a foundation for efficiency, productivity, and profits. On the other hand, investors know too that negative publicity, lawsuits, and fines can lower stock prices, diminish customer loyalty, and threaten a company’s long-term viability. Many companies accused of misconduct have experienced dramatic declines in the value of their stock when concerned investors divested their stocks and bonds. Warren Buffett and his company Berkshire Hathaway command significant respect from investors because of their track record of financial returns and the integrity of their organizations. Buffett says, “I want employees to ask themselves whether they are willing to have any contemplated act appear the next day on the front page of their local paper—to be read by their spouses, children and friends—with the reporting done by an informed and critical reporter.” The high level of accountability and trust Buffett places in his employees translates into investor trust and confidence.41

TIAA-CREF investor participants were asked would they choose a financial services company with strong ethics or higher returns. Surprisingly, 92 percent of respondents said

they would choose ethics while only 5 percent chose higher returns.42 Investors look at the bottom line for profits or the potential for increased stock

prices or dividends. But they also look for any potential flaws in the company’s performance, conduct, and financial reports. Therefore, gaining investors’ trust and confidence is vital to sustaining the financial stability of the firm.

Ethics Contribute to Customer Satisfaction It is generally accepted that customer satisfaction is one of the most important factors in successful business strategy. Although a company must continue to develop, alter, and adapt products to keep pace with customers’ changing desires and preferences, it must also seek to develop long-term relationships with customers and its stakeholders. Patagonia, Inc. has engaged in a broad array of environmentally, socially responsible and ethical behaviors over many years to better connect with its target markets. The company has donated more than $31 million to over 1,000 environmentally oriented causes. Employees can

volunteer for an environmental group and get up to two months pay. The entire clothing line was sourced using organic cotton in 1996. Targeting Generation Y, the company is selling “Vote the Environment” t-shirts and donates $5 from each to the League of Conservation Voters. In addition, the company is currently creating the Patagonia National Park to protect wildland ecosystems and biodiversity in Chile and Argentina. All new facilities are being built with LEED certification showing their commitment to green building and the environment.43

For most businesses, both repeat purchases and an enduring relationship of mutual respect and cooperation with their customers are essential for success. By focusing on customer satisfaction, a company continually deepens the customer’s dependence on the company, and as the customer’s confidence grows, the firm gains a better understanding of how to serve the customer so the relationship may endure. Successful businesses provide an opportunity for customer feedback, which can engage the customer in cooperative problem solving. As is often pointed out, a happy customer will come back, but a disgruntled customer will tell others about his or her dissatisfaction with a company and discourage friends from dealing with it.

The public’s trust is essential to maintaining a good long-term relationship between a business and consumers. The Millennium Poll of 25,000 citizens in 23 countries found

Customer satisfaction is one of the

most important factors in successful

business strategy.

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that almost 60 percent of people focus on social responsibility ahead of brand reputation or financial factors when forming impressions of companies.44 As social responsibility becomes more important for companies, it has been suggested that corporate social responsibility is a sign of good management and that it may, according to one study, indicate good financial performance. However, another study indicates that the reverse may be true, that companies who have good financial performance are able to spend more money on social responsibility.45 Google would be an example of such a company. Google shows extreme care for its employees at its Googleplex headquarters in Mountain View, CA. Investment in their employees satisfaction and retention involves providing bicycles for efficient travel between meetings, lava lamps, massage chairs, shared work cubicles to allow for intellectual stimulation and idea generation, laptops for every employee, foosball, pool tables, volleyball courts, assorted video games, pianos, ping pong tables, lap pools, gyms, yoga and dance classes, meditation classes, wine tasting groups, film clubs, salsa dancing clubs, healthy lunches for staff at a wide variety of cafes, outdoor seating for “brainstorming,” and snack rooms packed with various snacks and drinks.46

When an organization has a strong ethical environment, it usually focuses on the core value of placing customers’ interests first. Putting customers first does not mean that the interests of employees, investors, and local communities should be ignored, however. An ethical culture that focuses on customers incorporates the interests of all employees, suppliers, and other interested parties in decisions and actions. Employees working in an ethical environment support and contribute to the process of understanding customers’ demands and concerns. Ethical conduct toward customers builds a strong competitive position that has been shown to affect business performance and product innovation positively.

Ethics Contribute to Profits A company cannot nurture and develop an ethical culture unless it has achieved adequate financial performance in terms of profits. Businesses with greater resources—regardless of their staff size—have the means to practice social responsibility while serving their customers, valuing their employees, and establishing trust with the public. Ethical conduct toward customers builds a strong competitive position that has been shown to affect business performance and product innovation positively.47 Green Mountain Coffee Company, which sells products under the Green Mountain, Newman’s Own, and Keurig brands, has built a strong reputation on social responsibility. The company donates to local and coffee-growing communities, as well as buys carbon offsets. Also, 28 percent of its coffee purchases are Fair Trade certified. Its CSR activities have led to more business. Organizations such as Creighton University chose to purchase Green Mountain Coffee products because students and educators appreciate the company’s environmentally friendly practices.48 Every day, business newspapers and magazines offer new examples of the consequences of business misconduct. It is worth noting, however, that most of these companies have learned from their mistakes and recovered after they implemented programs to improve ethical and legal conduct.

Ample evidence shows that being ethical pays off with better performance. As indicated earlier, companies that are perceived by their employees as having a high degree of honesty and integrity have a much higher average total return to shareholders than do companies perceived as having a low degree of honesty and integrity.49 A recent study demonstrates that, even using a variety of measurement methods, companies actively engaging in corporate social responsibility have higher pre-tax income than firms that are

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merely focused on financial performance; therefore ambition and performance are not in conflict with being ethical.50 These results provide strong evidence that corporate concern for ethical conduct is becoming a part of strategic planning toward obtaining the outcome of higher profitability. Rather than being just a compliance program, ethics is becoming one of the management issues within the effort to achieve competitive advantage.

OUR FRAMEWORK FOR STUDYING BUSINESS ETHICS

We have developed a framework for this text to help you understand how people make ethical decisions and deal with ethical issues. Table 1–3 summarizes each element in the framework and describes where each topic is discussed in this book.

In Part One, we provide an overview of business ethics. Chapter 1 defines the term business ethics and explores the development and importance of this critical business area. In Chapter 2, we explore the role of various stakeholder groups in social responsibility and corporate governance.

Part Two focuses on ethical issues and the institutionalization of business ethics. In Chapter 3, we examine business issues that create ethical decision making in organizations. In Chapter 4, we look at the institutionalization of business ethics including both mandatory and voluntary societal concerns.

In Part Three, we delineate the ethical decision making process and then look at both individual factors and organizational factors that influence decisions. Chapter 5 describes the ethical decision making process from an organizational perspective. Chapter 6 explores individual factors that may influence ethical decisions in business, including moral philosophies and cognitive moral development. Chapter 7 focuses on the organizational dimensions including corporate culture, relationships, and conflicts.

In Part Four, we explore systems and processes associated with implementing business ethics into global strategic planning. Chapter 8 discusses the development of an effective ethics program. In Chapter 9, we examine issues related to implementing and auditing ethics programs. And finally, Chapter 10 considers ethical issues in a global context.

We hope that this framework will help you to develop a balanced understanding of the various perspectives and alternatives available to you when making ethical business decisions. Regardless of your own personal values, the more you know about how individuals make decisions, the better prepared you will be to cope with difficult ethical decisions. Such knowledge will help you improve and control the ethical decision making environment in which you work.

It is your job to make the final decision in an ethical situation that affects you. Sometimes that decision may be right; sometimes it may be wrong. It is always easy to look back with hindsight and know what one should have done in a particular situation. At the time, however, the choices might not have been so clear. To give you practice making ethical decisions, Part Five of this book contains a number of cases. In addition, each chapter begins with a vignette, “An Ethical Dilemma,” and ends with a minicase, “Resolving Ethical Business Challenges,” that involves ethical problems. We hope they will give you a better sense of the challenges of making ethical decisions in the real business world.

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Chapter 1: The Importance of Business Ethics 23

TABLE 13 Our Framework for Studying Business Ethics

Chapter Highlights

1. The Importance of Business Ethics ● Defi nitions

● Reasons for studying business ethics

● History

● Benefi ts of business ethics

2. Stakeholder Relationships, Social Responsibility, and Corporate Governance

● Stakeholder relationships

● Stakeholder infl uences in social responsibility

● Corporate governance

3. Emerging Business Ethics Issues ● Recognizing an ethical issue

● Honesty, fairness, and integrity

● Ethical issues and dilemmas in business: abusive and disruptive behavior, lying, confl icts of interest, bribery, corporate intelligence, discrimination, sexual harassment, environmental issues, fraud, insider trading, intellectual property rights, and privacy

● Determining an ethical issue in business

4. The Institutionalization of Business Ethics

● Mandatory requirements

● Voluntary requirements

● Core practices

● Federal Sentencing Guidelines for Organizations

● Sarbanes–Oxley Act

5. Ethical Decision Making and Ethical Leadership

● Ethical issue intensity

● Individual factors in decision making

● Organizational factors in decision making

● Opportunity in decision making

● Business ethics evaluations and intentions

● The role of leadership in a corporate culture

● Leadership styles infl uence ethical decisions

● Habits of strong ethical leaders

(continued)

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24 Part : An Overview of Business Ethics

TABLE 13 Our Framework for Studying Business Ethics (continued)

Chapter Highlights

6. Individual Factors: Moral Philosophies and Values

● Moral philosophies, including teleological development philosophies; and cognitive moral deontological, relativist, virtue ethics, and justice philosophies

● Stages of cognitive moral development

7. Organizational Factors: The Role of Ethical Culture and Relationships

● Corporate culture

● Interpersonal relationships

● Whistle-blowing

● Opportunity and confl ict

8. Developing an Effective Ethics Program

● Ethics programs

● Codes of ethics

● Program responsibility

● Communication of ethical standards

● Systems to monitor and enforce ethical standards

● Continuous improvement of ethics programs

9. Implementing and Auditing Ethics Programs

● Implementation programs

● Ethics audits

10. Business Ethics in a Global Economy ● Ethical perceptions economy

● Culture and cultural relations

● Multinational corporations

● Universal ethics

● Global ethics issues

SUMMARY This chapter provides an overview of the field of business ethics and introduces the framework for the discussion of business ethics. Business ethics comprises principles and standards that guide behavior in the world of business. Investors, employees, customers, interest groups, the legal system, and the community often determine whether a specific action is right or wrong, ethical or unethical.

Studying business ethics is important for many reasons. Recent incidents of unethical activity in business underscore the widespread need for a better understanding of the

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Chapter 1: The Importance of Business Ethics 25

factors that contribute to ethical and unethical decisions. Individuals’ personal moral philosophies and decision making experience may not be sufficient to guide them in the business world. Studying business ethics will help you begin to identify ethical issues and recognize the approaches available to resolve them.

The study of business ethics evolved through five distinct stages. Before 1960, business ethics issues were discussed primarily from a religious perspective. The 1960s saw the emergence of many social issues involving business and the idea of social conscience as well as a rise in consumerism, which culminated with Kennedy’s Consumers’ Bill of Rights. Business ethics began to develop as an independent field of study in the 1970s, with academics and practitioners exploring ethical issues and attempting to understand how individuals and organizations make ethical decisions. These experts began to teach and write about the idea of corporate social responsibility, an organization’s obligation to maximize its positive impact on stakeholders and to minimize its negative impact. In the 1980s, centers of business ethics provided publications, courses, conferences, and seminars, and many companies established ethics committees and social policy committees. The Defense Industry Initiative on Business Ethics and Conduct was developed to guide corporate support for ethical conduct; its principles had a major impact on corporate ethics.

However, less government regulation and an increase in businesses with international operations raised new ethical issues. In the 1990s, government continued to support self- regulation. The FSGO sets the tone for organizational ethics programs by providing incentives for companies to take action to prevent organizational misconduct. The twenty- first century ushered in a new set of ethics scandals, suggesting that many companies had not fully embraced the public’s desire for higher ethical standards. The Sarbanes–Oxley Act therefore stiffened penalties for corporate fraud and established an accounting oversight board. The current trend is away from legally based ethical initiatives in organizations toward cultural initiatives that make ethics a part of core organizational values. The ethical component of a corporate culture relates to the values, beliefs, and established and enforced patterns of conduct that employees use to identify and respond to ethical issues. The term ethical culture describes the component of corporate culture that captures the rules and principles that an organization defines as appropriate conduct. It can be viewed as the character or decision making process that employees use to determine whether their responses to ethical issues are right or wrong.

Research and anecdotes demonstrate that building an ethical reputation among employees, customers, and the general public provides benefits that include increased efficiency in daily operations, greater employee commitment, increased investor willingness to entrust funds, improved customer trust and satisfaction, and better financial performance. The reputation of a company has a major effect on its relationships with employees, investors, customers, and many other parties and thus has the potential to affect its bottom line.

Finally, this text introduces a framework for studying business ethics. Each chapter addresses some aspect of business ethics and decision making within a business context. 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, and global business ethics.

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26 Part : An Overview of Business Ethics

business ethics

principles

values

Consumers’ Bill of Rights

social responsibility

Defense Industry Initiative on Business Ethics and Conduct

Federal Sentencing Guidelines for Organizations

Sarbanes–Oxley Act

ethical culture

I M P O R T A N T T E R M S F O R R E V I E W

Frank Garcia was just starting out as a salesperson with Acme Corporation. A c m e ’ s c o r p o r a t e culture was top-down, or hierarchical. Because of the competitive nature of the medical supplies industry, few mistakes were tolerated. Otis Hillman was a buyer for Thermocare, a national hospital chain. Frank’s first meeting with Otis was a success, resulting in a $500,000 contract. This sale represented a significant increase for Acme and an additional $1,000 bonus for Frank.

Some months later, Frank called on Thermocare, seeking to increase the contract by $500,000. “Otis, I think you’ll need the additional inventory. It looks as if you didn’t have enough at the end of last quarter,” said Frank.

“You may be right. Business has picked up. Maybe it’s because of your product, but then again, maybe not. It’s still not clear to me whether Acme is the best for us. Speaking of which, I heard that you have season tickets to the Cubs!” replied Otis.

Frank thought for a moment and said, “Otis, I know that part of your increases is due to our quality products. How about we discuss this over a ball game?”

“Well, OK,” Otis agreed. By the seventh-inning stretch, Frank had

convinced Otis that the additional inventory was needed and offered to give Thermocare a pair of season tickets. When Frank’s boss, Amber, heard of the sale, she was very pleased. “Frank, this is

great. We’ve been trying to get Thermocare’s business for a long time. You seem to have connected with their buyer.” As a result of the Thermocare account, Frank received another large bonus check and a letter of achievement

from the vice president of marketing. Two quarters later, Frank had become one of

the top producers in the division. At the beginning of the quarter, Frank had run the numbers on Thermocare’s account and found that business was booming. The numbers showed that Otis’s business could probably handle an additional $750,000 worth of goods without hurting return on assets. As Frank went over the figures with Otis, Otis’s response was, “You know, Frank, I’ve really enjoyed the season tickets, but this is a big increase.” As the conversation meandered, Frank soon found out that Otis and his wife had never been to Cancun, Mexico. Frank had never been in a situation like this before, so he excused himself to another room and called Amber about what he was thinking of doing.

“Are you kidding!” responded Amber. “Why are you even calling me on this? I’ll find the money somewhere to pay for it.”

