Bus 220 Set 1

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Terms in this set (...)

Part of decision making at all levels of work and management
Ethics
Comprises organizational principles, values, and norms that may originate from individuals, organizational statements, or from the legal system that primarily guide individual and group behavior in business
Business Ethics
Values and judgements play a critical role when we make__?
Ethical decisions
Refer to a persons personal philosophies about what is right or wrong
Morals
Specific and pervasive boundaries for behavior that should not be violated
Principles
Enduring beliefs and ideals that are socially enforced
values
What are the top two most trusted industries in the world?
Technology and Automotive
Theological discussions of ethics emerged Year?
1960s
In what decade did social conscience emerge?
1960s
Who came up with the consumer bill of rights
John F Kennedy
What is the consumer bill of rights?
Right to safety
Right to be informed
Right to choose
Right to be heard
What decade did Consumer protection groups fight for legislation changes and who led the fight?
Ralph Nader in the 1960s
An organizations obligation to maximize positive impact and minimize negative impact on stakeholders
Corporate Social Responsibilty
In what decade did business ethics become an acknowledged field of study and firms establish ethics commities
1980s
Foundation for the Federal Sentencing Guidelines for Organizations to come in the 1990s
Defense Industry Initiative on Business Ethics and Conduct (DII)
Who introduced self regulation that changed the rules of business
Reagan
acceptable behavior as defined by the company and industry
ethical culture
Minimizing the need for enforced compliance. Maximize utilization of principles/ethical reasoning in difficult or new situations. These are the goals of the?
Ethical culture
Do companies need profits in order to meet their responsibilities?
Yes
Helps identify internal and external stakeholders. Helps monitor and respond to needs, values, and expectations of stakeholder groups
Stakeholder Framework
The formal system of accountability and control of ethical and socially responsible behavior
Corporate governance
Those who have a stake or claim in some aspect of a company's products, operations, markets, industry, and outcomes.
Stakeholders
What are the three approaches to stakeholder theory?
Normative
Descriptive
Instrumental
Principles and values help identify ethical guidelines that dictate how to treat stakeholders
Normative
Focuses on actual behavior, addressing decisions and strategies in stakeholder relationships
Descriptive
Examines stakeholder relationships and describes outcomes for particular behaviors
Instrumental
stakeholders whose continued association is absolutely necessary for a firms survival
Primary Stakeholders
Stakeholders who do not typically engage in transactions with the firm and are not essential to a firms survival
Secondary Stakeholders
What are the four levels of social responsibility
economic
legal
ethical
philanthropic
Strong sustained economic performance. Rigorous compliance. Ethical actions beyond what is legally required. Voluntary contributions to advance reputation and stakeholder commitment. these are the four interrelated dimensions of
corporate citizenship
is one of an organization's greatest intangible assets with tangible value
reputation
The four Social Responsibility Issues
Social
Consumer Protection
Sustainability
Corporate Governance
Deals with concerns that affect the welfare of our entire society, associated with the most common good
Social
The company has the responsibility of taking precautions to prevent consumer harm
Consumer Protection
Business can no longer afford to ignore the natural environment as a stakeholder
sustainability
To maximize positive outcomes that meet stakeholders needs is the purpose of a
stakeholder orientation
What is the formal system of Corporate Governance
Accountability
Oversight
Control
How closely workplace decisions align with a firms strategic direction
Accountability
A system of checks and balances to minimize opportunities for misconduct
Oversight
The process of auditing and improving organizational decisions and actions
Control
Founded in classic economic precepts.
Maximizing wealth for investors and owners. Which model?
Shareholder Model
A broader view of the purpose of business.
Stakeholder model
Holds final responsibility for its firms success, failure, and ethical actions
Board of directors
Is the concept of board members being linked to more than one company
Interlocking Directorate
How do you implement a stakeholders perspective?
