Case Matrix
This case matrix provides a listing of the cases in the back of the book and shows how they can accompany the text
chapters. A given case may be appropriate for multiple chapters.
Page
771
784
790
797
802
805
808
810
812
814
820
823
824
827
831
832
833
837
840
842
843
845
855
861
865
868

871
873
876
883
892
897
901
907
908
910
912
913
923
926
929
933
935
937
941
942

Case Title
Case 1
Case 2
Case 3
Case 4
Case 5
Case 6
Case 7
Case 8

Case 9
Case 10
Case 11
Case 12
Case 13
Case 14
Case 15
Case 16
Case 17
Case 18
Case 19
Case 20
Case 21
Case 22
Case 23
Case 24
Case 25
Case 26
Case 27
Case 28
Case 29
Case 30
Case 31
Case 32
Case 33
Case 34
Case 35
Case 36
Case 37
Case 38

Case 39
Case 40
Case 41
Case 42
Case 43
Case 44
Case 45
Case 46

Wal-Mart: The Main Street Merchant of Doom
The Body Shop: Pursuing Social and Environmental Change
The Body Shop's Reputation is Tarnished
The Body Shop International PLC (1998–2007)
The HP Pretexting Predicament
Dick Grasso and the NYSE: Is It a Crime to Be Paid Well?
The Waiter Rule: What Makes for a Good CEO?
Do as I Say, Not as I Did
Say-on-Pay
Martha Stewart: Free Trading or Insider Trading?
The Case of the Killer Phrases (A)
To Hire or Not to Hire
Does Cheating in Golf Predict Cheating in Business?
The Travel Expense Billing Controversy
Phantom Expenses
Family Business
Should Business Hire Illegal Immigrants?
This Little Piggy: Should the Xeno-Pig Make It to Market?
Toxic Tacos? The Case of Genetically Modified Foods
Something’s Rotten in Hondo
Sweetener Gets Bitter Reaction

Nike, Inc., and Sweatshops
Coke and Pepsi in India: Issues, Ethics, and Crisis Management
Chiquita: An Excruciating Dilemma between Life and Law
Astroturf Lobbying
The Ethics of Earmarks
DTC: The Pill-Pushing Debate
Easy Credit Hard Future
Big Pharma’s Marketing Tactics
Firestone and Ford: The Tire Tread Separation Tragedy
McDonald’s: The Coffee Spill Heard ’Round the World
Is the Customer Always Right?
The Hudson River Cleanup and GE
Safety? What Safety?
Little Enough or Too Much?
The Betaseron Decision (A)
A Moral Dilemma: Head versus Heart
Wal-Mart and Its Associates: Efficient Operator or Neglectful Employer?
Dead Peasant Life Insurance
The Case of the Fired Waitress
Pizza Redlining: Employee Safety or Discrimination?
After-Effects of After-Hours Activities: The Case of Peter Oiler
Tattoos and Body Jewelry: Employer and Employee Rights
Is Hiring on the Basis of “Looks” Unfair or Discriminatory?
When Management Crosses the Line
The Case of Judy


Chapter Number
1


2

3

4

5

6

7

8

9

10

11

12

13

14

15

16


17

18

19


BUSINESS & SOCIETY
Ethics and Stakeholder Management
Seventh Edition

Archie B. Carroll
University of Georgia

Ann K. Buchholtz
University of Georgia

Australia

Canada

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United States



Business & Society: Ethics and
Stakeholder Management, 7th Edition
Archie B. Carroll, Ann K. Buchholtz
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1 2 3 4 5 6 7 11 10 09 08



Preface

B

usiness & Society: Ethics and Stakeholder Management, Seventh Edition,
employs a stakeholder management framework that emphasizes business’s
social and ethical responsibilities to external and internal stakeholder
groups. A managerial perspective is embedded within the book’s dual themes of
business ethics and stakeholder management. The ethics dimension is central
because it has become increasingly clear that ethical or moral considerations are
woven into the fabric of the public issues that organizations face. Economic and
legal issues are inevitably present, too. However, these aspects are treated more
directly in other business administration courses.
The stakeholder management perspective is essential because it requires
managers to (1) identify the various groups or individuals who have stakes in
the firm or its actions, decisions, and practices, and (2) incorporate those stakeholders’ concerns into the firm’s strategic plans and daily operations. Stakeholder
management is an approach that increases the likelihood that decision makers
will integrate ethical wisdom with management wisdom in all that they do.
As this edition goes to press, we are beginning to reach some closure on the
fraud and ethics scandals that have dominated the business news since the early
2000s. The Enron scandal and subsequent scandals involving such firms as
WorldCom, Tyco, Arthur Andersen, Adelphia, Global Crossing, and HealthSouth
constituted an ethical tsunami. Most of the trials of the CEOs and top executives
of these firms have concluded, and a number of them are currently serving time
behind bars. The horrific attacks on the World Trade Center and the Pentagon on
September 11, 2001, are still in our memories—especially for their relevance to
such topics as crisis management, global ethics, the business–government
relationship, and impacts on both internal and external stakeholders. These major
events will be with us forever, and we urge readers to keep in mind the extent to
which our world is now changed as they read through the book and consider its

