Chapter 2 business ethics and social responsibility ferrell

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Business eTHiCs Ethical Decision Making and Cases

O.C. Ferrell Auburn University

John Fraedrich Southern Illinois University—Carbondale

Linda Ferrell Auburn University

TwElfTh EDiTion

Australia • Brazil • Mexico • Singapore • United Kingdom • United States

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Business Ethics: Ethical Decision Making and Cases, Twelfth Edition O.C. Ferrell, John Fraedrich and Linda Ferrell

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To James Collins Ferrell and George Collins Ferrell.

—O.C. Ferrell

To Debbie FIBJ. —John Fraedrich

To Stanley J. Fredrick. —Linda Ferrell

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brief contents

4: POM Wonderful: Crazy Healthy! 368

5: Monsanto: A Growing Controversy 374

6: Starbucks Venti Social Responsibility and Brand Strategy 387

7: Walmart Juggles Risks and Rewards 398

8: New Belgium Brewing: Crafting a Fresh Social Responsibility and Sustainability Initiative 416

9: The NCAA Has Many Balls in the Air 426

10: Google: The Drive to Balance Privacy with Profit 439

11: Zappos: Taking Steps toward Maximizing Stakeholder Satisfaction 460

12: Lululemon: Turning Lemons into Lemonade 473

13: Insider Trading at the Galleon Group 482

14: Whole Foods: 365 Degrees of Commitment to Stakeholders 491

15: Apple Maintains Strong Ethical Roots 506

16: PepsiCo: Poised to Deal with the “Next Generation” 521

17: Fraud in Dixon, Illinois: All the Queen’s Horses Could Not Save Her 536

18: Herbalife Reborn 542

19: CVS: “Fired Up” about Social Responsibility 562

20: Enron: Not Accounting for the Future 574

Endnotes E-1 Index I-1

Part 1: An Overview of Business Ethics 1 1: The Importance of Business Ethics 1

2: Stakeholder Relationships, Social Responsibility, and Corporate Governance 27

Part 2: Ethical Issues and the Institutionalization of Business Ethics 55 3: Emerging Business Ethics Issues 55

4: The Institutionalization of Business Ethics 84

Part 3: The Decision Making Process 113 5: Ethical Decision Making 113

6: Individual Factors: Moral Philosophies and Values 136

7: Organizational Factors: The Role of Ethical Culture and Relationships 163

Part 4: Implementing Business Ethics in a Global Economy 192 8: Developing an Effective Ethics Program 192

9: Managing and Controlling Ethics Programs 214

10: Globalization of Ethical Decision Making 244

11: Ethical Leadership 278

12: Sustainability: Ethical and Social Responsibility Dimensions 309

Part 5: Cases 342 1: The Volkswagen Scandal: An Admission to Emission

Fraud 344

2: Uber Hits a Bump in the Road 349

3: Wells Fargo: The Stage Coach Went Out of Control 361

iv

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contents

Chapter 2: Stakeholder Relationships, Social Responsibility, and Corporate Governance 27 Chapter Objectives, 27 | Chapter Outline, 27

An Ethical Dilemma 28

Stakeholders Define Ethical Issues in Business 29 Identifying Stakeholders, 31 • A Stakeholder Orientation, 32

Social Responsibility and Business Ethics 35 Issues in Social Responsibility 37 Social Responsibility and the Importance of a Stakeholder Orientation 39 Corporate Governance Provides Formalized Responsibility to Stakeholders 40

Views of Corporate Governance, 43 • The Role of Boards of Directors, 44 • Greater Demands for Accountability and Transparency, 45 • Executive Compensation, 46

Implementing a Stakeholder Perspective 47 Step 1: Assessing the Corporate Culture, 47 • Step 2: Identifying Stakeholder Groups, 47 • Step 3: Identifying Stakeholder Issues, 48 • Step 4: Assessing Organizational Commitment to Stakeholders and Social Responsibility, 48 • Step 5: Identifying Resources and Determining Urgency, 49 • Step 6: Gaining Stakeholder Feedback, 49

