Chapters 1-4 Flashcards
morals
a person’s personal philosophies about what is right or wrong
business ethics
comprises organizational principles, values, and norms that may originate from individuals or other organizations
principles
specific boundaries for behavior that should not be violated (human rights, freedom of speech)
values
enduring beliefs and ideals that are socially enforced
ethics
behavior or decisions made within a group’s values or morals (within corporate culture there are rules that determine right and wrong)
workplace integrity
the pressure to compromise organizational standards, observed misconduct, reporting of misconduct when observed, and retaliation against reports
moral dilemma
two or more morals in conflict with one another
value dilemma
two or more beliefs/ideals in conflict with one another
the 1960’s: consumer’s bill of rights
right to safety, right to be informed, right to choose, right to be heard
under john f kennedy there was an antibusiness trend that caused this event
the 1970’s
business ethics became a common expression
academic researchers sought to identify ethicals issues and help people act ethically
corporate social responsibility
an organization’s obligation to maximize its positive impact on stakeholders and minimize its negative impact
the 1980’s
business ethics reaches maturity
stakeholder theory was developed
defense industry initiative on business ethics and conduct
an organization developed to guide corporate support for ethical conduct
reagan-bush era
belief that self-regulation rather than regulation by gov’t was in the public’s best interest
members must undergo ethics training
the 1990’s
institutionalization of business ethics
Clinton continued to support self-regulation and free trade
federal sentencing guidelines for organizations (FSGO)
guidelines that codified into law incentives to reward organizations for taking action to prevent misconduct
the 2000’s
sarbanes-oxley: misconduct at Enron with Arthur Andersen in 2002
SOX & FSGO - institutionalized the need to discover and address ethical and legal risk
Obama inherited the great global financial recession from Bush
the 2010’s
dodd-frank wall street reform and consumer protection act - legislation that addressed some of the issues related to the financial crisis and recession, designed to make the financial services industry more ethical and responsible
the 2020’s
environmental social governance (ESG) - a framework for evaluation of firm performance in the areas of E,S, and G
firms and gov’t are needed to find solutions to sustainability issues
ethical culture
acceptable behavior as defined by the company and industry
ethics contributes to employee commitment
there is a willingness to sacrifice for the company
increases group creativity and job satisfaction
decreases turnover
less pressure to compromise ethical standards
ethics contributes to investor loyalty
provides a foundation for efficiency, productivity, and profits
ethics contributes to profits
leads to better business performance
corporate concern for ethical conduct is becoming a part of strategic planning toward obtaining the outcome of higher profitability
stakeholders
those who have a “stake” or claim in some aspect of a company’s products, operations, markets, industry, or outcomes
examples of stakeholders
customers
sharholders
employees
suppliers
gov’t agencies
communities
normative
identifies ethical guidelines that dictate how firms should treat stakeholders
descriptive
focuses on the firm’s behavior; addresses how decisions are made for stakeholder relationships
instrumental
describes what happens if firms behave in a particular way
primary stakeholders
those whose continued association and resources are absolutely necessary for a firm’s survival
secondary stakeholders
stakeholders who do not typically engage directly in transactions with a company and therefore are not essential to its survival
stakeholder interaction model
this approach recognizes other stakeholders and explicitly acknowledges that dialogue exists between a firm’s internal and external environments
stakeholder orientation
the degree to which a firm understands and addresses stakeholder demands
-must include activities to address stakeholder issues
the 4 levels of social responsibility
economic
legal
ethical
philanthropic
corporate citizenship
the extent to which businesses strategically meet the economic, legal, ethical, and philanthropic responsibilities place on them by various stakeholders
reputation
a corporation’s image and an intangible asset with tangible value
What does social responsibility rest on?
