Ethical Decision Making Flashcards
Business ethics
It comprises the principles, values, and standards that guide behavior in the world of business.
What is corporate governance?
A formal system of accountability and control of ethical and socially responsible behavior.
Where do stakeholders apply values and standards?
Through working conditions, consumer rights, environmental conservation, product safety, and proper information disclosure.
What are the two kinds of stakeholders and their purposes?
Primary stakeholders are those whose continued association is absolutely necessary for a firm’s survival (employees, customers, investors, and shareholders etc.)
Secondary stakeholders do not engage in transactions with a company and are not essential for its survival (AARP or specialty groups)
What is a stakeholder orientation?
The degree to which a firm understands and addresses stakeholder demands.
What are the three activities of the stakeholder orientation?
The organization-wide generation of data about stakeholder groups and assessment of the firm’s effects on these groups.
The distribution of this info throughout the firm.
The organization’s responsiveness as a whole to this intelligence.
What is social responsibility?
An organizational obligation to maximize its positive impact on stakeholders and to minimize its negative impact.
What are the four levels of social responsibility?
Economic
Legal
Ethical
Philanthropic
What is corporate citizenship?
The extent to which businesses strategically meet the economic, legal, ethical, and philanthropic responsibilities of it’s stakeholders.
Reputation
An organization’s greatest intangible asset with tangible value.
What are fudiciaries?
Persons placed in positions of trust who use due care and loyalty in acting on behalf of the best interests of the organization.
What is corporate governance?
A formal system to monitor accountability, oversight, and control.
The two types of directors?
Inside- corporate officers, consultants, major shareholders, or others who benefit directly from the organization’s success.
Outside- Persons who bring mor independence to the monitoring function. They are not bound by past allegiances, friendships, or a current role in the company. This prevents conflict of interest.
What is an ethical issue?
A situation, problem, or even an opportunity that requires discussion, thought, or investigation to make a decision.
What is collusion?
A secret agreement between two or more parties for a fraudulent, illegal, or deceitful purpose.
What is an ethical dilemma?
A problem, situation, or opportunity that requires an individual, group, or organization to choose among several wrong or unethical actions.
The two types of bribery?
Active- the person who gives the bribe.
Passive- the person who receives or accepts the bribe.
What is corporate intelligence?
A collection and analysis of information on markets, technologies, customers, and competitors, as well as on socioeconomic and external political trends.
The Kyoto Protocol
An international treaty on climate change committed to reducing emissions of carbon dioxide and five other greenhouse gases and to engaging in emissions trading if member signatories maintain or increase emissions of these gases.
What are the three categories of false or misleading advertisements?
Puffery- exaggerated advertising, blustering, and boasting upon which no reasonable buyer would rely on.
Implied Falsity- a tendency to mislead, confuse, or deceive the public.
Literal Falsity- Tests Prove: the advertisement cites a study or test that establishes the claim.
Bald Assertions: a claim that cannot be substantiated.
Duplicity and Guile
Duplicity- example: a customer who stages an accident and then seeks damages against the store.
Guile- example: a crafty customer who understands right/wrong behavior but uses tricks to obtain an unfair advantage.
Insider trading
Illegal insider trading is the buying or selling of stocks by insiders who possess material that is still not public.
Legal insider trading involves buying and selling stock in an insider’s own company, but not all the time.
Intellectual property
Involves the legal protection of intellectual properties such as music, books, and movies.
The three types of fraud
Accounting
Marketing
Consumer
What are the three dimensions required for an effective organizational practice of business ethics?
Legal- society’s codification of what is wrong and right.
Voluntary- includes the beliefs, values, and voluntary contractual obligations of a business.
Core practices- appropriate and common practices that help ensure compliance with legal requirements and societal expectations.
Norms
Norms dictate and clarify desirable behaviors through principles, rules, policies, and procedures.
What is civil law?
The rights and duties of individuals and organizations.
Criminal law
Prohibits specific actions-such as fraud, theft, or securities trading violations-but also imposes fines or imprisonment as punishment.
What are the laws and regulations that govern business activities?
Hint: there are five.
Regulation of competition Protection of consumers Promotion of equity and safety Protection of the natural environment Incentives to encourage organizational compliance programs to deter misconduct.
What is corporate espionage?
The act of illegally taking information from a corporation through computer hacking, theft, intimidation, sorting through trash, and through impersonation of organizational members.
Pro competitive legislation
Encourages competition and prevent activities that restrain trade.
What is Sustainability?
It meets the present needs without compromising future generations to meet their own needs.
What are gatekeepers?