content.

Applicable Courses for Text
This text is appropriate for college and university courses that carry such titles as
Business and Society; Business and Its Environment; Business Ethics; Business and
Public Policy; Social Issues in Management; Business, Government, and Society;
and Stakeholder Management. This book is appropriate for either a required or
elective course seeking to meet the standards (revised January 31, 2007) of the
Association to Advance Collegiate Schools of Business (AACSB International).
The book has been used successfully in both undergraduate and graduate
courses.
iii


iv

Preface

Though the AACSB does not require any specific courses, its standards
indicate that the school’s curriculum should result in undergraduate and master’s
degree programs that contain topics covered in this textbook. For an undergraduate degree program, learning experiences should be provided in such
general knowledge and skill areas as: ethical understanding and reasoning abilities
and multicultural and diversity understanding. For both undergraduate and master’s
degree programs, learning experiences should be provided in such general
knowledge and skill areas as ethical and legal responsibilities in organizations and
society and domestic and global environments of business.
Stated another way, the book is ideal for coverage of perspectives that form the
context for business: ethical and global issues; the influence of political, social,
legal and regulatory, environmental, and technological issues; and the impact of
diversity on organizations. The book provides perspectives on business, society,

and ethics in the United States as well as in Europe and other parts of the world:
versions of the previous edition were published in Canada and in China. A special
effort has been made to include some examples from different parts of the world
to illustrate major points.

Objectives in Relevant Courses
Depending on the placement of a course in the curriculum or the individual
instructor’s philosophy or strategy, this book could be used for a variety of objectives. The courses for which it is intended include several essential goals.
1.
2.

Students should be made aware of the expectations and demands that
emanate from stakeholders and are placed on business firms.
As prospective managers, students need to understand appropriate business
responses and management approaches for dealing with social, political,
environmental, technological, and global issues and stakeholders.

3.

An appreciation of ethical issues and the influence these issues have on
society, management decision making, behavior, policies, and practices is
important.

4.

The broad question of business’s legitimacy as an institution in a global
society is at stake and must be addressed from both a business and societal
perspective. These topics are vital for business to build trust with society and
all stakeholders.
The increasing extent to which social, ethical, public, and global issues must

be considered from a strategic perspective is critical in such courses.

5.

New to the Seventh Edition
This Seventh Edition has been updated and revised to reflect the most recent
research, laws, cases, and examples appropriate for courses in which it is used.
Material in this new edition includes:


Preface

•

New research, surveys, and examples throughout all the chapters

•

Coverage throughout the text on the most recent ethics scandals and their
influence on business, society, organizations, and people

•

Chapter on “Corporate Governance: Foundational Issues” moved to Part 2 of
the book to emphasize its escalating importance in recent years

•

Discussion of recent developments with the Sarbanes-Oxley Act and the Alien
Tort Claims Act, two laws with significant importance to managers today

New “Ethics in Practice Cases” and “Search the Web” features in each
chapter
Forty-six end-of-text cases:

•
•



Twelve new cases, including those on Hewlett-Packard (HP), Say-on-Pay,
Should Business Hire Illegal Aliens?, Chiquita Bananas, Coke & Pepsi in
India, the Credit Card Industry, and Tatoo/Body Art as Employee
Rights?



