You are here

Understanding Business Ethics

Understanding Business Ethics

Third Edition

Other Titles in:
Business Ethics

600 pages | SAGE Publications, Inc

Filled with real-world case studies and examples of ethical dilemmas, Understanding Business Ethics prepares you to make ethical decisions in today’s complex, global environment. Bestselling authors explain the fundamental importance of ethical leadership, decision making, and strategic planning while examining emerging trends in business ethics such as the developing world, human rights, environmental sustainability, and technology.

In addition to presenting information related to the Association to Advance Collegiate Schools of Business (AACSB), the text’s 26 real-world cases profile a variety of industries, countries, and ethical issues in a way that is relevant and meaningful to your lives. Using an applied approach, this text helps you understand why and how business ethics really do matter!


  • New coverage of current and relevant topics such as corporate social responsibility, information technology, social media, big data, NGOs as stakeholders, and challenges to establishing an ethical organisation
  • New chapter-opening vignettes and real-life ethical dilemmas highlight contemporary examples such as “The Interview” movie and North Korea, Samsung and Child Labour, and the Hillsborough football disaster
  • New cases covering recent ethical situations such as Disney’s corporate social responsibility reputation and the General Motor’s ignition recall issue show you how to practically apply the concepts being learned to their everyday life
  • An extensive instructor’s manual covering all of the case studies and exercises in the book as well as links to additional material.        

The free, open-access Student Study site at features web quizzes, web resources, video resources, and more. There is also a dedicated Instructor site providing additional teaching resources.

Chapter 1: The Foundation of Ethical Thought

The Role of Morals

The Foundation of Ethical Theory

Teleological Frameworks

Deontological Frameworks

Seven Guiding Principles to Support Ethical Actions

The Seven Deadly Sins

The Trolley Problem

Global Business Standards Codex

Chapter 2: The Evolving Complexities of Business Ethics
The Global Complexity of Business Ethics

History of Business Ethics

The Role of Integrity

Specific Behaviors of High Integrity

Is Everyone Unethical?

The Cheating Culture

Grade Inflation and the Institutional Pressure to Cheat

The Role of Technology and Cheating

Generational Differences Pertaining to Ethics

The Role of Trust in Ethical Conduct

Chapter 3: Stakeholders and Corporate Social Responsibility
What Is a Stakeholder?

Management’s Response to Stakeholders

The Ability to Build Trust with the Stakeholders

The Role of Stakeholder Communications

Triple Bottom Line Reporting

The Benefit Corporation

Suppliers as Stakeholders

Customers as Stakeholders

Government as a Stakeholder

NGOs as Stakeholders

Local Community and Society as Stakeholders

The Role of Corporate Social Responsibility

Alternative Firm Configurations to Address Stakeholder Issues

The Role of Corporate Reputation

The Role of Corporate Philanthropy

Part II: Internal Focus of Ethical Issues
Chapter 4: Ethics and Financial Reporting
Ethics and Financial Reporting

The Role of Creative Accounting

The History of Ponzi Schemes

The Role Of Insider Trading As An Ethical Issue

Ethical Philosophies and Accounting Issues

The Role of Financial Reporting

The Objectives of Financial Reporting

Where Were the Auditors?

Responsibilities of Management

The Use of Heuristics in Auditing

Responsibilities of Auditors

Responsibilities of Audit Committees

AICPA Code of Professional Conduct

Components of the Sarbanes-Oxley Act

Public Company Accounting Oversight Board

Section 404—Internal Controls

A Comprehensive Model of Top Management Fraud

Accounting Shenanigans or Tricks of the Trade

Chapter 5: Ethical Leadership and Corporate Governance
Ethical Leadership

A Manager’s Ability to Develop Trust, Commitment, and Effort

The Responsibility of Managers

The Transformation From Moral Person to Ethical Leader

Ethics and Corporate Governance

Board of Directors

The Role of the Board of Directors

A Contingent Perspective of Corporate Governance

Ethics and the Structure of the Board of Directors

The Benefits of a Strong Board of Directors

CEO Compensation and Ethical Reputation

Ethical Viewpoints Explaining CEO Compensation

Corporate Governance and Stakeholders

Chapter 6: Strategic Planning, Corporate Culture, and Corporate Compliance
Ethics and Strategic Planning

The Ethical Cycle

Using Strategic Ethical Decisions to Build Character

Is There a Link Between Strategic Planning and an Ethical Culture?