“Is this OK with Acme?” asked Frank. “You let me worry about that,” Amber told

him. When Frank suggested that Otis and his

wife be his guests in Cancun, the conversation

RESOLVING ETHICAL BUSINESS CHALLENGES*

sh ut

te rs

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es /B

ru no

M ed

le y

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Chapter 1: The Importance of Business Ethics 27

seemed to go smoothly. In Cancun, Otis decided to purchase the additional goods, for which Frank received another bonus increase and another positive letter from headquarters.

Some time later, Amber announced to her division that they would be taking all of their best clients to Las Vegas for a thank-you party. One of those invited was Thermocare. When they arrived, Amber gave each person $500 and said, “I want you to know that Acme is very grateful for the business that you have provided us. As a result of your understanding the qualitative differences of our products, we have doubled our production facilities. This trip and everything that goes with it for the next few days is our small way of saying thank you. Every one of you has your salesperson here. If there is anything that you need, please let him or her know, and we’ll try to accommodate you. Have a good time!”

That night Otis saw Frank at dinner and suggested to him that he was interested in attending an “adult entertainment” club. When Frank came

to Amber about this, she said, “Is he asking you to go with him?”

“No, Amber, not me!” “Well, then, if he’s not asking you to go, I

don’t understand why you’re talking to me. Didn’t I say we’d take care of their needs?”

“But what will Acme say if this gets out?” asked Frank.

“Don’t worry; it won’t,” said Amber.

Q U E S T I O N S • E X E R C I S E S 1. What are the potential ethical issues faced by

Acme Corporation? 2. What should Acme do if there is a desire to

make ethics a part of its core organizational values?

3. Identify the ethical issues of which Frank needs to be aware.

4. Discuss the advantages and disadvantages of each decision that Frank could make.

*This case is strictly hypothetical; any resemblance to real persons, companies, or situations is coincidental.

Check your EQ, or Ethics Quotient, by completing the following. Assess your performance to evaluate your overall understanding of the chapter material.

1. Business ethics focuses mostly on personal ethical issues. Yes No 2. Business ethics deals with right or wrong behavior within a particular organization. Yes No 3. An ethical culture is based upon the norms and values of the company. Yes No 4. Business ethics contributes to investor loyalty. Yes No 5. The trend is away from cultural or ethically based initiatives to legal initiatives in

organizations. Yes No

6. Investments in business ethics do not support the bottom line. Yes No

ANSWERS:1. No. Business ethics focuses on organizational concerns (legal and ethical—employees, customers, suppliers, society). 2. Yes. That stems from the basic defi nition. 3. Yes. Norms and values help create an organizational culture and are key in supporting or not supporting ethical conduct. 4. Yes. Many studies have shown that trust and ethical conduct contribute to investor loyalty. 5. No. Many businesses are communicating their core values to their employees by creating ethics programs and appointing ethics offi cers to oversee them. 6. No. Ethics initiatives cause consumer, employee, and shareholder loyalty and positive behavior that contributes to the bottom line.

C H E C K Y O U R E Q

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Chapter 1 1. “New US Consumer Survey Shows High Distrust of Financial

Services Companies,” Business Wire, January 20, 2009, http:// findarticles.com/p/articles/mi_m0EIN/is_2009_Jan_20/ai_ n31202849/ (accessed May 27, 2009).

2. “New National Poll: Nearly 40 Percent of ‘Ethically Prepared’ Teens Believe Lying, Cheating, or Violence Necessary to Succeed,” Junior Achievement/Deloitte Teen Ethics Survey, http://www. ja.org/files/polls/2008-JA-Deloitte-Teen-Ethics-Survey-Data.pdf (accessed January 13, 2009).

3. “Teens Respect Good Business Ethics,” USA Today, December 12, 2005, B1.

4. Marianne Jennings, “An Ethical Breach by Any Other Name,” Financial Engineering News, January/February 2006.

5. Paul W. Taylor, Principles of Ethics: An Introduction to Ethics, 2nd ed. (Encino, CA: Dickenson, 1975), 1.

7. Wroe Alderson, Dynamic Marketing Behavior (Homewood, IL: Irwin, 1965), 320.

8. Ethics Resource Center, 2005 National Business Ethics Survey: How Employees Perceive Ethics at Work (Washington, DC: Ethics Resource Center, 2005), 4, 28, 29.

9. Heather Timmons and Bettina Wassener, “Satyam Chief Admits Huge Fraud,” http://www.nytimes.com/2009/01/08/business/ worldbusiness/08satyam.html (accessed January 13, 2009).

10. Mark Dolliver, “Corporate Reputation Hits a New Low,” April 28, 2009, http://www.adweek.com/aw/content_display/data-center/ research/e3i0dac803b1646d6af9cc89a12ad823619 (accessed May 27, 2009).

11. “Ex-Goldman Associate Is Sentenced in Insider Trading Case,” New York Times, January 13, 2009, http://dealbook.blogs.nytimes. com/2008/01/03/ex-goldman-associate-is-sentenced-in-insider- trading-case/ (accessed January 13, 2009).

12. “PWC Accounting Firm Reaches $97 Million Settlement with Ohio in AIG Case,” Insurance Journal, http://www. insurancejournal.com/news/national/2008/10/06/94335.htm (accessed January 14, 2009).

13. “In Wake of Stevens Case Dismissal, Alaska Republicans Call for Special Election,” http://www.foxnews.com/politics/2009/04/02/ wake-stevens-case-dismissal-alaska-republicans-special-election/ (accessed May 27, 2009).

14. John Lyman, “Who Is Scooter Libby? The Guy Behind the Guy,” Center for American Progress (October 28, 2005).

15. Leonard Cassuto, “Big Trouble in the World of ‘Big Physics’,” Salon, September 16, 2002, http://dir.salon.com/story/tech/ feature/2002/09/16/physics/index.html (accessed August 4, 2009).

16. Nicholas Wade and Choe Sang-Hun, “Researcher Faked Evidence of Human Cloning, Koreans Report,” The New York Times, January 10, 2006, http://www.nytimes.com/2006/01/10/ science/10clone.html?_r=1 (accessed August 4, 2009).

17. Dylan Hernandez, “Dodgers’ Manny Ramirez suspended 50 games after failing drug test,” May 8, 2009, http://www.latimes.com/sports/ la-sp-manny-ramirez8-2009may08,0,7402416,print.story (accessed June 3, 2009).

18. “Caraco Pharmaceutical Laboratories, Lfd. Announces a Nationwide Voluntary Recall of All Lots of Digoxin Tablets Due to Size,” FDA Product Recall, March 31, 2009, http://www.hipusa. com/downloads/digoxinrecall2009.pdf (accessed May 27, 2009).

19. Archie B. Carroll and Ann K. Buchholtz, Business and Society: Ethics and Stakeholder Management (Cincinnati: South-Western, 2006), 452–455.

20. Alan R. Yuspeh, “Development of Corporate Compliance Programs: Lessons Learned from the DII Experience,” in Corporate Crime in America: Strengthening the “Good Citizenship” Corporation (Washington, DC: U.S. Sentencing Commission, 1995), 71–79.

21. Eleanor Hill, “Coordinating Enforcement Under the Department of Defense Voluntary Disclosure Program,” in Corporate Crime in America: Strengthening the “Good Citizenship” Corporation (Washington, DC: U.S. Sentencing Commission, 1995), 287–294.

22. “Huffing and Puffing in Washington: Can Clinton’s Plan Curb Teen Smoking?” Consumer Reports 60 (1995): 637.

23. Arthur Levitt, with Paula Dwyer, Take on the Street (New York: Pantheon Books, 2002).

24. Hill, “Coordinating Enforcement.” 25. Richard P. Conaboy, “Corporate Crime in America: Strengthening

the Good Citizen Corporation,” in Corporate Crime in America: Strengthening the “Good Citizenship” Corporation (Washington, DC: U.S. Sentencing Commission, 1995), 1–2.

26. United States Code Service (Lawyers’ Edition), 18 U.S.C.S. Appendix, Sentencing Guidelines for the United States Courts (Rochester, NY: Lawyers Cooperative Publishing, 1995), sec. 8A.1.

27. Steve Stecklow and Diya Gullapalli, “SEC Sues Reserve’s Bent and Son,” Wall Street Journal, May 6, 2009, http://online.wsj.com/ article/SB124154900090988321.html (accessed May 5, 2009).

28. “WorldCom CEO Slaps Arthur Andersen,” CNN, July 8, 2002, www.cnn.com.

29. “Fraud Inc.,” CNN/Money, http://money.cnn.com/news/specials/ corruption/ (accessed February 5, 2002); “SEC Formalizes

N O T E S

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Investigation into Halliburton Accounting,” Wall Street Journal online, December 20, 2002, http://online.wsj.com.

30. World Economic Forum, “Trust in Governments, Corporations and Global Institutions” December 15, 2005, http://www2. weforum.org/site/homepublic.nsf/Content/Full+Survey_+Trust+ in+Governments,+Corporations+and+Global+Institutions+ Continues+to+Decline.html (accessed August 4, 2009).

31. “Corporate Reform Bill Passed,” CNN, July 25, 2002, www.cnn. com.

32. KPMG Forensic Integrity Survey 2008-2009, http://www.kpmg. com.br/publicacoes/forensic/Integrity_Survey_2008_2009.pdf (accessed June 3, 2009).

33. Masamitsu Sakurai, “Environmental Commitments in Global Business,” Ethisphere, May 13, 2009, http://ethisphere.com/ environmental-commitments-in-global-business/ (accessed May 27, 2009).

34. Bernard J. Jaworski and Ajay K. Kohli, “Market Orientation: Antecedents and Consequences,” Journal of Marketing 57 (1993): 53–70.

35. Ethics Resource Center, 2000 National Business Ethics Survey: How Employees Perceive Ethics as Work (Washington, DC: Ethics Resource Center, 2000), 67.

36. Wal-Mart Sustainability Progress Report, 2008, http:// walmartstores.com/Sustainability/7951.aspx; Wal-Mart Stores, Inc., http://walmartstores.com (accessed June 2, 2009).

37. Terry W. Loe, “The Role of Ethical Culture in Developing Trust, Market Orientation and Commitment to Quality” (PhD diss., University of Memphis, 1996).

38. Ethics Resource Center, 2000 National Business Ethics Survey, 5. 39. John Galvin, “The New Business Ethics,” SmartBusinessMag.com,

June 2000, 99. 40. “How Ethics Influence Future Profitability—Wal-Mart’s Way,” May 20,

2009, http://www.insideretailing.com.au/Default.aspx?articleId=5395&a rticleType=ArticleView&tabid=53 (accessed June 3, 2009).

41. “Biz Deans Talk—Business Management Education Blog,” January 2, 2009, http://www.deanstalk.net/deanstalk/2009/01/warren- buffetts.html (accessed May 27, 2009).

42. “Investors Prefer Ethics over High Return,” USA Today, January 16, 2006, B1.

43. Patagonia, Zumer, http://www.zumer.com/companies/show/18 (accessed May 27, 2009.)

44. “Trend Watch,” Business Ethics, March/April 2000, 8. 45. Marjorie Kelly, “Holy Grail Found. Absolute, Definitive Proof

That Responsible Companies Perform Better Financially,” Business Ethics, Winter 2004.

46. “Google’s Corporate Culture,” http://www.google.com/intl/en/ corporate/culture.html (accessed May 27, 2009).

47. O. C. Ferrell, Isabelle Maignan, and Terry W. Loe, “The Relationship Between Corporate Citizenship and Competitive Advantage,” in Rights, Relationships, and Responsibilities, ed. O. C. Ferrell, Lou Pelton, and Sheb L. True (Kennesaw, GA: Kennesaw State University, 2003).

48. Annual Report 2008, Green Mountain Coffee, http://www. greenmountaincoffee.com/gmcrcontent/GMCR-ANNUAL- REPORT-2008.pdf (accessed June 2, 2009).

49. Galvin, “The New Business Ethics.” 50. Chung Hua-Shen and Yuan Change, “Ambition Versus

Conscience, Does Corporate Social Responsibility Pay Off? The Application of Matching Methods,” Journal of Business Ethics, (2009) 88: 133–153.

Chapter 2 1. Vikas Anand, Blake E. Ashforth, and Mahendra Joshi, “Business

as Usual: The Acceptance and Perpetuation of Corruption in

Organizations,” Academy of Management Executive 18, no. 2 (2004): 39–53.

2. Debbie Thorne, O. C. Ferrell, and Linda Ferrell, Business and Society (Boston: Houghton Mifflin, 2003), 64–65.

3. Stephanie Simon and Julie Jargon, “PETA Ads to Target McDonald’s,” The Wall Street Journal, May 1, 2009, http://online.wsj.com/article/ SB124112986550474853.html (accessed June 2, 2009).

4. Lynn Brewer, Robert Chandler, and O. C. Ferrell, “Managing Risks for Corporate Integrity: How to Survive an Ethical Misconduct Disaster,” (Mason OH: Texere/Thomson, 2006), 11.

5. Roger Parloff, “Wall Street: It’s Payback Time,” Fortune, January 19, 2009, 61.

6. Press Release, “JP Morgan Chase Completes Bear Stearns Acquisition,” http://www.bearstearns.com/includes/pdfs/ PressRelease_BSC_31May08.pdf (accessed August 4, 2009).

7. Ji Lee, “The End,” Conde Nast Portfolio, December 9, 2008, 116– 117.

8. David Enrich, “Citigroup Is Halting Some Payouts,” The Wall Street Journal, June 2, 2009, http://online.wsj.com/article/ SB124391159480975333.html (accessed June 11, 2009).

9. Brewer, Chandler, and Ferrell, “Managing Risks for Corporate Integrity,” 11.

10. Adapted from Isabelle Maignan, O. C. Ferrell, and Linda Ferrell, “A Stakeholder Model for Implementing Social Responsibility in Marketing,” European Journal of Marketing 39 (2005): 956–977.

11. Ibid. 12. Ibid. 13. Thorne, Ferrell, and Ferrell, Business and Society. 14. Isabelle Maignan and O. C. Ferrell, “Corporate Social

Responsibility: Toward a Marketing Conceptualization,” Journal of the Academy of Marketing Science 32 (2004): 3–19.

15. Ibid. 16. Ibid. 17. Roger Bate, “China’s Bad Medicine,” The Wall Street Journal, May

5, 2009, http://online.wsj.com/article/SB124146383501884323.html (accessed June 10, 2009).

18. Maignan and Ferrell, “Corporate Social Responsibility.” 19. G. A. Steiner and J. F. Steiner, Business, Government, and Society

(New York: Random House, 1988). 20. Milton Friedman, “Social Responsibility of Business Is to Increase

Its Profits,” New York Times Magazine, September 13, 1970, 122–126.

21. “Business Leaders, Politicians and Academics Dub Corporate Irresponsibility ‘An Attack on America from Within,’” Business Wire, November 7, 2002, via America Online.

22. Adam Smith, The Theory of Moral Sentiments, Vol. 2. (New York: Prometheus, 2000).

23. Theodore Levitt, The Marketing Imagination (New York: Free Press, 1983).

24. Norman Bowie, “Empowering People as an End for Business,” in People in Corporations: Ethical Responsibilities and Corporate Effectiveness, ed. Georges Enderle, Brenda Almond, and Antonio Argandona (Dordrecht, Netherlands: Kluwer Academic Press, 1990), 105–112.

