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Business Ethics Case Studies and Selected Readings
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Business Ethics Case Studies and Selected Readings
EIGHTH EDITION
MARIANNE MOODY JENNINGS Arizona State University
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Business Ethics: Case Studies and Selected Readings, Eighth Edition Marianne Moody Jennings
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Library of Congress Control Number: 2013955496
ISBN-13: 978-1-285-42871-0
ISBN-10: 1-285-42871-4
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Brief Contents Preface xiv Acknowledgments xxii
UNIT 1 Ethical Theory, Philosophical Foundations, Our Reasoning Flaws, and Types of Ethical Dilemmas 1
SECTION A Defining Ethics 2 SECTION B Resolving Ethical Dilemmas 33
UNIT 2 Solving Ethical Dilemmas and Personal Introspection 53 SECTION A Business and Ethics: How Do They Work Together? 54 SECTION B What Gets in the Way of Ethical Decisions in Business? 65 SECTION C Resolving Ethical Dilemmas in Business 79
UNIT 3 Business, Stakeholders, Social Responsibility, and Sustainability 109 SECTION A Business and Society: The Tough Issues of Economics,
Social Responsibility, and Business 110 SECTION B Applying Social Responsibility and Stakeholder Theory 126 SECTION C Social Responsibility and Sustainability 170 SECTION D Government as a Stakeholder 179
UNIT 4 Ethics and Company Culture 189 SECTION A Temptation at Work for Individual Gain and That Credo 190 SECTION B The Organizational Behavior Factors 194 SECTION C The Psychological and Behavior Factors 219 SECTION D The Structural Factors: Governance, Example, and Leadership 246 SECTION E The Industry Practices and Legal Factors 274 SECTION F The Fear-and-Silence Factor 303 SECTION G The Culture of Goodness 342
UNIT 5 Ethics and Contracts 357 SECTION A Contract Negotiations: All Is Fair and Conflicting Interests 358 SECTION B Promises, Performance, and Reality 368
UNIT 6 Ethics in International Business 387 SECTION A Conflicts Between the Corporation’s Ethics and
Business Practices in Foreign Countries 388 SECTION B Bribes, Grease Payments, and “When in Rome …” 415
UNIT 7 Ethics, Business Operations, and Rights 423 SECTION A Workplace Safety 424 SECTION B Workplace Loyalty 439 SECTION C Workplace Diversity and Atmosphere 455 SECTION D Workplace Privacy and Personal Lives 461
v Copyright 2014 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).
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SECTION E Workplace Confrontation 471 SECTION F Workplace and the Environment 482
UNIT 8 Ethics and Products 491 SECTION A Advertising Content 492 SECTION B Product Safety 503 SECTION C Product Sales 527 SECTION D Products and Social Issues 543
UNIT 9 Ethics and Competition 547 SECTION A Covenants Not to Compete 548 SECTION B All’s Fair, or Is It? 558 SECTION C Intellectual Property and Ethics 565
The Ethical Common Denominator (ECD) Index: The Common Threads of Business Ethics 573
Alphabetical Index 585 Business Discipline Index 591 Product/Company/Individuals Index 601 Topic Index 639
vi Brief Contents
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Contents Preface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiv Acknowledgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xxii
U N I T
1 Ethical Theory, Philosophical Foundations, Our Reasoning Flaws, and Types of Ethical Dilemmas
SECTION A Defining Ethics 2 Reading 1.1 You, Your Values, and a Credo 2 Reading 1.2 The Parable of the Sadhu: Pressure, Small Windows of Opportunity, and
Temptation 4 Reading 1.3 What Are Ethics? From Line-Cutting to Kant 9 Reading 1.4 The Types of Ethical Dilemmas: From Truth to Honesty
to Conflicts 17 Reading 1.5 On Rationalizing and Labeling: The Things We Do That Make Us
Uncomfortable, but We Do Them Anyway 23 Case 1.6 “I Was Just Following Orders”: The CIA, Interrogation, and the
Role of Legal Opinions 27 Reading 1.7 The Slippery Slope, the Blurred Lines, and How We Never Do Just
One Thing 30 Case 1.8 Hank Greenberg and AIG, and Steve Cohen and SAC Capital 31
SECTION B Resolving Ethical Dilemmas 33 Reading 1.9 Some Simple Tests for Resolving Ethical Dilemmas 33 Reading 1.10 Some Steps for Analyzing Ethical Dilemmas 38 Reading 1.11 On Plagiarism 39 Case 1.12 The Little Teacher Who Could: Piper, Kansas, and Term
Papers 40 Case 1.13 Dog Walkers and Scoopers 42 Case 1.14 Puffing Your Résumé 43 Case 1.15 Dad, the Actuary, and the Stats Class 46 Case 1.16 Wi-Fi Piggybacking 46 Case 1.17 Stuyvesant High School and the Cheating Culture of
Excellence 47 Case 1.18 Speeding: You Can’t Survive on the Road unless
You Do 48 Case 1.19 Hazing Drinking, and Campuses 50 Case 1.20 The Pack of Gum 51
vii Copyright 2014 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).