How to Address Strategic Ethical Decision Making From a Global Perspective

How to Address Ethical Crisis and Disaster Recovery

Corporate Culture

Evaluation of Corporate Culture

Using Organizational Integrity to Link Corporate Culture to Corporate Compliance

Ethics and Corporate Compliance

The U.S. Federal Sentencing Guidelines for Organizations

The Challenge of Compliance

Corporate Compliance Systems and Global Corruption

Chapter 7: Decision Making and Human Resource Issues
Ethical Decision Making: Kohlberg’s Six Stages of Moral Development

The Role of Emotion in Moral Decision Making

Rationalizing Unethical Behaviors

Ethical Decision Making and Moral Intensity

The Role of Power and Influence in Ethical Decisions

Human Resource Issues

The Role of Workplace Diversity

Ethical Climate and Organizational Misbehavior

Sexual Harassment and Sexual Discrimination

Office Bullying

Employee Monitoring

The Ethical Issues Related to Extreme Jobs

Part III: External Focus of Ethical Issues
Chapter 8: Ethics and the Environment
The Tragedy of the Commons

Natural Environment as a Stakeholder

Natural Environment as a Competitive Advantage

Voluntary Environmental Compliance

What Does It Mean to Be Green?

Employees as Environmental Stakeholders

NGOs as Environmental Stakeholders

Communicating the Firm’s Environmental Commitment to Its Stakeholders

United States Government Regulations

Environmental Accounting Issues

Environmental Justice

Environmental Sustainability

Ethics and Climate Change

Climate Change as a Strategic Option

The Effects of Climate Change on the Firm

A Firm’s Carbon Footprint

Chapter 9: Ethics and Information Technology
Why Are Information Technology Ethical Issues Important?

Management Issues and Policy Areas for Information Technology

The Next Step: Critical Analysis

Privacy of Employees

Types of Computer Monitoring

Telephone Monitoring

Privacy of Customers

The Challenge of Technology

The Role of Government Regulations

The Volunteer Censoring of Internet Search Information

Technology-Based Fraud

Internet Attacks


Chapter 10: Marketing and Advertising
Alternative Views of the Foundation of Marketing and Advertising

Green Marketing

Ethical Consumer Behavior

Relationship Marketing and Privacy

The Role of Consumer Boycotts

The Ethical Challenges of Product Recalls

The Reasons for Recalls

The Steps of a Recall

Financial Costs of a Recall

The Ethics of Fair Pricing

Ethics of Purchasing and Sales

False and Misleading Advertising

The Eventual Truth in Advertising

Advertising to Children

The Sydney Principles

The Magic of Disney

Chapter 11: Ethical Issues in the Developing World
The Bottom of the Pyramid

New Generation Business Strategies for the Bottom of the Pyramid

Social Entrepreneurship

Fair Trade

Human Rights

Poverty and Hunger

Food Versus Fuel

The UN Millennium Development Goals

Part IV: Developing and Evaluating a Strong Ethical Focus
Chapter 12: Establishing a Code of Ethics and Ethical Guidelines
Role of a Code of Ethics