25. Herman Miller, www.hermanmiller.com; level, http://levelcertified. org/ (accessed June 2, 2009).

26. Press Release, “PNC Commits $28 Million to National City Communities for 2009,” PNC Media Room, November 12, 2008, http://pnc.mediaroom.com/index.php?s=43&item=595 (accessed August 4, 2009).

27. Paige Brady, “Walking the Walk,” Whole Foods Market Blog, April 23, 2009, http://blog.wholefoodsmarket.com/2009/04/ walking-the-walk/ (accessed August 4, 2009).

28. Ibid.

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29. Steve Quinn, “Wal-Mart Green with Energy,” [Fort Collins] Coloradoan, July 24, 2005, E1–E2.

30. ISO Standards Catalogue, http://www.iso.org/iso/iso_catalogue. htm (accessed June 2, 2009).

31. Anne Carey and Keith Simmons, “USA Leads in Wind Power,” American Wind Energy Association and the Global Wind Energy Council, printed in USA Today, February 17, 2009, p. A1.

32. Tobias Webb, James Rose, and Peter Davis, “ISO 26000 Indicates Immaturity: If Corporate Responsibility Is to Be Effective, Prominence Has to Be Given to Both Quantitative and Qualitative Analyses,” Ethical Corporation (December 2005): 9.

33. Archie B. Carroll, “The Pyramid of Corporate Social Responsibility: Toward the Moral Management of Organizational Stakeholders,” Business Horizons 34 (1991): 42.

34. Isabelle Maignan, O. C. Ferrell, and G. Tomas M. Hult, “Corporate Citizenship: Cultural Antecedents and Business Benefits,” Journal of the Academy of Marketing Science 27 (1999): 457.

35. Gallup Daily Tracking, http://www.gallup.com/poll/us.aspx?CSTS= pollnav&to=POLL-US-News (accessed June 2, 2009).

36. Dodge v. Ford Motor Co., 204 Mich.459, 179 N.W. 668, 3 A.L.R. 413 (1919).

37. “The Moral Hazards of Managing Other People’s Money,” The Wall Street Journal, April 29, 2009, http://online.wsj.com/article/ SB124087477951861329.html (accessed June 2, 2009).

38. Alfred Marcus and Sheryl Kaiser, “Managing Beyond Compliance: The Ethical and Legal Dimensions of Corporate Responsibility,” North Coast Publishers, 2006, 79.

39. Joann S. Lublin, “Corporate Directors’ Group Gives Repair Plan to Boards,” The Wall Street Journal, March 24, 2009, http://online. wsj.com/article/SB123784649341118187.html (accessed June 11, 2009).

40. Phil Mattingly, “AIG Chief Goes Off Script, Says Employees Will Return Some of Bonus Money,” ” CQ Politics, March 18, 2009, http://www.cqpolitics.com/wmspage.cfm?docID=news- 000003077969 (accessed August 4, 2009).

41. Ben W. Heineman, Jr., “Are You a Good Corporate Citizen?” Wall Street Journal, June 28, 2005, B2.

42. Phred Dvorak, “Poor Year Doesn’t Stop CEO Bonuses,” The Wall Street Journal, March 18, 2009, http://online.wsj.com/article/ SB123698866439126029.html (accessed June 11, 2009).

43. Darryl Reed, “Corporate Governance Reforms in Developing Countries,” Journal of Business Ethics 37 (2002): 223–247.

44. Bryan W. Husted and Carlos Serrano, “Corporate Governance in Mexico,” Journal of Business Ethics 37 (2002): 337–348.

45. Maria Maher and Thomas Anderson, Corporate Governance: Effects on Firm Performance and Economic Growth (Paris: Organisation for Economic Co-operation and Development, 1999).

46. A. Demb and F. F. Neubauer, The Corporate Board: Confronting the Paradoxes (Oxford, Eng.: Oxford University Press, 1992).

47. Maher and Anderson, Corporate Governance. 48. Organisation for Economic Co-operation and Development, The

OECD Principles of Corporate-Governance (Paris: Organisation for Economic Co-operation and Development, 1999).

49. Louis Lavelle, “The Best and Worst Boards,” BusinessWeek, October 7, 2002, 104–114.

50. Damian Paletta, Maya Jackson Randall, and Michael R. Crittenden, “Geithner Calls for Tougher Standards on Risk,” The Wall Street Journal, March 25, 2009, http://online.wsj.com/ article/SB123807231255147603.html (accessed June 11, 2009).

51. Melvin A. Eisenberg, “Corporate Governance: The Board of Directors and Internal Control,” Cordoza Law Review 19 (1997): 237.

52. S. Trevis Certo, Catherine Dalton, Dan Dalton, and Richard Lester, “Boards of Directors’ Self-Interest: Expanding for Pay in Corporate Acquisitions?” The Journal of Business Ethics 77, no. 2 (January 2008): 219–230.

53. Geoffrey Colvin, “CEO Knockdown,” Fortune, April 4, 2005. 54. David Weidner, “Changing the Dynamic of Shareholder

Influence,” The Wall Street Journal, June 4, 2009, http://online.wsj. com/article/SB124406195031882459.html (accessed June 11, 2009).

55. Saks Shareholders Call for Annual Director Election,” Reuters, http://www.reuters.com/article/ousiv/idUSTRE5525DZ20090603 (accessed June 3, 2009).

56. Amy Borrus, “Should Directors Be Nervous,” BusinessWeek online, March 6, 2006 http://www.businessweek.com/magazine/ content/06_10/b3974062.htm (accessed August 4, 2009).

57. John A. Byrne, with Louis Lavelle, Nanette Byrnes, Marcia Vickers, and Amy Borrus, “How to Fix Corporate Governance,” BusinessWeek, May 6, 2002, 69–78.

58. “How Business Rates: By the Numbers,” BusinessWeek, September 11, 2000, 148–149.

59. Michael R Crittenden and Patrick Yoest, “AIG’s Liddy Asks Employees to Give Back Bonuses,” The Wall Street Journal, March 18, 2009, http://online.wsj.com/article/SB123738312138170487. html (accessed June 11, 2009).

60. “2009 Executive PayWatch,” AFL-CIO, http://www.aflcio.org/ corporatewatch/paywatch/ (accessed June 3, 2009).

61. Sarah Anderson, John Cavanagh, Ralph Estes, Chuck Collins, and Chris Hartman, A Decade of Executive Excess: The 1990s Sixth Annual Executive. Boston: United for a Fair Economy, 1999, online, June 30, 2006, http://www.faireconomy.org/press_ room/1999/a_decade_of_executive_excess_the_1990s (accessed August 4, 2009).Louis Lavelle, “CEO Pay, The More Things Change . . .,” BusinessWeek, October 16, 2000, 106–108.

62. Kara Scanell, “SEC Ready to Require More Pay Disclosures,” The Wall Street Journal, June 3, 2009, http://online.wsj.com/article/ SB124397831899078781.html (accessed June 11, 2009).

63. Gary Strauss, “America’s Corporate Meltdown,” USA Today, June 27, 2002, 1A, 2A.

64. Li-Chiu Chi, “Do transparency and performance predict firm performance? Evidence from the Taiwan Market,” Expert Systems with Applications, Vol 36, Issue 8, October 2009, http://www. sciencedirect.com/science?_ob=ArticleURL&_udi=B6V03- 4VTVPW4-1&_user=10&_rdoc=1&_fmt=&_orig=search&_ sort=d&_docanchor=&view=c&_acct=C000050221&_ version=1&_urlVersion=0&_userid=10&md5=3b7a30dbefb291c4c 56f3a5f3a62d859 (accessed August 5, 2009).

65. Marjorie Kelly, “Business Ethics 100 Best Corporate Citizens 2005,” Business Ethics (Spring 2005): 20–25.

66. “Obesity Issue Looms Large,” Washington Wire, Wall Street Journal online, March 3, 2006, http://blogs.wsj.com/ washwire/2006/03/03/obesity-issue-looms-large/ (accessed August 4, 2009).

67. “Six in Ten Say Family Put Off Medical Care Due to Cost,” MarketWatch, April 23, 2009, http://www.marketwatch.com/story/ six-ten-say-family-put?dist=msr_8 (accessed June 3, 2009).

68. “Corporate Social Responsibility at Starbucks,” http://www. starbucks.com/aboutus/csr.asp (accessed March 21, 2006).

69. Stephanie Armour, “Maryland First to OK ‘Wal-Mart Bill’ Law Requires More Health Care Spending,” USA Today, January 13, 2006, B1.

70. Kris Hudson, “Wal-Mart to Offer Improved Health-Care Benefits,” Wall Street Journal, February 24, 2006, A2.

71. “Oil Watchdog: Running Scared on Hot Fuel,” Consumer Watchdog, April 27, 2009, http://www.oilwatchdog.org/ articles/?storyId=26724 (accessed June 3, 2009).

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Chapter 3 1. Kevin Duffy, “Beazer Homes, SEC Reach Settlement on Earnings,”

AJC Media Solutions, September 24, 2008, http://www.ajc.com/ ee/content/business/stories/2008/09/24/beazer_homes_settlement. html?cxntlid=inform_sr (accessed June 4, 2009).

2. Deborah Solomon and Mark Maremont “Bankers Face Strict New Pay Cap,” The Wall Street Journal, February 14–15, 2009, p. A1, A10.

3. Eric H. Beversluis, “Is There No Such Thing as Business Ethics?,” Journal of Business Ethics 6 (1987): 81–88. Reprinted by permission of Kluwer Academic Publishers, Dordrecht, Holland.

4. Carolyn Said, “Ellison Hones His ‘Art of War’ Tactics,” San Francisco Chronicle, June 10, 2003, A1.

5. Michael Liedtke, “Oracle CEO to Pay $122M to Settle Lawsuit,” Associated Press, Washington Post online, November 22, 2005, via http://www.accessmylibrary.com/coms2/summary_0286- 12061795_ITM (accessed August 5, 2009).

6. Beversluis, “Is There No Such Thing as Business Ethics?” 82. 7. Vernon R. Loucks, Jr., “A CEO Looks at Ethics,” Business Horizons

30 (1987): 4 8. Press Release, “As Labor Day Nears, Workplace Bullying Institute

Finds Half of Working Americans Affected by Workplace Bullying,” Zogby International, August 30, 2007, http://www.zogby.com/ search/ReadNews.cfm?ID=1353 (accessed August 5, 2009).

9. Lisa Broadt, “Proposed Laws Could Send Firms to Court for ‘Abusive’ Behavior’”, Washington Business Journal, http://www. bizjournals.com/washington/stories/2008/09/29/smallb8.html (accessed February 2, 2009).

10. David Whelan, “Only the Paranoid Resurge,” Forbes, April 10, 2006, 42–44.

11. Charles Forelle, “EU Plans Fresh Strike on Microsoft,” The Wall Street Journal, May 30, 2009, http://online.wsj.com/article/ SB124362706194767281.html (accessed June 4, 2009).

12. Duff Wilson, “Harvard Medical School in Ethics Quandary,” The New York Times, March 2, 2009, http:// www.nytimes.com/2009/03/03/business/03medschool. html?scp=3&sq=harvard%20medical&st=cse (accessed June 4, 2009).

13. “Panel Seeks Fuller Disclosure of Drug Company Payments,” Forbes, April 27, 2009, http://www.forbes.com/feeds/ hscout/2009/04/28/hscout626501.html (accessed June 4, 2009).

14. “The Company We Keep: Why Physicians Should Refuse to See Pharmaceutical Representatives,” Annals of Family Medicine 3, no. 1 (2005): 82–85.

15. “GAO Document B-295402,” Lockheed Martin Corporation, February 18, 2005, http://www.gao.gov/decisions/bidpro/295402. htm (accessed August 5, 2009).

16. John Byrne, “Fall from Grace,” BusinessWeek, August 12, 2002, 50–56.

17. Dionne Searcey, “U.S. Cracks Down on Corporate Bribes,” The Wall Street Journal, May 26, 2009, http://online.wsj.com/article/ SB124329477230952689.html (accessed June 4, 2009).

18. Ira Winkler, Corporate Espionage: What It Is, Why It’s Happening in Your Company, What You Must Do About It (New York: Prima, 1997); Ira Winkler, Spies Among Us: How to Stop the Spies, Terrorists, Hackers, and Criminals You Don’t Even Know You Encounter Every Day (Indianapolis: Wiley, 2005); Kevin D. Mitnick and William L. Simon, The Art of Intrusion: The Real Stories Behind the Exploits of Hackers, Intruders and Deceivers (Indianapolis: Wiley, 2005).

19. William M Bulkeley, “Suit Alleges Internet Espionage,” The Wall Street Journal, February 2, 2009, http://online.wsj.com/article/ SB123353995726038063.html (accessed June 11, 2009).

20. “About Equal Employment Opportunity,” U.S. Equal Employment Opportunity Commission, http://www.eeoc.gov/abouteeo/index. html (accessed August 5, 2009).

21. Bureau of the Census, Statistical Abstract of the United States, 2001 (Washington, DC: Government Printing Office, 2002), 17.

22. John C. Hendrickson, “EEOC Charges Sidley & Austin with Age Discrimination,” Equal Employment Opportunity Commission, January 13, 2005, http://www.eeoc.gov/press/1-13-05.html (accessed August 5, 2009 ).

23. “Lockheed Martin to Pay $773,000 to Settle Age Discrimination Lawsuit,” Occupational Health & Safety, April 8, 2008, http:// ohsonline.com/articles/2008/04/lockheed-martin-to-pay-773000- to-settle-age-discrimination-lawsuit.aspx (accessed June 3, 2009).

24. Sue Shellenberger, “Work and Family,” Wall Street Journal, May 23, 2001, B1.

25. “What Is Affirmative Action?” HR Content Library, October 12, 2001, http://www.hrnext.com/content/view.cfm?articles_ id=2007&subs_id=32 (accessed August 5, 2009).

26. “What Affirmative Action Is (and What It Is Not),” National Partnership for Women & Families, http://www. nationalpartnership.org/site/DocServer/AffirmativeActionFacts. pdf?docID=861 (accessed August 5, 2009).

27. Ibid 28. Ibid 29. Debbie Thorne McAlister, O. C. Ferrell, and Linda Ferrell,

Business and Society: A Strategic Approach to Social Responsibility, 2nd ed. (Boston: Houghton Mifflin, 2008), 165-166.

30. Joe Millman, “Delayed Recognition; Arab Americans Haven’t Put Much Effort into Advancing Their Rights as a Minority. Until Relatively Recently, That Is.” Wall Street Journal, November 14, 2005, R8.

31. See http://www.eeoc.gov/stats/harass.html for EEOC statistics. 32. Paula N. Rubin, “Civil Rights and Criminal Justice: Primer on

Sexual Harassment Series: NIJ Research in Action,” October 1995, http://www.ncjrs.org/txtfiles/harass.txt (accessed August 5, 2009).

33. Steve Stecklow, “Sexual-Harassment Cases Plague U.N.,” The Wall Street Journal, May 21, 2009, http://online.wsj.com/article/ SB124233350385520879.html (accessed June 11, 2009).

34. Zabkowicz v. West Bend Co., 589 F. Supp. 780, 784, 35 EPD Par.34, 766 (E.D. Wis.1984)

35. Iddo Landau, “The Law and Sexual Harassment,” Business Ethics Quarterly 15, no. 2 (2005): 531–536.

36. “Enhancements and Justice: Problems in Determining the Requirements of Justice in a Genetically Transformed Society,” Kennedy Institute Ethics Journal 15, no. 1 (2005): 3–38.

