Instructor Manual: Ferrell & Fraedrich, Business Ethics: Ethical Decision Making and Cases, 14e, 2026,
9798214043098; Chapter 1: The Importance of Business Ethics
Instructor Manual
Ferrell & Fraedrich, Business Ethics: Ethical Decision Making and Cases, 14e,
2026, 9798214043098; Chapter 1: The Importance of Business Ethics
TABLE OF CONTENTS
Purpose and Perspective of the Chapter.............................................................................2
Chapter Objectives.................................................................................................................2
What’s New in This Chapter..................................................................................................2
Chapter Outline......................................................................................................................3
Additional Activities and Assignments...............................................................................10
a
© 2026 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or 1
posted to a publicly accessible website, in whole or in part.
, Instructor Manual: Ferrell & Fraedrich, Business Ethics: Ethical Decision Making and Cases, 14e, 2026,
9798214043098; Chapter 1: The Importance of Business Ethics
PURPOSE AND PERSPECTIVE OF THE CHAPTER
The purpose of this chapter is to provide an understanding of the evolving landscape
of business ethics. First, we develop a definition of business ethics and discuss why
it has become an important topic in business education. Next, we examine the
evolution of business ethics in North America and explore the benefits of ethical
decision making in business. It explores how ethical conduct is increasingly integrated
into organizational culture, emphasizing the roles of stakeholders, including
employees, shareholders, and consumers, in demanding responsible behavior.
Additionally, this chapter examines the ethical challenges posed by emerging
technologies like artificial intelligence and big data, and their potential to improve or
complicate corporate social responsibility and ethical decision making. Finally, we
provide a framework for examining business ethics in this text.
CHAPTER OBJECTIVES
The following objectives are addressed in this chapter:
1-1 Define business ethics from an organizational perspective
1-2 Identify reasons for studying business ethics
1-3 Describe the historical development and evolution of business ethics
1-4 Discuss the importance of developing and supporting an ethical culture
1-5 Provide evidence that ethical value systems support business performance
1-6 Discuss a model for studying business ethics
[return to top]
WHAT’S NEW IN THIS CHAPTER
The following elements are improvements in this chapter from the previous edition:
Revised chapter learning objectives
New Business Ethics in the Real World boxed feature: Compromising Ethics to
Save Theranos
Updated tables and figures throughout
New examples throughout
Updated end of chapter material: Summary and Resolving Ethical Business
Challenges.
[return to top]
a
© 2026 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or 2
posted to a publicly accessible website, in whole or in part.
, Instructor Manual: Ferrell & Fraedrich, Business Ethics: Ethical Decision Making and Cases, 14e, 2026,
9798214043098; Chapter 1: The Importance of Business Ethics
CHAPTER OUTLINE
The following outline organizes activities (including any existing discussion questions
in PowerPoints or other supplements) and assessments by chapter (and therefore by
topic), so that you can see how all the content relates to the topics covered in the
text.
I. Business Ethics Defined (LO 1-1)
i. Morals refer to an individual’s personal philosophies about what
is right or wrong. The important point is that when one speaks of
morals, it is personal or singular.
ii. Principles are specific and pervasive boundaries for behavior that
should not be violated and often become the basis for rules.
iii. Morals, values, and principles describe positive or good traits that
are often applied to the business organization or industry.
iv. Investors, employees, customers, interest groups, the legal system,
and the community often determine whether a specific action or
standard is ethical or unethical. In a business context, groups that
have a “stake” or claim in some aspect of a firm’s products,
operations, markets, industry, and outcomes—customers,
employees, investors, suppliers, government agencies, special
interest groups, communities—are known as stakeholders.
v. Ethics are the behavior or decisions made within a group’s values
or morals. In our case, we are discussing decisions made in
business by groups of people representing the business
organization.
vi. Business ethics comprises organizational principles, values, and
norms that may originate from individuals, organizational
statements, or the legal system that primarily guide individual
and group behavior in business.
vii. Corporate culture can be defined as a set of values, norms, and
artifacts, including ways of solving problems that members
(employees) of an organization share.
viii. A 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 they has faced before.”
ix. 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 help individuals or
society and contribute to social and economic well-being.
II. Why Study Business Ethics? (LO 1-2)
a. A Crisis in Business Ethics
a
© 2026 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or 3
posted to a publicly accessible website, in whole or in part.
