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Arts and Humanities
Ethics Exam 1
Terms in this set (80)
Who does unethical behavior hurt?
Go out of business, the entire community can be hurt, families of employees, investors and suppliers, individuals involved could potentially go to prison.
What is a stakeholder?
Everyone that the decision affects.
Failure to consider stakeholders can result in?
the long term sustainability of the organization.
Why care about ethics?
Can cause financial and marketing risks, company can go out of business or employees to jail, repuation can provide competitive advantage, consumers can boycott unethical behavior, credible organizations do better in the long-run.
Sarbanes-Oaxley requires what?
1. Honest and ethical conduct
2. Full fair, accurate, timely, and understandable disclosure in the reports.
3. Compliance with applicable governmental rules.
What is ethics?
They study of how human beings should properly live their lives.
How do you make ethical choices?
Through careful and reasoned decision making.
Who is we?
individuals or collectively
Companies core values
beliefs and principles that provide the ultimate guide in its decision-making
Why is legal compliance insufficient?
1. Is the law itself ethical?
2. Societies that value individual freedom will be reluctant to legally require more that just an ethical minimum.
3. Telling business that its ethical responsibilities end with obedience to the law is inviting more legal regulation.
4. The law can't anticipate every enw dilemma
5. compliance is not enough
How is ethical decision making different from other decision making?
1. Ethics is practical and normative.
2. Ethics is a vital element of practical reasoning (what we should do)
3. It is in persuit of truth
what we should do
what we should believe
Ethical theories :
are patterns of thinking, or methodologies, to help us decide what to do
What is the ethical decision making process?
1. Determine the facts
2. identify ethical issues involved
3. identify stakeholders
4. consider the available alternatives
5. consider how a decision affects stakeholders
6. make a decision
7. monitor and learn from the outcome
shortsightedness about values, the inability to recognize ethical issues
results from focusing failures
means by which ethical issues might go unnoticed
Element that distinguishes good people who make ethically responsible decisions from good people who do not
2 ways in which responsible decision making can go wrong
People can simply choose to do something unethical.
Well-intentioned people fail to choose ethically
Considering only limited alternatives
select the alternative that satisfies minimum decision criteria
Other ethical stumbling blocks
USUAL SUSPECTS FOR EXPLAINING UNETHICAL CONDUCT
Enormous amounts of corporate executive compensation.
Lack of oversight of corporate executive decisions.
Significant distance between decision makers and those they impact.
Set of ethical values that has not yet caught up to technological advances.
The most serious challenge we all face
Making ethically responsible decisions throughout one's life
Personal integrity lies at the heart of such individual decision-making
What kind of person am I?
What are my values?
What do I stand for
Reasons that guide an individual's ethical judgement fall into three main catagories
3. Personal Character
an attempt to provide a systematic answer to the fundamental question, How should we live our lives?
Directs us to decide based on overall consequences of our acts
Deontological ethical traditions
Direct us to act on the basis of moral principles such as respecting human rights.
Directs us to consider the moral character of individuals and how various character traits can contribute to, or obstruct, a happy and meaningful human life.
One movement within utilitarian thinking invokes the tradition of
Claims that free and competitive markets are the best means for attaining utilitarian goals
SHORTCOMINGS OF UTILITARIAN ETHICS
Forces us to examine the outcomes of our decisions.
It is difficult to know everyone who will be affected by our decisions and how they are impacted.
It does not exhaust the range of ethical concerns.
ethical frameworks are principle-based.
It supplements the utilitarian approach.
It tells us that there are some rules that we ought to follow even if doing so prevents good consequences from happening or even if it results in some bad consequences.
insure the integrity and proper functioning of the economic, legal, or financial system.
Rules which are derived from various institutions in which we participate, or from various social roles that we fill.
Role-based rules (Business)
According to Immanuel Kant, German philosopher, there is essentially one fundamental ethical principle that we should follow
Respect the dignity of each individual human beingAct according to those rules that could be universally agreed to by all people.
Treat each person as end in themselves and never only as means to our own ends.
Two related rights have emerged as fundamental within philosophical ethics
If autonomy, or "self-rule," is a fundamental characteristic of human nature, then the freedom to make our own choices deserves special protection as a basic right.
Since all humans possess this fundamental characteristic, equal treatment and equal consideration is also a fundamental right.
is a tradition within philosophical ethics that seeks a full and detailed description of those character traits, or virtues, that would constitute a good and full human life.
An ethics of virtue shifts the focus from questions about
what a person should do, to a focus on who that person is
WHAT IS CORPORATE CULTURE?
A shared pattern of beliefs, expectations and meanings that influence and guide the thinking and behaviors of the members of that organization.
It shapes the people who are members of the organization.
It is also shaped by the people who comprise it.
If you join a firm with a culture that supports other values than those with which you are comfortable, there will be values conflicts, for better or worse.
No culture, in business or elsewhere, is static.
Culture is present in the following elements
Tempo of work
The organization's approach to humor
Methods of problem-solving
The competitive environment
Where do we get our habits and character?