37. “EEOC Litigation Settlements, June 2004” The U.S. Employment Opportunity Commission, October 5, 2004, http://www.eeoc.gov/ litigation/settlements/settlement06-04.html (accessed August 5, 2009).

38. Alex Frangos, “Timber Backs a New ‘Green’ Standard,” The Wall Street Journal, March 29, 2006, p. B6.

39. Ibid 40. Russell Gold and Ian Talley, “Exxon CEO Advocates Emissions

Tax,” The Wall Street Journal, January 9, 2009, http://online.wsj. com/article/SB123146091530566335.html (accessed June 4, 2009).

41. William T. Neese, O. C. Ferrell, and Linda Ferrell, “An Analysis of Mail and Wire Fraud Cases Related to Marketing Communication: Implications for Corporate Citizenship,” Journal of Business Research (2005), 58, p. 910-918

42. “Snapshot,” USA Today, October 3, 2002, A1. 43. Donna Kardos, “KPMG Is Sued Over New Century,” The Wall

Street Journal, April 2, 2009, http://online.wsj.com/article/ SB123860415462378767.html (accessed June 11, 2009).

44. Matt Kranz, “More Earnings Restatements on Way,” USA Today, October 25, 2002, 3B.

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45. Tess Stynes, “WellCare Swings to Loss on Legal Costs, Investment Charges,” The Wall Street Journal, May 11, 2009, http://online.wsj. com/article/SB124204184849506371.html (accessed June 11, 2009).

46. Cassell Bryan-Low, “Accounting Firms Face Backlash over the Tax Shelters They Sold,” Wall Street Journal online, February 7, 2003, http://online.wsj.com/article/SB1044568358985594893. html?mod=googlewsj (accessed August 5, 2009)

47. Press release, “Court Bars Global Marketing Group From Payment Processing,” Federal Trade Commission, February 18, 2009, http:// www.ftc.gov/opa/2009/02/gmg.shtm (accessed June 11, 2009).

48. Gillette Co. v. Wilkinson Sword, Inc., 89-CV-3586, 1991 U.S. Dist. Lexis 21006, *6 (S.D.N.Y. January 9, 1991).

49. Am. Council of Certified Podiatric Physicians & Surgeons v. Am. Bd. of Podiatric Surgery, Inc., 185 F.3d 606, 616 (6th Cir. 1999); Johnson & Johnson-Merck Consumer Pharms. Co. v. Rhone-Poulenc Rorer Pharms., Inc., 19 F.3d 125, 129–30 (3d Cir. 1994); Coca-Cola Co. v. Tropicana Prods., Inc., 690 F.2d 312, 317 (2d Cir. 1982).

50. Jeff Bater, “FTC Says Companies Falsely Claim Cellphone Patches Provide Protection,” Wall Street Journal online, February 21, 2002, http://online.wsj.com/article/SB101423360415658320. html?mod=googlewsj (accessed August 5, 2009).

51. Archie B. Carroll, Business and Society: Ethics and Stakeholder Management (Cincinnati: South-Western, 1989), 228–230.

52. “Netgear Settles Suit over Speed Claims,” Wall Street Journal, November 28, 2005, C5.

53. “AT&T Settles Lawsuit Against Reseller Accused of Slamming,” Business Wire, via America Online, May 26, 1998.

54. “Newsletter; Federal Trade Commission Report: ID Theft #1 Complaint,” February 2005, http://www.machine-solution.com/_ Article+FTC+ID+Theft.html (accessed August 5, 2009).

55. Keith B. Anderson, “Consumer Fraud in the United States: The Second FTC Survey,” The Federal Exchange Commission, October 2007, http://www2.ftc.gov/opa/2007/10/fraud.pdf (accessed August 5, 2009).

56. Kathy Grannis, “Troubled Economy Increases Shoplifting Rates, According to National Retail Security Survey,” National Retail Federation, June 16, 2009, http://www.nrf.com/modules.php?name= News&op=viewlive&sp_id=746 (accessed August 5, 2009).

57. Liz Rappaport, “Case Opens New Front on Insider Trading,” The Wall Street Journal, May 6, 2009, http://online.wsj.com/article/ SB124153448113387615.html (accessed June 11, 2009).

58. Tami Luhbu, “Countrywide’s Mozilo Accused of Fraud,” CNN Money, June 4, 2009, http://money.cnn.com/2009/06/04/news/ economy/mozilo_fraud_charges/index.htm (accessed June 11, 2009).

59. Anna Wilde Mathews, “Copyrights on Web Content Are Backed,” Wall Street Journal, October 27, 2000, B10.

60. “Today’s Briefing,” Commercial Appeal, November 15, 2000, C1. 61. Roger Bate, “China’s Bad Medicine,” The Wall Street Journal, May

5, 2009, http://online.wsj.com/article/SB124146383501884323. html (accessed August 5, 2009); “Chinese Intellectual Property Violations,” Idea Buyer, http://www.ideabuyer.com/news/chinese- intellectual-property-violations/ (accessed August 5, 2009).

62. Deli Yang, Mahmut Sonmez, Derek Bosworth, and Gerald Fryzell, “Global Software Piracy: Searching for Further Explanations,” Journal of Business Ethics, September 2008.

63. “Cryptography Policy,” the Electronic Protection Information Center, //www.epic.org/crypto/ (accessed August 5, 2009).

64. Nora J. Rifon, Robert LaRose, and Sejung Marina Choi, “Your Privacy Is Sealed: Effects of Web Privacy Seals on Trust and Personal Disclosures,” Journal of Consumer Affairs 39, no. 2 (2002): 339–362.

65. Steven Ward, Kate Bridges, and Bill Chitty, “Do Incentives Matter? An Examination of On-line Privacy Concerns and Willingness to

Provide Personal and Financial Information,” Journal of Marketing Communications 11, no. 1 (2005): 21–40.

66. “2005 Electronic Monitoring and Surveillance Survey: Many Companies Monitoring, Recording, Videotaping—and Firing— Employees,” New York Times, May 18, 2005, via http://www. amanet.org/press/amanews/ems05.htm (accessed August 5, 2009).

67. Mans Hulden, “Amid widening privacy investigation, Finnish police arrest Sonera executive,” Associated Press, November 22, 2002, via http://www.highbeam.com/doc/1P1-69756506.html (accessed August 5, 2009).

68. Tamar Lewin, “Chevron Settles Sexual Harassment Charges,” The New York Times, February 22, 1995, http://www.nytimes. com/1995/02/22/us/chevron-settles-sexual-harassment-charges. html (accessed August 5, 2009).

69. John Galvin, “The New Business Ethics,” SmartBusinessMag.com (June 2000): 97.

70. “Ethical Issues in the Employer–Employee Relationship,” Society of Financial Service Professionals, via https://www.iema.net/news/ envnews?startnum=1901&cids[]=230&aid=1753 (accessed August 5, 2009); Mitch Wagner, “Google’s Pixie Dust,” InformationWeek, issue 1061 (2005): 98.

71. Stephenie Steitzer, “Commercial Web Sites Cut Back on Collections of Personal Data,” Wall Street Journal, March 28, 2002, http://online.wsj.com/article/SB1017247161553469240. html?mod=googlewsj (accessed August 5, 2009).

72. Christopher Conkey, “FTC Goes After Firm That Installs Spyware Secretly,” Wall Street Journal, October 6, 2005, D4.

73. Eve M. Caudill and Patrick E. Murphy, “Consumer Online Privacy: Legal and Ethical Issues,” Journal of Public Policy & Marketing 19 (2000): 7.

74. Galvin, “The New Business Ethics,” 98. 75. Steitzer, “Commercial Web Sites Cut Back on Collections of

Personal Data.”

Chapter 4 1. “Corporate Information: Corporate Culture,” Google, http://www.

google.com/corporate/culture.html, (accessed June 4, 2009). 2. Alistair Barr, “IRS Tries to Force UBS to Reveal US Tax Dodgers,”

Market Watch, February 19, 2009, http://www.marketwatch.com/ story/ubs-kept-52000-secret-bank-accounts?print=true&dist=print MidSection (accessed June 4, 2009).

3. “Targeting Illegal Tax Shelters,” Democratic Leadership Council, July 30, 2008, http://www.dlc.org/ndol_ci.cfm?kaid=139&subid=90 0082&contentid=252601 (accessed January 14, 2009).

4. Kara Scannell, “Assured of SEC’s Survival, Schapiro Now Fights to Keep Regulatory Teeth,” The Wall Street Journal, June 11, 2009, http://online.wsj.com/article/SB124468047175204449.html (accessed June 12, 2009).

5. Loretta Chao and Sky Canaves, “Legality of China Web Filter Is Challenged,” The Wall Street Journal, June 15, 2009, http://online. wsj.com/article/SB124482083845410171.html?mod=googlenews_ wsj (accessed June 12, 2009).

6. Gregory T. Gundlach, “Price Predation: Legal -Limits and Antitrust Considerations,” Journal of Public Policy & Marketing 14 (1995): 278.

7. David Goldman, “Obama Vows Antitrust Crackdown,” CNN Money, May 11, 2009, http://money.cnn.com/2009/05/11/news/ economy/antitrust/index.htm (accessed June 12, 2009).

8. Steve Lohr, “High-Tech Antitrust Cases: The Road Ahead,” The New York Times, May 13, 2009, http://bits.blogs. nytimes.com/2009/05/13/high-tech-antitrust-the-road- ahead/?scp=1&sq=high-tech%20antitrust&st=cse (accessed June 12, 2009).

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9. “10 Ways to Combat Corporate Espionage,” Data Destruction News, http://www.imakenews.com/accushred/e_article001225805. cfm?x=bdtNVCP,bbGvRs5c,w (accessed August 5, 2009).

10. “Baseball’s Antitrust Exemption: Q&A,” ESPN, December 5, 2001, http://sports.espn.go.com/espn/print?id=1290707&type=story (accessed June 4, 2009).

11. “A Child Shall Lead the Way: Marketing to Youths,” Credit Union Executive, May–June 1993, 6–8.

12. Julia Angwin, “How to Keep Kids Safe Online,” The Wall Street Journal, January 22, 2009, http://online.wsj.com/article/ SB123238632055894993.html (accessed June 12, 2009).

13. Jennifer Levitz, “Laws Take on Financial Scams Against Seniors,” The Wall Street Journal, May 19, 2009, http://online.wsj.com/ article/SB124269210323932723.html (accessed June 12, 2009).

14. “Women’s Earnings as a Percentage of Men’s 1951–2007,” U.S. Women’s Bureau and the National Info Please, http://www. infoplease.com/ipa/A0193820.html (accessed August 5, 2009).

15. Joan Lowy, “Airline Industry Changes Raise Safety Issues,” USA Today, May 16, 2009, http://www.usatoday.com/news/ nation/2009-05-16-airline-pilots_N.htm (accessed August 5, 2009).

16. “United Nations General Assembly Report,” http://www.un.org/ documents/ga/res/42/ares42-187.htm (accessed June 4, 2009).

17. “Consumer Interest in Environmental Purchasing Not Eclipsed by Poor Economy,” Cone 2009 Environmental Survey, http://www. coneinc.com/content2032 (accessed June 12, 2009).

18. “Smackdown: GE, Siemens Duel Over Who’s Greener,” The Wall Street Journal, May 28, 2009, http://blogs.wsj.com/ environmentalcapital/2009/05/28/smackdown-ge-siemens-duel- over-whos-greener/ (accessed June 12, 2009).

19. Ibid. 20. Michael Arndt, Wendy Zellner, and Peter Coy, “Too Much

Corporate Power,” BusinessWeek, September 11, 2000, 149. 21. Marilyn Adams, “U.S. Keeps Wary Eye on Cruise Ships for More

Pollution,” USA Today, November 8, 2002, http://www.usatoday. com/travel/news/2004-05-05-norway-pollution_x.htm (accessed August 5, 2009).

22. “Electronics Recycling is Making Gains, Says EPA,” PC World, January 8, 2009, http://www.pcworld.com/businesscenter/ article/156721/article.html?tk=nl_bnxnws (accessed June 12, 2009).

23. Sarah Lynch, “Schapiro: More Oversight Needed for Credit-Rating Firms,” The Wall Street Examiner, April 15, 2009, http://forums. wallstreetexaminer.com/index.php?showtopic=807630 (accessed June 12, 2009).

24. Mike Spector and Shelly Banjo, “Pay at Nonprofits Gets a Closer Look,” The Wall Street Journal, March 27, 2009, http://online.wsj. com/article/SB123811160845153093.html (accessed June 12, 2009).

25. Penelope Patsuris, “The Corporate Scandal Sheet,” Forbes online, August 26, 2002, www.forbes.com/home/2002/07/25/ accountingtracker.html (accessed August 5, 2009).

26. Nelson D. Schwartz, “The Looting of Kmart, Part 2,” Fortune, February 17, 2003, 30; Elliot Blair Smith, “Probe: Former Kmart CEO ‘Grossly Derelict,’” USA Today, January 27, 2003, B1.

27. David McHugh, “Business Wants to Restore Public Trust,” America Online, January 28, 2003.

28. Amy Borrus, “Learning to Love Sarbanes–Oxley,” BusinessWeek, November 21, 2005, 126–128.

29. Stephen Taub, “SEC:1,300 ‘Whistles’ Blown Each Day” CFO.com, August 3, 2004, http://www.cfo.com/article.cfm/3015607 (accessed March 15, 2006).

30. Julie Homer, “Overblown (In the Wake of Sarbanes–Oxley, Some Serious Misconceptions Have Arisen About What Blowing the Whistle Actually Means),” CFO Magazine, October 1, 2003, http://www.cfo.com/article.cfm/3010513/c_2984349/?f=archives (accessed August 5, 2009).

31. “Foley Study Reveals Continued High Cost of Being Public,” Foley & Lardner LLP, August 2, 2007, http://www.foley.com/news/ news_detail.aspx?newsid=3074 (accessed June 12, 2009).

32. “Sarbanes–Oxley Act Improves Investor Confidence, But at a Cost,” CPA Journal, October 2005, http://www.nysscpa.org/cpajournal/ 2005/1005/perspectives/p19.htm (accessed March 16, 2006).

33. Tricia Bisoux, “The Sarbanes–Oxley Effect,” BizEd, July/August 2005, 24–29.

34. Ibid. 35. “Sarbox and the Constitution,” The Wall Street Journal, May 20,

2009, http://online.wsj.com/article/SB124268754900032175.html (accessed June 12, 2009).

36. James C. Hyatt, “Birth of the Ethics Industry,” Business Ethics (Summer 2005): 20–27.

37. Amy Borrus, “Learning to Love Sarbanes– Oxley,” BusinessWeek, November 21, 2005, 126–128.

38. Win Swenson, “The Organizational Guidelines’ ‘Carrot and Stick’ Philosophy, and Their Focus on ‘Effective’ Compliance,” in Corporate Crime in America: Strengthening the “Good Citizenship”-Corporation (Washington, DC: U.S. Sentencing Commission, 1995), 17–26.

39. United States Code Service (Lawyers’ Edition), 18 U.S.C.S. Appendix, Sentencing Guidelines for the United States Courts (Rochester, NY: Lawyers Cooperative Publishing, 1995), sec. 8A.1.

