BAB 3

 Adopting a Stakeholder Orientation

An organization has duties and responsibilities with regard to each stakeholder;
however, the implicit social contract between business and society means that meeting
legal requirements might support only minimal ethical standards. Society on the
whole and in the long run requires that business consider a broader range of duties in
its relationships with key stakeholders.
 Weighing Stakeholder Claims
There are three approaches to stakeholder theory: the descriptive approach, the
instrumental approach, and the normative approach. The normative approach takes the
most comprehensive view of the organization and its stakeholders and is the
fundamental basis of stakeholder theory. Organizations can analyze stakeholder
claims by classifying them on the basis of their intensity and impact on the firm, as
well as on the basis of their relationship to the firm. Such classifications may include
enabling stakeholders, normative stakeholders, functional stakeholders, and diffused
stakeholders. Using the lens of the four “publics” (the nonpublic, the latent, the aware,
and the active), we can also understand a stakeholder claim on the basis of the
public’s degree of awareness of a problem and ability to do something about it.
 Ethical Decision-Making and Prioritizing Stakeholders
Business leaders prioritize those stakeholders who have immediate needs or high
urgency or great significance to the organization, and the identity of these groups may
shift over time. Stakeholders can also be prioritized on the basis of their relationship
to the organization using a matrix of their power and interest. Steps in the MITRE
stakeholder management process are to establish trust, identify stakeholders, gather
and analyze appropriate data, present information to management, and let
stakeholders know they matter.Because customers are often considered high-priority
stakeholders, it can be essential for corporations and nonprofit organizations to
manage any expectations that customers (or donors) may have.
 Corporate Social Responsibility (CSR)
Most organizations must practice genuine corporate social responsibility to be
successful in the modern marketplace. The triple bottom line places people and the
planet on equal standing with profit in the mission of an organization. The genuine
practice of CSR, unlike greenwashing, requires a commitment to an additional
stakeholder, the planet, whose continued healthy existence is essential for any
organization to operate.
 Amenities : resources made available to employees in addition to wages, salary, and
other standard benefits
 descriptive approach : a theory that views the company as composed of various
stakeholders, each with its own interests
 diffused stakeholder : a stakeholder with an interest in a company’s decisions and
whose impacts on a firm can be large even if the relationship is generally weaker than
other types
 enabling stakeholder : a stakeholder who permits an organization to function within
the economic and legal system
 ethical maximum : the strongest action a company can choose to behave ethically in
a given situation
 ethical minimum : the least a company might do to claim it holds an ethically
positive position
 exigency: the level of urgency of a stakeholder claim
 functional stakeholder: a stakeholder whose relationships influence or govern an
organization’s inputs and outputs
 greenwashing: carrying out superficial CSR efforts that merely cover up systemic
ethics problems for the sake of public relations
 instrumental approach: a theory proposing that good management of stakeholders is
important because it can help the bottom line
 normative approach: a theory that considers stakeholders as ends unto themselves
rather than means to achieve a better bottom line
 normative stakeholder: a stakeholder in the organization’s industry who influences
its norms or informal rules
 social responsibility of business: the view that stakeholders are not the means to the
end (profit) but are ends in and of themselves as human beings
 stakeholder claim: a particular stakeholder’s interest in a business decision
 stakeholder management: the process of accurately assessing stakeholder claims so
an organization can manage them effectively
 stakeholder prioritization: the process of deciding which stakeholders to focus on
and in what sequence
 triple bottom line (TBL): a measure that accounts for an organization’s results in
terms of its effects on people, planet, and profits
BAB 4
 Corporate Law and Corporate Responsibility
While some argue that corporations have a primary duty to maximize profits for
the benefit of shareholders, others assert that businesses have a duty to the society in
which they operate, a duty that serves as the basis of the CSR philosophy. Many court
cases have addressed the issue, but it has not been conclusively resolved.
Despite the ongoing ethical debate, being a good corporate citizen is a goal toward
which most contemporary corporations strive. An effective CSR policy usually means
that companies have to commit to both an internal and external approach to ethics.
Corporate social responsibility and good corporate governance are in reality just two
sides of the very same coin. Social responsibility does not mean lower profitability.
 Sustainability: Business and the Environment
Adopting sustainability as a strategy means protecting the environment. Society has
an interest in the longterm survival, indeed the flourishing, of ecological habitats and
natural resources, and we ask and expect companies to respect this societal goal in
their business activities.
When analyzing what a business owes society in return for the freedom to extract
our natural resources, we must balance development and preservation. It may be easy
to say from afar that a business should cut back on how much it pollutes the air, but
what happens when that means cutting back on fossil fuel use and transitioning to
electric vehicles, a choice that affects everyone on a personal level?
 Government and the Private Sector
One challenge in a free enterprise system is balancing the need for government
regulation and private-sector corporate managers’ need for independence in running
their businesses. The Sarbanes-Oxley Act tries to strike this balance by mandating
transparency in corporate governance. This debate also includes the question whether
businesses operating in the private sector ought to do public good on their own,
regardless of whether the government mandates it. For example, many companies
make a commitment to keep the environment clean, and to do so by going above and
beyond what the law requires.
Key Terms
 business judgment rule the principle that officers, directors, and managers of a
corporation are not liable for losses incurred when the evidence demonstrates that
decisions were reasonable and made in good faith
 cap and trade a system that limits greenhouse gas emissions by companies while
allowing them to buy and sell pollution allowances
 carbon footprint the amount of carbon dioxide and other carbon compounds released
by the consumption of fossil fuels
 carbon tax a pay-to-pollute system in which those who discharge carbon into the air
pay a fee or tax
 Citizens United a 2010 Supreme Court ruling in favor of unlimited spending by
individuals and corporations on political campaigns
 Commerce Clause an enumerated power listed in the Constitution giving the federal
government the right to regulate commerce between states
 corporate personhood the legal doctrine holding that a corporation, separate and
apart from the people who are its owners and managers, has some of the same legal
rights and responsibilities enjoyed by natural persons
 fiduciary duty a very high level of legal responsibility owed by those who manage
someone else’s money, which includes the duties of care and loyalty
 limited liability a business owner’s protection against loss of personal assets, granted
with corporate status
 moral minimum the minimal actions or practices a business must undertake to satisfy
the base threshold for acting ethically
 quid pro quo the tradeoff someone makes in return for getting something of value;
from the Latin meaning this for that
 Sarbanes-Oxley legislation passed in 2002 that mandates reporting transparency by
businesses in areas ranging from finance to accounting to supply chain activities
 shareholder primacy a company’s duty to maximize profits for stockholders
 states’ rights a view that states should have more governing authority than the federal
government, based on the Tenth Amendment, which reserves to the states any right
not specifically delegated to the federal government
 sustainability a long-term approach to the interaction between business activity and
societal impact on the environment and other stakeholders
 tragedy of the commons an economy theory highlighting the human tendency to use
as much of a free natural resource as wanted without regard for others’ needs or for
long-term environmental effects or issues
BAB 5