, Instructor Manual: Ferrell & Fraedrich, Business Ethics: Ethical Decision Making and Cases, 14e, 2026,
9798214043098; Chapter 1: The Importance of Business Ethics
i. The Global Business Ethics Survey (GBES) measures workplace
integrity as the pressure to compromise organizational standards,
observed misconduct, reporting of misconduct when observed,
and retaliation against reports.
ii. Business ethics decisions and activities have come under greater
scrutiny by many different stakeholders, including consumers,
employees, investors, government regulators, and special interest
groups.
iii. Social media and financial services have some of the lowest
ratings, indicating that organizations in these sectors have not
been able to restore their reputations after scandals over the last
two decades.
b. Specific Issues
i. Several ethical issues must be addressed to prevent misconduct.
Misuse of company resources, abusive behavior, harassment,
accounting fraud, conflicts of interest, defective products,
bribery, counterfeit products, and employee theft are all
problems cited as potential risk areas.
ii. Ethics plays an important role in the public sector as well. In
government or political ethics, several politicians and high-
ranking officials have experienced significant negative publicity.
iii. Every organization has the potential for unethical behavior.
iv. Double standards are at least partly due to differences in wealth
and the success between businesses and consumers.
c. The Reasons for Studying Business Ethics
i. Many people believe that if a company hires good people with
strong values, then it will be a “good citizen” organization.
ii. A moral dilemma is defined as a situation where a person is
faced with multiple choices, all of which are undesirable as
defined by the person.
iii. A value dilemma is the same, only that the individual’s beliefs are
grounded in societal norms.
iv. Just being a good person and having sound personal values may
not be sufficient to handle the ethical issues that arise in a
business organization.
v. Failure to establish shared values and ethics codes will result in
a wide range of conduct when faced with the same ethical
issues.
vi. Studying business ethics will help you begin to identify ethical
issues when they arise and recognize the approaches available
for resolving them.
III. The Development of Business Ethics (LO 1-3)
a. Before 1960: Ethics in Business
a
© 2026 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or 4
posted to a publicly accessible website, in whole or in part.
9798214043098; Chapter 1: The Importance of Business Ethics
Instructor Manual
Ferrell & Fraedrich, Business Ethics: Ethical Decision Making and Cases, 14e,
2026, 9798214043098; Chapter 1: The Importance of Business Ethics
TABLE OF CONTENTS
Purpose and Perspective of the Chapter.............................................................................2
Chapter Objectives.................................................................................................................2
What’s New in This Chapter..................................................................................................2
Chapter Outline......................................................................................................................3
Additional Activities and Assignments...............................................................................10
a
© 2026 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or 1
posted to a publicly accessible website, in whole or in part.
, Instructor Manual: Ferrell & Fraedrich, Business Ethics: Ethical Decision Making and Cases, 14e, 2026,
9798214043098; Chapter 1: The Importance of Business Ethics
PURPOSE AND PERSPECTIVE OF THE CHAPTER
The purpose of this chapter is to provide an understanding of the evolving landscape
of business ethics. First, we develop a definition of business ethics and discuss why
it has become an important topic in business education. Next, we examine the
evolution of business ethics in North America and explore the benefits of ethical
decision making in business. It explores how ethical conduct is increasingly integrated
into organizational culture, emphasizing the roles of stakeholders, including
employees, shareholders, and consumers, in demanding responsible behavior.
Additionally, this chapter examines the ethical challenges posed by emerging
technologies like artificial intelligence and big data, and their potential to improve or
complicate corporate social responsibility and ethical decision making. Finally, we
provide a framework for examining business ethics in this text.
CHAPTER OBJECTIVES
The following objectives are addressed in this chapter:
1-1 Define business ethics from an organizational perspective
1-2 Identify reasons for studying business ethics
1-3 Describe the historical development and evolution of business ethics
1-4 Discuss the importance of developing and supporting an ethical culture
1-5 Provide evidence that ethical value systems support business performance
1-6 Discuss a model for studying business ethics
[return to top]
WHAT’S NEW IN THIS CHAPTER
The following elements are improvements in this chapter from the previous edition:
Revised chapter learning objectives
New Business Ethics in the Real World boxed feature: Compromising Ethics to
Save Theranos
Updated tables and figures throughout
New examples throughout
Updated end of chapter material: Summary and Resolving Ethical Business
Challenges.