Contributions of a Stakeholder Perspective 49 Summary 50 Important Terms For Review, 52 | Resolving Ethical Business Challenges, 53 | Check Your EQ, 54

PArt 1: An OvervIew Of BUSIneSS ethICS 1

Chapter 1: The Importance of Business Ethics 1 Chapter Objectives, 1 | Chapter Outline, 1

An Ethical Dilemma 2

Business Ethics Defined 4 Why Study Business Ethics? 5

A Crisis in Business Ethics, 5 • Specific Issues, 7 • The Reasons for Studying Business Ethics, 8

The Development of Business Ethics 9 Before 1960: Ethics in Business, 10 • The 1960s: The Rise of Social Issues in Business, 10 • The 1970s: Business Ethics as an Emerging Field, 11 • The 1980s: Business Ethics Reaches Maturity, 11 • The 1990s: Institutionalization of Business Ethics, 12 • The Twenty-First Century of Business Ethics, 13

Developing Organizational and Global Ethical Cultures 15 The Benefits of Business Ethics 16

Ethics Contributes to Employee Commitment, 16 • Ethics Contributes to Investor Loyalty, 17 • Ethics Contributes to Customer Satisfaction, 18 • Ethics Contributes to Profits, 19

Our Framework for Studying Business Ethics 20 Summary 22 Important Terms for Review, 24 | Resolving Ethical Business Challenges, 25 | Check Your EQ, 26

v

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vi Contents

PArt 2: ethICAl ISSUeS And the InStItUtIOnAlIzAtIOn Of BUSIneSS ethICS 55

Chapter 3: Emerging Business Ethics Issues 55 Chapter Objectives, 55 | Chapter Outline, 55

An Ethical Dilemma 56

Recognizing an Ethical Issue (Ethical Awareness) 57 Foundational Values for Identifying Ethical Issues 58

Integrity, 59 • Honesty, 59 • Fairness, 60 Ethical Issues And Dilemmas In Business 61

Misuse of Company Time and Resources, 61 • Abusive or Intimidating Behavior, 62 • Lying, 64 • Conflicts of Interest, 65 • Bribery, 65 • Corporate Intelligence, 66 • Discrimination, 67 • Sexual Harassment, 69 • Fraud, 71 • Consumer Fraud, 74 • Financial Misconduct, 75 • Insider Trading, 76 • Intellectual Property Rights, 77 • Privacy Issues, 77

The Challenge of Determining an Ethical Issue in Business 79 Summary 79 Important Terms for Review, 80 | Resolving Ethical Business Challenges, 82 | Check Your EQ, 83

Chapter 4: The Institutionalization of Business Ethics 84 Chapter Objectives, 84 | Chapter Outline, 84

An Ethical Dilemma 85

Managing Ethical Risk Through Mandated and Voluntary Programs 86 Mandated Requirements for Legal Compliance 88

Laws Regulating Competition, 89 • Laws Protecting Consumers, 91 • Laws Promoting Equity and Safety, 95

The Sarbanes–Oxley (SOx) Act 96 Public Company Accounting Oversight Board, 97 • Auditor and Analyst Independence, 98 • Whistle-Blower Protection, 98 • Cost of Compliance, 98

Dodd–Frank Wall Street Reform and Consumer Protection Act 99

Financial Agencies Created by the Dodd–Frank Act, 99 • Consumer Financial Protection Bureau, 99 • Whistle-Blower Bounty Program, 100

Laws that Encourage Ethical Conduct 100 Federal Sentencing Guidelines for Organizations 100 Core or Best Practices 104

Voluntary Responsibilities, 105 • Cause-Related Marketing, 105 • Strategic Philanthropy, 106 • Social Entrepreneurship, 106