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U N I T
2 Solving Ethical Dilemmas and Personal Introspection
SECTION A Business and Ethics: How Do They Work Together? 54 Reading 2.1 What’s Different about Business Ethics? 54 Reading 2.2 The Ethics of Responsibility 55 Reading 2.3 Is Business Bluffing Ethical? 56
SECTION B What Gets in the Way of Ethical Decisions in Business? 65 Reading 2.4 How Leaders Lose Their Way: What Price Hubris? 65 Reading 2.5 Moral Relativism and the Either/or Conundrum 67 Reading 2.6 P = f(x) The Probability of an Ethical Outcome Is a Function of the Amount of
Money Involved: Pressure 68 Case 2.7 MF Global, Jon Corzine, and a Bankruptcy 69 Case 2.8 On Saying One Thing and Doing Another: Public Perception and Deception
Covering for the CEO 75
SECTION C Resolving Ethical Dilemmas in Business 79 Reading 2.9 Framing Issues Carefully: A Structured Approach for Solving Ethical Dilemmas
and Trying Out Your Ethical Skills on Some Business Cases 79 Case 2.10 Galleon Hedge Fund: Expert Networks, Friendly Discussions or Insider
Trading? 80 Case 2.11 What Was Up with Wall Street? The Goldman Standard and Shades of
Gray 82 Case 2.12 Making Believe We Are at Work or Being Loyal: The Alibis of Technology 93 Case 2.13 Make-Believe Reality TV: Storage Wars and Reconstructed Home Sales 94 Case 2.14 Travel Expenses: A Chance for Extra Income 95 Case 2.15 Do Cheaters Prosper? 96 Case 2.16 The Home Repair Contractor Tempted By Customers and Contracts 96 Case 2.17 Penn State: Framing Ethical Issues 97
U N I T
3 Business, Stakeholders, Social Responsibility, and Sustainability
SECTION A Business and Society: The Tough Issues of Economics, Social Responsibility, and Business 110 Reading 3.1 The Social Responsibility of Business Is to Increase Its Profits 110 Reading 3.2 A Look at Stakeholder Theory 115 Reading 3.3 Business with a Soul: A Reexamination of What Counts in Business
Ethics 118 Reading 3.4 Appeasing Stakeholders with Public Relations 121 Reading 3.5 Conscious Capitalism: Creating a New Paradigm for Business 122 Reading 3.6 Marjorie Kelly and the Divine Right of Capital 123 Reading 3.7 Schools of Thought on Social Responsibility 124
SECTION B Applying Social Responsibility and Stakeholder Theory 126 Case 3.8 Skittles, Trayvon Martin, and Social Responsibility 126 Case 3.9 Guns, Stock Prices, Safety, Liability, and Social Responsibility 127 Case 3.10 The Craigslist Connections: Facilitating Crime 133
viii Contents
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Case 3.11 Planned Parenthood Backlash at Companies and Charities 133 Reading 3.12 The Regulatory Cycle, Social Responsibility, Business Strategy, and
Equilibrium 135 Case 3.13 Fannie, Freddie, Wall Street, Main Street, and the Subprime Mortgage Market:
Of Moral Hazards 139 Case 3.14 Cruises, Comfort, and Costs 150 Case 3.15 Ice-T, the Body Count Album, and Shareholder Uprisings 156 Case 3.16 Athletes and Doping: Costs, Consequences, and Profits 162 Case 3.17 Back Treatments and Meningitis in an Under-the-Radar Industry 168
SECTION C Social Responsibility and Sustainability 170 Reading 3.18 The New Environmentalism 170 Case 3.19 GM, the Volt, and Halted Sales and Production 172 Case 3.20 Buying Local: The Safety Issues in Farmers’ Markets 173 Case 3.21 Biofuels and Food Shortages in Guatemala 174 Case 3.22 The Dictator’s Wife in Louboutin Shoes Featured in Vogue Magazine 174 Case 3.23 Herman Miller and Its Rain Forest Chairs 175
SECTION D Government as a Stakeholder 179 Case 3.24 Solyndra: Bankruptcy of Solar Resources 179 Case 3.25 Stanford University and Government Payment for Research 180 Case 3.26 Minority-Owned Businesses and Reality 183 Case 3.27 Prosecutorial Misconduct: Ends Justifying Means? 183
U N I T
4 Ethics and Company Culture
SECTION A Temptation at Work for Individual Gain and That Credo 190 Reading 4.1 The Moving Line 190 Reading 4.2 Not All Employees Are Equal When It Comes to Moral Development 191
