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I. Teacher to Teacher Dialogue
all aspects of business education, this increase in emphasis on law/ethics issues has come none
too soon.
One of the reasons I enjoy using Professor Cheeseman’s text is that he has a real talent for
helping both students and law teachers cross that bridge from black letter law to the larger ethics
II. Chapter Objectives
1. Describe how law and ethics intertwine.
2. Describe the moral theories of business ethics.
3. Describe the theories of the social responsibility of business.
4. Examine the provisions of the Sarbanes-Oxley Act.
5. Describe corporate citizenship.
III. Key Question Checklist
When a corporate behavior is questioned, which school of ethics would be most appropriate
to examine?
Is the behavior unethical?
What standard of ethical behavior should be applied?
ETHICS AND SOCIAL
RESPONSIBILITY OF BUSINESS
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Ethics and Social Responsibility of Business
IV. Text Materials
Introduction to Ethics and Social Responsibility of Business
Businesses organized in the United States are subject to its laws. They are also subject to the laws
Ethics and the Law
Ethics is the set of morals or values that govern the actions of an individual or group. Ethics and
Case 42.1 Business Ethics: Wal-Mart Stores, Inc. v. Samara Brothers, Inc.
529 U.S. 205, 120 S.Ct. 1339, 2000 U.S. Lexis 2197 (2000), Supreme Court of the United States
Facts: Wal-Mart Stores, Inc., was sued by Samara Brothers, Inc., for allegedly stealing the “trade
dress” of Samara under Section 43(a) of the Lanham Act. Walmart had directed one of its
suppliers to make exact copies of children’s clothing that Samara had designed and sold. Walmart
dress?
product, and is often protected under the Lanham Act. It should have been protected under
the case.
Business Ethics
Ethical Fundamentalism – Ethical fundamentalism is when a person looks to an outside source
for ethical rules or commands.
Ethics: Whistleblower Statute
program. After he received no response, he chose to file a qui tam lawsuit under the federal False
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received $34 million, pursuant to the act.
Utilitarianism – The moral theory which dictates that people must choose the actions or follow
the rules that will provide the greatest good to society.
Rawls’s Social Justice Theory – John Locke and Jean-Jacques Rousseau proposed a social
contract theory of morality. John Rawls’s distributive justice theory states that fairness is
Case 42.2 Ethics: Starbucks Corporation v. Wolfe’s Borough Coffee, Inc.
736 F.3d 198, 2013 U.S. App. Lexis 23114 (2013), United States Court of Appeals for the
Second Circuit
Facts: Starbucks has a significant presence in the coffee industry. A small competitor began to
dilute the Starbucks branding.
Issue: Did the Charbucks name cause dilution to Starbucks and was it an anti-trust violation?
Social Responsibility of Business
Maximizing Profits – The traditional view says that business should maximize profits for
shareholders.
Global Law: Is the Outsourcing of U.S. Jobs to Foreign Countries Ethical?
Moral Minimum – This theory holds that a corporation has a duty to make a profit while
avoiding harm to others.
Ethics: Sarbanes-Oxley Act Requires Public Companies to Adopt Codes of Ethics
Ethics and Social Responsibility of Business
Corporate Citizenship – The corporate citizenship theory of social responsibility states that
business has a responsibility to do good, because they owe a debt to society to make it a better
crimes against humanity were conducted due to the respondents’ conduct. Although the case was
dismissed in the lower courts, the plaintiffs appealed to the Supreme Court.
Issue: Does the Alien Tort Statute permit US federal courts to decide issues regarding conduct
that occurred in another country?
under the Alien Tort Statute.
Ethics Questions: The plaintiffs can’t sue in Nigeria and get a fair trial. The U.S. does owe a
Global Law: Conducting Business in Russia
principles.
VII. Key Terms and Concepts
responsibility to do good.
Corporate social audit—An audit of a corporation, usually conducted by independent
Ethical fundamentalism—When a person looks to an outside source for ethical rules or
commands.
group.
Ethics and the law—Ethics and the law are intertwined. Sometimes the rule of law and the
rule of ethics demand the same response by a person confronted with a problem.
False Claims Act—Permits private parties to sue companies for fraud on behalf of the
government.
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unto you.”
Maximize profits—A theory of social responsibility that says a corporation owes a duty to
take actions that maximize profits for shareholders.
Rawls’s social justice theory—A moral theory that says each person is presumed to have
entered into a social contract with all others in society to obey moral rules that are necessary
for people to live in peace and harmony.
Sarbanes-Oxley Act—Makes certain conduct illegal and establishes criminal penalties for
violations.
Utilitarianism—A moral theory that dictates that people must choose the action or follow the
rule that provides the greatest good to society.