Miller, Business Law: Text & Exercises, 10e © 2023; Chapter 01: Introduction to the Law Miller, Business Law: Text & Exercises, 10e © 2023; Chapter 01: Introduction to the Law
Instructor Manual Purpose and Perspective of the Chapter
The purpose of this chapter is to examine the relationship between law and ethics. The chapter
Business Law Text & Exercises, 10th Edition presents issues involved to determining the ethical responsibilities of businesses and provides
Chapter 1-43 students a framework for analyzing and making ethical decisions.
Chapter 1
Cengage Supplements
The following product-level supplements provide additional information that may help you in
preparing your course. They are available in the Instructor Resource Center.
PowerPoint Deck
Table of Contents
Purpose and Perspective of the Chapter ............................................................................................................... 2 List of Student Downloads
Cengage Supplements .................................................................................................................................................. 2 Students should download the following items from the Student Companion Center to complete
the activities and assignments related to this chapter:
List of Student Downloads ...................................................................................................................................... 2
Chapter Objectives ......................................................................................................................................................... 2 PowerPoint Deck (without teaching notes, activities, or answers)
Key Terms ........................................................................................................................................................................... 2
Chapter Objectives
What's New in This Chapter ........................................................................................................................................ 3 The following objectives are addressed in this chapter:
Chapter Outline ............................................................................................................................................................... 4
1. Discuss how business can discourage unethical behavior
Discussion Questions ..................................................................................................................................................... 8
2. Explain the relationship between law and ethics
Additional Resources .................................................................................................................................................. 10
Cengage Video Resources ................................................................................................................................... 10 3. Compare duty-based ethics and utilitarian ethics
Appendix ......................................................................................................................................................................... 10 4. Identify ethical problems in the global context
Generic Rubrics......................................................................................................................................................... 10
Key Terms
Standard Writing Rubric ....................................................................................................................................... 10
business ethics: Ethics in a business context; a consensus of what constitutes right or wrong
Standard Discussion Rubric ................................................................................................................................. 12 behavior in the world of business and the application of moral principles to situations that arise
in a business setting.
categorical imperative: A concept developed by the philosopher Immanuel Kant as an ethical
guideline for behavior. In deciding whether an action is right or wrong, or desirable or
undesirable, a person should evaluate the action in terms of what would happen if everybody
else in the same situation, or category, acted the same way.
corporate social responsibility (CSR): The concept that corporations can and should act
ethically and be accountable to society for their actions.
cost-benefit analysis: A decision-making technique that involves weighing the costs of a given
action against the benefits of the action.
duty-based ethics: An ethical philosophy rooted in the idea that every person has certain duties
to others, including both humans and the planet. Those duties may be derived from religious
principles or from other philosophical reasoning.
ethical reasoning: A reasoning process in which an individual links his or her moral convictions
or ethical standards to the particular situation at hand.
© 2023 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible 1 © 2023 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible 2
website, in whole or in part. website, in whole or in part.
, Miller, Business Law: Text & Exercises, 10e © 2023; Chapter 01: Introduction to the Law Miller, Business Law: Text & Exercises, 10e © 2023; Chapter 01: Introduction to the Law
ethics: Moral principles and values applied to social behavior. o Applying the IDDR Framework
moral minimum: The minimum degree of ethical behavior expected of a business firm, which is Retained and Updated Digital Update feature—
usually defined as compliance with the law. o Should Employees Have a Right of Disconnecting? (Discussing overtime rules and
outcome-based ethics: An ethical philosophy that focuses on the impacts of a decision on
digital connectivity of employees through smartphones and other devices.)
society or on key stakeholders.