The Importance of Institutionalization in Business Ethics 107 Summary 108 Important Terms for Review, 110 | Resolving Ethical Business Challenges, 111 | Check Your EQ, 112

PArt 3: the deCISIOn MAKInG PrOCeSS 113

Chapter 5: Ethical Decision Making 113 Chapter Objectives, 113 | Chapter Outline, 113

An Ethical Dilemma 114

A Framework for Ethical Decision Making in Business 115

Ethical Issue Intensity, 115 • Individual Factors, 117 • Organizational Factors, 119 • Opportunity, 121 • Business Ethics Intentions, Behavior, and Evaluations, 124

Using the Ethical Decision Making Model to Improve Ethical Decisions 125 Normative Considerations in Ethical Decision Making 126

Institutions as the Foundation for Normative Values, 127 • Implementing Principles and Core Values in Ethical Business Decision Making, 129

Understanding Ethical Decision Making 131 Summary 132 Important Terms for Review, 133 | Resolving Ethical Business Challenges, 134 | Check Your EQ, 135

Chapter 6: Individual Factors: Moral Philosophies and Values 136 Chapter Objectives, 136 | Chapter Outline, 136

An Ethical Dilemma 137

Moral Philosophy Defined 138 Moral Philosophies 140

Instrumental and Intrinsic Goodness, 140 • Teleology, 142 • Deontology, 144 • Relativist Perspective, 146 • Virtue Ethics, 147 • Justice, 149

Applying Moral Philosophy to Ethical Decision Making 150 Cognitive Moral Development and Limitations 152

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Contents vii

White-Collar Crime 154 Individual Factors in Business Ethics 157 Summary 158 Important Terms for Review, 160 | Resolving Ethical Business Challenges, 161 | Check Your EQ, 162

Chapter 7: Organizational Factors: The Role of Ethical Culture and Relationships 163 Chapter Objectives, 163 | Chapter Outline, 163

An Ethical Dilemma 164

Defining Corporate Culture 165 The Role of Corporate Culture in Ethical Decision Making 167

Ethical Frameworks and Evaluations of Corporate Culture, 169 • Ethics as a Component of Corporate Culture, 170 • Compliance Versus Values-Based Ethical Cultures, 172 • Differential Association, 173 • Whistle-Blowing, 173

Leaders Influence Corporate Culture 176 Power Shapes Corporate Culture, 177 • Motivating Ethical Behavior, 179 • Organizational Structure, 180

Group Dimensions of Corporate Structure and Culture 182

Types of Groups, 182 • Group Norms, 184 Variation in Employee Conduct 185 Can People Control their Actions within a Corporate Culture? 187 Summary 188 Important Terms for Review, 189 | Resolving Ethical Business Challenges, 190 | Check Your EQ, 191

PArt 4: IMPleMentInG BUSIneSS ethICS In A GlOBAl eCOnOMy 192

Chapter 8: Developing an Effective Ethics Program 192 Chapter Objectives, 192 | Chapter Outline, 192

An Ethical Dilemma 193

The Responsibility of the Corporation to Stakeholders 194 The Need for Organizational Ethics Programs 195 An Effective Ethics Program 198

An Ethics Program can Help Avoid Legal Problems, 198 • Values Versus Compliance Programs, 201

Codes of Conduct 201 Ethics Officers 204 Ethics Training and Communication 205 Systems to Monitor and Enforce Ethical Standards 207

Continuous Improvement of an Ethics Program, 209 • Common Mistakes in Designing and Implementing an Ethics Program, 209

Summary 210

Important Terms for Review, 211 | Resolving Ethical Business Challenges, 212 | Check Your EQ, 213

Chapter 9: Managing and Controlling Ethics Programs 214 Chapter Objectives, 214 • Chapter Outline, 214 An Ethical Dilemma 215

Implementing an Ethics Program 216 The Ethics Audit 218 Benefits of Ethics Auditing 219