Twenty two revised and updated cases



Twelve cases carried over from the previous edition

•

A Case Matrix inside the front cover that suggests appropriate chapter uses
for end-of-text cases

•

An Ethics in Practice Case Matrix inside the back cover that recommends

chapter uses for “Ethics in Practice Cases” that appear in the various
chapters

•

Favorite cases from past editions are included in the Instructor’s Manual with
Test Bank so that they may be duplicated and used in class

•

A revised Instructor’s Manual

“Ethics in Practice” Cases
Continuing in this Seventh Edition are in-chapter features titled “Ethics in
Practice” Cases. Interspersed throughout the chapters, these short features present
either (1) actual ethical situations faced by companies or managers or (2) dilemmas
faced personally in the work experiences of our former students. These latter
types of cases are real-life situations actually confronted by our students in their
full-time and part-time work experiences. The students contributed these cases on
a voluntary basis, and we are pleased they gave us permission to use them. We
would like to acknowledge them for their contributions to the book. Instructors
may wish to use these as mini-cases for class discussion on a daily basis when a
lengthier case is not assigned.

v


vi

Preface


“Search the Web” Features
The “Search the Web” inserts in each chapter highlight an important and relevant
webpage or pages that augment each chapter’s text material. The “Search the
Web” feature may highlight a pertinent organization and its activities or special
topics covered in the chapter. These features permit students to explore topics in
more detail. Most of the websites have links to other related sites. The use of
search engines to find other relevant materials is encouraged because the Web
now catalogs a wealth of relevant information to the text topics and cases.

Structure of the Book
PART 1. BUSINESS, SOCIETY, AND
STAKEHOLDERS
Part 1 of the book provides an introductory coverage of pertinent business,
society, and stakeholder topics and issues. Because most courses for which this
book is intended evolved from the issue of corporate social responsibility, this
concept is treated early on. Part 1 documents and discusses how corporate social
responsiveness evolved from social responsibility and how these two matured
into a concern for corporate social performance and corporate citizenship. The
stakeholder management concept is also given early coverage because it provides
a way of thinking about all topics in the book.

PART 2. CORPORATE GOVERNANCE AND
STRATEGIC MANAGEMENT ISSUES
The second part of the text addresses corporate governance and strategic
management for stakeholder responsiveness. The purpose of this part is to discuss
management considerations for dealing with the issues discussed throughout the
text. Corporate governance is covered early because in the past decade this topic
has been identified to be vital for effective strategic management. The strategic
management perspective is useful because these issues have impacts on the total

organization and are a serious concern for many upper-level managers. Special
treatment is given to corporate public policy, issues and crisis management, and
public affairs management.
Some instructors may elect to cover Part 2 later in their courses. Part 2 could
easily be covered after Part 4 or 5. This option would be most appropriate for
those using the book for a business ethics course or for those who desire to spend
less time on the governance, strategy, and management perspectives.

PART 3. BUSINESS ETHICS AND MANAGEMENT
Four chapters dedicated to business ethics topics are presented in Part 3. In real
life, business ethics cannot be separated from the full range of external and


Preface

internal stakeholder concerns. Part 3 focuses on business ethics fundamentals,
personal and organizational ethics, business ethics and technology, and ethical
issues in the global arena.

PART 4. EXTERNAL STAKEHOLDER ISSUES
Vital topics here include business relations with government, consumers, the
environment, and the community. In each of these topic areas we see social and
ethical issues that dominate business today. The business–government
relationship is divided into a chapter on regulatory initiatives for monitoring
business practices and another chapter addressing business attempts to influence
government—primarily through lobbying. Consumers, the environment, and
community stakeholders are then treated in separate chapters.

PART 5. INTERNAL STAKEHOLDER ISSUES
The primary stakeholders covered in this part are employees. Here we consider

workplace issues and the key themes of employee rights, employment discrimination, and affirmative action. Two chapters address the changing social contract
between business and employees and the urgent topic of employee rights. A final
chapter treats the important topic of employment discrimination and affirmative
action. Owner stakeholders could be seen as internal stakeholders, but we have
decided to cover them in Part 2 alongside the subject of corporate governance.

CASE STUDIES AT END OF TEXT
The forty-six cases placed at the end of the book address a wide range of topics
and decision situations. The cases are of varying length. Twelve of the cases are
new to the Seventh Edition; among these are some longer cases. Twenty-two other
cases have been updated. All the cases are intended to provide instructors and
students with real-life situations within which to further analyze course issues
and topics covered throughout the book. The cases have intentionally been placed
at the end of the text material so that instructors will feel freer to use them with
any text material they desire. The Case Matrix that appears inside the front cover
provides suggested chapter usage for each of the cases.
Many of the cases in this book have ramifications that spill over into several
areas, and almost all of them may be used for different chapters. Preceding the
cases is a set of guidelines for case analysis that the instructor may wish to use in
place of (or in addition to) the questions that appear at the end of each case.
Some cases from previous editions have been moved to the Instructor’s Manual
with Test Bank. If instructors wish to use some of their favorite previous cases, you
may copy and distribute them in class or contact your local representative to have
a custom edition created to include the cases you have selected.