1 New Case:
outsourcing: The practice by which a company hires an outside firm or individual to perform
work rather than hiring employees. o Case 3.1: Al-Dabagh v. Case Western Reserve University (2015)—on a university’s
principle of rights: The principle that human beings have certain fundamental rights (to life, discharge of a student for failure to meet professionalism standards because he
freedom, and the pursuit of happiness, for example). A key factor in determining whether a sexually harassed other students, was late for classes, and convicted of a DUI
business decision is ethical under this theory is how that decision affects the rights of others, o New Case 3.2: Watson Laboratories, Inc. v. State of Mississippi (2018)—on short-
such as employees, consumers, suppliers, and the community. term profit maximization when drug manufacturer lied to Medicaid to obtain
stakeholders: Groups, other than the company’s shareholders, that are affected by corporate
overpayment for its drugs.
decisions. Stakeholders include employees, customers, creditors, suppliers, and the community
in which the corporation operates. 5 New Case in Points
triple bottom line: The idea that investors and others should consider not only corporate o 2014 case on the moral minimum
profits, but also the corporation’s impact on people and on the planet in assessing the firm. (The o 2017 case on Volkswagen diesel-gate
bottom line is people, planet, and profits.) o 2015 Morgan Stanley case on sales contests
utilitarianism: An approach to ethical reasoning in which ethically correct behavior is related to o 2015 case on Gandhi furniture on unethical conduct with customer
an evaluation of the consequences of a given action on those who will be affected by it. In o 2015 case on defective Takata Corp. airbags in cars
utilitarian reasoning, a ―good‖ decision is one that results in the greatest good for the greatest
7 New Examples
number of people affected by the decision.
o On Fraud Reduction and Data Analytics Act.
[return to top] o On Dodd-Frank Wall Street Reform and Consumer Protection Act.
o On Google’s code of conduct.
What's New in This Chapter o On Costco’s Code of Ethics.
The following elements are improvements in this chapter from the previous edition: o On Google’s popular corporation social responsibility policies
New chapter title and chapter-opening introduction scenario discussing recent o On a garment worker who claimed that Nike abused workers in Thai factory by
technology scandal involving finger-prick blood test kits withholding wages and forcing them to work 16 hours a day.
New chapter organization and subheads throughout (including new headings for o On Chinese factory supplier making Apples products violated environment
―outsourcing‖ and ―corruption‖) standards.
New section on Making Ethical Business Decisions and new materials on Systematic Reworked material on Corporate Social Responsibility, including expanded discussion on
Approach: IDDR (―I desire to do right‖) that will be used throughout the text to analyze the social and corporate aspects of CSR.
ethics, including in all of the new ―A Question of Ethics‖ problems in the remaining 1 New Business Scenario
chapters. 3 New Case Problems (based on 2012 and 2017 cases)
o New ―Application of the IDDR Approach‖ subsection with step-by-step discussion 1 New ―A Question of Ethics‖ applying all-new IDDR Approach (based on 2016 case)
and sample scenario. 1 New Time-Limited Group Assignment on corporate social responsibility
1 New Exhibit 3–1: An Analysis of Ethical Approaches to the Sample [return to top]
Dilemma (for new IDDR Approach)
o 1 New Term & Concept
Chapter Outline
I. The Importance of Business Ethics
outsourcing
1 New Ethics Today feature—
© 2023 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible 3 © 2023 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible 4
website, in whole or in part. website, in whole or in part.
, Miller, Business Law: Text & Exercises, 10e © 2023; Chapter 01: Introduction to the Law Miller, Business Law: Text & Exercises, 10e © 2023; Chapter 01: Introduction to the Law
a. The Relationship of Law and Ethics – The law does not codify all ethical i. Religious Ethical Principles - Religious standards dictate how one should
requirements. treat others (―Do unto others as you would have them do unto you‖) and
i. Ethics can be subjective and changeable. In the law, too, there are many are generally absolute. For businesses, religious principles can—
―gray areas‖ in which it is difficult to predict how a court will rule. A (1) Unify employees and increase employee motivation.
company is more likely to succeed in a legal dispute if it can show that it (2) Alienate those with different religious backgrounds or social or
acted ethically, responsibly, and in good faith. political beliefs.