40. O. C Ferrell and Linda Ferrell, “Current Developments in Managing Organizational Ethics and Compliance Initiatives,” University of Wyoming, white paper, Bill Daniels Business Ethics Initiative 2006.

41. Ibid. 42. Lynn Brewer, “Capitalizing on the Value of Integrity: An

Integrated Model to Standardize the Measure of Non-financial Performance as an Assessment of Corporate Integrity,” in Managing Risks for Corporate Integrity. How to Survive an Ethical Misconduct Disaster, ed. Lynn Brewer, Robert Chandler, and O. C. Ferrell (Mason, OH: Thomson/Texere, 2006), 233–277.

43. “Balanced, Active Lifestyles,” McDonald’s, http://www.mcdonalds. com/usa/good/balanced__active_lifestyles.html (accessed August 5, 2009).

44. Ingrid Murro Botero, “Charitable Giving Has 4 Big Benefits,” Business Journal of Phoenix online, January 1, 1999, www. bizjournals.com/phoenix/stories/1999/01/04/smallb3.html (accessed August 5, 2009).

45. 2007 Corporate Citizen Report, Wells Fargo, https://www. wellsfargo.com/downloads/pdf/about/csr/reports/ wf2007corporate_citizenship.pdf (accessed June 4, 2009).

46. “Walmart Foundation Fact Sheet,” http://walmartstores.com/ FactsNews/FactSheets/#CharitableGiving (accessed June 4, 2009).

47. “Wal-Mart Giving,” Walmartfacts.com, http://www.walmartfacts. com/community/walmart-foundation.aspx (accessed March 17, 2006).

48. Steve Hilton, “Bisto: Altogether now, ‘Aah . . .,’” Ethical Corporation, December 2005, 50.

49. “How We’re Helping,” Home Depot, http://corporate. homedepot.com/wps/portal/!ut/p/c1/04_SB8K8xLLM9MSS zPy8xBz9CP0os3gDdwNHH0sfE3M3AzMPJ8OAEBcD KADKR2LKmxrD5fHr9vPIz03VL8iNKAcAJzsP4g!!/dl2/ d1/L2dJQSEvUUt3QS9ZQnB3LzZfMEcwQUw5TDQ3RjA2 SEIxUEs5MDAwMDAwMDA!/ (accessed June 12, 2009).

50. Swenson, “The Organizational Guidelines’ ‘Carrot and Stick’ Philosophy.”

Chapter 5 1. Thomas M. Jones, “Ethical Decision Making by Individuals

in Organizations: An Issue-Contingent Model,” Academy of

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Management Review 16 (February 1991): 366–395; O. C. Ferrell and Larry G. Gresham, “A Contingency Framework for Understanding Ethical Decision Making in Marketing,” Journal of Marketing 49 (Summer 1985): 87–96; O. C. Ferrell, Larry G. Gresham, and John Fraedrich, “A Synthesis of Ethical Decision Models for Marketing,” Journal of Macromarketing 9 (Fall 1989): 55–64; Shelby D. Hunt and Scott Vitell, “A General Theory of Marketing Ethics,” Journal of Macromarketing 6 (Spring 1986): 5–16; William A. Kahn, “Toward an Agenda for Business Ethics Research,” Academy of Management Review 15 (April 1990): 311–328; Linda K. Trevino, “Ethical Decision Making in Organizations: A Person-Situation Interactionist Model,” Academy of Management Review 11 (March 1986): 601–617.

2. Jones, “Ethical Decision Making,” 367, 372. 3. Donald P. Robin, R. Eric Reidenbach, and P. J. Forrest, “The

Perceived Importance of an Ethical Issue as an Influence on the Ethical Decision-Making of Ad Managers,” Journal of Business Research 35 (January 1996): 17.

4. Jack Beatty, “The Enron Ponzi Scheme,” The Atlantic Monthly, March 13, 2002, http://www.theatlantic.com/doc/200203u/ pp2002-03-13 (accessed August 17, 2009).

5. Roselie McDevitt and Joan Van Hise, “Influences in Ethical Dilemmas of Increasing Intensity,” Journal of Business Ethics 40 (October 2002): 261–274.

6. Anusorn Singhapakdi, Scott J. Vitell, and George R. Franke, “Antecedents, Consequences, and Mediating Effects of Perceived Moral Intensity and Personal Moral Philosophies,” Journal of the Academy of Marketing Science 27 (Winter 1999): 19.

7. Ibid. 8. Ibid. 9. Ibid., 17. 10. Steven A. Holmes, “Fannie Mae Eases Credit to Aid Mortgage

Lending,” New York Times, September 30, 1999, http://www. nytimes.com/1999/09/30/business/fannie-mae-eases-credit-to-aid- mortgage-lending.html (accessed April 7, 2009).

11. Reuters, “Fannie Mae, Freddie Mac Subprime Restrictions Ease,” CNBC, September 19, 2007,. http://www.cnbc.com/id/20869608/ (accessed April 8, 2009).

12. T. W. Loe, L. Ferrell, and P. Mansfield, “A Review of Empirical Studies Assessing Ethical Decision-Making in Business,” Journal of Business Ethics 25 (2000): 185–204.

13. Steven Kaplan, Kurt Pany, Janet Samuels, and Jian Zhang, “An Examination of the Association Between Gender and Reporting Intentions for Fraudulent Financial Reporting Intentions for Fraudulent Financial Reporting,” Journal of Business Ethics 87, No. 1 (June 2009): 15–30.

14. Michael J. O’Fallon, and Kenneth D. Butterfield, “A Review of the Empirical Ethical Decision-Making Literature: 1996–2003,” Journal of Business Ethics 59 (July 2005): 375–413; P. M. J. Christie, J. I. G. Kwon, P. A. Stoeberl, and R. Baumhart, “A Cross-Cultural Comparison of Ethical Attitudes of Business Managers: India, Korea and the United States,” Journal of Business Ethics 46 (September 2003): 263–287; G. Fleischman and S. Valentine, “Professionals’ Tax Liability and Ethical Evaluations in an Equitable Relief Innocent Spouse Case,” Journal of Business Ethics 42 (January 2003): 27–44; A. Singhapakdi, K. Karande, C. P. Rao, and S. J. Vitell, “How Important Are Ethics and Social Responsibility? A Multinational Study of Marketing Professionals,” European Journal of Marketing 35 (2001): 133–152.

15. R. W. Armstrong, “The Relationship Between Culture and Perception of Ethical Problems in International Marketing,” Journal of Business Ethics 15 (November 1996): 1199–1208; J. Cherry, M. Lee, and C. S. Chien, “A Cross-Cultural Application of a Theoretical Model of Business Ethics: Bridging the Gap Between Theory and Data,” Journal of Business Ethics 44 (June 2003):

359–376; B. Kracher, A. Chatterjee, and A. R. Lundquist, “Factors Related to the Cognitive Moral Development of Business Students and Business Professionals in India and the United States: Nationality, Education, Sex and Gender,” Journal of Business Ethics 35 (February 2002): 255–268.

16. J. M. Larkin, “The Ability of Internal Auditors to Identify Ethical Dilemmas,” Journal of Business Ethics 23 (February 2000): 401–409; D. Peterson, A. Rhoads, and B. C. Vaught, “Ethical Beliefs of Business Professionals: A Study of Gender, Age and External Factors,” Journal of Business Ethics 31 (June 2001): 225–232; M. A. Razzaque and T. P. Hwee, “Ethics and Purchasing Dilemma: A Singaporean View,” Journal of Business Ethics 35 (February 2002): 307–326.

17. J. Cherry and J. Fraedrich, “An Empirical Investigation of Locus of Control and the Structure of Moral Reasoning: Examining the Ethical Decision-Making Processes of Sales Managers,” Journal of Personal Selling and Sales Management 20 (Summer 2000): 173–188; M. C. Reiss and K. Mitra, “The Effects of Individual Difference Factors on the Acceptability of Ethical and Unethical Workplace Behaviors,” Journal of Business Ethics 17 (October 1998): 1581–1593.

18. O. C. Ferrell and Linda Ferrell, “Role of Ethical Leadership in Organizational Performance,” Journal of Management Systems 13 (2001): 64–78.

19. James Weber and Julie E. Seger, “Influences upon Organizational Ethical Subclimates: A Replication Study of a Single Firm at Two Points in Time,” Journal of Business Ethics 41 (November 2002): 69–84.

20. Sean Valentine, Lynn Godkin, and Margaret Lucero, “Ethical Context, Organizational Commitment, and Person-Organization Fit,” Journal of Business Ethics 41 (December 2002): 349–360.

21. Bruce H. Drake, Mark Meckler, and Debra Stephens, “Transitional Ethics: Responsibilities of Supervisors for Supporting Employee Development,” Journal of Business Ethics 38 (June 2002): 141–155.

22. Ferrell and Gresham, “A Contingency Framework,” 87–96. 23. R. C. Ford and W. D. Richardson, “Ethical Decision-Making: A

Review of the Empirical Literature,” Journal of Business Ethics 13 (March 1994): 205–221; Loe, Ferrell, and Mansfield, “A Review of Empirical Studies.”

24. National Business Ethics Survey, How Employees Perceive Ethics at Work (Washington, DC: Ethics Resource Center, 2000), 30.

25. “Employee Theft Solutions,” The Shulman Center, http://www. employeetheftsolutions.com/ (accessed January 14, 2009).

26. Niraj Sheth, Jackie Range, and Geeta Anand, “Corporate Scandal Shakes India,” Wall Street Journal, January 8, 2009, http://online. wsj.com/article/SB123131072970260401.html (accessed January 9, 2009).

27. National Business Ethics Survey, 30. 28. R. Eric Reidenbach and Donald P. Robin, Ethics and Profits

(Englewood Cliffs, NJ: Prentice-Hall, 1989), 92. 29. “Small Virtues: Entrepreneurs Are More Ethical,” BusinessWeek

online, March 8, 2000, www.businessweek.com/smallbiz/0003/ ib3670029.htm?scriptFramed (accessed August 17, 2009).

30. Constance E. Bagley, “The Ethical Leader’s Decision Tree,” Harvard Business Review, January–February 2003, 18.

31. Choe San-hun, “Samsung Chairman Resigns,” The New York Times, April 23, 2008, http://www.nytimes.com/2008/04/23/business/ worldbusiness/23samsung.html?scp=1&sq=samsung%20lee&st=cse (accessed June 5, 2009); “About Samsung,” http://www.samsung. com/us/aboutsamsung/index.html (accessed June 5, 2009).

32. Daniel J. Brass, Kenneth D. Butterfield, and Bruce C. Skaggs, “Relationship and Unethical Behavior: A Social Science Perspective,” Academy of Management Review 23 (January 1998): 14–31.

33. Andrew Kupfor, “Mike Armstrong’s AT&T: Will the Pieces Come Together?” Fortune, April 26, 1999, 89.

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34. From Managing Risks for Corporate Integrity: How to Survive an Ethical Misconduct Disaster, 1st edition, by Brewer, Chandler, and Ferrell. Copyright © 2006. Reprinted with permission of South- Western, a division of Thomson Learning: www.thomsonrights. com. Fax 800 730-2215.

35. J. M. Burns, Leadership (New York: Harper & Row, 1985). 36. Royston Greenwood, Roy Suddaby, and C. R. Hinings,

“Theorizing Change: The Role of Professional Associations in the Transformation of Institutionalized Fields,” Academy of Management Journal 45 (January 2002): 58–80.

37. Eric Pillmore, “How Tyco International Remade its Corporate Governance,” speech at Wharton Business School, September 2006.

38. Stephen R. Covey, The 7 Habits of Highly Effective People (New York: Simon & Schuster, 1989).

39. Archie B. Carroll, “Ethical Leadership: From Moral Managers to Moral Leaders,” in Rights, Relationships and Responsibilities, Vol. 1, ed. O. C. Ferrell, Sheb True, and Lou Pelton (Kennesaw, GA: Kennesaw State University, 2003), 7–17.

40. Andy Serwer, “Wal-Mart: Bruised in Bentonville,” Fortune online, April 4, 2005, http://money.cnn.com/magazines/fortune/ fortune_archive/2005/04/18/8257005/index.htm (accessed August 17, 2009).

41. Thomas I. White, “Character Development and Business Ethics Education,” in Rights, Relationships and Responsibilities, Vol. 1, ed. O. C. Ferrell, Sheb True, and Lou Pelton (Kennesaw, GA: Kennesaw State University, 2003), 137–166.

42. Carroll, “Ethical Leadership,” 11. 43. Keith H. Hammonds, “Harry Kraemer’s Moment of Truth,” Fast

Company online, December 19, 2007, www.fastcompany.com/ online/64/kraemer.html (accessed August 17, 2009).

44. Carroll, “Ethical Leadership,” 11. 45. “About Herman Miller: Awards and Recognition,” http://www.

hermanmiller.com/About-Us/About-Herman-Miller/Awards-and- Recognition (accessed August 17, 2009); Press Release, “Herman Miller, Inc. Again Recognized Among ‘100 Best Companies to Work For’ in America, Herman Miller, Inc., January 23, 2009, http://www.hermanmiller.com/DotCom/jsp/aboutUs/newsDetail. jsp?navId=194&topicId=49&newsId=662 (accessed August 17, 2009); Press Release, “Herman Miller, Inc. Celebrates 20 Years as Industry Leader in Fortune’s ‘Most Admired’ Companies Survey,” March 7, 2008, http://www.hermanmiller.com/DotCom/jsp/ aboutUs/newsDetail.jsp?navId=194&topicId=49&newsId=591 (accessed August 17, 2009).

46. Carroll, “Ethical Leadership,” 12. 47. About Xerox, http://www.xerox.com/go/xrx/portal/STServlet?

projectID=ST_About_Xerox&pageID=Landing&Xcntry=USA&Xl ang=en_US (accessed June 5, 2009).

48. Nanette Burns and Roger O. Crockett, “Ursula Burns: An Historic Succession at Xerox,” Businessweek, May 28, 2009, http://www. businessweek.com/magazine/content/09_23/b4134018712853.htm (June 5, 2009).

49. Supplier Diversity Program, Xerox, http://www.xerox.com/about- xerox/citizenship/supplier-diversity/enus.html (accessed June 5, 2009).

50. Brent Smith, Michael W. Grojean, Christian Resick, and Marcus Dickson, “Leaders, Values and Organizational Climate: Examining Leadership Strategies for Establishing an Organizational Climate Regarding Ethics,” Journal of Business Ethics, as reported at “Research @ Rice: Lessons from Enron—Ethical Conduct Begins at the Top,” Rice University, June 15, 2005, www.explore.rice.edu/ explore/NewsBot.asp?MODE=VIEW&ID=7478&SnID=878108660 (accessed August 17, 2009).

51. “Our Core Values,” Whole Foods, http://www.wholefoodsmarket. com/company/corevalues.php (accessed June 5, 2009).

52. Herb Baum and Tammy Kling, “Book Review: The Transparent Leader,” in Leadership Now, http://www.leadershipnow.com/ leadershop/0060565470.html (accessed August 17, 2009).

53. Waste Management Earns Top Honors in Global Ranking of Ethical Firms,” Houston Business Journal, June 4, 2008, http:// www.bizjournals.com/houston/stories/2008/06/02/daily27.html (accessed June 5, 2009).