SECTION B The Organizational Behavior Factors 194 Reading 4.3 Why Corporations Can’t Control Chicanery 194 Case 4.4 Swiping Oreos at Work: Is It a Big Deal? 202 Reading 4.5 The Effects of Compensation Systems: Incentives, Bonuses, Pay, and
Ethics 202 Case 4.6 A Primer on Accounting Issues and Ethics and Earnings Management 206 Case 4.7 Law School Application Consultants 216 Case 4.8 The Daiquiri Concession and Ferragamo Shoes and the County
Supervisors 217
SECTION C The Psychological and Behavior Factors 219 Reading 4.9 The Layers of Ethical Issues: Individual, Organization, Industry, and
Society 219 Case 4.10 Rogues: Bad Apples or Bad Barrel: Jett and Kidder, Leeson and Barings Bank,
Kerviel and Société General, the London Whale and Chase, Kweku Adoboli and UBS, and LIBOR Rates for Profit 228
Case 4.11 FINOVA and the Loan Write-Off 239 Case 4.12 Inflating SAT Scores for Rankings and Bonuses 244 Case 4.13 Hiding the Slip-Up on Oil Lease Accounting: Interior Motives 244
Contents ix
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SECTION D The Structural Factors: Governance, Example, and Leadership 246 Reading 4.14 Re: A Primer on Sarbanes-Oxley and Dodd-Frank 246 Case 4.15 WorldCom: The Little Company That Couldn’t After All 250 Case 4.16 Bank of America: The Merrill Takeover, the Disclosures, and
the Board 267 Reading 4.17 Getting Information from Employees Who Know to Those Who Can
and Will Respond 269 Case 4.18 Westland/Hallmark Meat Packing Company and the Cattle Standers 272
SECTION E The Industry Practices and Legal Factors 274 Reading 4.19 The Subprime Saga: Bear Stearns, Lehman, Merrill, and CDOs 274 Case 4.20 Enron: The CFO, Conflicts, and Cooking the Books with Natural Gas and
Electricity 281 Case 4.21 Arthur Andersen: A Fallen Giant 295 Case 4.22 The Ethics of Walking Away 302
SECTION F The Fear-and-Silence Factors 303 Case 4.23 HealthSouth: The Scrushy Way 303 Case 4.24 Royal Dutch and the Reserves 311 Case 4.25 Dennis Kozlowski: Tyco and the $6,000 Shower Curtain 313 Case 4.26 Bausch & Lomb and Krispy Kreme: Channel Stuffing and
Cannibalism 323 Reading 4.27 A Primer on Whistleblowing 328 Case 4.28 Beech-Nut and the No-Apple-Juice Apple Juice 328 Case 4.29 NASA and the Space Shuttle Booster Rockets 334 Case 4.30 Diamond Walnuts and Troubled Growers 337 Case 4.31 New Era: If It Sounds Too Good to Be True, It Is Too Good to
Be True 338
SECTION G The Culture of Goodness 342 Case 4.32 Bernie Madoff: Just Stay Away from the Seventeenth Floor 342 Case 4.33 Adelphia: Good Works via a Hand in the Till 344 Case 4.34 The Atlanta Public School System: Good Scores by Creative
Teachers 348 Case 4.35 The NBA Referee and Gambling for Tots 350 Case 4.36 Giving and Spending the United Way 351 Case 4.37 The Baptist Foundation: Funds of the Faithful 354
U N I T
5 Ethics and Contracts
SECTION A Contract Negotiations: All Is Fair and Conflicting Interests 358 Case 5.1 The Governor and Negotiations for Filling a President’s Senate
Seat 358 Case 5.2 Facebook and the Pre-IPO 359 Case 5.3 Finding a Way Around Government Regulations 361 Case 5.4 Subway: Is 11 Inches the Same as 12 Inches? 362 Case 5.5 Sears and High-Cost Auto Repairs 363
x Contents
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SECTION B Promises, Performance, and Reality 368 Case 5.6 Payday Loans and Checking Account Deductions 368 Case 5.7 Pensions: Promises, Payments, and Bankruptcy 369 Case 5.8 Department Store Returns or Rentals 374 Case 5.9 Government Contracts, Research, and Double-Dipping 375 Case 5.10 Yale University and the Compensation of Professors for Government
Research: Double-Dipping or Confusion? 377 Case 5.11 When Corporations Pull Promises Made to Government 378 Case 5.12 Intel and the Chips: When You Have Made a Mistake 380 Case 5.13 Mortgage Foreclosure: Robo-Signatures and “Close Enough” 384 Case 5.14 Red Cross and the Use of Funds 385
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