Asses the corporate culture
Identify stakeholder groups
Identify stake holder issues
Assessing commitment to CSR
Identifying resources and determining urgency
Gaining stakeholder feedback
is a problem, situation,
or opportunity that requires an individual
or group to choose among actions
ethical issue
Uncompromising adherence to
ethical values
Integrity
Truthfulness or trustworthiness
Telling the truth to the best of your knowledge
Honesty
A lack of integrity, incomplete
disclosure, or an unwillingness to tell the truth
Dishonesty
The quality of being just, equitable,
and impartial
Fairness
How wealth or income is distributed
Equality
Occurs when an action that has an
effect upon another is returned
Reciprocity
The tradeoff between equity and
efficiency
Optimization
is a problem, situation, or
opportunity that requires an individual or
group to chose among several wrong or
unethical actions
ethical dilemma
One of the most common ethical
problems
Abusive or Intimidating
Behavior
Can be physical threats, false accusations,
profanity, insults, harshness, ignoring
someone, or unreasonableness
Abusive or Intimidating
Behavior
Three types of lies
Joking without malice
Commission lying
Omission lying
is creating a false
perception with words that deceive the
receiver
➢ Creating noise
Commission lying
is intentionally not
informing channel members of problems
relating to a product that affects awareness,
intention, or behavior
Omission lying
Exist when an individual must choose
whether to advance his/her personal
interests, those of the organization, or
some other group
Conflicts of
Interest
The practice of offering something in
order to gain an illicit advantage
Bribery
The person who promises or gives
the bribe commits the offense (type of bribery)
Active bribery
An offense committed by the
official who receives the bribe (type of bribery)
Passive bribery
Legal as long as
they are small (type of bribery)
Facilitation payments
The collection and analysis of
information on...
❖ Markets
❖ Technologies
❖ Customers and competitors
❖ Socioeconomic and external political trends
Corporate
Intelligence
Three Corporate intelligence models
Passive monitoring system for early
warning
❖ Tactical field support
❖ Support dedicated to top management
strategy
A repeated, unwanted behavior of a
sexual nature perpetrated upon an
individual by another
Sexual
Harassment
A personal, loving, and/or sexual
relationship with someone with whom
you share professional responsibilities
Dual
Relationship
The
relationship causes a conflict of interest or
impairment of professional judgment
Dual
Relationship
Any purposeful communication that
deceives, manipulates, or conceals facts
in order to create a false impression
Fraud
Top Method of Initial Detection of
Operational Frauds
Tip
The process of dishonestly creating,
distributing, promoting, and pricing products
Marketing
Fraud
Exaggerated advertising claims,
blustering, and boasting
Puffery
An advertising message that
misleads, confuses, or deceives the public
Implied falsity
Claims can be divided into tests
prove (establishment claims) and bald assertions
(non-establishment claims)
Literally false:
When consumers attempt to deceive
businesses for personal gain
Consumer
Fraud
involves an employee who helps
a consumer commit fraud
Collusion
involves a consumer duping a
store
Duplicity
is associated with a person who uses
tricks to obtain an unfair advantage
Guile
Involves legally buying and
selling stock in an insider's own company, but not all
the time
Legal insider trading
The buying or selling of
stocks by insiders who possess material that is not
public
Illegal insider trading
Involve the legal protection of intellectual
properties
Intellectual Property
Rights and Privacy
Three dimensions of institutionalization
Voluntary practices
Core practices
Mandated boundaries
Beliefs, values, and
voluntary contractual obligations of a business
Voluntary practices
Giving back to communities and
causes
Philanthropy
Documented best practices, often
encouraged by legal and regulatory forces and
trade associations
Core practices
Externally imposed
boundaries of conduct (e.g. laws, rules,
regulations and other requirements)
Mandated boundaries
Government established laws/regulations
➢ Set minimum standards for responsible behavior
Legal
Compliance
Elements of an
Ethical Culture (Diagram)
Center - Culture
Middle Ring - values, norms, artifacts, behavior
Outer ring - Voluntary actions, governance, core practices, legal compliance
defines the rights and duties of
individuals and organizations
Civil law
prohibits specific actions and
imposes punishments for breaking the law
Criminal law
Laws establish the basic ground rules for
responsible business activities