vii


viii


Preface

Support for the Instructor
INSTRUCTOR’S MANUAL WITH TEST BANK
Prepared by Leigh Johnson of Murray State University, M. Suzanne Clinton of the
University of Central Oklahoma, and B. J. Parker, the Instructor’s Manual with Test
Bank includes learning objectives, teaching suggestions, complete chapter outlines,
highlighted key terms, answers to discussion questions, suggestions for using the
management and organization video, case notes, supplemental cases, and NEW
group exercises. The test bank for each chapter includes true/false, multiplechoice, short-answer, and essay questions. This edition’s strengthened test bank
now offers questions correlated to AACSB guidelines and learning standards and
identified by level of difficulty.
A computerized version of the test bank is also available electronically.
ExamView®, an easy-to-use test-generating program, enables instructors to create
printed tests, Internet tests, and online (LAN-based) tests quickly. Instructors can
use the software provided to enter their own questions and customize the
appearance of the tests they create. The QuickTest wizard permits test generators
to use an existing bank of questions, creating a test in minutes using a step-bystep selection process.
The Instructor’s Manual with Test Bank is available only on the website and on
the Instructor’s Resource CD-ROM. ExamView is available only on the
Instructor’s Resource CD-ROM.

POWERPOINT SLIDES
Prepared by Deborah J. Baker of Texas Christian University, the PowerPoint
presentation is colorful and varied; it is designed to hold students’ interest and
reinforce each chapter’s main points. The PowerPoint presentation is available
only on the website and on the Instructor’s Resource CD-ROM.

ABC VIDEO (DVD ISBN 0-324-58063-0)
Bring the programming power of ABC into your classroom with this DVD of

high-interest clips. Short segments—perfect for introducing key concepts—cover
a range of issues found within the text. Suggestions for video usage are provided
in the Instructor’s Manual with Test Bank, making it easy to gain the most from this
exceptional resource.

INSTRUCTOR’S RESOURCE CD-ROM
(0-324-58068-1)
Included are the Instructor’s Manual with Test Bank and PowerPoint slides.


Preface

BUSINESS AND COMPANY RESOURCE CENTER
Instructors may elect to bundle within the student text an access card to the
Business and Company Resource Center (BCRC). Infomark bookmarks related to
chapter material will be included online to aid instructors in assignment creation
using BCRC.

WEBSITE
This website ( features interactive quizzes, flashcards, and BCRC resources. Instructors can download
resources, including the Instructor’s Manual with Test Bank and PowerPoint presentation slides.

Acknowledgments
First, we would like to express gratitude to our professional colleagues in the
Social Issues in Management (SIM) Division of the Academy of Management, the
International Association for Business and Society (IABS), and the Society for
Business Ethics (SBE). Over the years these individuals have meant a lot to us and
have helped to provide a stimulating intellectual environment for pursuing these
topics in which we have a common interest. Many of these individuals are cited in
this book quite liberally, and their work is appreciated.

Second, we would like to thank the many adopters of the six previous editions
who took the time to provide us with helpful critiques. Many of their ideas and
suggestions have been used for this Seventh Edition. We give particular thanks to
the following reviewers of the Sixth Edition for their input and direction:
Abe Bakhsheshy, University of Utah
Leigh Johnson, Murray State University
Robert J. Senn, Shippensburg University
We especially want to thank the reviewers for all previous editions. We tried to
honor their recommendations and suggestions as time and space permitted. The
contributions of the following individuals have led to improvements in the text:
Steven C. Alber, Hawaii Pacific University
Paula Becker Alexander, Seton Hall University
Laquita C. Blockson, College of Charleston
Peter Burkhardt, Western State College of Colorado
George S. Cole, Shippensburg University
Jeanne Enders, Portland State University
John William Geranios, George Washington University
Kathleen Getz, American University
Peggy A. Golden, University of Northern Iowa

ix


x

Preface

Russell Gough, Pepperdine University
Michele A. Govekar, Ohio Northern University
Robert H. Hogner, Florida International University