 The Relationship between Business Ethics and Culture

Culture has a tremendous influence on ethics and its application in a business setting.
In fact, we can argue that culture and ethics cannot be separated, because ethical
norms have been established over time by and make sense to people who share the
same background, language, and customs. For its part, business operates within at
least two cultures: its organizational culture and the wider culture in which it was
founded. When a business attempts to establish itself in a new environment, a third
culture comes into play. With
increasingly diverse domestic and global markets and the spread of consumerism,
companies must consider the ethical implications of outsourcing production and resist
the temptation to look the other way when their values are challenged by the reality of
overseas supply or distribution chains.
 Business Ethics over Time
As a function of culture, ethics is not static but changes in each new era. Technology
is a driving force in ethical shifts, as we can see in tracing changes from the age of
mercantilism to the Industrial Revolution to the postindustrial era and the Information
Age. Some of the most successful recent efforts to advance ethical practices have
come from influences outside industry, including government regulation and
consumer pressure.
 The Influence of Geography and Religion
Business is primarily about relationships—with employees, business partners, and
customers and clients. Ethical standards and practices governing these relationships
depend on the environment they exist in, an environment that, in turn, depends on
additional factors such as geography and religion. Religion’s role in business is less
certain today; we are perhaps more likely to see a universal, secular code of ethics
develop than to see religion serve as common ground for different cultures to come
together.
 Are the Values Central to Business Ethics Universal?
Any system of business ethics must consider the processes of enculturation and
acculturation as well as the fact that ethical standards may shift depending on
geography or time, even if certain underlying ethical values (e.g., prohibitions against
lying, fraud, or murder) may remain constant. It is usually in a business’s best interest
to promote human flourishing within the organization, providing comprehensive
training along a humanistic business model, which applies the social sciences to
ensure profitability and responsibility in an organization as well as happy, productive
employees.
Key Terms
 Acculturation the cultural transmission and socialization process that stems from
cultural exchange
 Consumerism a lifestyle characterized by the acquisition of goods and services
 Enculturation the process by which humans learn the rules, customs, skills, and
values to participate in a society
 humanistic business model a business model for balancing profitability and
responsibility fairly, especially with regard to stakeholders
 localization the process of adapting a product for non-native environments and
languages, especially in other nations and cultures
 mercantilism the economic theory that global wealth is static and prosperity comes
from the accumulation of wealth through extraction of resources or trade
 moral agency the self-awareness, freedom, and ability to make choices based on
one’s perception of right and wrong
 universal values ethical principles that apply everywhere despite differences in time,
geography, and culture
BAB 6