54. 2008 Sustainability Report, Waste Management, http://www. wm.com/wm/WM_2008_ExecSummary_SRR.pdf (accessed June 5, 2009).

Chapter 6 1. James R. Rest, Moral Development Advances in Research and

Theory (New York: Praeger, 1986), 1. 2. “Business Leaders, Politicians and Academics Dub Corporate

Irresponsibility ‘An Attack on America from Within,’” Business Wire, November 7, 2002, via Find Articles, http://findarticles. com/p/articles/mi_m0EIN/is_2002_Nov_7/ai_94631434/ (accessed August 19, 2009). A.C. Ahuvia, If Money Doesn’t Make Us Happy, Why Do We Act As If It Does?, Journal of Economic Psychology 29 (2008): 491–507.

3. Abhijit Biswas, Jane W. Licata, Daryl McKee, Chris Pullig, and Christopher Daughtridge, “The Recycling Cycle: An Empirical Examination of Consumer Waste Recycling and Recycling Shopping Behaviors,” Journal of Public Policy & Marketing 19 (2000): 93.

4. Miguel Bastons, “The Role of Virtues in the Framing of Decisions,” Journal of Business Ethics (2008): 395.

5. “Court Says Businesses Liable for Harassing on the Job,” Commercial Appeal, June 27, 1998, A1.

6. Richard Brandt, Ethical Theory (Englewood Cliffs, NJ: Prentice-Hall, 1959), 253–254.

7. J. J. C. Smart and B. Williams, Utilitarianism: For and Against (Cambridge, UK: Cambridge University Press, 1973), 4.

8. C. E. Harris, Jr., Applying Moral Theories (Belmont, CA: Wadsworth, 1986), 127–128.

9. Gordon Fairclough, “Tainting of Milk Is Open Secret in China,” Wall Street Journal, November 3, 2008, http://online.wsj.com/ article/SB122567367498791713.html (accessed August 18, 2009).

10. Immanuel Kant, “Fundamental Principles of the Metaphysics of Morals,” in Problems of Moral Philosophy: An Introduction, 2nd ed., ed. Paul W. Taylor (Encino, CA: Dickenson, 1972), 229.

11. Example adapted from Harris, Applying Moral Theories, 128–129. 12. Gerald F. Cavanaugh, Dennis J. Moberg, and Manuel Velasquez,

“The Ethics of Organizational Politics,” Academy of Management Review 6 (1981): 363–374; U.S. Bill of Rights, http://www.law. cornell.edu/constitution/constitution.billofrights.html (accessed August 18, 2009).

13. Marie Brenner, “The Man Who Knew Too Much,” Vanity Fair, May 1996, available at http://www.jeffreywigand.com/vanityfair. php (accessed August 18, 2009).

14. Norman E. Bowie and Thomas W. Dunfee, “Confronting Morality in Markets,” Journal of Business Ethics 38 (2002): 381–393.

15. Kant, “Fundamental Principles,” 229. 16. Thomas E. Weber, “To Opt In or Opt Out: That Is the Question

When Mulling Privacy,” Wall Street Journal, October 23, 2000, B1. 17. GNews, “Hoover High School from MTV’s ‘Two-a-Days’ in

Major Controversy,” July 18, 2007, http://gnewsworld.com/ HooverHighSchool (accessed June 15, 2009).

18. C. R. Bateman, J. P Fraedrich, and R. Iyer, “The Integration and Testing of the Janus-Headed Model Within Marketing,” Journal of Business Research 56 (2003): 587–596; J. B. DeConinck and W. F. Lewis, “The Influence of Deontological and Teleological

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Considerations and Ethical Culture on Sales Managers’ Intentions to Reward or Punish Sales Force Behavior,” Journal of Business Ethics 16 (1997): 497–506; J. Kujala, “A Multidimensional Approach to Finnish Managers’ Moral Decision-Making,” Journal of Business Ethics 34 (2001): 231–254; K. C. Rallapalli, S. J. Vitell, and J. H. Barnes, “The Influence of Norms on Ethical Judgments and Intentions: An Empirical Study of Marketing Professionals,” Journal of Business Research 43 (1998): 157–168; M. Shapeero, H. C. Koh, and L. N. Killough, “Underreporting and Premature Sign- Off in Public Accounting,” Managerial Auditing Journal 18 (2003): 478–489.

19. William K. Frankena, Ethics (Englewood Cliffs: Prentice-Hall, 1963).

20. R. E. Reidenbach and D. P. Robin, “Toward the Development of a Multidimensional Scale for Improving Evaluations of Business Ethics,” Journal of Business Ethics 9, no. 8 (1980): 639–653.

21. Patrick E. Murphy and Gene R. Laczniak, “Emerging Ethical Issues Facing Marketing Researchers,” Marketing Research 4, no. 2 (1992): 6–11.

22. T. K. Bass and Barnett G. Brown, “Religiosity, Ethical Ideology, and Intentions to Report a Peer’s Wrongdoing,” Journal of Business Ethics 15, no. 11 (1996): 1161–1174; R. Z. Elias, “Determinants of Earnings Management Ethics Among Accountants,” Journal of Business Ethics 40, no. 1 (2002): 33–45; Y. Kim, “Ethical Standards and Ideology Among Korean Public Relations Practitioners,” Journal of Business Ethics 42, no. 3 (2003): 209–223; E. Sivadas, S. B. Kleiser, J. Kellaris, and R. Dahlstrom, “Moral Philosophy, Ethical Evaluations, and Sales Manager Hiring Intentions,” Journal of Personal Selling & Sales Management 23, no. 1 (2003): 7–21.

23. Manuel G. Velasquez, Business Ethics Concepts and Cases, 4th ed. (Upper Saddle River, NJ: Prentice-Hall, 1998), 132–133.

24. Ibid. 25. Adapted from Robert C. Solomon, “Victims of Circumstances? A

Defense of Virtue Ethics in Business,” Business Ethics Quarterly 13, no. 1 (2003): 43–62.

26. Ian Maitland, “Virtuous Markets: The Market as School of the Virtues,” Business Ethics Quarterly (January 1997): 97.

27. Ibid. 28. Stefanie E. Naumann and Nathan Bennett, “A Case for Procedural

Justice Climate: Development and Test of a Multilevel Model,” Academy of Management Journal 43 (2000): 881–889.

29. Joel Brockner, “Making Sense of Procedural Fairness: How High Procedural Fairness Can Reduce or Heighten the Influence of Outcome Favorability,” Academy of Management Review 27 (2002): 58–76.

30. “Wainwright Bank and Trust Company Award for Social Justice Inside and Out,” Business Ethics (November/December 1998): 11.

31. John Fraedrich and O. C. Ferrell, “Cognitive Consistency of Marketing Managers in Ethical Situations,” Journal of the Academy of Marketing Science 20 (1992): 245–252.

32. Manuel Velasquez, Claire Andre, Thomas Shanks, S. J., and Michael J. Meyer, “Thinking Ethically: A Framework for Moral Decision Making,” Issues in Ethics (Winter 1996): 2–5.

33. Lawrence Kohlberg, “Stage and Sequence: The Cognitive Developmental Approach to Socialization,” in Handbook of Socialization Theory and Research, ed. D. A. Goslin (Chicago: Rand McNally, 1969), 347–480.

34. Adapted from Kohlberg, “Stage and Sequence.” 35. Clare M. Pennino, “Is Decision Style Related to Moral

Development Among Managers in the U.S.?” Journal of Business Ethics 41 (2002): 337–347.

36. A. K. M. Au and D. S. N. Wong, “The Impact of Guanxi on the Ethical Decision-Making Process of Auditors—An Exploratory

Study on Chinese CPA’s in Hong Kong,” Journal of Business Ethics 28, no. 1 (2000): 87–93; D. P Robin, G. Gordon, C. Jordan, and E. Reidenback, “The Empirical Performance of Cognitive Moral Development in Predicating Behavioral Intent,” Business Ethics Quarterly 6, no. 4 (1996): 493–515; M. Shapeero, H. C. Koh, and L. N. Killough, “Underreporting and Premature Sign-Off in Public Accounting,” Managerial Auditing Journal 18, no. 6 (1996): 478–489; N. Uddin and P. R. Gillett, “The Effects of Moral Reasoning and Self- Monitoring on CFO Intentions to Report Fraudulently on Financial Statements,” Journal of Business Ethics 40, no. 1 (2002): 15–32.

37. David O. Friedrichs, Trusted Criminals, White Collar Crime in Contemporary Society (Belmont, CA: Wadsworth, 1996).

38. Jason Szep, “Recession Leads to Surge in Online Crime: U.S. Report,” Canada.com, March 30, 2009, http://www.canada.com/ news/Recession+leads+surge+online+crime+report/1445008/story. html (accessed June 15, 2009).

39. “FBI Turns to Fraud After Focus on Terror,” IOL, February 14, 2009, http://www.iol.co.za/?set_id=1&click_id=3&art_ id=nw20090214102435228C386891 (accessed August 18, 2009).

40. Stephen Bernard, “SEC Charges Texas Financier With ‘Massive Fraud’,” ABC News, February 17, 2009, http://abcnews.go.com/ Business/wireStory?id=6896169 (accessed August 18, 2009).

41. “Blagojevich Arrested on Federal Charges,” Chicago Breaking News, December 9, 2008, http://www.chicagobreakingnews. com/2008/12/source-feds-take-gov-blagojevich-into-custody.html (accessed August 18, 2009).

42. Diana B. Henriques and Jack Healy, “Madoff Goes to Jail After Guilty Pleas,” The New York Times, March 12, 2009, http://www. nytimes.com/2009/03/13/business/13madoff.html?hp (accessed March 12, 2009).

43. H. J. Eysenck, “Personality and Crime: Where Do We Stand?” Psychology, Crime & Law 2, no. 3 (1996): 143–152; Shelley Johnson Listwan, Personality and Criminal Behavior: Reconsidering the Individual, University of Cincinnati, Division of Criminal Justice, 2001, http://criminaljustice.cech.uc.edu/docs/dissertations/ ShelleyJohnson.pdf (accessed August 18, 2009).

44. J. M. Rayburn and L. G. Rayburn, “Relationship Between Machiavellianism and Type A Personality and Ethical- Orientation,” Journal of Business Ethics 15, no. 11 (1996): 1209– 1219.

45. Quoted in Marjorie Kelly, “The Ethics Revolution,” Business Ethics (Summer 2005): 6.

46. O. C. Ferrell and Larry G. Gresham, “A Contingency Framework for Understanding Ethical Decision Making in Marketing,” Journal of Marketing 49 (2002): 261–274.

47. Thomas I. White, “Character Development and Business Ethics Education,” in Fulfilling Our Obligation: Perspectives on Teaching Business Ethics, ed. Sheb L. True, Linda Ferrell, and O. C. Ferrell (Kennesaw, GA: Kennesaw State University Press, 2005), 165.

48. Ibid., 165–166.

Chapter 7 1. J. W. Lorsch, “Managing Culture: The Invisible Barrier to Strategic

Change,” California Management Review 28 (1986): 95–109. 2. “Transforming Our Culture: The Values for Success,” Mutual of

Omaha, http://www.careerlink.org/emp/mut/corp.htm (accessed February 19, 2003).

3. Richard L. Daft, Organizational Theory and Design (Cincinnati: South-Western, 2007).

4. Stanley M. Davis, quoted in Alyse Lynn Booth, “Who Are We?” Public Relations Journal (July 1985): 13–18.

5. SWAMEDIA, Southwest Airlines Story Leads, http://www. swamedia.com/ (accessed May 28, 2009).

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6. William Clay Ford, Jr., “A Message from the Chairman,” Ford Motor Company, http://www.ford.com/en/ourCompany/ corporateCitizenship/ourLearningJourney/message (accessed February 19, 2003); “GM and Ford: Roadmaps for Recovery,” BusinessWeek online, March 14, 2006, http://www.businessweek. com/print/investor/content/mar2006/pi20060314_416862.htm (accessed March 30, 2006).

7. Bill Vlasic and Nick Bunkley, “Ford Seeks to Eliminate $10.4 Billion of its Debt,” The New York Times, March 4, 2009, http:// www.nytimes.com/2009/03/05/business/economy/05ford.html?_ r=1&pagewanted=print (accessed May 29, 2009).

8. Abstracted from “Enhancing Compliance with Sarbanes-Oxley 404,” Quantisoft, http://www.quantisoft.com/Industries/Ethics. htm (accessed June 8, 2009).

9. Taras Vasyl, Julie Rowney, and Piers Steel, “Half a Century of Measuring Culture: Approaches, Challenges, Limitations, and Suggestions Based on the Analysis of 121 Instruments for Quantifying Culture,” white paper, 2008, Haskayne School of Business/University of Calgary, 2500 University Drive N.W., Calgary, Alberta, T2N 1N4, Canada, (403) 220-6074, taras@ ucalgary.ca, http://www.ucalgary.ca/˜taras/_private/Half_a_ Century_of_Measuring_Culture.pdf (accessed June 8, 2009).

10. Ibid. 11. Geert Hofstede, Bram Neuijen, Denise Daval Ohayv; and Geert

Sanders, “Measuring Organizational Cultures: A Qualitative and Quantitative Study across Twenty Cases,” Administrative Science Quarterly 35, no. 2 (1990): 286–316.

12. N. K. Sethia and M. A. Von Glinow, “Arriving at Four Cultures by Managing the Reward System,” in Gaining Control of the Corporate Culture (San Francisco: Jossey-Bass, 1985), 409.

13. “United Parcel Service, Inc: Company Report,” http:// moneycentral.msn.com/companyreport?Symbol=UPS (accessed May 30, 2009).

14. “Brown Deeply Rooted in Going Green: Some of the Many Ways UPS Conserves,” http://compass.ups.com/features/article. aspx?id=1891&srch_pos=1&srch_phr=Compressed+%22natural+g as%22+Vehicles (accessed May 30, 2009).

15. “The Boston Consulting Group Leaps to Number Three on FORTUNE’s ‘100 Best Companies to Work For,” January 22, 2009, http://www.bcg.com/about_bcg/media_center/press_releases. jsp?id=2825&yearpub (accessed May 30, 2009).

16. Peter Lattman, “Boeing’s Top Lawyer Spotlights Company’s Ethical Lapses,” January 31, 2006, http://blogs.wsj.com/ law/2006/01/31/boeings-top-lawyer-rips-into-his-company/ (accessed March 31, 2006).

17. Susan M. Heathfield “Five Tips for Effective Employee Recognition,” http://humanresources.about.com/od/ rewardrecognition/a/recognition_tip.htm (accessed June 4, 2009).

18. Christopher Lawton, “Judge Sanctions Gateway for Destroying Evidence,” Wall Street Journal, March 31, 2006, A3.

19. Isabelle Maignan, O. C. Ferrell, and Thomas Hult, “Corporate Citizenship, Cultural Antecedents and Business Benefit,” Journal of the Academy of Marketing Science 27 (1999): 455–469.

20. R. Eric Reidenbach and Donald P. Robin, Ethics and Profits (Englewood Cliffs, NJ: Prentice-Hall, 1989), 92.

21. Paul Lindow and Jill Race, “Beyond Traditional Audit Techniques,” Journal of Accountancy Online, July 2002, http://www.journalofaccountancy.com/Issues/2002/Jul/ BeyondTraditionalAuditTechniques.htm (accessed August 19, 2009).