stakeholder orientation
-each stakeholder is given due consideration
corporate governance
the development or formal systems of accountability, oversight, and control
the stakeholder model
-places the board of directors in the position of balancing the interests and conflicts of a company’s various constituencies
duty of care (duty of diligence)
the legal obligation of an individual or organization to make informed and prudent decisions and avoid behavior that could cause harm to others
duty of loyalty
the obligation of individuals to make decisions that are in the best interest of the corporation and its stakeholders
accountability
how closely workplace decisions align with a firm’s stated strategic direction and its compliance with ethical and legal considerations
oversight
provides a system of checks and balances that limit employees’ and managers’ opportunities to deviate from policies and strategies aimed at preventing unethical and illegal activities
control
process of auditing, improving organizational decisions and actions
SHAREHOLDER model of corporate governance
founded in classic economic precepts, including the goal of maximizing wealth for investors and owners
STAKEHOLDER model of corporate governance
a broader view of the purpose of business that considers stakeholder welfare in tandem with corporate needs and interests
the role of boards of directors
they hold the ultimate responsibility for their firms’ success or failure, as well as the ethics of their actions
(FSGO holds them accountable for creating and ethical culture)
interlocking directorate
the concept of board members being linked to more than one company
executive compensation
how executives are compensated for their leadership, organizational service, and performance
implementing a stakeholder perspective
step 1: assessing the corporate culture
step 2: identifying stakeholder groups
step 3: identifying stakeholder issues
step 4: assessing organizational commitment to stakeholders and social responsibility
step 5: identifying resources and determining urgency
step 6: gaining stakeholder feedback
sustainability
the potential for the long-term well-being of the natural environment, including all biological entities
sustainable development
meeting the needs of the present without compromising the ability of future generations to meet their own needs, with an emphasis on the natural environment
ethical awareness
the ability to perceive an issue or dilemma involving principles, values, and appropriate behavior
stockholder evaluations diagram
stakeholders evaluate a company’s ethical issue awareness and their ability to make decisions to address ethical situations
climate change
the long-term variation in average weather patterns
kyoto protocol
an international treaty meant to curb global greenhouse gas emissions by having countries voluntarily reduce national outputs
the clean air act
used to push regulations placing limits on air pollution
one major goal is a 30% reduction in emissions from coal-powered plants by 2030
water pollution
one of the biggest contributors to illnesses in developing countries
land pollution
dumping of residential and industrial wastes, strip mining, poor forest conservation
-deforestation
-urban sprawl
-biodiversity - increasing pressure on wildlife, plants, and their habitats
environmental protection agency (EPA)
this agency’s mission is to protect human health and the environment
leadership in energy & environmental design (LEED)
a certification program that recognizes sustainable building practices and strategies
geothermal power
comes from the natural heat inside the earth, which is extracted by drilling into steam beds
green marketing
a strategy involving stakeholder assessment to create meaningful long-term relationships with customers while maintaining, supporting, and enhancing the natural environment
greenwashing
misleading a consumer into thinking a good or service is more environmentally friendly than it really is
stakeholder assessment
requires acknowledging and actively monitoring the environmental concerns of all legitimate stakeholders
ISO 14000
a comprehensive set of environmental standards that encourage a cleaner, safer, and healthier world developed by the International Organization for Standardization
mandated boundaries
externally imposed boundaries of conduct, such as laws, rules, regulations, and other requirements
core practice
documented best practices, often encouraged by legal and regulatory forces as well as industry trade associations
better business bureau (BBB)
a leading self-regulatory body that provides directions for managing customer disputes and reviews advertising cases
voluntary boundaries
includes the beliefs, values, and voluntary contractual obligations of a business
civil law
defines the rights and duties of individuals and organizations (including businesses)
criminal law
not only prohibits specific actions - such as fraud, theft, or securities trading violations - but also imposes fines or imprisonment as punishment for breaking the laws
procompetitive legislation
laws have been passed to prevents the establishment of monopolies, inequitable pricing practices, and other practices that reduce or restrict competition among businesses
consumer protection law
laws that protect consumers require businesses to provide accurate information about their goods and services and to follow safety standards
bureau of consumer protection
protects consumers against unfair, deceptive, or fraudulent practices
food and drug administration (FDA)
federal agency of the US department or health and human services that has strict standards for approving drugs
Title VII of the Civil Rights Act
prohibits discrimination in employment on the basis of race, sex, religion, color, or national origin
public company accounting oversight board (PCAOB)
monitors accounting firms auditing public corporations and establishes standards and rules for auditors in accounting firms
whistle-blower protection
employees of public companies and accounting firms are accountable to report unethical behavior
whistle-blower bounty program
whistle-blowers who report financial fraud receive between 10% to 30% of the fines and settlements collected
voluntary responsibilities of a business
improve communities
reduce gov’t involvement
develop employee leadership skills
foster an ethical culture
cause-related marketing
ties an organization’s products directly to a social concern through a marketing program
strategic philanthropy
the synergistic and mutually beneficial use of an organization’s core competencies and resources to deal with key stakeholders
social entrepreneurship
when an entrepreneur founds and organization with the purpose of creating social value
