Chapter 10 Flashcards
What is the definition of ethics, and what do ethics study and what do they deal with?
Ethics: a system of moral principles, quality or practice.
Ethics is the study of what is right and good for humans
Ethics deals with moral duty- acting according to a set of moral beliefs
What three platitudes express a statement of the idea that “good ethics makes good business?
Platitudes (tiresome old sayings)
- unethical companies rarely prosoer
- good ethics makes good business
- honesty is the best policy
What are the consequences of misbehaving as a corporation?
Bad reputation, stock market woes, por employee performance, loss of business/profits, government penalties
Which makes more money – bad businesses or good businesses?
Gooooooooood
But many companies that behave unethically make lots of money
What two things are wrong with the assertion that “good ethics make good business?”
- it is often not true
2. it has nothing to do with ethics
Be able to identify five consequences of the idea that “unethical behavior breeds cynicism.”
- we tend not to trust the person who behaved badly
- each detected lie tends to weaken our confidence in other persons besides the liar (one person fucks you over so you are weary of other people fucking you over)
- every bad act tends to infect the whole group
- the influence of a bad example can lower the morale of an entire community
- when a community/business gets a reputation for being unethical, other people don’t want to do business with them
If people behave differently than they know to be “right” what is it that psychologists say they would be prone to suffer?
Cognitive Dissonance
What does the maintenance of high ethical standards measure?
It measures our sympathy with our fellow humans, that there is some larger purpose at work
Who is Milton Friedman and what does he equate with economic freedom?
Famous economist from U of Chicago, equated economic freedom with political freedom
What does Friedman think is a “fundamental misconception of the character … of a free economy?”
The view that corporate officials and labor leaders have a social responsibility that goes beyond serving the interest of their stockholders/members
What does he state is the “one and only social responsibility of business”?
To use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game
What is the “nub” of Friedman’s assertion?
That the responsibility of business is “to make as much money for their stockholders as possible, so long as its legal.”
What objection is there to Friedman’s idea?
It has been tried and found wanting.
What is the problem with the assertion that “the business of business is money?”
It tends to focus attention on one effect of business: the money making effect.
What three things does business affect and what does failure to take all three into account lead to?
The economy, the society, and the environment. Failure to take all three into account leads to serious dislocations
When the goal of a business is to make as much money as possible, who is the main interested party? Who else?
The shareholder. But stakeholders are also interested.
What does a company using the stakeholder model consider shareholders?
Considers the shareholders as among the interested parties.
But also recognizes other concerns: there is nothing wrong with making a profit, and companies that recognize a community of stakeholder interests have no desire to be nonprofit organizations
What type of profit do such companies seek to make?
Satisfactory profit.
What are the two critiques of the Stakeholder Model from the political left and the political right?
Right: business people using it get distracted into doing something other than what business is for: making money, and then become philanthropists, thus wasting money
Left: it doesn’t go far enough, it fails to acknowledge many stakeholders and so it fails to compel the business to honor those interests
Who is Abraham Maslow and what concept did he develop?
American psychologist. Realized there was other reasons besides greed for unethical behavior, like self-esteem.
Developed the concept of humans’ “hierarchy of needs”
Be able to describe the five levels of the Hierarchy of Needs and what each constitutes.
(bottom to top)
Physiological Needs: breathing, eating, drinking
Safety Needs: job/financial security, safe from harm.
Social Needs: interaction with other people
Esteem Needs: internal or external.
• Internal: those related to self-esteem
• External: social status and recognition
Self-Actualization: quest of reaching ones full potential as a person. Unlike lower levels, this need is never fully satisfied.
What is capitalistic business generally very happy to reinforce?
Societies belief that consumption is a good thing – even patriotic.
What is the “construction of social reality” that business reinforces and how does it project it?
The mechanism by which business constructs social reality and it projects itself into our lives by primarily advertising.
What is broadly protected by the First Amendment?
Advertising/commercial speech
What did the 20th Century bring about in the United States?
A new social order in the us, overwhelmingly based on the principle of national commercial exchange.
Establishing and Maintaining an Ethical Business (p. 276-278).
What is the first necessary thing to establish and maintain an ethical standard of business?
You need to determine what ethical standards you aspire to, so you do not deviate from those standards
What must top management set?
An example in the firm, because employees are unlikely to be completely ethical unless they have a good example leading them.
Describe three ways ethical standards can be communicated to employees.
- some businesses have in house “code of ethics” that provide a guide to appropriate behavior
- some businesses articulate some general principles at employee orientation and staff meetings
- senior managements example needs to be watched closely