Ethical Crisis Management and Recovery, 222 • Measuring Nonfinancial Ethical Performance, 223 • Risks and Requirements in Ethics Auditing, 226

The Auditing Process 227 Secure Commitment of Top Managers and Board of Directors, 229 • Establish a Committee to Oversee the Ethics Audit, 229 • Define the Scope of the Audit Process, 230 • Review Organizational Mission, Values, Goals, and Policies and Define Ethical Priorities, 231 • Collect and Analyze Relevant Information, 232 • Verify the Results, 235 • Report the Findings, 236

The Strategic Importance of Ethics Auditing 237 Summary 240 Important Terms for Review, 241 | Resolving Ethical Business Challenges, 242| Check Your EQ, 243

Chapter 10: Globalization of Ethical Decision Making 244 Chapter Objectives, 244 | Chapter Outline, 244

An Ethical Dilemma 245

Global Culture, Values, and Practices 246 Economic Foundations of Business Ethics 249

Economic Systems, 251 Multinational Corporations 255

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viii Contents

Global Cooperation to Support Responsible Business 257

International Monetary Fund, 257 • United Nations Global Compact, 258 • World Trade Organization, 259

Global Ethics Issues 260 Global Ethical Risks, 260 • Bribery, 261 • Antitrust Activity, 263 • Internet Security And Privacy, 265 • Human Rights, 266 • Health Care, 267 • Labor and Right to Work, 268 • Compensation, 269 • Consumerism, 270

The Importance of Ethical Decision Making in Global Business 272 Summary 274 Important Terms for Review, 275 | Resolving Ethical Business Challenges, 276 | Check Your EQ, 277

Chapter 11: Ethical Leadership 278 Chapter Objectives, 278 | Chapter Outline, 278

An Ethical Dilemma 279

Defining Ethical Leadership 280 Requirements for Ethical Leadership 283 Benefits of Ethical Leadership 285 Ethical Leadership and Organizational Culture 287 Managing Ethical Business Conflicts 289

Conflict Management Styles, 289 Ethical Leaders Empower Employees 292 Ethical Leadership Communication 293

Ethical Leadership Communication Skills, 294 Leader–Follower Relationships 297

Ethics Programs and Communication, 297 • Power Differences and Workplace Politics, 298 • Feedback, 299

Leadership Styles and Ethical Decisions 299 The Radar Model 302 Summary 305 Important Terms for Review, 306 | Resolving Ethical Business Challenges, 307 | Check Your EQ, 308

Chapter 12: Sustainability: Ethical and Social Responsibility Dimensions 309 Chapter Objectives, 309 | Chapter Outline, 309

An Ethical Dilemma 310

Defining Sustainability 311 How Sustainability Relates to Ethical Decision Making and Social Responsibility 312

Global Environmental Issues 314 Atmospheric, 314 • Water, 317 • Land, 319

Environmental Legislation 322 Environmental Protection Agency (EPA), 323 • Environmental Regulations, 324

Alternative Energy Sources 328 Wind Power, 328 • Geothermal Power, 329 • Solar Power, 329 • Nuclear Power, 329 • Biofuels, 330 • Hydropower, 330

Business Response to Sustainability Issues 330 Green Marketing, 332 • Greenwashing, 333

Strategic Implementation of Environmental Responsibility 334

Recycling Initiatives, 334 • Stakeholder Assessment, 335 • Risk Analysis, 336 • The Strategic Environmental Audit, 337

Summary 338 Important Terms for Review, 339 | Resolving Ethical Business Challenges, 340 | Check Your EQ, 341

PArt 5: CASeS 342

Case 1: The Volkswagen Scandal: An Admission to Emission Fraud 344

Case 2: Uber Hits a Bump in the Road 349

Case 3: Wells Fargo: The Stage Coach Went Out of Control 361

Case 4: POM Wonderful: Crazy Healthy! 368

Case 5: Monsanto: A Growing Controversy 374

Case 6: Starbucks Venti Social Responsibility and Brand Strategy 387

Case 7: Walmart Juggles Risks and Rewards 398

Case 8: New Belgium Brewing: Crafting a Fresh Social Responsibility and Sustainability Initiative 416