II. Setting the Right Ethical Tone (3) Cause negative publicity and even protests or boycotts.
a. Ethical Leadership: Having ethical leadership is likely to lead to employees ii. The Principle of Rights - According to the principle that persons have
acting ethically themselves. rights (to life and liberty, for example), a key factor in determining
b. Ethical Codes of Conduct: one of the most effective ways of setting the tone of whether a business decision is ethical is how that decision affects the
ethical behavior is to create an ethical code of conduct. rights of others, including employees, consumers, suppliers, the
c. Corporate Compliance Programs: in large corporations other components of an community, and society.
ethics program include an ethics committee, ethical training programs, and (1) Conflicting Rights- Which takes priority?
internal audits. (2) Resolving Conflicts- Should whichever right is stronger take
d. Conflicts and Trade-offs: The duties of many groups (shareholders and priority?
employees) may conflict causing management to face ethical issues. iii. Kantian Ethical Principles - Immanuel Kant believed that people should
III. Sarbanes-Oxley Act be respected because they are qualitatively different from other physical
a. Public Company Accounting Oversight Board- objects.
i. Oversees the audit of companies, or issuers, whose securities are sold to (1) People are not a means to an end - Treating human beings as a
public investors in order to protect the interest of investors and the public means to an end (profit, for example) denies their basic humanity.
ii. To register public accounting firms that prepare audit reports for issuers Empowered employees share solutions and are more productive.
b. Enforcement and Penalties- (2) Categorical imperative- Kant’s categorical imperative is that
i. Board can inspect registered public accounting firms individuals should evaluate their actions in light of the
ii. Investigate firms that violate the act consequences that would follow if everyone acted the same way.
iii. Discipline those firms by imposing sanctions ranging from temporary or b. Outcome-Based Ethics - Utilitarianism focuses on the consequences of an
permanent suspensions to civil penalties up to $15 million. action, not its nature or a set of moral values or religious beliefs.
iv. The Act also prohibits falsifying or destroying records with the intent to i. Cost-Benefit Analysis - An action is morally correct, or ―right,‖ when it
obstruct or influence a federal investigation- violations may result in a fine produces the greatest amount of good for the greatest number of
and imprisonment for up to 20 years individuals. Applying this theory requires—
IV. Business Ethics and the Law (1) A determination of who will be affected.
a. Moral minimum- minimum acceptable standard for ethical business behavior (2) A cost-benefit analysis—an assessment of the negative and
(simply obeying the law). positive effects on those affected.
b. Laws Regulating Business- most business firms are subject to extensive (3) A choice among alternatives that will produce the maximum
government regulation- from hiring and firing personnel to selling products in societal utility (the greatest positive benefits for the greatest
the marketplace. number of individuals).
c. Gray Areas in the Law- while legality of a decision is usually relatively clear, the ii. Problems with the Utilitarian Approach - An act that produces the
ethical position is somewhat grayer. Business should be prepared to defend their greatest good for the most may not seem to be the most ethical.
actions. c. Poll Activity: 1 minute total. Asks students about their own ethical philosophy.
V. Approaches to Ethical Reasoning d. Corporate Social Responsibility - Corporate social responsibility (CSR) involves
a. Duty-Based Ethics - Duty-based ethics are derived from religious authorities or incorporating a commitment to good citizenship, with a commitment to making
philosophical reasoning. These standards are focused on concepts of right and ethical decisions, improving society and minimizing environmental impact.
wrong, of duties owed and rights to be protected. i. The Corporate Aspects of CSR- Any socially responsible activity—relevant,
significant, and related to a corporation’s business—can benefit the firm
© 2023 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible 5 © 2023 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible 6
website, in whole or in part. website, in whole or in part.
, Miller, Business Law: Text & Exercises, 10e © 2023; Chapter 01: Introduction to the Law Miller, Business Law: Text & Exercises, 10e © 2023; Chapter 01: Introduction to the Law
in terms of increasing goodwill and sales, decreasing operating costs, and imported and sold in the United States by U.S. businesses. U.S. firms usually
more impressive, committed, and long-term employees. refuse to deal with certain suppliers or arrange to monitor their workplaces to
ii. The Social Aspects of CSR- Corporations can actively promote social goals make sure that the workers are not being mistreated.