Sylvester R. Houston, University of Denver
Ralph W. Jackson, University of Tulsa
David C. Jacobs, American University
Ed Leonard, Indiana University–Purdue University Fort Wayne
Timothy A. Matherly, Florida State University
Kenneth R. Mayer, Cleveland State University
Douglas M. McCabe, Georgetown University
Bill McShain, Cumberland University
Harvey Nussbaum, Wayne State University
E. Leroy Plumlee, Western Washington University
Richard Raspen, Wilkes University
Dawna Rhoades, Embry-Riddle Aeronautical University
William Rupp, University of Montevallo
Robert J. Rustic, The University of Findlay
John K. Sands, Western Washington University
David S. Steingard, St. Joseph’s University
John M. Stevens, The Pennsylvania State University
Diane L. Swanson, Kansas State University
Dave Thiessen, Lewis-Clark State College
Jeff R. Turner, Howard Payne University
Marion Webb, Cleveland State University
George E. Weber, Whitworth College
Ira E. Wessler, Robert Morris University
We would also like to express gratitude to our students, who have not only
provided comments on a regular basis but have also made this Seventh Edition
more relevant by personally contributing ethical dilemmas that are highlighted in
the “Ethics in Practice” Case features found in many of the chapters. In addition
to those who are named in these features and have given permission for their
materials to be used, we would like to thank the following students for their
anonymous contributions: Edward Bashuk, Kevin Brinker, Adrienne Brown,

Bryan Burnette, Luis Delgado, Henry DeLoach, Chris Fain, Eric Harvey, Sloane
Hyatt, Jensen Mast, Luke Nelson, Kristen Nessmith, Will Nimmer, Kimberly
Patterson, Angela Sanders, and Nicole Zielinski.
We express grateful appreciation to all of the authors of the other cases that
appear in the final section of the text. Contributing cases were Steven Brenner,
Portland State University; Jill Brown, Lehigh University; Norma Carr-Ruffino, San
Francisco State University; Bryan Dennis, University of South Carolina, Beaufort;


Preface

Joe Gerard, SUNY Institute of Technology; Julia Merren, former student; and
Kareem Shabana, Indiana University at Kokomo. We especially appreciate
Kareem Shabana and Jill Brown for their careful reviews of all our cases before
revision. We also thank other faculty members who contributed cases for previous
editions that carried forward into the Seventh Edition. We gratefully acknowledge
the support of our departmental staff at the University of Georgia, without whom
we could not have finished the book on time. We especially wish to thank Ruth
Davis, Mary Hillier, and Department Head Allen Amason.
Finally, we wish to express sincere appreciation to our family members and
friends for their patience, understanding, and support when work on the book
altered our priorities and plans.

Archie B. Carroll
Ann K. Buchholtz

xi


About the Authors

Archie B. Carroll
Professor Carroll is Director of the Nonprofit Management & Community Service
Program in the Terry College of Business, University of Georgia, and serves as a
professor in the GLOBIS Study Abroad Program in Verona, Italy. He is Robert W.
Scherer Chair of Management & Corporate Public Affairs Emeritus and Professor
of Management Emeritus in the Terry College of Business, where he has been a
faculty member since 1972. Dr. Carroll received his three academic degrees from
Florida State University in Tallahassee.
Professor Carroll has published numerous books, chapters, articles, and
encyclopedia entries. His research has appeared in the Academy of Management
Journal, Academy of Management Review, Business and Society, Journal of Business
Ethics, Business Ethics Quarterly, Business and Society Review, Business Ethics: A
European Review, and many other publications.
Professor Carroll has served on the editorial review boards of Business and
Society, Business Ethics Quarterly, Academy of Management Review, Journal of
Management, and the Journal of Public Affairs. He is former division chair of the
Social Issues in Management (SIM) Division of the Academy of Management, a
founding board member of the International Association for Business and Society
(IABS), and former president of the Society for Business Ethics. He was elected a
Fellow of the Academy of Management and the Southern Management
Association.
In 1992, Professor Carroll was awarded the Sumner Marcus Award for Distinguished Service by the SIM Division of the Academy of Management; in 1993, he
was awarded the Terry College of Business, University of Georgia, Distinguished
Research Award for his work in corporate social performance and business ethics.
In 2003 he was awarded the Distinguished Service Award by the Terry College of
Business.

