Business Ethics Readings and Cases in Corporate Morality

• Addresses a broad range of the most current, intriguing, often complex issues and cases in corporate morality
• Provides impartial, point-counterpoint presentations of different perspectives on the most important and highly contended issues of business ethics
• Updated and significant case studies are included to reinforce student learning
• Now contains mini-cases based on actual MBA student dilemmas
• Each author has substantial experience in teaching, writing, and conducting research in the field

W. Michael Hoffman is the founding Executive Director of the Center for Business Ethics at Bentley University in Waltham, Massachusetts. Dr. Hoffman is also the Hieken Professor of Business and Professional Ethics at Bentley University and is the author or editor of 16 books.

Robert E. Frederick is professor of philosophy and chair of the Philosophy Department at Bentley University in Waltham, Massachusetts. He is also Research Scholar at the Center for Business Ethics at Bentley and editor of the Center’s journal Business and Society Review.

Mark S. Schwartz is a professor of business ethics and corporate social responsibility at the School of Administrative Studies at York University (Toronto, Canada), and is a Research Fellow for the Center for Business Ethics at Bentley University. He has published in a range of journals, including the Journal of Business Ethics, Business Ethics Quarterly, and Business & Society.

Preface xii

General Introduction: The Nature of Business Ethics 1

Part 1 Ethics and Business: From Theory to Practice 37

Introduction 37

1 Theories of Economic Justice 43

Justice as Fairness 43
John Rawls

Distributive Justice 49
Robert Nozick

Distributive Justice and Utilitarianism 55
J. J. C. Smart

The “Invisible Hand” 59
Jan Narveson

Corporate Ethics in a Devilish System 70
Kent Greenfield

Questions for Discussion 77

2 Ethics and Business Decision Making 78

Teaching Ethical Decision Making and Principled Reasoning 78
Michael Josephson

Business Ethics and Moral Motivation: A Criminological Perspective 86
Joseph Heath

Ethical Leadership and the Psychology of Decision Making 105
David M. Messick and Max H. Bazerman

Cost-Benefit Analysis: An Ethical Critique 120
Steven Kelman

Cost-Benefit Analysis Defended 127
Herman B. Leonard and Richard J. Zeckhauser

Questions for Discussion 130

Cases for Part 1 131

Mini-Cases 131

MBA Student Mini-Dilemmas 132

Cases

The Parable of the Sadhu 133
Bowen H. McCoy

The Ford Pinto 139
W. Michael Hoffman

The Analyst’s Dilemma (A) 145
Joseph L. Badaracco Jr. and Jerry Useem

Walk Away From Your Mortgage! 149
Roger Lowenstein

The Ok Tedi Copper Mine 150
Manuel G. Velasquez

Part 2 The Nature of the Corporation 157

Introduction 157

3 A gency, Legitimacy, and Responsibility 163

Can a Corporation Have a Conscience? 163
Kenneth E. Goodpaster and John B. Matthews Jr.

Is Business Bluffing Ethical? 172
Albert Z. Carr

The Social Responsibility of Business is to Increase its Profits 180
Milton Friedman

Stakeholder Theory of the Modern Corporation 184
R. Edward Freeman

Ethics in Business: Two Skeptical Challenges 192
Robert E. Frederick

Commentary on the Social Responsibility of Corporate Entities: Bad and Not-so-Bad Arguments for Shareholder Primacy 202
Lynn A. Stout

Questions for Discussion 215

4 C orporate Governance and Accountability 216

Who Rules the Corporation? 216
Ralph Nader, Mark Green, and Joel Seligman

Power and Accountability: The Changing Role of the Corporate Board of Directors 224
Irving S. Shapiro

Who Should Control the Corporation? 231
Henry Mintzberg

Tone at the Top: An Ethics Code for Directors? 243
Mark S. Schwartz, Thomas W. Dunfee, and Michael J. Kline

Do CEOs Get Paid Too Much? 264
Jeffrey Moriarty

Questions for Discussion 274

Cases for Part 2 275

Mini-Cases 275

MBA Student Mini-Dilemmas 277

Cases

Fire Destroys Malden Mills 277

Anonymous

Merck & Co., Inc. (A) 279
David Bollier and Stephanie Weiss

Bailouts and Bonuses on Wall Street 284
Kirsten Martin and Michael Scotto

Citigroup’s Chief Rebuffed on Pay by Shareholders 297
Jessica Silver-Greenberg and Nelson D. Schwartz

Part 3 Work in the Corporation 301

Introduction 301

5 Employee Rights and Duties 307

Employee Rights 307
Ronald Duska

Human Rights, Workers’ Rights, and the “Right” to Occupational Safety 316
Tibor R. Machan

Whistle-Blowing 320
Richard T. De George

The Morality of Whistleblowing: A Commentary on Richard T. De George 338
W. Michael Hoffman and Mark S. Schwartz