and move toward solving social problems. Some companies publish a. Wages and Working Conditions - Allegations that a U.S. business allows
annual corporate social responsibility—or sustainability, or citizenship— its foreign suppliers to engage in unethical practices with employees and
reports to highlight their activities. working environments hurt that firm’s reputation and goodwill.
iii. Stakeholders and CSR- Stakeholders include employees, customers, b. Corporate Watch Groups - Today, few companies can assume that their
creditors, suppliers, advocacy groups, and the community in which a actions overseas and in other nations will go unnoticed by ―corporate
business operates. It is sometimes said that duties to these groups should watchdogs‖ that uncover and then publicize unethical corporate behavior.
be weighed against the duty to a firm’s owners. Thus, U.S. businesses take steps to avoid such publicity.
e. Think Pair Share Activity (2) PPT Slide: 10 minute(s) total. Have students c. Avoiding Corruption - Under the Foreign Corrupt Practices Act, U.S. businesses
break into pairs or small groups and consider the following: Alexander, the CEO of are prohibited from making payments to (bribing) foreign official to secure
Westwind Baby Furnishings, received a report from one of his quality inspectors favorable business contracts. Corruption is widespread in some nations, however,
about a possible defect in the Baby Sleeptime Crib Westwind had just started to and it can be the norm to make so-called side payments in private business in
market. The report said the bed was not safe for older babies, because there was a certain locations. Companies must take care when doing business in countries
chance it would collapse if the baby climbed up onto the railing. Westwind had where corruption is common.
manufactured 20,000 Baby Sleeptime Cribs and would lose a great deal of money if d. Discussion Activity: 5-10 minutes total.
it could not market the cribs. As a class, discuss the following: Corporate Officers and Directors for a large
Who are all the stakeholders in the decision whether or not to recall the cribs? company are aware that the company is producing harmful discharges into a
(Answer: The students should identify at minimum: customers, shareholders (if any) waterway, in violation of environmental laws. They have calculated that paying the
or owners, employees of the company such as officers, quality inspectors, etc. maximum daily fine for the violation is more economical that the cost it would take
Students may also identify government agencies such as Consumer Protection to install equipment needed to remedy the pollution plus the production downtime
Agencies (state or federal). and lost profits.
VI. Social Media What are the legal obligations and ethical obligations of these parties? (Answer:
a. The use of social media in hiring decisions- Some employers review job Students should be able to identify responsibilities to various stakeholders and
candidates’ Facebook pages, blogs, and tweets. Some may reject candidates determine whether profit maximization should be the ultimate right to be protected
who do not participate in social media. Judging a job candidate based on what over other ethical obligations. A follow up question for the class may be whether
she or he does outside of the workplace can be seen as unethical laws like this (which allow a wrongdoer to continue to do wrong so long as they
b. The use of social media to discuss work-related issues have the financial means to cover their fines, should be permitted?)
i. The responsibility of employers- Companies that fire employees
for criticizing other employees or managers in social media outlets
[return to top]
may violate federal labor law.
ii. The responsibility of employees- Is it ethical for an employee to
post negatively about his or her employer in social media? Discussion Questions
You can assign these questions several ways: in a discussion forum in your LMS; as whole-class
V. Business Ethics on a Global Level
discussions in person; or as a partner or group activity in class.
a. World Religions, Cultural Norms, and Ethics – Global businesses need to be
1. In negotiating a business deal, is ―strategic misrepresentation‖ permissible? From a
conscious of the impact of different religious principles and cultural norms on
duty-based ethics viewpoint, in an absolute sense, it would unethical not to disclose information
ethics. For instance, in certain countries the consumption of alcohol is forbidden
on which the negotiator knows the other side might hinge its decisions. In contrast, a
for religious reasons. It would be considered unethical for a U.S. business to
negotiator owes an ethical duty to negotiate in the best interests of whomever he or she is
produce alcohol in those countries and employ local workers to assist in alcohol
negotiating for. When one ethical duty conflicts with another, a decision has to be made as to
production.
which duty is more fundamental. Frequently, questions faced by businesspersons do not have
b. Monitoring the Employment Practices of Foreign Suppliers - Concerns
clear-cut answers, but involve choices between arguably equally good alternatives. A thoughtful
include the rights and the treatment of foreign workers who make goods
© 2023 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible 7 © 2023 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible 8
website, in whole or in part. website, in whole or in part.