Ann K. Buchholtz
Professor Buchholtz is an associate professor of strategic management in the Terry
College of Business at the University of Georgia. Dr. Buchholtz received her Ph.D.

from the Leonard N. Stern School of Business at New York University.
Professor Buchholtz’s research focuses on the social and ethical implications
of corporate governance. Journals in which her work has appeared include the
Academy of Management Journal, Academy of Management Review, Journal of
Management, Business Ethics Quarterly, Business & Society, Journal of Management
Studies, and Organization Science, among others.
xii


About the Authors

Her teaching and consulting activities are in the areas of business ethics, social
issues, strategic leadership, and corporate governance. In 2006, she was named a
Senior Teaching Fellow at the University of Georgia. Her service learning activities in the classroom received a “Trailblazer Advocate of the Year” award from
the Domestic Violence Council of Northeast Georgia in 2003.
Professor Buchholtz has been elected to chair the Social Issues in Management
(SIM) Division of the Academy of Management, and she serves on the board of
directors of the International Association of Business and Society (IABS). She was
on the task force that developed a code of ethics for the Academy of Management
and serves as the inaugural chair of the ethics adjudication committee. Prior to
entering academe, Dr. Buchholtz’s work focused on the educational, vocational,
and residential needs of individuals with disabilities. She has worked for a variety
of organizations in both managerial and consultative capacities, and she has
consulted with numerous public and private firms.

xiii


Brief Contents
Part One

BUSINESS, SOCIETY, AND STAKEHOLDERS
Chapter 1
Chapter 2
Chapter 3

1

The Business and Society Relationship
Corporate Citizenship: Social Responsibility, Responsiveness,
and Performance
The Stakeholder Approach to Business, Society, and Ethics

Part Two
CORPORATE GOVERNANCE AND
STRATEGIC MANAGEMENT ISSUES
Chapter 4
Chapter 5
Chapter 6

119

Corporate Governance: Foundational Issues
Strategic Management and Corporate Public Affairs
Issues Management and Crisis Management

Part Three
BUSINESS ETHICS AND MANAGEMENT
Chapter 7
Chapter 8
Chapter 9

Chapter 10

231

Business Ethics Fundamentals
Personal and Organizational Ethics
Business Ethics and Technology
Ethical Issues in the Global Arena

Part Four
EXTERNAL STAKEHOLDER ISSUES
Chapter 11
Chapter 12
Chapter 13
Chapter 14
Chapter 15
Chapter 16

447

Business, Government, and Regulation
Business Influence on Government and Public Policy
Consumer Stakeholders: Information Issues and Responses
Consumer Stakeholders: Product and Service Issues
The Natural Environment as Stakeholder
Business and Community Stakeholders

Part Five
INTERNAL STAKEHOLDER ISSUES
Chapter 17

Chapter 18
Chapter 19

xiv

657

Employee Stakeholders and Workplace Issues
Employee Stakeholders: Privacy, Safety, and Health
Employment Discrimination and Affirmative Action


Contents
Preface iii
About the Authors xii
Brief Contents xiv

Part One
BUSINESS, SOCIETY, AND STAKEHOLDERS

1

CHAPTER 1

The Business and Society Relationship 3
Business and Society 5
Society as the Macroenvironment 7
A Pluralistic Society 8
A Special-Interest Society 10
Business Criticism and Corporate Response 11

Focus of the Book 24
Structure of the Book 27
Summary 29
Key Terms 30
Discussion Questions 30
End Notes 31
CHAPTER 2

Corporate Citizenship: Social Responsibility, Responsiveness, and
Performance 33
The Corporate Social Responsibility Concept 34
Arguments Against and For Corporate Social Responsibility 49
Corporate Social Responsiveness 55
Corporate Social Performance 57
Corporate Citizenship 60
Business’s Interest in Corporate Citizenship 65
Social Performance and Financial Performance Relationship 67
Socially Responsible or Ethical Investing 72
Summary 74
Key Terms 75
Discussion Questions 75
End Notes 76

xv


xvi

Contents


CHAPTER 3

The Stakeholder Approach to Business, Society, and Ethics 81
Origins of the Stakeholder Concept 83
Who Are Business’s Stakeholders? 84
Strategic, Multifiduciary, and Synthesis Approaches 91
Three Values of the Stakeholder Model 92
Key Questions in Stakeholder Management 93
Effective Stakeholder Management 106
Developing a Stakeholder Culture 108
Stakeholder Management Capability 108
The Stakeholder Corporation 111
Principles of Stakeholder Management 111
Strategic Steps Toward Successful Stakeholder Management 112
Summary 113
Key Terms 114
Discussion Questions 114
End Notes 115