Conflicts of Interest 350
Thomas L. Carson

The Moral Problem in Insider Trading 368
Alan Strudler

Questions for Discussion 382

6 The Modern Workplace: Obligations and Limits 383

A Kantian Theory of Meaningful Work 383
Norman E. Bowie

Organization of Work in the Company and Family Rights of the Employees 392
Domènec Melé

Workplace Wars: How Much Should I be Required to Meet the Needs of Your Children? 401
Claudia Mills

Discrimination, Harassment, and the Glass Ceiling: Women Executives as Change Agents 407
Myrtle P. Bell, Mary E. McLaughlin, and Jennifer M. Sequeira

The Debate Over the Prohibition of Romance in the Workplace 418
Colin Boyd

Questions for Discussion 431

Cases for Part 3 432

Mini-Cases 432

MBA Student Mini-Dilemmas 433

Cases

The Case of the Mismanaged Ms. 434
Sally Seymour

Heineken NV: Workplace HIV/AIDS Programs in Africa (A) 439
Diana Barrett and Daniella Ballou

Banking: A Crack in the Swiss Vault 450
Andy Court and Keith Sharman

Will Rewards for Whistleblowers Encourage Ethical Behavior? 454
Matthew Gilley and W. Michael Hoffman

Boeing Chief is Ousted after Admitting Affair 455
Leslie Wayne

Abuse Scandal Inquiry Damns Paterno and Penn State 457
Ken Belson

Timeline: The Penn State Scandal 460
Justin Sablich, Ford Fessenden, and Alan McLean

You’ve Been Tagged! (Then Again, Maybe Not): Employers and Facebook 463
William P. Smith and Deborah L. Kidder

Part 4 The Corporation in Society 475

Introduction 475

7 The Consumer 481

The Dependence Effect 481
John Kenneth Galbraith

The Non Sequitur of the “Dependence Effect” 485
F. A. von Hayek

The Ethics of Consumer Protection 488
Manuel G. Velasquez

Marketing and the Vulnerable 504
George G. Brenkert

Questions for Discussion 513

8 The Environment and Sustainability 514

Morality, Money, and Motor Cars 514
Norman Bowie

Business and Environmental Ethics 520
W. Michael Hoffman

Creating Sustainable Value 529
Stuart L. Hart and Mark B. Milstein

Rethinking the Concept of Sustainability 542
Alexis J. Bañon Gomis, Manuel Guillén Parra, W. Michael Hoffman, and Robert E. McNulty

Questions for Discussion 552

9 International Business 553

Ethical Dilemmas for Multinational Enterprise: A Philosophical Overview 553
Richard T. De George

International Business, Morality, and the Common Good 557
Manuel G. Velasquez

Values in Tension: Ethics Away from Home 567
Thomas Donaldson

The Case for Leveraged-Based Corporate Human Rights Responsibility 576
Stepan Wood

What’s Wrong with Bribery 602
Scott Turow

Capitalism with a Human Face: The UN Global Compact 604
Klaus M. Leisinger

Questions for Discussion 620

Cases for Part 4 621

Mini-Cases 622

MBA Student Mini-Dilemmas 623

Cases

The Ethics of Marketing: Nestlé’s Infant Formula 624
James E. Post

TransAuto Corporation Trade-offs 629
Rewritten by Mark S. Schwartz

Sony Online Entertainment: EverQuest® or EverCrack? 632
Judith W. Spain and Gina Vega

Dicing with Death? A Case Study of Guidant Corporation’s Implantable Defibrillator Business 636
Martin E. Sandbu

Chiquita Accused of Funding Colombia Terrorists 642
Curt Anderson

Wal-Mart Hushed Up a Vast Mexican Bribery Case 644
David Barstow

Yahoo! and Google in China 656
John M. Kline

Google Softens Tone on China 661
Amir Efrati and Loretta Chao

Part 5 Challenges and Emerging Issues 665

Introduction 665

10 C hallenges and Emerging Issues 669

What’s the Matter with Business Ethics? 669
Andrew Stark

Developing and Sustaining an Ethical Corporate Culture: The Core Elements 677
Mark S. Schwartz

The Ethics Officer as Agent of the Board: Leveraging Ethical Governance Capability in the Post-Enron Corporation 689
W. Michael Hoffman and Mark Rowe

Can a Company be Too Ethical? 699
Andrew W. Singer

God as a Managerial Stakeholder? 705
Mark S. Schwartz

The Fortune at the Bottom of the Pyramid 720
C. K. Prahalad and Stuart L. Hart

Questions for Discussion 733

Business Ethics in Hollywood Movies 733
Mark S. Schwartz

Cases for Part 5 735

Mini-Cases 735

Cases

Global Corporation: Running a Global Ethics and Compliance Program 736
Lisa A. Stewart

Barrick’s Tanzanian Project Tests Ethical Mining Policies 743
Geoffrey York

An Ethical Approach to Crisis Management 749
Mark S. Schwartz, Wesley Cragg, and W. Michael Hoffman

Why I Am Leaving Goldman Sachs 756
Greg Smith

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