Ethics, Corporate Social Responsibility, and Sustainability

Question 1

Define ethics

Answer 1

accepted principles of right or wrong that govern the conduct of a person, members of a profession or the actions of an organization. Ethics involves an active process of applying values, which may range from religious principles to customs and traditions.

Question 2

Define business ethics

Answer 2

the accepted principles of right or wrong governing the conduct of businesspeople.

Question 3

Ethical strategy

Answer 3

a strategy or course of action that does not violate these accepted principles.

Question 4

The relationship between law and ethics

Answer 4

Law cannot codify all ethical requirements. Therefore, an action might be unethical, yet not necessarily illegal
It is unethical to lie to your friends, but it is not illegal.
• An act is illegal does not necessarily mean it is immoral
o Honoring a contract with a totalitarian, repressive regime

Question 5

What are the four components of moral behavior?

Answer 5

Moral sensitivity
Moral judgment
Moral motivation
Moral character

Question 6

Moral sensitivity

Answer 6

the ability to see an ethical dilemma, including how our actions will affect others.

Question 7

Moral judgment

Answer 7

the ability to reason correctly about what ‘ought’ (have to) to be done in a specific situation.

Question 8

Moral motivation

Answer 8

a personal commitment to moral action, accepting responsibility for the outcome.

Question 9

Moral character

Answer 9

courageous persistence in spite of fatigue or temptations to take the easy way out.

Question 10

Human rights

Answer 10

• Freedom of association
• Freedom of speech
• Freedom of assembly
• Freedom of movement
• Freedom from political repression

Question 11

Sullivan principles

Answer 11

GM board of director Leon Sullivan. Argued it was okay to do business in South Africa under apartheid If two conditions were fulfilled.
• Not obey apartheid laws in SA operations
• Should do everything in their power to promote abolition of apartheid laws

Question 12

Tragedy of commons

Answer 12

occurs when a resource held in common by all but owned by no one is overused by individuals

Question 13

What are two arguments on corruption?

Answer 13

• Side payments and so on enhance welfare

* Corruption reduces the returns on business investment and leads to low economic growth.

Question 14

What are some arguments for bribes?

Answer 14

Necessary for profits
Common practice
Accepted practice
Form of commission, tax, or compensation

Question 15

What are some arguments against bribes?

Answer 15

Wrong and illegal in most developed nations
Compromises personal beliefs
Managers should not deal with corrupt governments
Once started, it never stops
One should take a stand for honesty, morality, and ethics
Create a dependence on corruption
Decieves stockholders and costs customers

Question 16

Ethical dilemma

Answer 16

a problem, situation, or opportunity that requires an individual or group to choose among several wrong or unethical actions

Question 17

Ethical issue

Answer 17

a problem or opportunity that requires an individual or group to choose among actions that are evaluated as ethical or unethical

Question 18

What is “to strawmen someone”?

Answer 18

In its simplest definition, straw man is the name of a logical fallacy,
which means that if you carefully dissect the argument or statement, it doesn’t make sense. … You put forth a straw man because you know it will be easy for you to knock down or discredit. It’s a way of misrepresenting your opponent’s position

Question 19

The Friedman doctrine

Answer 19

“The social responsibility of business is to increase profits”- as long as the company follow the rules of the law.

Question 20

Cultural relativism

Answer 20

ethics are nothing more than the reflection of a culture- all ethics is culturally determined and a firm should adopt the ethics of the culture in which it is operating.

Question 21

The righteous Moralist

Answer 21

claims that a multinational’s home-country standards of ethics are the appropriate ones for companies to follow in foreign countries.

Question 22

The Naive Immoralist

Answer 22

Says that if a manager of a multinational sees that firms in other nations aren’t following ethical norms the manager should not either. Classic example of the drug lord problem.

Question 23

Utilitarian and Kantian Ethics

Answer 23

• Developed in the 1700/1800

* Form a tradition on which newer approaches have been constructed

Question 24

Utilitarian approaches to ethics

Answer 24

that the moral worth of actions or practices is determined by their consequences. Actions have multiple consequences, some good and some are harmful.

Question 25

Kantian ethics

Answer 25

The belief that people should be treated as ends and never as means to the ends of others. People are not instruments, they need to be respected as such.

Question 26

Rights theories

Answer 26

Human beings have fundamental rights and privileges- outside of national boundaries and cultures.

Question 27

Just distribution

Answer 27

Is one that is considered fair and equitable.

Question 28

What are two major challenges when an MNE seeks to be accepted into an unfamiliar society?

Answer 28

a. Achieving corporate legitimacy in an unfamiliar society.

b. Differing philosophies between Multinational corporation and host countries.

Question 29

What is CSR?

Answer 29

Corporate social responsibility
• Being employee friendly
• Environmentally friendly
• Mindful of ethics
• Respectful of communities where firms produce
• Being investor friendly
• .. support the arts, universities etc.
Firm sacrificing profits in the social interest
Sacrifice = firm must go beyond legal and contractual obligations on a voluntary basis
Voluntary? Institutional pressures? Required by law?

Question 30

Social Contract (Donaldson and Dunfee 1999)

Answer 30

There is a tacit social contract between the firm and society; the contract bestows certain rights in exchange for certain responsibilities.

Question 31

Stakeholder

Answer 31

Any individual or group who can affect or is affected by the actions, decisions, policies, practices, or goals of the organization.
Stakeholder is a variant of the concept of stockholder/shareholder– an investor/owner of businesses

Question 32

Primary stakeholders

Answer 32

Have a direct stake in the organization and its success

Question 33

Secondary stakeholders

Answer 33

Have a public or special interest stake in the organization that is more indirect

Question 34

Stakeholder Theory

Answer 34

(Freeman, 1984)
A stakeholder is “any group or individual who can affect or is affected by the achievement of an organization’s purpose.” Argues that it is in the company’s strategic interest to respect the interests of all its stakeholders.
Basic idea: organizations are multilateral agreements between the enterprise and its multiple stakeholders:

Question 35

Sustainability

Answer 35

Meeting our society’s needs in ways that don’t compromise the ability of future generations to meet theirs
At its core, sustainability is about being responsible with resources – people, land, energy, water, materials and capital

Question 36

Determinants of ethical behavior

Answer 36

Societal culture
Decision-Making processes
Leadership
Unrealistic performance goals
Organizational culture
Personal ethics

Question 37

Concept of justice developed by John Rawls suggest that?

Answer 37

a decision is just and ethical if people would allow it when designing a social system under a veil of ignorance.

Question 38

What can managers do to make sure ethical issues are considered in international business decisions?

Answer 38

• Favor hiring and promoting people with a well-grounded sense of personal ethics
• build an organizational culture and exemplify leadership behaviors that place a high value on ethical behavior
• put decision-making processes in place that require people to consider the ethical dimension of business decisions
• establish ethics officers in the organization with responsibility for ethical decision making
• be morally courageous and encourage others to do the same
• make corporate social responsibility a cornerstone of enterprise policy
• pursue strategies that are sustainable

Question 39

What do MNEs that are practicing business-focused sustainability integrate?

Answer 39

a focus on market orientation, addressing the needs of multiple stakeholders, and adhering to corporate social responsibility principles.

Question 40

What are SDG

Answer 40

Sustainable development goals (17 goals)

Question 41

How does trade affect the emission levels?

Answer 41

Through three major channels:
- Scale effect – increase in emissions die to higher level of economic activity
- Composition effect – change in emission because of a change in the relative shares of different foods in production.
- Technique effect – impact of emissions due to a change in production methods
The net change in aggregate emissions is determined by the interaction of these three effects.