Part Two
CORPORATE GOVERNANCE AND STRATEGIC MANAGEMENT
ISSUES
119
CHAPTER 4

Corporate Governance: Foundational Issues 121
Legitimacy and Corporate Governance 122
Problems in Corporate Governance 126
Improving Corporate Governance 135
The Role of Shareholders 142

Summary 147
Key Terms 148
Discussion Questions 149
End Notes 149
CHAPTER 5

Strategic Management and Corporate Public Affairs 153
The Concept of Corporate Public Policy 154
Four Key Strategy Levels 157
The Strategic Management Process 164
Public Affairs 173
Public Affairs as a Part of Strategic Management 174
The Corporate Public Affairs Function Today 175
Important Public Affairs Concepts Today 177
Public Affairs Strategy 181
Incorporating Public Affairs Thinking into All Managers’ Jobs 183


Contents

Future of Corporate Public Affairs in the Twenty-first Century 186
Summary 186
Key Terms 187
Discussion Questions 187
End Notes 188
CHAPTER 6

Issues Management and Crisis Management 191
Issues Management 193
Crisis Management 210

Summary 226
Key Terms 227
Discussion Questions 227
End Notes 227

Part Three
BUSINESS ETHICS AND MANAGEMENT

231

CHAPTER 7

Business Ethics Fundamentals 233
The Public’s Opinion of Business Ethics 237
Business Ethics: What Does It Really Mean? 242
Ethics, Economics, and Law: A Venn Model 249
Four Important Ethics Questions 250
Three Models of Management Ethics 254
Making Moral Management Actionable 269
Developing Moral Judgment 270
Elements of Moral Judgment 279
Summary 282
Key Terms 283
Discussion Questions 283
End Notes 283
CHAPTER 8

Personal and Organizational Ethics 287
Levels at Which Ethics May Be Addressed 288
Personal and Managerial Ethics 292

Managing Organizational Ethics 310
From Moral Decisions to Moral Organizations 339
Summary 340
Key Terms 341
Discussion Questions 341
End Notes 342

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xviii

Contents

CHAPTER 9

Business Ethics and Technology 347
Technology and the Technological Environment 349
Characteristics of Technology 350
Ethics and Technology 353
Information Technology 355
Biotechnology 374
Summary 385
Key Terms 385
Discussion Questions 386
End Notes 386
CHAPTER 10

Ethical Issues in the Global Arena 391
The New, New World of International Business 392

MNCs and the Global Environment 397
Ethical Issues in the Global Business Environment 403
Improving Global Business Ethics 428
Summary 440
Key Terms 440
Discussion Questions 441
End Notes 441

Part Four
EXTERNAL STAKEHOLDER ISSUES

447

CHAPTER 11

Business, Government, and Regulation 449
A Brief History of Government’s Role 450
The Roles of Government and Business 452
Interaction of Business, Government, and the Public 455
Government’s Nonregulatory Influence on Business 456
Government’s Regulatory Influences on Business 465
Deregulation 475
Summary 479
Key Terms 480
Discussion Questions 480
End Notes 480
CHAPTER 12

Business Influence on Government and Public Policy 483
Corporate Political Participation 484

Coalition Building 494
Political Action Committees 495


Contents

Summary 504
Key Terms 505
Discussion Questions 505
End Notes 506
CHAPTER 13

Consumer Stakeholders: Information Issues and Responses 509
The Consumer Movement 510
Product Information Issues 514
The Federal Trade Commission 535
Self-Regulation in Advertising 539
Summary 541
Key Terms 541
Discussion Questions 542
End Notes 542
CHAPTER 14

Consumer Stakeholders: Product and Service Issues 547
Two Central Issues: Quality and Safety 548
Consumer Product Safety Commission 560
Food and Drug Administration 563
Business’s Response to Consumer Stakeholders 566
Total Quality Management Programs 567
Six Sigma 570

Summary 571
Key Terms 572
Discussion Questions 572
End Notes 573
CHAPTER 15

The Natural Environment as Stakeholder 577
The Sustainability Imperative 578
A Brief Introduction to the Natural Environment 579
The Impact of Business upon the Natural Environment 581
Responsibility for Environmental Issues 591
The Role of Governments in Environmental Issues 594
Other Environmental Stakeholders 600
Business Environmentalism 606
The Future of Business: Greening and/or Growing? 613
Summary 614
Key Terms 614
Discussion Questions 615
End Notes 615