Instructor Manual Purpose and Perspective of the Chapter
The purpose of this chapter is to examine the relationship between law and ethics. The chapter
Business Law Text & Exercises, 10th Edition presents issues involved to determining the ethical responsibilities of businesses and provides
Chapter 1-43 students a framework for analyzing and making ethical decisions.
Chapter 1
Cengage Supplements
The following product-level supplements provide additional information that may help you in
preparing your course. They are available in the Instructor Resource Center.
PowerPoint Deck
Table of Contents
Purpose and Perspective of the Chapter ............................................................................................................... 2 List of Student Downloads
Cengage Supplements .................................................................................................................................................. 2 Students should download the following items from the Student Companion Center to complete
the activities and assignments related to this chapter:
List of Student Downloads ...................................................................................................................................... 2
Chapter Objectives ......................................................................................................................................................... 2 PowerPoint Deck (without teaching notes, activities, or answers)
Key Terms ........................................................................................................................................................................... 2
Chapter Objectives
What's New in This Chapter ........................................................................................................................................ 3 The following objectives are addressed in this chapter:
Chapter Outline ............................................................................................................................................................... 4
1. Discuss how business can discourage unethical behavior
Discussion Questions ..................................................................................................................................................... 8
2. Explain the relationship between law and ethics
Additional Resources .................................................................................................................................................. 10
Cengage Video Resources ................................................................................................................................... 10 3. Compare duty-based ethics and utilitarian ethics
Appendix ......................................................................................................................................................................... 10 4. Identify ethical problems in the global context
Generic Rubrics......................................................................................................................................................... 10
Key Terms
Standard Writing Rubric ....................................................................................................................................... 10
business ethics: Ethics in a business context; a consensus of what constitutes right or wrong
Standard Discussion Rubric ................................................................................................................................. 12 behavior in the world of business and the application of moral principles to situations that arise
in a business setting.
categorical imperative: A concept developed by the philosopher Immanuel Kant as an ethical
guideline for behavior. In deciding whether an action is right or wrong, or desirable or
undesirable, a person should evaluate the action in terms of what would happen if everybody
else in the same situation, or category, acted the same way.
corporate social responsibility (CSR): The concept that corporations can and should act
ethically and be accountable to society for their actions.
cost-benefit analysis: A decision-making technique that involves weighing the costs of a given
action against the benefits of the action.
duty-based ethics: An ethical philosophy rooted in the idea that every person has certain duties
to others, including both humans and the planet. Those duties may be derived from religious
principles or from other philosophical reasoning.
ethical reasoning: A reasoning process in which an individual links his or her moral convictions
or ethical standards to the particular situation at hand.
© 2023 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible 1 © 2023 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible 2
website, in whole or in part. website, in whole or in part.
, Miller, Business Law: Text & Exercises, 10e © 2023; Chapter 01: Introduction to the Law Miller, Business Law: Text & Exercises, 10e © 2023; Chapter 01: Introduction to the Law
ethics: Moral principles and values applied to social behavior. o Applying the IDDR Framework
moral minimum: The minimum degree of ethical behavior expected of a business firm, which is Retained and Updated Digital Update feature—
usually defined as compliance with the law. o Should Employees Have a Right of Disconnecting? (Discussing overtime rules and
outcome-based ethics: An ethical philosophy that focuses on the impacts of a decision on
digital connectivity of employees through smartphones and other devices.)
society or on key stakeholders.