Code of Ethics and Stakeholders

Benefits of a Code of Ethics

Content of a Code of Ethics

The Role of Total Responsibility Management and a Code of Ethics

Steps for an Effective Code of Ethics

Value of a Code of Ethics

How to Make a Code of Ethics More Effective

Examples of Codes of Ethics

Role of Government Regulations

Global Code of Ethics

Chapter 13: Evaluating Corporate Ethics
Why Firms Need Ethics Training Programs

Establishing an Ethics Training Program

Establishing a Global Ethics Training Program

Benefits of an Ethics Training Program

Enforcement and the Ethics Training Program

Sending the Right Message to the Employees

Corporate Ethics Officers

Ethical Auditing

Components of the Ethical Audit



Government Regulations and Whistle-Blowing

Evaluation of Ethics and Stakeholders

Part V: Cases
Case 1: Bernard Madoff: How “One Big Lie” Can Destroy Thousands of Lives
Case 2: Siemens: How the Greased Wheels Slid off the Ethical Track
Case 3: TOMS Shoes: Helping Soles All Over the World
Disney Citizenship: Lending a Mouse Ear to Hear How to Help Society
Case 4: World Food Programme: A Quarter a Day Keeps the Hunger Away
Case 5: Rupert Murdoch and News Corporation: All the News That’s Fit to Hack
Case 6: Enron: Were They the Crookedest Guys in the Room?
Case 7: Google: Don’t Be Evil Unless?.?.?.
Case 8: HealthSouth: The Rise and Fall of the Scrushy Empire
Case 9: De Beers and the Conflict Diamonds: A Monopoly Doesn’t Last Forever
Case 10: Interface: More Than Just a Carpet Company
Case 11: Facebook and Privacy: Big Brother “Likes” Us
Case 12: Outsourcing at Mattel: Elmo Sad?.?.?.?Elmo Covered in Lead Paint
Case 13: GM and the Ignition Switch: It Is Deja Vu All Over Again
Case 14: McWane: A Dangerous Business
Case 15: Merck’s Vioxx: How Would You Interpret the Data?
Case 16: Music Industry: Ethical Issues in a Digital Age
Case 17: Apple Outsourcing in China: iSweatshop?
Case 18: Patagonia: Don’t Buy Our Stuff
Case 19: Tokyo Electric Power and the Fukushima Daiichi Nuclear Power Disaster: A Tsunami of Problems
Case 20: Tyco: I’m Sure That It’s a Really Nice Shower Curtain
Case 21: Olympus: A Corporate Governance Picture That Was Out of Focus
Case 22: Wal-Mart: But We Do Give Them a 10% Employee Discount
Case 23: WorldCom: Can You Hear the Lawsuits Now?
Case 24: BP and the Deepwater Horizon Disaster: “I Would Like My Life Back”
Case 25: Greyston Bakery: The Zen of Philanthropy


Student Study Site

Use the Student Study Site to get the most out of your course!

Our Student Study Site at is completely open-access and offers a wide range of additional features, including something no other publisher offers: SAGE Journal articles!

 The open-access Student Study Site includes the following:

  • Mobile-friendly web quizzes allow for independent assessment of progress made in learning course material.
  • Carefully selected, video links feature relevant interviews, lectures, personal stories, inquiries, and other content for use in independent or classroom-based explorations of key topics.
  • EXCLUSIVE! Access to certain full-text SAGE journal articles that have been carefully selected for each chapter. Each article supports and expands on the concepts presented in the chapter. 
  • Web resources are included for further research and insights. 
Instructor Resource Site

Calling all instructors!
It’s easy to log on to SAGE’s password-protected Instructor Teaching Site at for complete and protected access to all text-specific Instructor Resources for Understanding Business Ethics, Third Edition. Simply provide your institutional information for verification and within 72 hours you’ll be able to use your login information for any SAGE title!

Password-protected Instructor Resources include the following:

  • A Microsoft® Word® test bank is available containing multiple choice, true/false, short answer, and essay questions for each chapter. The test bank provides you with a diverse range of pre-written options as well as the opportunity for editing any question and/or inserting your own personalized questions to effectively assess students’ progress and understanding.
  • A Respondus electronic test bank is available and can be used on PCs. The test bank contains multiple choice, true/false, short answer, and essay questions for each chapter and provides you with a diverse range of pre-written options as well as the opportunity for editing any question and/or inserting your own personalized questions to effectively assess students’ progress and understanding. Respondus is also compatible with many popular learning management systems so you can easily get your test questions into your online course.
  • Editable, chapter-specific Microsoft® PowerPoint® slides offer you complete flexibility in easily creating a multimedia presentation for your course.
  • An instructor guide includes sample answers to the discussion questions in the book.
  • Case notes include PowerPoint slides and a Word file of teaching notes for each case are designed for instructors to expand questions to students, or initiate class discussion.
  • EXCLUSIVE! Access to certain full-text SAGE journal articles that have been carefully selected for each chapter. Each article supports and expands on the concepts presented in the chapter. 
  • Sample course syllabi for semester and quarter courses provide suggested models for use when creating the syllabi for your courses.
  • Chapter-specific discussion questions help launch classroom interaction by prompting students to engage with the material and by reinforcing important content. 
  • Carefully selected, web-based video links feature relevant interviews, lectures, personal stories, inquiries, and other content for use in independent or classroom-based explorations of key topics.
  • Web resources are included for further research and insights. 

“Looking for a deeply reflected and applicable textbook for in-class use in business ethics? Here it is. The best textbook I’ve ever found is the Stanwicks’ masterpiece. Your students will love it.”

Volker Brecht
Southern University at New Orleans

“Great textbook, with relevant cases from the real world.”

Biruk Alemayehu
Southern University at New Orleans

“Excellent book with proper framing and interesting analyzes in various areas/fields, with special emphasis on practical cases.”

Alberto Costa
Universidade De Aveiro

Understanding Business Ethics has sound principles that is a good fit for an undergraduate ethics course. The companion materials also add breadth to my instruction.

Ms Tracy Brown Wright
Public Relations Dept, University Of Florida
July 28, 2022

This is an excellent book, well structured and clear content, whit a very practical approach on business and a lot of examples.

Dr Monica Acosta
Business Administration, Northern Arizona University
March 9, 2021

This text provides a comprehensive overview of Business Ethics with a firm grounding in the various ethical approaches.

Dr Robert Elkington
Business Administration , University of Ontario Institute of Technology
December 6, 2016

I did adopt this text for 2016 - 2017 but I am not finding it what I need. I had used Johnson, C. Managing Ethical Challenges of Leadership in the past and believe that was a better fit with my course. I just requested the text by Johnson on Organizational Ethics and hope to use that in 2017 - 2018.

Professor wanda foster
Business Administration , Concordia University
June 28, 2016

I am using this text this semester. It works well, but I still find that I need to supplement it with more "meaty" materials on financial, marketing, and human capital management. I have also found that the portion of Chapter 11 on global ethics was mainly geared toward social and environmental ethical issues. I needed more on corruption, bribery and negotiation with companies from different cultures.

Professor wanda foster
Business Administration , Concordia University
October 2, 2016

New chapters & case studies are good additions.

Professor Kelly King
Business, Tyler Junior College
April 4, 2016

Peter A. Stanwick

Peter A. Stanwick is an associate professor emeritus in the Department of Management and Entrepreneurship at Auburn University. His research has been published in various journals, including The Journal of Business Ethics, Management Decision, The Journal of Corporate Citizenship, The Journal of Corporate Accounting and Finance, Business Strategy and the Environment, Eco-Management and Auditing, American Business Review, International Journal of Commerce and Management, Southern Business Review, International Journal of Management, Journal of Business Strategies, Journal of Organizational Change Management, Journal of Business and Economic... More About Author

Sarah D. Stanwick

Sarah D. Stanwick is associate professor emerita in the School of Accountancy at Auburn University. Her research has been published in various journals, including The Journal of Business Ethics, Advances in Accounting, The Accounting Educators’ Journal, The Journal of Corporate Accounting and Finance, The CPA Journal, The Journal of Corporate Citizenship, Business Strategy and the Environment, Eco-Management and Auditing, and the International Journal of Commerce and Management. While at Auburn University, she has received two Daniel F. Breeden Endowments for Faculty Enhancement and a Pursell Ethics Grant. In addition, she received a... More About Author

Also available as a South Asia Edition.