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Contents

CHAPTER 16

Business and Community Stakeholders 619

Community Involvement 620
Corporate Philanthropy or Business Giving 626
The Loss of Jobs 640
Summary 651
Key Terms 652
Discussion Questions 652
End Notes 652

Part Five
INTERNAL STAKEHOLDER ISSUES

657

CHAPTER 17

Employee Stakeholders and Workplace Issues 659
The New Social Contract 660
The Employee Rights Movement 663
The Right Not to Be Fired Without Cause 666
The Right to Due Process and Fair Treatment 670
Freedom of Speech in the Workplace 673
Summary 684
Key Terms 685
Discussion Questions 685
End Notes 685
CHAPTER 18

Employee Stakeholders: Privacy, Safety, and Health 689
Right to Privacy in the Workplace 690
Workplace Safety 704

The Right to Health in the Workplace 714
Summary 720
Key Terms 720
Discussion Questions 721
End Notes 721
CHAPTER 19

Employment Discrimination and Affirmative Action 725
The Civil Rights Movement and Minority Progress 726
Federal Laws Prohibiting Discrimination 729
Expanded Meanings of Discrimination 738
Issues in Employment Discrimination 740
Affirmative Action in the Workplace 756
Summary 762


Contents

Key Terms 762
Discussion Questions 763
End Notes 763

Cases
Case
Case

1
2

Case

Case
Case
Case

3
4
5
6

Case
Case
Case
Case
Case
Case
Case

7
8
9
10
11
12
13

Case
Case
Case
Case
Case


14
15
16
17
18

Case 19
Case
Case
Case
Case

20
21
22
23

Case 24
Case
Case
Case
Case
Case
Case

25
26
27
28

29
30

Case 31
Case 32
Case 33

Wal-Mart: The Main Street Merchant of Doom 771
The Body Shop: Pursuing Social and Environmental
Change 784
The Body Shop’s Reputation Is Tarnished 790
The Body Shop International PLC (1998–2007) 797
The HP Pretexting Predicament 802
Dick Grasso and the NYSE: Is It a Crime to Be Paid
Well? 805
The Waiter Rule: What Makes for a Good CEO? 808
Do as I Say, Not as I Did 810
Say-on-Pay 812
Martha Stewart: Free Trading or Insider Trading? 814
The Case of the Killer Phrases (A) 820
To Hire or Not to Hire 823
Does Cheating in Golf Predict Cheating in Business?
824
The Travel Expense Billing Controversy 827
Phantom Expenses 831
Family Business 832
Should Business Hire Illegal Immigrants? 833
This Little Piggy: Should the Xeno-Pig
Make It to Market? 837
Toxic Tacos? The Case of Genetically Modified Foods

840
Something’s Rotten in Hondo 842
Sweetener Gets Bitter Reaction 843
Nike, Inc., and Sweatshops 845
Coke and Pepsi in India: Issues, Ethics, and Crisis
Management 855
Chiquita: An Excruciating Dilemma Between Life and
Law 861
Astroturf Lobbying 865
The Ethics of Earmarks 868
DTC: The Pill-Pushing Debate 871
Easy Credit Hard Future 873
Big Pharma’s Marketing Tactics 876
Firestone and Ford: The Tire Tread Separation
Tragedy 883
McDonald’s—The Coffee Spill Heard ’Round the
World 892
Is the Customer Always Right? 897
The Hudson River Cleanup and GE 901

xxi


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Contents

Case
Case
Case

Case
Case
Case
Case

32
33
34
35
36
37
38

Case 39
Case 40
Case 41
Case 42
Case 43
Case 44
Case 45
Case 46

Is the Customer Always Right? 897
The Hudson River Cleanup and GE 901
Safety? What Safety? 907
Little Enough or Too Much? 908
The Betaseron Decision (A) 910
A Moral Dilemma: Head versus Heart 912
Wal-Mart and Its Associates: Efficient Operator or
Neglectful Employer? 913

Dead Peasant Life Insurance 923
The Case of the Fired Waitress 926
Pizza Redlining: Employee Safety or Discrimination?
929
After-Effects of After-Hours Activities: The Case of
Peter Oiler 933
Tattoos and Body Jewelry: Employer and Employee
Rights 935
Is Hiring on the Basis of “Looks” Unfair or
Discriminatory? 937
When Management Crosses the Line 941
The Case of Judy 942

Name Index 943
Subject Index 946