1 New Case:
outsourcing: The practice by which a company hires an outside firm or individual to perform
work rather than hiring employees. o Case 3.1: Al-Dabagh v. Case Western Reserve University (2015)—on a university’s
principle of rights: The principle that human beings have certain fundamental rights (to life, discharge of a student for failure to meet professionalism standards because he
freedom, and the pursuit of happiness, for example). A key factor in determining whether a sexually harassed other students, was late for classes, and convicted of a DUI
business decision is ethical under this theory is how that decision affects the rights of others, o New Case 3.2: Watson Laboratories, Inc. v. State of Mississippi (2018)—on short-
such as employees, consumers, suppliers, and the community. term profit maximization when drug manufacturer lied to Medicaid to obtain
stakeholders: Groups, other than the company’s shareholders, that are affected by corporate
overpayment for its drugs.
decisions. Stakeholders include employees, customers, creditors, suppliers, and the community
in which the corporation operates. 5 New Case in Points
triple bottom line: The idea that investors and others should consider not only corporate o 2014 case on the moral minimum
profits, but also the corporation’s impact on people and on the planet in assessing the firm. (The o 2017 case on Volkswagen diesel-gate
bottom line is people, planet, and profits.) o 2015 Morgan Stanley case on sales contests
utilitarianism: An approach to ethical reasoning in which ethically correct behavior is related to o 2015 case on Gandhi furniture on unethical conduct with customer
an evaluation of the consequences of a given action on those who will be affected by it. In o 2015 case on defective Takata Corp. airbags in cars
utilitarian reasoning, a ―good‖ decision is one that results in the greatest good for the greatest
7 New Examples
number of people affected by the decision.
o On Fraud Reduction and Data Analytics Act.
[return to top] o On Dodd-Frank Wall Street Reform and Consumer Protection Act.
o On Google’s code of conduct.
What's New in This Chapter o On Costco’s Code of Ethics.
The following elements are improvements in this chapter from the previous edition: o On Google’s popular corporation social responsibility policies
New chapter title and chapter-opening introduction scenario discussing recent o On a garment worker who claimed that Nike abused workers in Thai factory by
technology scandal involving finger-prick blood test kits withholding wages and forcing them to work 16 hours a day.
New chapter organization and subheads throughout (including new headings for o On Chinese factory supplier making Apples products violated environment
―outsourcing‖ and ―corruption‖) standards.
New section on Making Ethical Business Decisions and new materials on Systematic Reworked material on Corporate Social Responsibility, including expanded discussion on
Approach: IDDR (―I desire to do right‖) that will be used throughout the text to analyze the social and corporate aspects of CSR.
ethics, including in all of the new ―A Question of Ethics‖ problems in the remaining 1 New Business Scenario
chapters. 3 New Case Problems (based on 2012 and 2017 cases)
o New ―Application of the IDDR Approach‖ subsection with step-by-step discussion 1 New ―A Question of Ethics‖ applying all-new IDDR Approach (based on 2016 case)
and sample scenario. 1 New Time-Limited Group Assignment on corporate social responsibility
1 New Exhibit 3–1: An Analysis of Ethical Approaches to the Sample [return to top]
Dilemma (for new IDDR Approach)
o 1 New Term & Concept
Chapter Outline
I. The Importance of Business Ethics
outsourcing
1 New Ethics Today feature—
© 2023 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible 3 © 2023 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible 4
website, in whole or in part. website, in whole or in part.
, Miller, Business Law: Text & Exercises, 10e © 2023; Chapter 01: Introduction to the Law Miller, Business Law: Text & Exercises, 10e © 2023; Chapter 01: Introduction to the Law
a. The Relationship of Law and Ethics – The law does not codify all ethical i. Religious Ethical Principles - Religious standards dictate how one should
requirements. treat others (―Do unto others as you would have them do unto you‖) and
i. Ethics can be subjective and changeable. In the law, too, there are many are generally absolute. For businesses, religious principles can—
―gray areas‖ in which it is difficult to predict how a court will rule. A (1) Unify employees and increase employee motivation.
company is more likely to succeed in a legal dispute if it can show that it (2) Alienate those with different religious backgrounds or social or
acted ethically, responsibly, and in good faith. political beliefs.