Case 9: The NCAA Has Many Balls in the Air 426

Case 10: Google: The Drive to Balance Privacy with Profit 439

Case 11: Zappos: Taking Steps toward Maximizing Stakeholder Satisfaction 460

Case 12: Lululemon: Turning Lemons into Lemonade 473

Case 13: Insider Trading at the Galleon Group 482

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Contents ix

Case 14: Whole Foods: 365 Degrees of Commitment to Stakeholders 491

Case 15: Apple Maintains Strong Ethical Roots 506

Case 16: PepsiCo: Poised to Deal with the “Next Generation” 521

Case 17: Fraud in Dixon, Illinois: All the Queen’s Horses Could Not Save Her 536

Case 18: Herbalife Reborn 542

Case 19: CVS: “Fired Up” about Social Responsibility 562

Case 20: Enron: Not Accounting for the Future 574

Endnotes E-1

Index I-1

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PrefAce

x

The 12th edition of Business Ethics: Ethical Decision Making and Cases has been revised to provide the most up-to-date content and cases available. This edition is a complete and comprehensive revision. This means that we provide current coverage of changes in the ethical, legal, social, and political environments. As the first ethics textbook with a man- agerial framework, we continue to address ethical decision making in an organizational context.

Our approach is to help students understand and participate in effective ethical deci- sion making in organizations. We approach business ethics from an applied perspective, focusing on conceptual frameworks, risks, issues, and dilemmas that will be faced in the real world of business. We prepare students for the challenges they will face in understand- ing how organizational ethical decision making works. We describe how ethical decisions in an organization involve collaboration in groups, teams, and discussions with peers. Many decisions fall into gray areas where the right decision may not be clear and requires the use of organizational resources and the advice of others. Students will face many ethical challenges in their careers, and our approach helps them to understand risks and be pre- pared to address ethical dilemmas. One approach to business ethics education is to include only a theoretical foundation related to ethical reasoning. Our method is to provide a bal- anced approach that includes the concepts of ethical reasoning as well as the organizational environment that influences ethical decision making.

The 12th edition provides new examples and cases that make foundational concepts come to life. Each chapter has been revised based on the latest research and best practices available. There are five new cases and the remaining cases have been completely revised. Most of the case titles are new and reflect current developments and are designed to engage students. The five new cases include: The Volkswagen Scandal: An Admission to Emission Fraud; Uber Hits a Bump in the Road; Wells Fargo: The Stage Coach Went Out of Control; POM Wonderful: Crazy Healthy!; and Fraud in Dixon, IL: All The Queen’s Horses Could not Save Her. All of the new cases were developed with the author’s oversight, exclusively for this book. They are crafted to provide students an opportunity to apply what they are learning to real world business ethics challenges. They are also designed to enhance critical thinking skills.

Using a managerial framework, we explain how ethics can be integrated into stra- tegic business decisions. This framework provides an overview of the concepts, processes, mandatory, core, and voluntary business practices associated with successful business eth- ics programs. Some approaches to business ethics are excellent as exercises in intellectual

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Preface xi

reasoning, but they cannot deal with the many actual issues and considerations that people in business organizations face. Our approach supports ethical reasoning and the value of individuals being able to face ethical challenges and voice their concerns about appropriate behavior. Employees in organizations are ultimately in charge of their own behavior and need to be skillful in making decisions in gray areas where the appropriate conduct is not always obvious.

We have been diligent in this revision to provide the most relevant examples of how the lack of business ethics has challenged our economic viability and entangled countries and companies around the world. This book remains the market leader because it addresses the complex environment of ethical decision making in organizations and pragmatic, actual business concerns. Every individual has unique personal principles and values, and every organization has its own set of values, rules, and organizational ethical culture. Business ethics must consider the organizational culture and interdependent relationships between the individual and other significant persons involved in organizational decision making. Without effective guidance, a businessperson cannot make ethical decisions while facing a short-term orientation, feeling organizational pressure to perform well and seeing rewards based on outcomes in a challenging competitive environment.