Mandated Requirement for
Legal Compliance (anti-trust laws)
Laws passed to prevent monopolies,
inequitable pricing, and other practices
that reduce or restrict competition
Laws Regulating
Competition
Sometimes called _____ because they encourage
competition and prevent activities that
restrain trade
procompetitive
legislation
require businesses
provide accurate information about products
and services and follow safety standards
Consumer protection
guards
against unfair, deceptive, or fraudulent practices
FTC's Bureau of Consumer Protection
regulates food safety, human drugs, and
tobacco, among other things
FDA
is the glue that holds businesses
and their stakeholders together
Trust
Overseers of business actions
➢ Accountants, regulators, lawyers, financial rating
firms, auditors
➢ Critical in providing accurate information to
stakeholders
Gatekeepers
Measure and disclose financial
information to the public
➢ Assure accuracy
❖ Some
Accountants
Assess financial risk and express that
risk through letter ratings from "AAA"
to "C"
Risk
Assessors
Established a system of federal oversight
of corporate accounting practices
The Sarbanes-Oxley
(SOX) Act
authority to monitor
accounting firms that audit public companies
Public Company Accounting Oversight
Board (PCAOB)
Reduces conflict of interest and increases
accountability
❖ Some legal protection for whistleblowers
❖ Jumpstart Our Business Startups (JOBS) Act
The Sarbanes-Oxley
(SOX) Act
Seeks to improve financial regulation,
increase oversight, and prevent excessive
risk-taking, deceptive practices and lack of
oversight
Dodd-Frank Wall Street Reform and
Consumer Protection Act
Instituted a whistle-blower bounty program
Dodd-Frank Wall Street Reform and
Consumer Protection Act
urges organizations to develop
and implement compliance programs
Federal Sentencing Guidelines for
Organizations
Focus on sound organizational practices
and integrity for performance measures
Highly Appropriate
Core Practices
Are most ethical issues financial?
No
Ties an
organization's product(s) to a social concern
through a marketing program
Voluntary
Responsibilities
The synergistic and
mutually beneficial use of core competencies
and resources to deal with stakeholders, benefit
the company and society
Strategic philanthropy:
Involves embedding values, norms, and
artifacts in organizations, industries, and
society
Institutionalization
in Business Ethics
The perceived relevance or importance
of an ethical issue to the individual,
work group, and/or organization
Ethical-Issue
Intensity
Reflects the ethical sensitivity of the
individual and/or work group
❖ Triggers the ethical decision making process
Ethical-Issue
Intensity
Relates to a person's
perception of social pressure and the harm
his/her decision will have on others
Moral intensity
People base their ethical decisions on their
own values and principles of right or wrong
Individual
Factors
Relates to individual differences in
relation to a general belief about how
one is affected by internal versus
external events or reinforcements
Locus of
Control
Managers with _________ go with the flow because
that's all they can do
External locus of control
Managers with __________ believe they can control
events; are masters of their destinies and trust in
their capacity to influence their environment
Internal locus of control
A set of values, norms,
and artifacts that members of an
organization share
Corporate culture
Reflects whether the firm has an
ethical conscience; is a function of many factors
Ethical culture
Those who have
influence in a work group
Significant others
Significant others examples
peer, coworker, manager, subordinate
Helps to explain
why many employees unquestioningly
follow superior's orders
Obedience to authority
The conditions in an organization that
limit/permit ethical/unethical behavior
Opportunity
Where employees
work, with whom they work, and the
nature of the work
Immediate job context
How
organizational decision makers should
approach an issue
Normative approaches:
approach that
examines how organizational decision makers
approach ethical decision making
descriptive
Concepts like fairness and justice are highly
important in a ______ stucture
normative
normative =
ideal standard
are central to an organization and
provide direction for action
Core values
takes into
account the political realities outside the
legal realm in the form of industry
standards
Normative business ethics
affects how a company operates
as well as the risks employees take for the
good of the firm
Competition
Foundation
for Normative Values
Social institutions include religion,
education, and individuals such as the
family unit
was one of the most influential
philosophers in his research on how
