Business ethics midterm

Question 1

Kohlberg’s theory of moral development

Answer 1

Stage 1: Obedience and Punishment. Stage 2: For self-benefit. Stage 3: For sake of reputation (good boy). Stage 4: Maintain social order. Stage 5: Conractual-Legalistic Orientation (people like to follow rules). Stage 6: Conscience/Principle Orientation

Question 2

Mill’s higher pleasures

Answer 2

Intellect, imagination, noble feelings, moral sentiments

Question 3

Mill’s lower pleasures

Answer 3

food, sleep, sex

Question 4

Friedman’s 5 arguments for corporations not being socially responsible

Answer 4

1. Social responsibility of business is to increase profits, not to provide employment, eliminate discrimination, avoid pollution, etc. To do anything but make profits is to preach socialism. 2. Businesses cannot have responsibility, because only people can have responsibilities. 3. Executive has obligation to stockholders, they are to act in accordance with their desires, making money. 4. No way for executive to know how to solve social ills, not his expertise. 5. Majority speaks through the law

Question 5

Basic trust

Answer 5

Trust that other people will act in certain kinds of standard ways, not to take advantage of their vulnerabilities. Has 2 conditions: 1. Commonality of motives associated with mutual acceptance of basic norms. 2. Consistency of behavior

Question 6

Guarded trust

Answer 6

When there are contracts and penalties in place to secure trust. Has the conditions of basic trust plus the knowledge of competence of the other party

Question 7

Extended trust

Answer 7

When you trust someone enough that there are no contracts or penalties in place. Has the three mentioned conditions plus openness/availability that you feel with the other party

Question 8

Caveat emptor

Answer 8

“Let the buyer beware!” Not telling the customer about the product, leaving it up to them to do the research and make the proper decision

Question 9

Paternalism

Answer 9

As a person of expertise, doing only what you know needs to be done, if someone wants a lot of work done but only needs one thing, you only do the one thing

Question 10

Limited paternalism

Answer 10

Using expertise to explain what the customer needs and letting him decide

Question 11

Information disclosure in sales (Holley)

Answer 11

1. Minimal information rule- the buyer is responsible for knowing info, dont tell anything he doesn’t specifically ask. 2. Modified minimal information rule- only tell proper safety rules. 3. Fairness rule- safety info plus giving info that the buyer could not reasonably be expected to know. 4. Mutual benefit rule- safety info plus giving buyer info needed to make reasonable judgment to buy or not. 5. Maximal info rule- give the buyer any info relevant

Question 12

When do you publicly whistleblow?

Answer 12

1. Need- a clear harm to society. 2. Proximity- whistleblower is in position to know and be involved. 3. Capability- chance of success. 4. Last resort- no other options

Question 13

Types of alienation (Marx)

Answer 13

1. One’s own labor. 2. From production. 3. From own body. 4. Humans from other humans

Question 14

Employment at will (EAW)

Answer 14

relationship exists as long as both parties agree they can be terminated at any time for any reason besides race, religion, sex, age, pregnancy, disabilities; as well as public policy exception, implicit contracts

Question 15

Free rider problem (Frank)

Answer 15

customers don’t feel responsible for their purchases, usually buy cheaper products despite its environmental costs

Question 16

Compliance-based programs vs. integrity-based programs

Answer 16

Compliance programs are primarily a legal concern. Integrity based programs are more than a legal concern, they have ethics instilled in the ethos of the company

Question 17

Federal Sentencing Guidlines

Answer 17

1. Having standards. 2. Assigned responsibility–adequate resources. 3. Due diligence in hiring. 4. Communications and training. 5. Monitoring, auditing, reporting. 6. Promotion and enforcement of ethical conduct. 7. Reasonable steps to prevent misconduct

Question 18

What contributes to moral muteness

Answer 18

1. Threat to harmony. 2. Threat to efficiency. 3. Threat to image of power and effectiveness

Question 19

Sarbanes oxley

Answer 19

1. Consequences for issuers. 2. Audit committee requirements. 3. Board and corporate officer requirements. 4. Accounting firm requirements. All items under these headings are things that were violated by Enron, other companies