Chapter 10

Question 1

What is the definition of ethics, and what do ethics study and what do they deal with?

Answer 1

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

Question 2

What three platitudes express a statement of the idea that “good ethics makes good business?

Answer 2

Platitudes (tiresome old sayings)

1. unethical companies rarely prosoer
2. good ethics makes good business
3. honesty is the best policy

Question 3

What are the consequences of misbehaving as a corporation?

Answer 3

Bad reputation, stock market woes, por employee performance, loss of business/profits, government penalties

Question 4

Which makes more money – bad businesses or good businesses?

Answer 4

Gooooooooood

But many companies that behave unethically make lots of money

Question 5

What two things are wrong with the assertion that “good ethics make good business?”

Answer 5

1. it is often not true

2. it has nothing to do with ethics

Question 6

Be able to identify five consequences of the idea that “unethical behavior breeds cynicism.”

Answer 6

1. we tend not to trust the person who behaved badly
2. 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)
3. every bad act tends to infect the whole group
4. the influence of a bad example can lower the morale of an entire community
5. when a community/business gets a reputation for being unethical, other people don’t want to do business with them

Question 7

If people behave differently than they know to be “right” what is it that psychologists say they would be prone to suffer?

Answer 7

Cognitive Dissonance

Question 8

What does the maintenance of high ethical standards measure?

Answer 8

It measures our sympathy with our fellow humans, that there is some larger purpose at work

Question 9

Who is Milton Friedman and what does he equate with economic freedom?

Answer 9

Famous economist from U of Chicago, equated economic freedom with political freedom

Question 10

What does Friedman think is a “fundamental misconception of the character … of a free economy?”

Answer 10

The view that corporate officials and labor leaders have a social responsibility that goes beyond serving the interest of their stockholders/members

Question 11

What does he state is the “one and only social responsibility of business”?

Answer 11

To use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game

Question 12

What is the “nub” of Friedman’s assertion?

Answer 12

That the responsibility of business is “to make as much money for their stockholders as possible, so long as its legal.”

Question 13

What objection is there to Friedman’s idea?

Answer 13

It has been tried and found wanting.

Question 14

What is the problem with the assertion that “the business of business is money?”

Answer 14

It tends to focus attention on one effect of business: the money making effect.

Question 15

What three things does business affect and what does failure to take all three into account lead to?

Answer 15

The economy, the society, and the environment. Failure to take all three into account leads to serious dislocations

Question 16

When the goal of a business is to make as much money as possible, who is the main interested party? Who else?

Answer 16

The shareholder. But stakeholders are also interested.

Question 17

What does a company using the stakeholder model consider shareholders?

Answer 17

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

Question 18

What type of profit do such companies seek to make?

Answer 18

Satisfactory profit.

Question 19

What are the two critiques of the Stakeholder Model from the political left and the political right?

Answer 19

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

Question 20

Who is Abraham Maslow and what concept did he develop?

Answer 20

American psychologist. Realized there was other reasons besides greed for unethical behavior, like self-esteem.
Developed the concept of humans’ “hierarchy of needs”

Question 21

Be able to describe the five levels of the Hierarchy of Needs and what each constitutes.

Answer 21

(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.

Question 22

What is capitalistic business generally very happy to reinforce?

Answer 22

Societies belief that consumption is a good thing – even patriotic.

Question 23

What is the “construction of social reality” that business reinforces and how does it project it?

Answer 23

The mechanism by which business constructs social reality and it projects itself into our lives by primarily advertising.

Question 24

What is broadly protected by the First Amendment?

Answer 24

Advertising/commercial speech

Question 25

What did the 20th Century bring about in the United States?

Answer 25

A new social order in the us, overwhelmingly based on the principle of national commercial exchange.

Question 26

Establishing and Maintaining an Ethical Business (p. 276-278).
What is the first necessary thing to establish and maintain an ethical standard of business?

Answer 26

You need to determine what ethical standards you aspire to, so you do not deviate from those standards

Question 27

What must top management set?

Answer 27

An example in the firm, because employees are unlikely to be completely ethical unless they have a good example leading them.

Question 28

Describe three ways ethical standards can be communicated to employees.

Answer 28

1. some businesses have in house “code of ethics” that provide a guide to appropriate behavior
2. some businesses articulate some general principles at employee orientation and staff meetings
3. senior managements example needs to be watched closely