 The Workplace Environment and Working Conditions

A company and its managers need to provide a workplace at which employees want to
work, free of safety hazards and all types of harassment. Perks and benefits also make
the company an attractive place to work. Yet another factor is managers who make
employees feel valued and respected. A company can use all these tools to attract and
retain top talent, helping to reach the goals of having a well-run company with a
satisfied workforce. Philosophers Aristotle and Immanuel Kant said taking ethical
action is the right thing to do. The decision to create an environment in which
employees want to come to work each day is, in large part, an ethical choice, because
it creates a healthy environment for all to encounter. However, the bonus comes when
a satisfied workforce fosters increased quality and productivity, which leads to
appreciative customers or clients and increased profitability. There is a financial
payoff in that a well-treated workforce is also a productive one.
 What Constitutes a Fair Wage?
The concept of paying people fairly can become complicated. It includes trying to
allocate and compensate workers in the most effective manner for the company, but it
takes judgement, wisdom, and a moral imperative to do it fairly. Managers must
balance issues of compensation equity, employee morale, motivation, and profits—all
of which may have legal, ethical, and business elements. The issue of a fair wage is
particularly salient for those earning the minimum wage, which, in real terms, has
declined by 23 percent since 1960, and for women, who continue to experience a
significant pay gap as compared with their male counterparts.
 An Organized Workforce
Employees seek fair treatment in the workplace and sometimes gain a negotiating
advantage with management by choosing to be represented by a labor union. Union
membership in the United States has fallen in recent years as federal and state law
have expanded to include worker protections unions fought for, and as the nation has
shifted from a manufacturing to a service economy. Public-sector employee groups
such as teachers, professors, first responders, and nurses are unionized in some cities
and states. U.S. workers have contributed to a long rise in productivity over the last
forty years but have not generally shared in wage gains.
 Privacy in the Workplace
Monitoring of employees, whether electronically or through drug testing, is a complex
area of workforce management. Numerous state and federal legal restrictions apply,
and employers must decide not only what they are legally allowed to do but also what
they should do ethically, keeping in mind the individual privacy
concerns of their employees
Key Terms
 business purpose exception an exception to the Electronic Communications Privacy
Act of 1986 that permits employers to monitor all oral and electronic
communications, assuming they can show a legitimate business purpose for doing so
 closed shop a union environment that requires new hires to be automatically enrolled
in the labor union and union dues to be automatically deducted from their pay
 codetermination a concept popular in Europe that gives workers the right to
participate on the board of directors of their company
 collective bargaining union negotiations with an employer on behalf of employees
 comparable worth the idea that pay should be based upon a job holder’s worth to the
organization rather than on salary history
 consent exception an exception to the Electronic Communications Privacy Act of
1986 that allows employers to monitor employee communications provided
employees have given their consent
 EEOC the Equal Employment Opportunity Commission, created by the U.S. Civil
Rights Act of 1964 and which attempts to eliminate discrimination in the workplace
based on race, gender, or creed
 employment at will a legal philosophy that holds that either the employee or the
employer may dissolve the employment arrangement at will (i.e., without cause and at
any time unless an employment contract is in effect that stipulates differently)
 OSHA the Occupational Safety and Health Act, which governs workplace safety, and
the Occupational Safety and Health Administration, which administers the act at the
federal level
 pay ratio the number of times greater the average executive’s salary is than the
average worker’s
 right-to-work law a state law that says a worker cannot be forced to join a union
 sexual harassment unwelcome touching, requests for sexual favors, and other verbal
or physical harassment of a sexual nature from a supervisor, coworker, client, or
customer
BAB 7