By focusing on individual issues and organizational environments, this book gives students the opportunity to see roles and responsibilities they will face in business. The past decade has reinforced the value of understanding the role of business ethics in the effective management of an organization. Widespread misconduct reported in the mass media every day demonstrates that businesses, governments, nonprofits, and institutions of higher learning need to address business ethics.

Our primary goal has always been to enhance the awareness and the ethical decision making skills that students will need to make business ethics decisions that contribute to responsible business conduct. By focusing on these concerns and issues of today’s challeng- ing business environment, we demonstrate that the study of business ethics is imperative to the long-term well-being of not only businesses but also our economic system.

PHILOSOPHY OF THIS TEXT

The purpose of this book is to help students improve their ability to make ethical decisions in business by providing them with a framework that they can use to identify, analyze, and resolve ethical issues in business decision making. Individual values and ethics are impor- tant in this process. By studying business ethics, students begin to understand how to cope with conflicts between their personal values and those of the organization.

Many ethical decisions in business are close calls. It often takes years of experience in a particular industry to know what is acceptable. We do not, in this book, provide ethical answers but instead attempt to prepare students to make informed ethical decisions. First, we do not moralize by indicating what to do in a specific situation. Second, although we provide an overview of moral philosophies and decision making processes, we do not pre- scribe any one philosophy or process as best or most ethical. Third, by itself, this book will not make students more ethical nor will it tell them how to judge the ethical behavior of others. Rather, its goal is to help students understand and use their current values and con- victions in making business decisions and to encourage everyone to think about the effects of their decisions on business and society.

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xii Preface

Many people believe that business ethics cannot be taught. Although we do not claim to teach ethics, we suggest that by studying business ethics a person can improve ethical decision making by identifying ethical issues and recognizing the approaches available to resolve them. An organization’s reward system can reinforce appropriate behavior and help shape attitudes and beliefs about important issues. For example, the success of some campaigns to end racial or gender discrimination in the workplace pro- vides evidence that attitudes and behavior can be changed with new information, aware- ness, and shared values.

CONTENT AND ORGANIZATION

In writing Business Ethics, 12th Edition, we strived to be as informative, complete, acces- sible, and up-to-date as possible. Instead of focusing on one area of ethics, such as moral philosophy or social responsibility, we provide balanced coverage of all areas relevant to the current development and practice of ethical decision making. In short, we have tried to keep pace with new developments and current thinking in teaching and practices.

The first half of the text consists of 12 chapters, which provide a framework to identify, analyze, and understand how businesspeople make ethical decisions and deal with ethical issues. Several enhancements have been made to chapter content for this edition. Some of the most important are listed in the next paragraphs.

Part 1, “An Overview of Business Ethics,” includes two chapters that help provide a broader context for the study of business ethics. Chapter 1, “The Importance of Busi- ness Ethics,” has been revised with many new examples and survey results to describe issues and concerns important to business ethics. Chapter 2, “Stakeholder Relationships, Social Responsibility, and Corporate Governance,” has been significantly reorganized and updated with new examples and issues.

Part 2, “Ethical Issues and the Institutionalization of Business Ethics,” consists of two chapters that provide the background that students need to identify ethical issues and understand how society, through the legal system, has attempted to hold organizations responsible for managing these issues. Chapter 3, “Emerging Business Ethics Issues,” has been reorganized and updated and provides expanded coverage of business ethics issues. Chapter 4, “The Institutionalization of Business Ethics,” examines key elements of core or best practices in corporate America today along with legislation and regulation require- ments that support business ethics initiatives. The chapter is divided into three main areas: voluntary, mandated, and core boundaries.

