Business Ethics: Ethical Decision Making & Cases 11th Edition Instructor manual

3.     As social demands grew, many businesses realized that they had to address ethical issues more directly.
4.     The Foreign Corrupt Practices Act, passed under Jimmy Carter, made it illegal for U.S. businesses to bribe government officials of other countries.
5.     Major business ethics issues emerged by the late 1970s, such as bribery, deceptive advertising, price collusion, product safety, and ecology.
6.     Academic researchers sought to identify ethical issues and to describe how businesspeople might choose to act in particular situations.
D.    The 1980s: Consolidation
1.     Business ethics became a legitimate field of study. Membership in business ethics organizations increased, while centers of business ethics provided publications, courses, conferences, and seminars.
a.     Stakeholder theory, pioneered by R. Edward Freeman, had a major impact on strategic management and corporations’ views of their responsibilities.
b.     Many firms established ethics and social policy committees to address ethical issues.
2.     The Defense Industry Initiative on Business Ethics and Conduct (DII) was developed to guide corporate support for ethical conduct. The DII includes six principles:
a.     Development and distribution of understandable, detailed codes of conduct.
b.     Provision of ethics training and development of communication tools to support the periods between training.
c.     Creation of an open atmosphere in which employees feel comfortable reporting violations, without fear of retribution.
d.     Performance of extensive internal audits and development of effective internal reporting and voluntary disclosure plans.
e.     Preservation of the integrity of the defense industry.
f.     Adoption of a philosophy of public accountability.
3.     The Reagan/Bush era ushered in the belief that self-regulation, rather than regulation by government, was in the public’s best interest.  The rules of business were changing at a phenomenal rate because of less regulation.
E.    The 1990s: Institutionalization of Business Ethics
1.     The Clinton administration continued to support self-regulation and free trade, although it strengthened regulation in some areas like health-related social issues.
2.     The Federal Sentencing Guidelines for Organizations, which were based on the six principles of the Defense Industry Initiative, codified into law incentives to reward organizations for taking action, such as developing effective internal legal and ethical compliance programs, in order to prevent misconduct.
a.     The guidelines mitigate penalties for businesses that strive to minimize misconduct and establish high ethical and legal standards.
b.     Under the FSGO, if a company lacks an effective ethical compliance program and its employees violate the law, it can incur severe penalties.
c.     The guidelines focus on firms taking action to prevent and detect business misconduct in cooperation with government regulation.
d.     Chapters 4 and 8 will provide more detail on the FSGO’s role in business ethics programs.
F.    The Twenty-First Century of Business Ethics
1.     New evidence emerged in the early 2000s that more than a few business executives and managers had not fully embraced the public’s desire for high ethical standards.
2.     To address a loss of confidence in financial reporting and corporate ethics, Congress passed the Sarbanes-Oxley Act in 2002, the most far-reaching change in organizational control and accounting regulations since the Securities and Exchange Act of 1934. The law:
a.     Made securities fraud a criminal offense and stiffened penalties for corporate fraud.
b.     Created an accounting oversight board that requires corporations to establish codes of ethics for financial reporting and to develop greater transparency in financial reports to investors and other interested parties.
c.     Requires top executives to sign off on their firms’ financial reports, risking fines and jail if they misrepresent their companies’ financial positions.
d.     Requires company executives to disclose stock sales immediately and prohibits companies from giving loans to top managers.
3.     Amendments to the FSGO require a business’s governing authority to be well informed about its ethics program with respect to content, implementation, and effectiveness.