22. S.C. Johnson Company, “We Offer an Innovative Environment” and “Our Philosophy,” http://www.scjohnson.com/careers/car_aie. asp and http://www.scjohnson.com/family/fam_com_phi.asp (accessed June 4, 2009).

23. E. Sutherland and D. R. Cressey, Principles of Criminology, 8th ed. (Chicago: Lippincott, 1970), 114.

24. O. C. Ferrell and Larry G. Gresham, “A Contingency Framework for Understanding Ethical Decision Making in Marketing,” Journal of Marketing 49 (1985): 90–91.

25. Walter Cunningham, “Get the Shuttle Back Up In the Air!” May 16, 2003, http://www.waltercunningham.com/op_ed_051603.htm (accessed August 19, 2009).

26. “Ethics and Nonprofits,” Stanford Social Innovation Review (Summer 2009), http://www.ssireview.org/articles/entry/ethics_ and_nonprofits (accessed June 4, 2009).

27. Matthew Goldstein, “Ex-Employees at Heart of Stanford Financial Probe,” BusinessWeek, February 13, 2009, http:// www.businessweek.com/bwdaily/dnflash/content/feb2009/ db20090213_848258.htm (accessed June 9, 2009).

28. Thomas S. Mulligan, “Whistle Blower Recounts Enron Tale,” Los Angeles Times, March 16, 2006, via http://www.whistleblowers. org/storage/whistleblowers/documents/whistle_blower_-_la_times. pdf (accessed August 19, 2009).

29. John W. Schoen, “Split CEO-Chairman Job, Says Panel,” MSNBC. com, January 9, 2003, http://www.msnbc.com/news/857171.asp (accessed June 27, 2006).

30. Michael Barbaro, “Wal-Mart Says Official Misused Company Funds,” The Washington Post, July 15, 2005, http://www. washingtonpost.com/wp-dyn/content/article/2005/07/14/ AR2005071402055.html (accessed August 19, 2009).

31. “Making Your Whistleblower Case Succeed: Basic Workings of Whistleblower Complaints,” http://www.jameshoyer.com/ practice_qui_tam.html?se= Overture (accessed April 5, 2006).

32. Paula Dwyer and Dan Carney, with Amy Borrus, Lorraine Woellert, and Christopher Palmeri, “Year of the Whistleblower,” BusinessWeek, December 16, 2002, 106–110.

33. Paula J. Desio (2009) “Federal Whistleblower Rights Increase Under the Stimulus Law,” Ethics Today, February 18, 2009, http:// www.ethics.org/ethics-today/0209/policy-report3.asp (accessed June 4, 2009).

34. Darren Dahl, “Learning to Love Whistleblowers,” Inc., March 2006, p. 21–23.

35. Jeff Benedict, The Mormon Way of Doing Business: Leadership and Success Through Faith and Family, (Warner Business Books, 2007), p. 22.

36. John R. P. French and Bertram Ravin, “The Bases of Social Power,” in Group Dynamics: Research and Theory, ed. Dorwin Cartwright (Evanston, IL: Row, Peterson, 1962), 607–623.

37. The Welch Way, “The Case for 20-70-10, http://www.welchway. com/Principles/Differentiation/The-Case-for-20-70-10.aspx (accessed June 4, 2009).

38. Frank Reynolds, “Ex-Worldcom CFO Gets Five Years for Role in $11 B Fraud,” Findlaw, August 19, 2005, http://news.findlaw. com/andrews/bf/cod/20050819/20050819sullivan.html (accessed August 20, 2009).

39. “Valuing Corporate Social Responsibility: McKinsey Survey Results,” February 2009, http://www.mckinseyquarterly.com/ Surveys/Valuing_corporate_social_responsibility_McKinsey_ Global_Survey_Results_2309 (accessed August 20, 2009); Julie Hutchinson, “BYOB: Bring Your Own Bag,” Rocky Mountain News, April 18, 2008, http://www.rockymountainnews.com/ news/2008/apr/18/byob-bring-your-own-bag/ (accessed August 20, 2009).

40. “What Employees Want,” April 2, 2008, http://www.managesmarter. com/msg/content_display/training/e3i34cf9af7da51e4a7eb30cd7c0 b9b01fa?imw=Y (accessed June 5, 2009).

41. Clayton Alderfer, Existence, Relatedness, and Growth (New York: Free Press, 1972), 42–44.

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42. Elaine Engeler, “UN: Forced Laborers Losing $21 Billion a Year,” The San Francisco Chronicle, May 12, 2009, http://www. sfgate.com/cgi-bin/article.cgi?f=/n/a/2009/05/12/international/ i052329D45.DTL (accessed August 20, 2009).

43. Stanley Holmes, “Cleaning Up Boeing,” BusinessWeek online, March 13, 2006, http://www.businessweek.com/print/magazine/ content/06_11/b3975088.htm?chan=gl (accessed April 6, 2006).

44. Spencer Ante, “They’re Hiring in Techland,” BusinessWeek online, January 23, 2006, http://www.businessweek.com/print/technology/ content/jan2006/tc20060123_960426.htm (accessed April 6, 2006).

45. Corporate Governance-Board Committees, Texas Instruments, http://www.ti.com/corp/docs/csr/corpgov/bcmembership. shtml (accessed June 5, 2009); “Texas Instruments and the TI Foundation Committed to United Way,” http://www.ti.com/corp/ docs/csr/factsheets/unitedWay.shtml (accessed June 5, 2009.)

46. Joseph A. Belizzi and Ronald W. Hasty, “Supervising Unethical Sales Force Behavior: How Strong Is the Tendency to Treat Top Sales Performers Leniently?” Journal of Business Ethics 43 (2003): 337–351.

47. John Fraedrich and O. C. Ferrell, “Cognitive Consistency of Marketing Managers in Ethical Situations,” Journal of the Academy of Marketing Science 20 (1992): 243–252.

48. “Helping Reduce Underage Tobacco Use,” Phillip Morris, http:// www.philipmorrisusa.com/en/cms/Responsibility/Helping_ Reduce_Underage_Tobacco_Use/default.aspx?src=top_nav (accessed August 20, 2009).

49. Matthew Kirdahy, “Smoke and Mirrors,” Forbes, November 1, 2006, http://www.forbes.com/2006/10/31/smoking-altria-lorillard- biz-bizhealth-cx_mk_1101smoking.html (accessed August 20, 2009).

Chapter 8 1. Bob Lewis, “Survival Guide: The Moral Compass—Corporations

Aren’t Moral Agents, Creating Interesting Dilemmas for Business Leaders,” InfoWorld, March 11, 2002, via http://www.findarticles. com (accessed June 8, 2009).

2. “The 100 Best Corporate Citizens,” March 6, 2009, http://www. forbes.com/2009/03/05/best-corporate-citizens-leadership- citizenship-ranking.html (accessed June 8, 2009).

3. Indra Nooyi, “Business Has a Job to Do: Rebuild Trust,” April 22, 2009, http://www.money.cnn.tv/2009/04/19/news/companies/ nooyi.fortune/index.htm (accessed June 8, 2009).

4. Linda K. Trevino and Stuart Youngblood, “Bad Apples in Bad Barrels: Causal Analysis of Ethical Decision Making Behavior,” Journal of Applied Psychology 75 (1990): 378–385.

5. Roger Parloff, “Wall Street: It’s Payback Time,” Fortune, January 19, 2009, 69.

6. Trevino and Youngblood, “Bad Apples in Bad Barrels.” 7. “AmericaEconomia Annual Survey Reveals Ethical Behavior of

Businesses and Executives in Latin America,” AmericaEconomia, December 19, 2002, via http://www.prnewswire.com.

8. Constance E. Bagley, “The Ethical Leader’s Decision Tree,” Harvard Business Review (February 2003): 18–19.

9. “Wall Street’s Entitlement Culture Hard to Shake,” January 23, 2009, http://www.msnbc.msn.com/id/28817800/ (accessed June 8, 2009).

10. “Forensic Leadership Message,” KPMG Forensic Ethics Survey 2008–2009, http://www.kpmg.com/SiteCollectionDocuments/ Integrity-Survey-2008-2009.pdf (accessed June 17, 2009).

11. “Conducting Ourselves Ethically and Transparently,” http://www. merck.com/corporate-responsibility/business-ethics-transparency/ approach.html (accessed June 8, 2009).

12. “Special Report: The OCEO 2005 Benchmarking Study Key Findings,” http://www.oceg.org/Details/18594 (accessed June 9, 2009).

13. “How Am I Doing?” Business Ethics (Fall 2005): 11. 14. KPMG Forensic Integrity Survey 2008–2009, http://www.kpmg.

com/SiteCollectionDocuments/Integrity-Survey-2008-2009.pdf (accessed June 8, 2009).

15. National Business Ethics Survey 2007: An Inside View of Private Sector Ethics, Ethics Resource Center, 2007, 18.

16. Mark S. Schwartz, “A Code of Ethics for Corporate Code of Ethics,” Journal of Business Ethics 41 (2002): 37.

17. Ibid. 18. “ASCE: Code of Ethics,” http://www.asce.org/inside/codeofethics.

cfm (accessed June 8, 2009); “Engineers Commit to Ending Corruption,” http://www.asce.org/pressroom/news/display_press. cfm?uid=2789, (accessed June 8, 2009).

19. National Business Ethics Survey 2007, 39. 20. “USSC Commissioner John Steer Joins with Compliance and

Ethics Executives from Leading U.S. Companies to Address Key Compliance, Business Conduct and Governance Issues,” Society for Corporate Compliance and Ethics, PR Newswire, October 31, 2005.

21. “ECOA Sponsoring Partner Member L’Oreal Sponsors the First Law and Business Ethics Masters Degree,” October 6, 2008, http:// www.csrwire.com/press/press_release/19336-ECOA-Sponsoring- Partner-member-L-Oreal-Sponsors-the-first-Law-and-Business- Ethics-Masters-Degree (accessed June 9, 2009).

22. Jim Nortz “Compliance and Ethics Officers: A Survival Guide for the Economic Downturn,” March 10, 2009, http://www. corporatecomplianceinsights.com/2009/compliance-and-ethics- officers-surviving-economic-downturn (accessed June 9, 2009).

23. Anne M. Simmons “Want to Avoid Unpleasant Compliance Surprises? Embrace a Strong Whistle-Blowing Policy,” January 8, 2009, http://ethisphere.com/want-to-avoid-unpleasant- compliance-surprises-embrace-a-strong-whistle-blowing-policy/ (accessed June 9, 2009).

24. “Combat Fraud of Almost $1 Trillion,” April 17, 2009, http:// ethicaladvocate.blogspot.com/2009_04_01_archive.html (accessed June 9, 2009).

25. Sven Erik Holmes, “The Road to a Model Ethics and Compliance Program,” May 13, 2009, http://ethisphere.com/the-road-to-a- model-ethics-and-compliance-program (accessed August 20, 2009).

26. Linda Ferrell and O.C. Ferrell, Ethical Business (DK Essential Managers Series, May 4, 2009), 1–72.

27. “Key TI Ethics Publications,” http://www.ti.com/corp/docs/csr/ corpgov/ethics/publication.shtml (accessed June 10, 2009).

28. Debbie Thorne LeClair and Linda Ferrell, “Innovation in Experiential Business Ethics Training,” Journal of Business Ethics 23 (2000): 313–322.

29. Press release, “Top Corporate Ethics Officers Tell Conference Board that More Ethics Scandals are Ahead” The Conference Board, June 17, 2002, via Highbeam, http://www.highbeam.com/ doc/1G1-87469997.html (accessed August 20, 2009).

30. Ibid. 31. David Slovin, “The Case for Anonymous Hotlines,” Risk &

Insurance, April 15, 2007, via FindArticles, http://findarticles. com/p/articles/mi_m0BJK/is_5_18/ai_n27221119/ (accessed August 20, 2009).

32. Mael Kaptein, “Guidelines for the Development of an Ethics Safety Net,” Journal of Business Ethics 41 (2002): 217.

33. National Business Ethics Survey 2007, 6. 34. Curt S. Jordan, “Lessons in Organizational Compliance: A Survey

of Government-Imposed Compliance Programs,” Preventive Law Reporter (Winter 1994): 7.

35. Lori T. Martens and Kristen Day, “Five Common Mistakes in Designing and Implementing a Business Ethics Program,” Business and Society Review 104 (1999): 163–170.

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36. Anne C. Mulkern, “Auditors Smelled Trouble,” Denver Post, October 2, 2002, A1.

Chapter 9 1. John Rosthorn, “Business Ethics Auditing—More Than a

Stakeholder’s Toy,” Journal of Business Ethics 27 (2000): 9–19. 2. Debbie Thorne, O. C. Ferrell, and Linda Ferrell, Business and

Society: A Strategic Approach to Corporate Citizenship, 3rd Edition (Boston: Houghton Mifflin, 2008).

3. Rosthorn, “Business Ethics Auditing.” 4. BP Sustainability Review 2008, http://www.bp.com/liveassets/

bp_internet/globalbp/STAGING/global_assets/e_s_assets/e_s_ assets_2008/downloads/bp_sustainability_review_2008.pdf (accessed June 11, 2009).

5. “Accountability,” Business for Social Responsibility, http://www. bsr.org/BSRResources/WhitePaperDetail.cfm?DocumentID=259 (accessed February 13, 2003).

6. Frank Reynolds, “Earnings Announcement Caused 25 Percent Stock Drop, Suit Says,” November 26, 2008, http://news.findlaw. com/andrews/bf/cod/20081126/20081126_cadence.html (accessed June 11, 2009).

7. Kevin J. Sobnosky, “The Value-Added Benefits of Environmental Auditing,” Environmental Quality Management 9 (1999): 25–32.

8. “Accountability,” Business for Social Responsibility. 9. Trey Buchholz, “Auditing Social Responsibility Reports: The

Application of Financial Auditing Standards,” Colorado State University, professional paper, November 28, 2000, 3.

10. “Accountability,” Business for Social Responsibility. 11. Fortune’s World’s Most Admired Companies, February 27, 2009,

http://money.cnn.com/magazines/fortune/mostadmired/2009/ index.html (accessed June 11, 2009).

12. “100 Most Influential People in Business Ethics 2008,” December 31, 2008, http://ethisphere.com/100-most-influential-people-in- business-ethics-2008/ (accessed June 11, 2009).

13. John Pearce, Measuring Social Wealth (London: New Economics Foundation, 1996) as reported in Warren Dow and Roy Crowe, What Social Auditing Can Do for Voluntary Organizations (Vancouver, Canada: Volunteer Vancouver, July 1999), 8.

14. Colin Barr, “Obama Talks Tough on CEO Pay,” February 4, 2009, http://money.cnn.com/2009/02/04/news/obama.exec.pay.fortune/ index.htm (accessed June 11, 2009).

15. “The Effect of Published Reports of Unethical Conduct on Stock Prices,” reported in “Business Ethics,” Business for Social Responsibility, http://www.bsr.org/BSRResources/ WhitePaperDetail.cfm?DocumentID=270 (accessed March 5, 2003).

16. Penelope Patsuris, “The Corporate Accounting Scandal Sheet,” Forbes online, August 26, 2002, www.forbes.com/2002/07/25/ accountingtracker.html (accessed September 3, 2009).

17. “Managing American Competitiveness,” PricewaterhouseCoopers, http://www.pwc.com/extweb/pwcpublications.nsf/docid/ B3C7B78DCB0AF4E285257583005001A7 (accessed June 12, 2009).

