As the behavior of Johnson & Johnson's, Dow Corning's, and Arthur
Andersen's managers suggests, managers may interpret their responsibilities
to their customers and to their organizations in very different ways. Johnson
& Johnson moved immediately to protect the public even though there was little
chance that any other supplies of Tylenol were contaminated. Dow Corning's managers
postponed action and, to safeguard the profits of their company, did not confront
the fact that their product was defective and dangerous. As a result, women
continued to receive silicon breast implants, and the potential for harm increased.
Arthur Andersen's managers intentionally committed illegal actions to protect their
own interests. Their sole goal was to hide evidence of their wrongdoing at the
expense of the public.
As the story of these companies suggests, an important ethical dimension is present
in most kinds of business decision making. In this chapter, we examine the nature of
the obligations and responsibilities a business has to the people and society affected
by the way it operates. First, we examine the nature of ethics and the sources of ethical
problems. Second, we discuss the major groups of people, called stakeholders, who
are affected by business. Third, we look at four rules or guidelines that companies can
use to decide whether a specific business decision is ethical or unethical. Fourth, we consider the sources of business ethics and the way companies can promote ethical
behavior. Finally, we examine the legal environment of business and describe the
many kinds of laws, rules and regulations that must be followed, both at home and
abroad, if a company is to do business in an honest and ethical way. By the end of this
chapter you will understand the central role that ethics plays in shaping the practice
of business and the life of a people, society, and nation.