 Loyalty to the Company

Although employees’ and employers’ concepts of loyalty have changed, it is
reasonable to expect workers to have a basic sense of responsibility to their company
and willingness to protect a variety of important assets such as intellectual property
and trade secrets. Current employees should not compete with their employer in a way
that would violate conflict-of-interest rules, and former employees should not solicit
previous customers or employees upon leaving employment.
 Loyalty to the Brand and to Customers
Employees have a duty to be loyal to the brand and treat customers well. Internal
marketing is one process by which a company instills employee commitment to the
brand and builds loyalty in its workforce. This loyalty should be a two-way street,
however. If the company wants its employees to treat customers with respect, it must
treat them with respect as well.
 Contributing to a Positive Work Atmosphere
Ethical employees accept their role in creating a workplace that is respectful, safe, and
welcoming by getting along with coworkers and doing what is best for the company.
They also comply with corporate codes of conduct, which cover a wide range of
behaviors, from financial dealings and bribery to sexual harassment. In addition, they
are alert to any situation in the workplace that could escalate into violence. In short,
the employee has a duty to be a responsible person in the job.
 Financial Integrity
Legal and cultural differences may allow bribes in other countries, but bribery and
insider trading (which allows someone with private information about securities to
profit from that knowledge at the public’s expense) are illegal in the United States, as
well as unethical. A clear gift policy should be in place to help employees understand
when it is acceptable to accept a gift from another employee or an outsider (such as a
vendor), and to distinguish gifts from bribes.
 Criticism of the Company and Whistleblowing
Employees should understand that there are limits to what can be posted about their
employer online, just as there are limits to what they can say in the workplace, and
that the First Amendment generally does not protect such speech. Whistleblowers are
protected, and sometimes rewarded, for their willingness to come forward, but they
can still face a hostile environment in some situations. Employees should not use
whistleblowing as an attempt to get back at a boss or employer they do not like;
rather, they should use it as a means to stop serious wrongdoing.

Key Terms
 a. Brand a type of product or service marketed by a particular company under a
particular name
b. branding the process of creating, differentiating, and maintaining a particular image
and/or reputation for a company, product, or service
c. bribe a payment in some form (cash or noncash) for an act that runs counter to the
legal and ethical culture
of the work environment
d. duty of confidentiality a common-law rule giving an employee responsibility to
protect the secrecy of the employer’s proprietary information, such as trade secrets,
material covered by patents and copyrights, employee records and salary information,
and customer data
e. duty of loyalty a common-law rule that requires an employee to refrain from acting in
a manner contrary to the employer’s interest
f. Foreign Corrupt Practices Act an amendment to the Securities and Exchange Act of
1934; its main purpose is to make it illegal for companies and their managers to
influence or bribe foreign officials with monetary payments or rewards of any kind in
an attempt to get or keep business opportunities outside the United States
g. insider trading the buying or selling of stocks, bonds, or other investments based on
nonpublic information that is likely to favorably affect the price of the security being
traded
h. intellectual property the manifestation of original ideas, protected by legal means
such as patent, copyright, or trademark
i. internal marketing the process of getting employees to believe in the company’s
product and even to buy it
j. non-compete agreement a contract clause ensuring that employees will not compete
with the company during or after employment there
k. nondisclosure agreement an agreement to prevent the theft of trade secrets, most of
which are protected only by a duty of secrecy and not by federal intellectual property
law
l. nonsolicitation clause an agreement that protects a business from an employee who
leaves for another job and then attempts to lure customers or former colleagues away
m. pay secrecy a policy of some companies to prevent employees from discussing their
salary with other workers
n. qui tam provision the section of the False Claims Act of 1863 that allows private
persons to file lawsuits for violations of the act on behalf of the government as well as
for themselves and so receive part of any penalty imposed
o. trade secret a company’s technical or design information, advertising and marketing
plans, and research and development data that would be useful to competitors
p. whistleblowing the act of reporting an employer to a governmental entity for
violating the law
q. work style the way and order in which we are most comfortable accomplishing our
tasks at work
r. workplace personality the manner in which we think and act on the job