18. Lynn Brewer, Robert Chandler, and O. C. Ferrell, Managing Risks for Corporate Integrity: How to Survive and Ethical Misconduct Disaster (Mason, Ohio: Thompson Higher Education), 49–50.

19. The methodology in this section was adapted from Thorne, Ferrell, and Ferrell, Business and Society.

20. “Accountability,” Business for Social Responsibility. 21. Ethics Resource Center, “Mission and Values,” http://www.ethics.

org/page/erc-mission-and-values (accessed September 3, 2009). 22. “Verification,” Business for Social Responsibility, http://www.

bsr.org/BSRResources/White PaperDetail.cfm?DocumentID=440 (accessed February 13, 2003).

23. “Ethical Statement,” Social Audit, SocialAudit.org, http://www. socialaudit.org/pages/ethical.htm (accessed March 4, 2003).

24. “Our Five Core Values,” Franklin Energy, http://www. franklinenergy.com/corevalues.html (accessed January 14, 2009).

25. “Verification,” Business for Social Responsibility. 26. “Audit and Evaluation,” Open Compliance and Ethics Group,

http://www.oceg.org/view/15839 (accessed September 3, 2009). 27. “Ethical Statement,” Social Audit. 28. “About Us: The Environment,” National Grid, https://www.

nationalgridus.com/niagaramohawk/about_us/environment.asp (accessed June 17, 2009).

29. “Verification,” Business for Social Responsibility. 30. Green Mountain Coffee, http://www.greenmountaincoffee.com

(accessed June 11, 2009). 31. Buchholz, “Auditing Social Responsibility Reports,” 15. 32. Willem Landman, Johann Mouton, and Khanyisa Nevhutalu,

“Chris Hani Baragwanath Hospital Ethics Audit,” Ethics Institute of South Africa, 2001, http://ethicssa.intoweb.co.za/UserFiles/ ethicssa.intoweb.co.za//CHBHFinalReport.pdf (accessed September 3, 2009).

33. “Verification,” Business for Social Responsibility. 34. “Introduction to Corporate Social Responsibility,” Business

for Social Responsibility, http;//www.bsr.org/BSRResources/ WhitePaperDetail.cfm?Document ID=138 (accessed March 5, 2003).

35. Landman, Mouton, and Nevhutalu, “Chris Hani Baragwanath Hospital Ethics Audit.”

36. “Introduction to Corporate Social Responsibility,” Business for Social Responsibility.

37. Liz Gunnison, “The Best and Worst CEOs Ever,” Condé Nast Portfolio, May 9, 2009, p. 44.

38. “Accountability,” Business for Social Responsibility. 39. Ibid. 40. Ethics and Compliance Officer Association, http://www.theecoa.

org (accessed June 18, 2009). 41. “Verification,” Business for Social Responsibility. 42. Ibid. 43. “Environment and Sustainability,” BP, http://www.bp.com/

subsection.do?categoryId=6932&contentId=7050724 (accessed June 18, 2009).

44. Nicole Dando and Tracey Swift, “From Methods to Ideologies,” Journal of Corporate Citizenship, December 2002, via http:// goliath.ecnext.com/coms2/gi_0199-1001798/From-methods-to- ideologies-closing.html (accessed September 3, 2009), 81.

45. Buchholz, “Auditing Social Responsibility Reports,” 16–18. 46. Ibid., 19–20. 47. “Accountability,” Business for Social Responsibility. 48. Buchholz, “Auditing Social Responsibility Reports,” 19–20. 49. Mouton, “Chris Hani Baragwanath Hospital Ethics Audit.” 50. “OCEG 2005 Benchmarking Study Key Findings,” Open

Compliance Ethics Group, http://www.oceg.org/Details/18594 (accessed September 3, 2009).

51. International Corporate Responsibility Survey, 2008, KPMG, http://www.kpmg.com/SiteCollectionDocuments/International- corporate-responsibility-survey-2008_v2.pdf (accessed June 17, 2009), 28.

52. International Corporate Responsibility Survey, 2008, KPMG, http://www.kpmg.com/SiteCollectionDocuments/International- corporate-responsibility-survey-2008_v2.pdf (accessed June 17, 2009).

53. Buchholz, “Auditing Social Responsibility Reports,” 1. 54. Sandra Waddock and Neil Smith, “Corporate Responsibility

Audits: Doing Well by Doing Good,” Sloan Management Review 41 (2000): 75–83.

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55. Buchholz, “Auditing Social Responsibility Reports,” 1. 56. Waddock and Smith, “Corporate Responsibility Audits.” 57. J. C. Collins and J. I. Porras, Built to Last: Successful Habits of

Visionary Companies (New York: HarperCollins, 1997). 58. Waddock and Smith, “Corporate Responsibility Audits.”

Chapter 10 1. Alan K. Reichert, Marion S. Webb, and Edward G. Thomas,

“Corporate Support for Ethical and Environmental Policies: A Financial Management Perspective,” Journal of Business Ethics 25 (2000): 54.

2. “What Happens when Countries Go Bankrupt?” TimeTurk: English, November 5, 2008, http://en.timeturk.com/What- Happens-when-Countries-Go-Bankrupt-10871-haberi.html (accessed June 13, 2009).

3. Alan S. Blinder, Keynesian Economics, Library of Economics and Liberty, http://www.econlib.org/library/Enc/KeynesianEconomics. html (accessed June 1, 2009).

4. Robert L. Formaini, “Milton Friedman—Economist as Public Intellectual,” Economic Insights, 7, no. 2 (2002), Federal Reserve Bank of Dallas, http://www.dallasfed.org/research/ei/ei0202.html (accessed June 5, 2009).

5. E. Roy Wientraub, “Neoclassical Economics,” Library of Economics and Liberty, http://www.econlib.org/library/Enc1/ NeoclassicalEconomics.html (accessed June 22, 2009).

6. “North Dakota Executive Pleads Guilty to Nine Counts of Tax Fraud on Eve of Trial,” May 29, 2009, http://www.usdoj.gov/opa/ pr/2009/May/09-tax-533.html (accessed June 1, 2009).

7. Richard Whitely, “U.S. Capitalism: A Tarnished Model?” The Academy of Management Perspectives (May 2009): 11–22.

8. Thayer Watkins, “The Economy and the Economic History of Sweden,” San José State University Department of Economics, http://www.sjsu.edu/faculty/watkins/sweden.htm (accessed June 22, 2009).

9. Tarun Khana, “Learning from Economic Experiments in China and India,” The Academy of Management Perspectives (May 2009): 36–43.

10. Timothy M. Devinney, “Is the Socially Responsible Corporation a Myth? The Good, the Bad, and the Ugly of Corporate Social Responsibility,” The Academy of Management Perspectives (May 2009): 44–56.

11. John (Jack) Ruhe and Monle Lee, “Teaching Ethics in International Business Courses: The Impacts of Religions,” Journal Of Teaching In International Business, 19, no. 4 (2008); Andrew Wilson, editor, World Scripture: A Comparative Anthology of Sacred Texts, A project of the international religious foundation (Paragon House: New York, 1995), ISBN: 1-55778-723-9.

12. “Global Roundup,” International Business Ethics Review (Spring/ Summer 2005): 17.

13. The Principles for Responsible Management Education, http:// www.unprme.org/the-6-principles/index.php (accessed June 22, 2009); The United Nations Global Compact, http://www. unglobalcompact.org/ (accessed June 22, 2009).

14. Neil King, Jr., “WTO Panel Rules Against Law on U.S. Punitive Import Duties,” Wall Street Journal, June 18, 2002, A2.

15. Emad Mekay, “Trade: U.S. Defies WTO Ruling on Duties,” Inter Press Service, http://www.ipsnews.net/interna.asp?idnews=25307 (accessed June 22, 2009).

16. Dionne Searcey, “U.S. Cracks Down on Corporate Bribes,” The Wall Street Journal, May 26, 2009, http://online.wsj.com/article/ SB124329477230952689.html (accessed June 22, 2009).

17. “Blow the Whistle—No Wait: Ethics Hotlines May Be Illegal in Europe,” Business Ethics (Fall 2005): 10.

18. Ethics Office News, Xerox, http://www.xerox.com/about-xerox/ citizenship/ethics/enus.html (accessed June 21, 2009).

19. “Court Rules Against Part of Wal-Mart Code,” Blog. WakeupWalMart.com, http://blog.wakeupwalmart.com/ ufcw/2005/06/court_rules_aga.html, accessed June 22, 2009.

20. Anup Shah, “Consumption and Consumerism,” Global Issues, September 3, 2008,. http://www.globalissues.org/issue/235/ consumption-and-consumerism (accessed June 22, 2009).

21. Keith Bradsher, “China Losing Taste for Debt From U.S.” The New York Times, January 7, 2009, http://www.nytimes.com/2009/01/08/ business/worldbusiness/08yuan.html (accessed June 22, 2009).

22. Karen Stein, “Understanding Consumption and Environmental Change in China: A Cross-national Comparison of Consumer Patterns,” Human Ecology Review; 16, no. 1 (Summer 2009): 41–49.

23. Louisa Lim. “In China, A Roaring Debate Over Hummer,” National Public Radio, All Things Considered, June 9, 2009, http://www.npr.org/templates/story/story.php?storyId=105168900 (accessed June 22, 2009).

24. Bay Fang and Thomas Omestad, “Spending Spree,” U.S. News & World Report, 140 no. 16 (May 1, 2006).

25. “China Mobile Internet Marketplace to Reach CNY 14.88 bn,” TMC News, June 18, 2009, http://www.tmcnet.com/ usubmit/2009/06/18/4232826.htm (accessed June 21, 2009).

26. Eric Bellman, “New Indian Middle Class Gets Caught In the Whirlwind of Revolving Credit,” The Wall Street Journal, October 28, 2008, http://online.wsj.com/article/SB122515009213974167. html (accessed June 22, 2009).

27. Subhash Agrawal, “India’s Premature Exuberance,” The Wall Street Journal, June 16, 2009, http://online.wsj.com/article/ SB124513568534118169.html (accessed June 22, 2009).

28. Maryam Niamir Fuller, KEYNOTE SPEECH: The Global Social and Ethical Context of Sustainable Land Management, UNDP/ GEF Pub, September 4, 2007, http://www.energyandenvironment. undp.org/undp/index.cfm?DocumentID=6445&module=Library& page=Document (accessed June 20, 2009).

29. “How Much of the World’s Resource Consumption Occurs in Rich Countries?” Earth Trends, http://earthtrends.wri.org/updates/ node/236 (accessed June 22, 2009); “The Global Sustainability Challenge,” http://www.globalsustainabilitychallenge.com/ (accessed September 4, 2009).

30. Matt Villano, “Office Space: Career Couch; The Separation of Church and Job,” The New York Times, February 5, 2006, http:// query.nytimes.com/gst/fullpage.html?res=9C0CE7D8163EF936A3 5751C0A9609C8B63 (accessed June 22, 2009).

31. “Global Trade Union Rights Situation Worsening,” 2009 ITUC Annual Survey of Trade Union Rights Violations, http://survey09. ituc-csi.org/ (June 22, 2009).

32. David Barboza, “McDonald’s in China Agrees to Unions,” The New York Times, April 10, 2007, http://query.nytimes.com/gst/ fullpage.html?res=9D00E6DC153FF933A25757C0A9619C8B63& n=Top/Reference/Times%20Topics/Subjects/F/Fringe%20Benefits (accessed June 16, 2009).

33. David G. Savage, “AT&T Wins Court Case Over Maternity Leave,” Los Angeles Times, May 19, 2009, http://articles.latimes.com/2009/ may/19/nation/na-court-pregnancy19 (accessed June 22, 2009).

34. Bob Sullivan, “La Difference’ Is Stark in EU, U.S. Privacy Laws” MSNBC.com, October 19, 2006, http://www.msnbc.msn.com/ id/15221111/ (accessed June 22, 2009).

35. Loretta Chao, “China Squeezes PC Makers,” The Wall Street Journal, June 8, 2009, http://online.wsj.com/article/ SB124440211524192081.html (accessed June 8, 2009).

36. Anup Shah, “Health Issues,” Global Issues, October 27, 2008, http://www.globalissues.org/issue/587/health-issues (accessed June 22, 2009).

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37. Jeff Aronson, “Dying For Drugs,” British Medical Journal, May 3, 2003, http://www.pubmedcentral.nih.gov/articlerender. fcgi?artid=1125906 (accessed June 22, 2009).

38. Robert Pear, “Obama Push to Cut Health Costs Faces Tough Odds,” The New York Times, May 12, 2009, http://www.nytimes. com/2009/05/12/us/politics/12health.html (accessed September 4, 2009); John McCormick and Bruce Japsen, “Obama Tells AMA US Health-Care Costs Are a ‘Ticking Time Bomb’,” The Chicago Tribune, June 15, 2009, http://www.commondreams.org/ headline/2009/06/15-9 (accessed June 20, 2009).

39. Reed Abelson, “While the U.S. Spends Heavily on Health Care, a Study Faults the Quality,” The New York Times, July 17, 2008, http://www.nytimes.com/2008/07/17/business/17health. html?scp=2&sq=U.S.%20Healthcare&st=cse (accessed June 20, 2009).

40. “Germany: Development of the Health Care System,”. Country Database, http://www.country-data.com/cgi-bin/query/r-4924. html (accessed June 20, 2009).

41. Dan Butterfield, “China’s ‘Sticky Floor’ Gender Pay Differences,” The McKinsey Quarterly. May 15, 2009, http://www. mckinseyquarterly.com/Chinas_sticky_floor_2354 (accessed September 4, 2009).

42. Don Wells, “Global Unions—Challenging Transnational Capital through Cross-Border Campaigns,” edited by Kate Bronfenbrenner, British Journal of Industrial Relations 47, no. 2 (June 2009): 448–451.

43. Jonathon Weisman and Joann S. Lublin, “Obama Lays Out Limits on Executive Pay,” The Wall Street Journal, February 17, 2009, http://online.wsj.com/article/SB123375514020647787.html (accessed June 21, 2009).

44. Deborah Solomon and Mark Maremont, “Bankers Face Strict New Pay Cap,” The Wall Street Journal, February 14, 2009, http:// online.wsj.com/article/SB123457165806186405.html (accessed June 21, 2009).

45. Joann S. Lublin, “More Directors Are Cutting Their Own Pay,” The Wall Street Journal, March 16, 2009, http://online.wsj.com/ article/SB123698734278425765.html (accessed June 21, 2009).

46. “China Orders Finance Executives to Cut Pay,” AOL News Australia, April 09, 2009, http://www.aol.com.au/news/story/ China-orders-finance-executives-to-cut-pay/1900051/index.html (accessed June 21, 2009).

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Chapter 1: The Importance of Business Ethics

AN ETHICAL DILEMMA
BUSINESS ETHICS DEFINED
WHY STUDY BUSINESS ETHICS?
THE DEVELOPMENT OF BUSINESS ETHICS
DEVELOPING AN ORGANIZATIONAL AND GLOBAL ETHICAL CULTURE
THE BENEFITS OF BUSINESS ETHICS
OUR FRAMEWORK FOR STUDYING BUSINESS ETHICS
SUMMARY
IMPORTANT TERMS FOR REVIEW
RESOLVING ETHICAL BUSINESS CHALLENGES
CHECK YOUR EQ

Notes

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