We can choose to develop some habits rather than others.
Our habits are shaped and formed by culture.
Traditional or Compliance Based
financial account focus
policies and producers focus
multiyear audit coverage
budgeted cost center
focus on policies, transactions, and compliance
Progressive or Value based Programs
risk identification, process improvement
risk management focus
continual risk reassessment coverage
accountability for performance improvement results
opportunities for other management positions
focus on goals, strategies, and risk management process
Values-based organizations have
codes of conduct; codes are rooted in a statement of values and it is presumed that the code includes mere examples of the values' application.
The argument in favor of a values-based culture
A compliance culture is only as strong and as precise as the rules with which workers are expected to comply.
A firm can only have a certain number of rules and the rules can never unambiguously apply to every conceivable situation
The goals of a traditional compliance-oriented program may include
Meeting legal and regulatory requirements.
Minimizing risks of litigation and indictment.
Improving accountability mechanisms
The goals of a more evolved and inclusive ethics program may entail a broader and more expansive application to the firm, including
Maintaining brand and reputation.
Recruiting and retaining desirable employees.
Helping to unify a firm's global operations.
Creating a better working environment for employees.
Doing the right thing in addition to doing things right.
If an executive is "quietly ethical" within the confines of the top management team
they are not likely to be perceived as an ethical leader.
How can we distinguish between effective leaders and ethical leaders?
Effective leaders achieve their goals through threats, intimidation, harassment and coercion.
Ethical leaders lead using more amenable interpersonal means such as modeling ethical behavior, persuasion, or using the impact of one's institutional role.
Ethical leadership embodies
utilitarianism and deontological frameworks.
It is the leader's responsibility to ensure
that the firm is guided by some set of organizing principles that can guide employees in their decision-making processes.
CODE OF CONDUCT
It is a statement of values.
Before affecting the culture through a code of conduct, a firm must first determine its mission so that decision makers have direction when dealing with dilemmas and other ethical challenges.
In the absence of other values, the only value is profit - at any cost.
A firm sends a clear message that a worker should do whatever it takes to reap profits.
A code of conduct delineates this foundation both for internal stakeholders and external stakeholders.
The code has the potential to:
Enhance corporate reputation.
Provide concrete guidance for internal decision-making.
Creating a built-in risk management system.
Serves as an articulation of the fundamental principles at the heart of the organization.
Guides all decisions, without abridgment.
No decision should ever breach the underlying mission as an ultimate dictate.
One of the most determinative elements of integration is
communication, without it, there is no clarity of purpose, priorities or process.
To explore the effectiveness of a corporation's integration process, consider:
Whether incentives are in the right place to encourage ethical decision making.
Whether ethical behavior is evaluated during a worker's performance review.
Disclosure of unethical or illegal activities to someone who is in the position to take action to prevent or punish the wrongdoing.
It can expose and end unethical activities, but it can also seem disloyal, it can harm the business, and it can extract significant costs on the whistleblower.
Whistleblowing can occur internally or externally.
Since, external whistleblowing can be so harmful to both the whistleblower and to the firm itself, internal mechanisms for reporting wrongdoing are preferable for all concerned.
Signs of a potentially damaging or ethically-challenged corporate culture - referred to as a "toxic" culture
Lack of any generally accepted base values for the organization, as discussed above.
How does the firm treat its customers, suppliers, clients, workers?
The management of its internal and external relationships.
How does the firm manage its finances?
Acts of an organization, identified by the USSC guidelines, which can serve as due diligence in preventing crime and the minimal requirements for an effective compliance and ethics program are
Standards and procedures
Responsibility of board and other executives; adequate resources and authority
Preclusion from authority: prior misconduct
Communication and training
Monitoring, evaluation, reporting processes
Incentive and disciplinary structures
Response and modification mechanisms
CORPORATE SOCIAL RESPONSIBILITY
CSR refers to the responsibilities that a business has to the society in which it operates
From an economic perspective
A business is an institution that exists to produce goods and services demanded by society and, by engaging in this activity, the business creates jobs and wealth that benefit society further.
The law has created a form of business called corporations, which limits the liability of individuals for the risks involved in the business activities.
ECONOMIC MODEL OF CSR
It hold that business' sole duty is to fulfill the economic functions businesses were designed to serve.
According to this model, the social responsibility of business managers is simply to pursue profit within the law.
Profit is a direct measure of how well a business firm is meeting society's expectations
Profit is an indication that business is efficiently and successfully producing the goods and services that society demands.
This model denies that business has any social responsibilities beyond the economic and legal ends for which it was created.
It has its roots in the utilitarian tradition and in neoclassical economics.
Primary social responsibility of business managers: Pursue maximum profits for shareholders.
By pursuing profits, business managers will allocate resources to their most efficient uses.
Consumers who most value a resource will be willing to pay the most for it; so profit is the measure of optimal allocation of resources.
The pursuit of profit will continuously work towards the optimal satisfaction of consumer demand: Optimal social good (Utilitarian interpretation)
Different meanings of the word responsible
Reliable or trustworthy.