II. Setting the Right Ethical Tone (3) Cause negative publicity and even protests or boycotts.
a. Ethical Leadership: Having ethical leadership is likely to lead to employees ii. The Principle of Rights - According to the principle that persons have
acting ethically themselves. rights (to life and liberty, for example), a key factor in determining
b. Ethical Codes of Conduct: one of the most effective ways of setting the tone of whether a business decision is ethical is how that decision affects the
ethical behavior is to create an ethical code of conduct. rights of others, including employees, consumers, suppliers, the
c. Corporate Compliance Programs: in large corporations other components of an community, and society.
ethics program include an ethics committee, ethical training programs, and (1) Conflicting Rights- Which takes priority?
internal audits. (2) Resolving Conflicts- Should whichever right is stronger take
d. Conflicts and Trade-offs: The duties of many groups (shareholders and priority?
employees) may conflict causing management to face ethical issues. iii. Kantian Ethical Principles - Immanuel Kant believed that people should
III. Sarbanes-Oxley Act be respected because they are qualitatively different from other physical
a. Public Company Accounting Oversight Board- objects.
i. Oversees the audit of companies, or issuers, whose securities are sold to (1) People are not a means to an end - Treating human beings as a
public investors in order to protect the interest of investors and the public means to an end (profit, for example) denies their basic humanity.
ii. To register public accounting firms that prepare audit reports for issuers Empowered employees share solutions and are more productive.
b. Enforcement and Penalties- (2) Categorical imperative- Kant’s categorical imperative is that
i. Board can inspect registered public accounting firms individuals should evaluate their actions in light of the
ii. Investigate firms that violate the act consequences that would follow if everyone acted the same way.
iii. Discipline those firms by imposing sanctions ranging from temporary or b. Outcome-Based Ethics - Utilitarianism focuses on the consequences of an
permanent suspensions to civil penalties up to $15 million. action, not its nature or a set of moral values or religious beliefs.
iv. The Act also prohibits falsifying or destroying records with the intent to i. Cost-Benefit Analysis - An action is morally correct, or ―right,‖ when it
obstruct or influence a federal investigation- violations may result in a fine produces the greatest amount of good for the greatest number of
and imprisonment for up to 20 years individuals. Applying this theory requires—
IV. Business Ethics and the Law (1) A determination of who will be affected.
a. Moral minimum- minimum acceptable standard for ethical business behavior (2) A cost-benefit analysis—an assessment of the negative and
(simply obeying the law). positive effects on those affected.
b. Laws Regulating Business- most business firms are subject to extensive (3) A choice among alternatives that will produce the maximum
government regulation- from hiring and firing personnel to selling products in societal utility (the greatest positive benefits for the greatest
the marketplace. number of individuals).
c. Gray Areas in the Law- while legality of a decision is usually relatively clear, the ii. Problems with the Utilitarian Approach - An act that produces the
ethical position is somewhat grayer. Business should be prepared to defend their greatest good for the most may not seem to be the most ethical.
actions. c. Poll Activity: 1 minute total. Asks students about their own ethical philosophy.
V. Approaches to Ethical Reasoning d. Corporate Social Responsibility - Corporate social responsibility (CSR) involves
a. Duty-Based Ethics - Duty-based ethics are derived from religious authorities or incorporating a commitment to good citizenship, with a commitment to making
philosophical reasoning. These standards are focused on concepts of right and ethical decisions, improving society and minimizing environmental impact.
wrong, of duties owed and rights to be protected. i. The Corporate Aspects of CSR- Any socially responsible activity—relevant,
significant, and related to a corporation’s business—can benefit the firm
© 2023 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible 5 © 2023 Cengage. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible 6
website, in whole or in part. website, in whole or in part.
, Miller, Business Law: Text & Exercises, 10e © 2023; Chapter 01: Introduction to the Law Miller, Business Law: Text & Exercises, 10e © 2023; Chapter 01: Introduction to the Law
in terms of increasing goodwill and sales, decreasing operating costs, and imported and sold in the United States by U.S. businesses. U.S. firms usually
more impressive, committed, and long-term employees. refuse to deal with certain suppliers or arrange to monitor their workplaces to
ii. The Social Aspects of CSR- Corporations can actively promote social goals make sure that the workers are not being mistreated.
and move toward solving social problems. Some companies publish a. Wages and Working Conditions - Allegations that a U.S. business allows
annual corporate social responsibility—or sustainability, or citizenship— its foreign suppliers to engage in unethical practices with employees and
reports to highlight their activities. working environments hurt that firm’s reputation and goodwill.
