Ch.4 – Institutionalization in Business Ethics 3 Dimensions of Institutionalization 1. Voluntary Practices include the beliefs, values, and voluntary contractual obligations a. Philanthropy is giving back to communities and causes b. All businesses engage in some level of commitment to voluntary activities to benefit both internal and external stakeholders c. Research has demonstrated that when both ethical and legal responsibilities are respected through core practices, economic performance benefits 2. Core Practices are documented best practices, often encouraged by legal and regulatory forces as well as industry trade associations a. Better Business Bureau is a leading self-regulatory body that provides directions for managing customer disputes and reviews advertising cases b. These practices are not enforced but there are consequences for not engaging in them 3. Mandated Boundary’s are externally imposed boundaries of conduct, such as laws, rules, regulations, and other requirements Elements of an Ethical Culture (From the inside to outside) Culture Values, Norms, Artifacts, Behavior o Values are broad and viewed as long – term enduring beliefs about issues such as integrity, trust, openness, diversity, and individual respect, and responsibility o Norms dictate desirable behaviors through principles, rules, policies, and procedures o Artifacts are visible, tangible external symbols of values and norms Ex: Websites, Code of Ethics, Rituals, language, and physical settings Voluntary Actions, Governance, Core Practices, Legal Compliance Legal Compliance p.96 - 97 Laws and regulations are established by governments to set minimum standards for responsible behavior – society’s codification of what is right and wrong. Laws regulating conduct are passed because some stakeholders believe business cannot be trusted to do what is right in certain areas, such as consumer safety and environmental protection But the opinions of society, as expressed in legislation, can change over time, and different courts and state legislatures may take diverging views Instructions to employees to “just obey the jaw” are meaningless without experience and effective training in dealing with specific legal risk areas The primary method of resolving conflicts and serious business ethics disputes is through lawsuits, or when one individual or organization uses civil law to take another individual or organization to court The role of laws is not so much to distinguish what is ethical or unethical as to determine the appropriateness of specific activities or situations Types of Laws 1. Civil Law defines the rights and duties of individuals and organizations 2. Criminal Law prohibits specific actions such as – fraud, theft, or securities trading violations – also imposes fines or imprisonment as punishment for breaking the law
Primary difference between civil and criminal law is the state or nation enforces criminal laws, whereas individuals (jury’s /
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