principles support the concept of justice
John Rawls
A thought experiment
that examined how individuals would
formulate principles if they did not know
what their future position in society would
be
Veil of ignorance
Two main principles of justice (Rawl)
Liberty principle
Difference principle
States that
each person has basic rights that are compatible
to the basic liberties of others
Liberty principle (equality principle):
States that economic and
social equalities (or inequalities) should be
arranged to provide the most benefit to the
least-advantaged members of society
Difference principle
result in business ethics
evaluations and decisions
Ethical issue intensity, individual factors,
and opportunity
The specific principles or values people
use to decide right from wrong
Moral Philosophy
Defined
Person-specific
❖ Guidelines for determining how to settle
conflicts and optimize mutual benefit
❖ Provide direction in formulating strategies
and resolving ethical issues
Moral Philosophy
The father of free market capitalism
➢ Developed the idea of the invisible hand
Adam Smith
(Who)
Markets reward or punish for unethical conduct
without the need for government regulation
➢ Currently the dominant form of capitalism
Milton Friedman
Values that
can be quantified by monetary means
➢ If an act produces value, accept it as ethical
Economic value orientation
Places special value on ideas and
ideals as products of the mind
Idealism
The view that an external world
exists independent of our perceptions
Realism
Everyone is guided by self-interest, competitive
Realism
Negative correlation to ethical decision-making
Realism
Positive correlation to ethical decision-making
Idealism
believe that only one thing is
intrinsically good
Monists
Pleasure is the ultimate good
Hedonism
believe that no one thing is
intrinsically good
Pluralists
reject the ideas that
➢ Ends can be separated from the means
➢ Ends, purposes, or outcomes are intrinsically good in
and of themselve
Instrumentalists
Focus on the end result
of actions and the goodness or happiness
created by them
Goodness theories
Emphasize the means
and motives by which actions are justified
Obligation theories
Obligation theories are Divided into two categories:
Teleology
Deontology
Considers acts as morally right or
acceptable if they produce a desired
result
Teleology
assess the moral
worth of a behavior by looking at the
consequences
Teleology
Two important teleological philosophies are
egoism and utilitarianism
defines right or acceptable behavior
in terms of consequences to the individual
➢ Maximizes personal interests
Egoism
Take a long-term
perspective and allow for the well-being of
others though their own self-interests
remain paramount
Enlightened egoists
seeks the greatest good
for the greatest number of people
Utilitarianism
Cost - Benefit analysis
Utilitarianism
Determine behavior
based on principles designed to promote
the greatest utility
Rule utilitarians
Examine a specific action
itself; not the rules governing it
Act utilitarians
Moral philosophies focusing on the
rights of individuals and on the
intentions associated with a particular
behavior
Deontology
Greek Word for ethics
Deontology
Categorical Imperative (Who)
Kant
Ethical acts can be viewed by everyone and the
rationale behind the act is suitable as a universal
principle
Categorical Imperative
Conformity to general
moral principles determines ethicalness
Rule deontologists
Actions are the proper
basis on which to judge morality
Act deontologists
Individuals and groups derive
definitions of ethical behavior
subjectively from experience
Relativist
Perspective
Relates to
observations of other cultures
Descriptive relativism
Proposes people
see situations from their own perspectives
Metaethical relativism
Assumes one
person's opinion is as good as another's
Normative relativism
Ethical behavior follows conventional
moral standards and compares behavior
against a standard "good" moral character
Virtue
Ethics
Fair treatment and due reward in
accordance with ethical or legal standards
Justice
An evaluation of the
results of a business relationship
Distributive justice
Considers the processes
and activities that produce desired outcomes
Procedural justice
Based on relationships
between organizational members, including
employees and managers
Interactional justice
Individuals use different moral
philosophies for personal decisions than
they use for work-related decisions
Moral Philosophy and
Ethical Decision-Making
This whole idea is important because it showed that individuals can change their values by moral development
Kohlberg's
Model
Illegal acts committed for personal and/or
organizational gain by abusing the trust and
authority associated with a given position
White Collar
Crime