Accountants, lawyers, financial rating agencies, and financial reporting services.
What is the Sarbanes-Oxley Act?
Establishes an oversight board to oversee the audit of public companies in order to protect the interests of investors and further the public interest in the preparation of informative, accurate, and independent audit reports for companies.
What are the five main duties of the Sarbanes-Oxley Act?
- Registration of public accounting firms
- Establishment of auditing, quality control, ethics, independence, and other standards relating to preparation of audit reports.
- Inspection of accounting firms.
- Investigations, disciplinary proceedings, and imposition of sanctions.
- Enforcement of compliance with accounting rules of the board, professional standards, and securities laws relating to the preparation and issuance of audit reports and obligations and liabilities of accountants.
Sections 404 has caused companies the most cost. Why?
- Requires that management create reliable internal financial controls.
- Management attest to the reliability of those controls and the accuracy of financial statements that result from those controls.
- That an independent auditor attests to the statements made.
The seven steps of the FSGO.
- A firm must develop and disseminate a code of conduct that communicates required standards and identifies key risk areas for organization.
- High-ranking personnel in the organization who are known to abide by the legal and ethical standards of the industry must have oversight over the program.
- No one with a known propensity to engage in misconduct should be put in a position of authority.
- A communications system for disseminating standards and procedures must also be put into place.
- Organizational communications should include a way for employees to report misconduct without fearing retaliation, such as an anonymous toll-free hotline or an ombudsman. Monitoring and auditing systems designed to detect misconduct are required.
- If misconduct is detected, then the firm must take appropriate and fair disciplinary action. Individuals both directly and indirectly responsible for the offense should be disciplined. In addition, the sanctions should be appropriate for the offense.
- After misconduct has been discovered, the organization must take steps to prevent similar offenses in the future. This usually involves making modifications to the ethical compliance program, additional employee training, and issuing communications about specific types of conduct.
The four benefits of philanthropy for society?
- Philanthropy improves the quality of life and helps make communities places where people want to do business, raise families, and enjoy life.
- Philanthropy reduces government involvement by providing assistance to stakeholders.
- It develops employee leadership skills.
- It also helps create an ethical culture and the values that can act as a buffer to organizational misconduct.
What is strategic philanthropy?
It is the synergistic and mutually beneficial use of an organization’s core competencies and resources to deal
with key stakeholders.
What are the six “spheres” of influence for individuals?
Workplace. Family. Religion. Legal system. Community. Profession.
Ethical issue intensity
The relevance or importance of an ethical issue in the eyes of the individual, work group, and/or organization.
What are the individual factors?
Gender. Education. Work experience. Nationality. Age. Locus of control.
Describe the types of locus of control.
External- future is based on luck, chance, and powerful people in the company. Go with the flow.
Internal- they control their own future. Masters of their universe.
The types of organizational factors and their purposes.
Corporate culture- a set of values, norms, and artifacts, including any ways of solving problems that employees share.
Ethical culture- corporate policy on ethics, top management’s leadership on ethical issues, the influence of coworkers, and the opportunity for unethical behavior.
Significant others- peers, managers, coworkers, and subordinates.
Obedience to authority- an employee who follows orders from superior employees.
What is opportunity?
Describes the conditions in an organization that limit or permit ethical or unethical behavior.
What’s the immediate job context?
Where they work.
Whom they work with.
The nature of the work.
The six types of leadership styles and their purposes?
The coercive leader- demands instantaneous obedience and focuses on achievement, initiative, and self-control.
Authoritative- inspires employees to follow a visor, facilitates change, and creates a strongly positive performance climate.
Affiliative- values people, their emotions, and their needs and relies on friendship and trust to promote flexibility, innovation, and risk taking.
Democratic- relies on participation and teamwork to reach collaborative decisions.
Pacesetting- attains or expects quick results from highly motivated individuals who value achievement and initiation.
Coaching- develops skills to foster long-term success, delegates responsibility, and skillfully issues challenging assignments.
What is the other way to classify leaders and their purposes?
Transactional- creates employee satisfaction through negotiating for desired behaviors or job performance.
Transformational- strives to raise employees’ level of commitment and to foster trust and motivation.
What are the seven habits of an ethical leader?
A strong personal character.
A passion to do right.
Are proactive.
Consider stakeholders’ interests.
Are role models for the organization’s values.
Are transparent and actively involved in organizational decision making.
Are competent managers who take a holistic view of the firm’s ethical culture.
What is moral philosophy?
Refers to the specific principles or rules that people use to decide what is wrong or wrong.
What is the concept of the economic value orientation?
It is associated with values that can be quantified by monetary means.