iii. Stakeholders and CSR- Stakeholders include employees, customers, b. Corporate Watch Groups - Today, few companies can assume that their
creditors, suppliers, advocacy groups, and the community in which a actions overseas and in other nations will go unnoticed by ―corporate
business operates. It is sometimes said that duties to these groups should watchdogs‖ that uncover and then publicize unethical corporate behavior.
be weighed against the duty to a firm’s owners. Thus, U.S. businesses take steps to avoid such publicity.
e. Think Pair Share Activity (2) PPT Slide: 10 minute(s) total. Have students c. Avoiding Corruption - Under the Foreign Corrupt Practices Act, U.S. businesses
break into pairs or small groups and consider the following: Alexander, the CEO of are prohibited from making payments to (bribing) foreign official to secure
Westwind Baby Furnishings, received a report from one of his quality inspectors favorable business contracts. Corruption is widespread in some nations, however,
about a possible defect in the Baby Sleeptime Crib Westwind had just started to and it can be the norm to make so-called side payments in private business in
market. The report said the bed was not safe for older babies, because there was a certain locations. Companies must take care when doing business in countries
chance it would collapse if the baby climbed up onto the railing. Westwind had where corruption is common.
manufactured 20,000 Baby Sleeptime Cribs and would lose a great deal of money if d. Discussion Activity: 5-10 minutes total.
it could not market the cribs. As a class, discuss the following: Corporate Officers and Directors for a large
Who are all the stakeholders in the decision whether or not to recall the cribs? company are aware that the company is producing harmful discharges into a
(Answer: The students should identify at minimum: customers, shareholders (if any) waterway, in violation of environmental laws. They have calculated that paying the
or owners, employees of the company such as officers, quality inspectors, etc. maximum daily fine for the violation is more economical that the cost it would take
Students may also identify government agencies such as Consumer Protection to install equipment needed to remedy the pollution plus the production downtime
Agencies (state or federal). and lost profits.
VI. Social Media What are the legal obligations and ethical obligations of these parties? (Answer:
a. The use of social media in hiring decisions- Some employers review job Students should be able to identify responsibilities to various stakeholders and
candidates’ Facebook pages, blogs, and tweets. Some may reject candidates determine whether profit maximization should be the ultimate right to be protected
who do not participate in social media. Judging a job candidate based on what over other ethical obligations. A follow up question for the class may be whether
she or he does outside of the workplace can be seen as unethical laws like this (which allow a wrongdoer to continue to do wrong so long as they
b. The use of social media to discuss work-related issues have the financial means to cover their fines, should be permitted?)
i. The responsibility of employers- Companies that fire employees
for criticizing other employees or managers in social media outlets
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may violate federal labor law.
ii. The responsibility of employees- Is it ethical for an employee to
post negatively about his or her employer in social media? Discussion Questions
You can assign these questions several ways: in a discussion forum in your LMS; as whole-class
V. Business Ethics on a Global Level
discussions in person; or as a partner or group activity in class.
a. World Religions, Cultural Norms, and Ethics – Global businesses need to be
1. In negotiating a business deal, is ―strategic misrepresentation‖ permissible? From a
conscious of the impact of different religious principles and cultural norms on
duty-based ethics viewpoint, in an absolute sense, it would unethical not to disclose information
ethics. For instance, in certain countries the consumption of alcohol is forbidden
on which the negotiator knows the other side might hinge its decisions. In contrast, a
for religious reasons. It would be considered unethical for a U.S. business to
negotiator owes an ethical duty to negotiate in the best interests of whomever he or she is
produce alcohol in those countries and employ local workers to assist in alcohol
negotiating for. When one ethical duty conflicts with another, a decision has to be made as to
production.
which duty is more fundamental. Frequently, questions faced by businesspersons do not have
b. Monitoring the Employment Practices of Foreign Suppliers - Concerns
clear-cut answers, but involve choices between arguably equally good alternatives. A thoughtful
include the rights and the treatment of foreign workers who make goods
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