BAB 8
 Diversity and Inclusion in the Workforce
A diverse workforce yields many positive outcomes for a company. Access to a deep
pool of talent, positive customer experiences, and strong performance are all
documented positives. Diversity may also bring some initial challenges, and some
employees can be reluctant to see its advantages, but committed managers can deal
with these obstacles effectively and make diversity a success through inclusion.
 Accommodating Different Abilities and Faiths
To accommodate religious beliefs, the absence of formal religious faith, or
disabilities, businesses should make every reasonable accommodation they can to
allow workers to contribute to the company. This may require scheduling flexibility,
the use of special devices, or simply an understanding manager.
 Sexual Identification and Orientation
Although about half the states prohibit sexual orientation discrimination in private and
public workplaces and a few do so in public workplaces only, federal law does not.
Successful companies will not only follow the applicable law but also develop ethical
policies to send a clear message that they are interested in job skills and abilities, not
sexual orientation or personal life choices.
 Income Inequalities
Income inequality has grown sharply while the U.S. middle class, though vital to
economic growth, has continued to shrink. Currently, the federal minimum wage is
$7.25 per hour, and many states simply follow the federal lead in establishing their
own minimums. Though some economists dispute the existence of a simple, direct
link between a shrinking middle class and governmental failure to raise the minimum
wage at a sufficiently rapid pace, no one denies that businesses themselves could take
the lead here by paying a higher minimum wage. Companies also can commit to hire
workers as employees rather than as independent contractors and pay the cost of their
benefits, and to pay women the same as men for similar work.
 Animal Rights and the Implications for Business
Mainstream businesses from pharmaceutical and medical companies to grocers and
restaurants must all consider the growing public awareness of the ethical treatment of
nonhuman animals. This evolving concern has particular consequences for
agribusiness in terms of what creatures we consider appropriate to cultivate and eat.
Cosmetic companies are increasingly subject to legislative mandates in the global
marketplace and to consumer pressure at home to adopt ethical policies with regard to
animal testing. An aware consuming public can continue to force improvements in
our treatment of animals.

BAB 10
 More Telecommuting or Less?
Remote workers save themselves the time and cost of a commute and are better able
to balance work and home life. Companies often benefit from the higher productivity
and lower turnover of telecommuting employees, and they can also provide a social
benefit by permitting employees to avoid commuting, reducing traffic congestion and
pollution. Some challenges of telecommuting for the manager are maintaining the
privacy of the firm’s data, transmitting corporate culture, defining performance
objectives, and encouraging collaboration. Employees have the challenge of
remaining focused on work when they are working elsewhere. Ethical companies
support their remote workers by developing and encouraging trust and guarding
against abuse. They also set clear and equitable expectations and rewards to ensure
fairness and keep open the lines of communication.

 Workplace Campuses
Traditional office buildings with separate workspaces for each worker are giving way
to multifunctional worksites where employees are encouraged to actively collaborate.
Some companies have expanded the workplace to include restaurants, recreation
facilities, and convenient amenities to attract and retain employees. Other companies
are building villages around their campuses to assist employees seeking to balance
work and home life. These all-encompassing work environments have some potential
downsides for employees, however, including a risk of tethering them to their
workplaces. Their effects on local communities are being questioned as well.

 Alternatives to Traditional Patterns of Work

When undertaken with equity and fairness, job sharing and flextime can create
flexibility for workers who need or want to limit their hours. These practices allow
employers to recruit more diverse employees, help them meet employees’ need for
work-life balance, and, in the case of job sharing, bring more than one person’s
perspective to problem solving. However, employers must clearly spell out
expectations and procedures for each employee to ensure success Given flexible hours
and job-sharing arrangements, the traditional employment-based U.S. economy
appears to be in transition toward new business models that offer many opportunities
but also serious challenges. Ethical issues in the access economy include the
responsibilities of each of the parties in a sharing transaction and the character of any
regulation, including taxes, that may be passed. In the gig economy, they include
workers’ insecure positions and lack of benefits, employers’ responsibility for paying
their fair share of social insurance (payroll) taxes, and the fair treatment of interns.

 Robotics, Artificial Intelligence, and the Workplace of the Future

Initially, robots and AI inspire both intrigue and fear in most of us. Fear of losing jobs
is a reality, but so too is intrigue about what the future holds. A key for companies is
to help workers retrain to become part of that future

 access economy a nontraditional business model in which consumers participate on

both sides of a transaction, sometimes facilitated by a third party
 artificial intelligence (AI) the branch of science that uses computer algorithms to
replicate human intelligent behavior by machines with minimal human intervention
 flextime a work schedule in which employees can select their own start and finish
time
 gig economy an environment in which individuals and businesses contract with
independent workers for the completion of short-term assignments, engagements, or
projects, offering few or no benefits beyond compensation
 job sharing the use of two or more employees to perform the work of one full-time
position
 robotics a field of research that includes computer science, mechanical and
electronics engineering, and science process with the objective to produce robots, or
related forms of automation, to replicate human tasks
 telecommuting
working from a remote location (home or other space) by means of electronic
connections