Part 3, “The Decision Making Process” consists of three chapters, which provide a framework to identify, analyze, and understand how businesspeople make ethical deci- sions and deal with ethical issues. Chapter 5, “Ethical Decision Making,” has been revised and updated to reflect current research and understanding of ethical decision making and contains a section on normative considerations in ethical decision making. Chapter 6, “Individual Factors: Moral Philosophies and Values,” has been updated and revised to explore the role of moral philosophies and moral development as individual factors in the ethical decision making process. Chapter 7, “Organizational Factors: The Role of Ethical Culture and Relationships,” considers organizational influences on business decisions, such as role relationships, differential association, and other organizational pressures, as well as whistle-blowing.

Part 4, “Implementing Business Ethics in a Global Economy,” looks at specific mea- sures that companies can take to build an effective ethics program as well as how these programs may be affected by global issues, leadership, and sustainability issues. Chapter 8, “Developing an Effective Ethics Program,” has been refined and updated with corporate

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Preface xiii

best practices for developing effective ethics programs. Chapter 9, “Managing and Con- trolling Ethics Programs,” offers a framework for auditing ethics initiatives as well as the importance of doing so. Such audits can help companies pinpoint problem areas, measure their progress in improving conduct, and even provide a “debriefing” opportunity after a crisis. Chapter 10, “Globalization of Ethical Decision Making” has been updated to reflect the complex and dynamic events that occur in global business. This chapter will help stu- dents understand the major issues involved in making decisions in a global environment. Chapter 11 focuses on ethical leadership. Reviewers indicated that they wanted more infor- mation provided on the importance of leadership to an ethical culture, and this chapter answers these requests. Finally, Chapter 12 is a chapter on sustainability. It examines the ethical and social responsibility dimensions of sustainability.

Part 5 consists of 20 cases that bring reality into the learning process. Five of these cases are new to the 12th edition, and the remaining 15 have been revised and updated. In addition, three shorter cases are available on the Instructor’s Companion website: •   The Challenges of Expense Account Fraud •   The Container Store: An Employee-Centric Retailer •   The Ethics Program at Eaton Corporation

The companies and situations portrayed in these cases are real; names and other facts are not disguised; and all cases include developments up to the middle of 2015. By reading and analyzing these cases, students can gain insight into ethical decisions and the realities of making decisions in complex situations.

TEXT FEATURES

Many tools are available in this text to help both students and instructors in the quest to improve students’ ability to make ethical business decisions. •   Each chapter opens with an outline and a list of learning objectives. •   Immediately following is “An Ethical Dilemma” that should provoke discussion about 

ethical issues related to the chapter. The short vignette describes a hypothetical incident involving an ethical conflict. Questions at the end of the “Ethical Dilemma” section focus discussion on how the dilemma could be resolved. All new ethical dilemmas have been provided for this edition.

•  Each chapter has a contemporary real-world debate issue. Many of these debate issues  have been updated to reflect current ethical issues in business. These debate issues have been found to stimulate thoughtful discussion relating to content issues in the chap- ter. Topics of the debate issues include the truthfulness of health claims, the universal health care debate, the contribution of ethical conduct to financial performance, legisla- tion concerning whistle-blowing, and the impact of carbon emission restrictions.

•  At the end of each chapter are a chapter summary and an important terms’ list, both of  which are handy tools for review. Also included at the end of each chapter is a “Resolv- ing Ethical Business Challenges” section. The vignette describes a realistic drama that helps students experience the process of ethical decision making. The “Resolving Ethi- cal Business Challenges” minicases presented in this text are hypothetical; any resem- blance to real persons, companies, or situations is coincidental. Keep in mind that there are no right or wrong solutions to the minicases.

The ethical dilemmas and real-life situations provide an opportunity for students to use concepts in the chapter to resolve ethical issues.