Attributing something as a cause for an event or action.
Attributing liability or accountability for some event or action, creating an obligation to make things right again.
Responsibility as accountability: Heart of CSR
Actions for which a business can be held accountable.
To be concerned with society's interests that should restrict or bind business's behavior.
What a business should or ought to do for the sake of society, even if this comes with an economic cost.
Three different types of responsibilities, on a scale from more to less demanding or binding:
Responsibility not to cause harm to others.
To prevent harm even in those cases where one is not the cause.
To do good (Volunteer and charitable work)
PHILANTHROPIC MODEL OF CSR
It holds that, like individuals, business is free to contribute to social causes as a matter of philanthropy.
Business has no strict obligation to contribute to social causes; but it can be a good thing when they do so.
Business has no ethical obligations to serve wider social goods.
Business should be encouraged to contribute to society in ways that go beyond the narrow obligations of law and economics.
Within the philanthropy model, there are occasions in which charity work is done because:
It brings the firm good public relations.
It provides a helpful tax deduction.
It builds good-will and/or a good reputation within the community
SOCIAL WEB MODEL OF CSR
It views business as a citizen of the society in which it operates and, like all members of a society, business must conform to the normal ethical duties and obligations that we all face.
According to philosopher Norman Bowie, beyond the economic view's duty to obey the law, business has an equally important ethical duty to respect human rights.
Respecting human rights: "Moral minimum"
It is expected of every person, whether they are acting as individuals or within corporate institutions.
Bowie identified his approach as a "Kantian" theory of business ethics
Kantian" framework of business ethics:
Bowie began with the distinction between the ethical imperatives to use no harm, to prevent harm, and to do good.
People have a strong ethical duty to cause no harm, and only a prima facie duty to prevent harm or to do good.
In Bowie's view, the obligation to cause no harm overrides other ethical considerations.
The pursuit of profit legitimately can be constrained by the duty to cause no harm.
Managers are the agents of stockholder-owners and their duty to stockholders over-rides the ethical imperatives to prevent harm, and to do good.
According to Bowie, business has a social responsibility to
respect the rights of its employees, even when not specified or required by law.
Right to safe and healthy workplaces
Right to privacy
Right to due process
According to Bowie, business has an ethical duty
to respect the rights of consumers, even when not specified in law.
(in Social web model)
Every business decision affects a wide variety of people, benefiting some and imposing costs on others.
The economic model argues that the firm should be managed for the sole benefit of stockholders
The stakeholder theory argues, on factual, legal, economic, and ethical grounds, that this is an inadequate understanding of business.
Stakeholder theory argues that the narrow economic model fails both as an accurate descriptive and as a reasonable normative account of business management.
Factual, economic considerations diminish the plausibility of the economic model.
In its Kantian formulation, stakeholder theory argues that
the overriding moral imperative is to treat all people as ends and never as means only
Stakeholder theory of corporate social responsibility is proven ethically superior than the classical model.
According to Freeman
The stakeholder theory does not give primacy to one stakeholder group over another, though there will be times when one group will benefit at the expense of others.
The management must keep the relationships among stakeholders in balance.
Stakeholders theory recognizes:
Some stakeholders have different power and impact on decisions than others.
Organizations have distinct missions, priorities and values, affecting the final decisions. Therefore, social responsibility would require decisions to prioritize competing and conflicting responsibilities
INTEGRATIVE MODEL OF CSR
Non-profit organizations: Pursue social ends as the very core of their mission.
Examples: NGOs, foundations, professional organizations, schools, colleges, and government agencies.
Some for-profit organizations have social goals as a central part of the strategic mission of the organization.
Example: Grameen bank
The implications of sustainability in the Integrative Model of CSR
Sustainability holds that a firm's financial goals must be balanced against, and perhaps even over-ridden by, environmental considerations.
Defenders of sustainability point out that all economic activity exists within a biosphere that supports all life.
They argue that present model of economics is already running up against the limits of the biosphere's capacity to sustain life.
The success of a business must be judged not only against the financial bottom line of profitability, but also against the ecological and social bottoms lines of sustainability.
A firm that is environmentally unsustainable — In the long-term, financially unsustainable.
CSR-related activities can improve profitability by
by enhancing a company's standing among its stakeholders, including consumers and employees.
The positive impact on the bottom line stems from customer preference and employee preference.
The practice of attending to the "image" of a firm.
There is nothing inherently wrong with managing a firm's reputation; the failure to do so might be a poor business decision.
But observers could challenge firms for engaging in CSR activities solely for the purpose of impacting their reputations.
The challenge is based on the fact that reputation management often works.
Essay question on morals, legal, integrity, and ethics
morals: a person's standards of behavior or beliefs concerning what is and is not acceptable for them to do.
legal: you do it because it is the law. Set standards, however, they cant make everything fall into the law.
integrity: the quality of being honest and having strong moral principles; moral uprightness
Ethics: how people should act
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