[return to top]
a
© 2026 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or 2
posted to a publicly accessible website, in whole or in part.
, Instructor Manual: Ferrell & Fraedrich, Business Ethics: Ethical Decision Making and Cases, 14e, 2026,
9798214043098; Chapter 1: The Importance of Business Ethics
CHAPTER OUTLINE
The following outline organizes activities (including any existing discussion questions
in PowerPoints or other supplements) and assessments by chapter (and therefore by
topic), so that you can see how all the content relates to the topics covered in the
text.
I. Business Ethics Defined (LO 1-1)
i. Morals refer to an individual’s personal philosophies about what
is right or wrong. The important point is that when one speaks of
morals, it is personal or singular.
ii. Principles are specific and pervasive boundaries for behavior that
should not be violated and often become the basis for rules.
iii. Morals, values, and principles describe positive or good traits that
are often applied to the business organization or industry.
iv. Investors, employees, customers, interest groups, the legal system,
and the community often determine whether a specific action or
standard is ethical or unethical. In a business context, groups that
have a “stake” or claim in some aspect of a firm’s products,
operations, markets, industry, and outcomes—customers,
employees, investors, suppliers, government agencies, special
interest groups, communities—are known as stakeholders.
v. Ethics are the behavior or decisions made within a group’s values
or morals. In our case, we are discussing decisions made in
business by groups of people representing the business
organization.
vi. Business ethics comprises organizational principles, values, and
norms that may originate from individuals, organizational
statements, or the legal system that primarily guide individual
and group behavior in business.
vii. Corporate culture can be defined as a set of values, norms, and
artifacts, including ways of solving problems that members
(employees) of an organization share.
viii. A 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 they has faced before.”
ix. 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 help individuals or
society and contribute to social and economic well-being.
II. Why Study Business Ethics? (LO 1-2)
a. A Crisis in Business Ethics
a
© 2026 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or 3
posted to a publicly accessible website, in whole or in part.
, Instructor Manual: Ferrell & Fraedrich, Business Ethics: Ethical Decision Making and Cases, 14e, 2026,
9798214043098; Chapter 1: The Importance of Business Ethics
i. The Global Business Ethics Survey (GBES) measures workplace
integrity as the pressure to compromise organizational standards,
observed misconduct, reporting of misconduct when observed,
and retaliation against reports.
ii. Business ethics decisions and activities have come under greater
scrutiny by many different stakeholders, including consumers,
employees, investors, government regulators, and special interest
groups.
iii. Social media and financial services have some of the lowest
ratings, indicating that organizations in these sectors have not
been able to restore their reputations after scandals over the last
two decades.
b. Specific Issues
i. Several ethical issues must be addressed to prevent misconduct.
Misuse of company resources, abusive behavior, harassment,
accounting fraud, conflicts of interest, defective products,
bribery, counterfeit products, and employee theft are all
problems cited as potential risk areas.
ii. Ethics plays an important role in the public sector as well. In
government or political ethics, several politicians and high-
ranking officials have experienced significant negative publicity.
iii. Every organization has the potential for unethical behavior.
iv. Double standards are at least partly due to differences in wealth
and the success between businesses and consumers.
c. The Reasons for Studying Business Ethics
i. Many people believe that if a company hires good people with
strong values, then it will be a “good citizen” organization.
ii. A moral dilemma is defined as a situation where a person is
faced with multiple choices, all of which are undesirable as
defined by the person.
iii. A value dilemma is the same, only that the individual’s beliefs are
grounded in societal norms.
iv. Just being a good person and having sound personal values may
not be sufficient to handle the ethical issues that arise in a
business organization.
v. Failure to establish shared values and ethics codes will result in
a wide range of conduct when faced with the same ethical
issues.
vi. Studying business ethics will help you begin to identify ethical
issues when they arise and recognize the approaches available
for resolving them.
III. The Development of Business Ethics (LO 1-3)
a. Before 1960: Ethics in Business
a
© 2026 Cengage Learning, Inc. All Rights Reserved. May not be scanned, copied or duplicated, or 4
posted to a publicly accessible website, in whole or in part.