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Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203

xiv Preface

Each chapter concludes with a series of questions that allow students to test their EQ (Ethics Quotient). •  Cases. In Part 5, following each real-world case are questions to guide students in rec-

ognizing and resolving ethical issues. For some cases, students can conduct additional research to determine recent developments because many ethical issues in companies take years to resolve.

EFFECTIVE TOOLS FOR TEACHING AND LEARNING

MindTap. MindTap is a digital learning solution that powers students from memorization to mastery. MindTap is a personalized teaching experience that gives you complete ownership of your course. With it, you can challenge all students, build their confidence, and empower them to be unstoppable. •   Access Everything You Need in One Place. Cut down on prep with MindTap’s

preloaded, organized course materials. Teach more efficiently with interactive multi- media, assignments, quizzes, and more. And give your students the power to read, lis- ten, and study on their phones, so they can learn on their terms.

•   Empower Your Students to Reach Their Potential. Twelve distinct metrics give you actionable insights into student engagement. Identify topics troubling your entire class and instantly communicate with struggling students. And students can track their scores to stay motivated toward their goals. Together, you can accelerate progress.

•   Your Course, Your Content. Only MindTap gives you complete control over your course. You have the flexibility to reorder textbook chapters, add your own notes, and embed a variety of content including OER. Personalize course content to your students’ needs. They can even read your notes, add their own, and highlight key text to aid their progress.

•   A Dedicated Team Whenever You Need Them. MindTap isn’t just a tool, it’s backed by a personalized team eager to support you. We help you set up your course and tailor it to your specific objectives, so you’ll be ready to make an impact from day one. And we’ll be standing by to help you and your students until the final day of the term.

Instructor’s Resource Website. You can find the following teaching tools on the password-protected instructor site. •  Case Notes. Case notes for every chapter provide additional context around each case,

discussion questions, and resource links. This tool includes talking points to help instructors lead student discussion and debate.

•  PowerPoints. PowerPoint continues to be a very popular teaching device, and a special effort has been made to upgrade the PowerPoint program to enhance classroom teach- ing. Lecture slides, containing such content as tables, graphs, and data, have been created to provide instructors with up-to-date content to supplement in-class chapter discussion.

•  Instructor’s Resource Manual. The Instructor’s Resource Manual contains a wealth of information. Teaching notes for every chapter include a brief chapter summary, detailed lecture outline, and notes for using the “Ethical Dilemma” and “Resolving Ethi- cal Business Challenges” sections. Detailed case notes point out the key issues involved and offer suggested answers to the questions. A separate section provides guidelines for using case analysis in teaching business ethics. Detailed notes are provided to guide

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Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.

Copyright 2019 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-203

Preface xv

the instructor in analyzing or grading the cases. Simulation role-play cases, as well as implementation suggestions, are included.

•  Role-Play Cases. The 12th edition provides eight behavioral simulation role-play cases developed for use in the business ethics course. The role-play cases and implementation methods can be found in the Instructor’s Resource Manual and on the website. Role-play cases may be used as a culminating experience to help students integrate concepts cov- ered in the text. Alternatively, the cases may be used as an ongoing exercise to provide students with extensive opportunities for interacting and making ethical decisions.

Role-play cases simulate a complex, realistic, and timely business ethics situation. Stu- dents form teams and make decisions based on an assigned role. The role-play case com- plements and enhances traditional approaches to business learning experiences because it (1) gives students the opportunity to practice making decisions that have business eth- ics consequences; (2) recreates the power, pressures, and information that affect decision making at various levels of management; (3) provides students with a team-based experi- ence that enriches their skills and understanding of group processes and dynamics; and (4) uses a feedback period to allow for the exploration of complex and controversial issues in business ethics decision making. The role-play cases can be used with classes of any size. •  Cengage Learning Testing Powered by Cognero. This is a flexible, online system that

allows you to author, edit, and manage test bank content from multiple Cengage Learn- ing solutions; create multiple test versions in an instant; and deliver tests from your LMS, your classroom or wherever you want.