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Business Ethics Workshop

Business Ethics Workshop. 2010 Summer Entrepreneurship Institute Prof. Gonzalo Freixes. "Art, like morality, consists of drawing the line somewhere." — G.K. Chesterton, English essayist and poet (1874-1936). What is Ethics?.

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Business Ethics Workshop

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  1. Business Ethics Workshop 2010 Summer Entrepreneurship Institute Prof. Gonzalo Freixes

  2. "Art, like morality, consists of drawing the line somewhere." — G.K. Chesterton, English essayist and poet (1874-1936) What is Ethics? “Ethics is a code of values which guide our choices and actions and determine the purpose and course of our lives.” — Ayn Rand, Russian-American novelist/philosopher (1905-1982)

  3. Who is an Ethical Person? "A moral being is one who is capable of comparing his past and future actions or motives, and of approving or disapproving of them." — Charles Darwin, English biologist (1809-1882)

  4. Theory of Moral Development(Lawrence Kohlberg)

  5. Character Counts Six Pillars of Character • Trustworthiness • Respect • Responsibility • Fairness • Caring • Citizenship - Michael Josephson, Josephson Institute of Ethics

  6. Professional Ethics • Impartiality & Objectivity • Openness, Full Disclosure • Due diligence, Duty of Care • Fidelity to Professional Responsibilities • Avoiding Conflicts of Interest (Actual, Potential or Apparent)

  7. All the Wrong Reasons “Everybody does it.” “If we don’t, someone else will.” “The only thing that matters is the bottom line!” “It doesn’t really hurt anyone.” “We’ll wait until the lawyers tell us it’s wrong.” “I was just following orders.”

  8. 7 Steps to Better Decisions An Ethical Approach to Business • Stop & Think • Clarify Goals • Determine Facts • Develop Options • Consider the Consequences • Choose Wisely • Monitor & Modify

  9. Corporate Responsibility • What is the purpose of a corporation? • Monotonic View vs. Pluralistic View • Corporate Constituency Statutes • Dolphins & Baby Formula (the case of Star Kist & Nestle)

  10. Principal  Agent relationship Agent has fiduciary duties  Loyalty  Performance  To Obey A can be liable to P or 3rd Parties Agents & Fiduciaries

  11. Fiduciary Duties - Loyalty • Stealing • Secrets • Conflicts • Commingling

  12. Fiduciary Duties - Performance • Care & Skill • Reputation • Disclose & Notify • Account • Stay in Scope

  13. Fiduciary Duties - Obey Obey your Principal, unless… • Illegal • Immoral

  14. Principal’s Duties to Agent • Opportunity to Work • Compensation • Indemnity • Cooperation

  15. Corporate ExecutivesDuty of Care • Act as a reasonable executive would • Protected by Business Judgment Rule  Informed decision  Rational basis  No conflict • Protected by Constituency Statutes

  16. Corporate ExecutivesDuty of Loyalty • Avoid Self Dealing • Avoid Common Directorships • Avoid seizing Corporate Opportunities

  17. Ethics in Global Business • Results of International Study 1. Personal Standards: EU 2. Interpersonal Standards (e.g. Loyalty): Japan 3. Organizational Standards: US • MNC’s deal with ethics “ad hoc” - viewed as “public relations” issue

  18. SARBANES-OXLEY ACT OF 2002  PUBLIC ACCOUNTING OVERSIGHT BOARD (PCAOB)  AUDITOR INDEPENDENCE  EXECUTIVE RESPONSIBILITY  FINANCIAL/ETHICAL DISCLOSURES

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