Exam 1 Flashcards
Who’s impacted by business decisions?
Shareholders Workers Customers Society Stakeholders The business
How many admitted to cheating on state tests in Arizona?
50%
How many admitted to changing answers in students tests or encouraging students to avoid a test altogether?
1%
Define business ethics …
The principles, values, and standards that guide behavior in the world of business
What are principles?
Specific and pervasive boundaries for behavior that are universal and absolute
Often become the basis for rules
Example: civil rights, freedom of speech
What are values?
Used to develop norms that are socially enforced
Examples: trust, integrity, accountability
How many employees reported observing at least 1 misconduct?
49%
How many reported a misconduct to management?
63%
What are the 5 stages of business ethics development?
Before 1960 1960s 1970s 1980s 1990s
What was President Harry S Truman’s Fair Deal program?
Defined such matters as civil rights and environmental responsibility as ethical issues that businesses had to address
Who outlined the consumer bill of rights?
1962 President John F Kennedy
What is the Consumer Bill of Rights?
The right to safety, to be informed, to choose, to be heard
What does the Foreign Corrupt Practices Act state?
Makes it illegal for US businesses to bribe government officials of other countries
Under who’s administration was the Foreign Corrupt Practices Act passed?
President Jimmy Carter
Who and when was the Sarbanes-Oxley Act passed?
By Congress in 2002
What is the Sarbanes-Oxley Act all about?
Makes securities fraud a criminal offense
Stiffens penalties for corporate fraud
Created an accounting oversight board that requires corporations to establish codes of ethics for financial reporting and to develop greater transparency in financial reports to investors and other interest parties
Requires top executives to sign off on their firms’ financial reports risking fines and prison time
Requires executives to disclose stock sales immediately
Prohibits companies from giving loans to top managers
Define ethical culture …
The character of the decision-making process that employees use to determine whether their response to ethical issues are right or wrong
Component of corporate culture that captures the values and norms that an organization defines as appropriate conduct
Whats the goal of ethical culture?
Minimize the need for enforced compliance of rules and maximize the use of principles that contribute to ethical reasoning in difficult or new situations
What does ethical culture create?
Shared values and support for ethical decisions
Who promotes ethical decision making?
Top management
What does business ethics focus on?
Organizational concerns (legal and ethical - employees, customers, suppliers, society)
Business ethics deals with right or wrong behavior within a particular organization.
True
An ethical culture is based upon the norms and values of the company.
Norms and values help create an organizational culture and are key in supporting or not supporting ethical conduct
Business ethics contributes to investor loyalty.
True
The trend is away from cultural or ethically based initiatives to legal initiatives in organizations.
False. Many businesses are communicating their core values to their employees by creating ethics programs and appointing ethics officers to oversee them.
Investments in business ethics do not support the bottom line.
False. Ethics initiatives create consumer, employee and shareholder loyalty and positive behavior that contribute to the bottom line.
What are the different types of stakeholders?
Primary and Secondary
What are primary stakeholders?
Association is absolutely necessary for a firm’s revival (employees, customers, investors …)
What are secondary stakeholders?
Don’t typically engage in transactions with a company and are not essential to its survival (media, trade associations, special interest groups)
What’s the stakeholder interaction model?
Reciprocal relationships between the firm and a host of stakeholders
This recognizes secondary stakeholders
Acknowledges the dialogue that exists between a firms internal and external environments
What is stakeholder orientation?
The degree to which a firm understands and addresses stakeholder demands
What are the sets of activities that comprises stakeholder orientation?
Generation of stakeholder groups data and assessment of the firm’s effects onto those groups
Distribution of information throughout the firm
Responsiveness of the organization as a whole to this information
What are the four levels of social responsibility?
Economic
Legal
Ethical
Philanthropic
What is the legal responsibility?
Abiding by all laws and regulations
What are the economic responsibilities?
Maximizing stakeholder wealth and / or value
What are the ethical responsibilities?
Following standards of acceptable behavior as judged by stakeholders
What are the philanthropic responsibilities?
Giving back to society
What’s corporate citizenship?
Express the extent to which businesses strategically meet the economic, legal, ethical and philanthropic responsibilities placed on them by their various stakeholders
What are the four interrelated dimensions of corporate citizenship?
Strong sustained economic performance
Rigorous compliance
Ethical actions beyond what the law requires
Voluntary contributions that advance the reputation and stakeholder commitment
What’s the stakeholder model of corporate governance?
Once the primary groups of stakeholders have been identified, managers must then implement the appropriate corporate governance mechanisms to promote the development of long-term relationships.
What is executive compensation?
How are executives compensated for their leadership, service and performance
Most boards spent more time deciding how much to compensate top executives than they do ensuring the integrity of the company’s financial reporting system.
Social responsibility in business refers to …
Social responsibility refers to an organization’s obligation to maximize its positive impact on society and minimize its negative impact.
Stakeholders provide resources that are more or less critical to a firm’s long-term success.
True
The most significant influence on ethical behavior in an organization is the opportunity to engage in unethical behavior.
False.Other influences such as corporate culture have more impact on ethical decisions within an organization
The stakeholder perspective is useful in managing social responsibility and business ethics.
True
Directors are chosen …
For their expertise, competence, and ability to bring diverse perspectives to strategic discussions.
What are fiduciaries?
Persons placed in positions of trust that act on behalf of the best interests of the organization.
What’s the duty of diligence?
To make informed and prudent decisions.
What is corporate governance?
The formal system of accountability for and control of ethical and socially responsible behavior.
What are CEOs and other executives expected to do to maintain trust and confidence of its stakeholders?
Tell the truth and act in a responsible manner
Why did Mark Hurd, former CEO of HP depart the company?
Although he didn’t violate the companies sexual harassment policy, investigators found that he had committed other violations as a result of an alleged relationship with a former contractor.
How do ethics create shareholder loyalty?
Shareholders recognize that ethical culture provides for efficiency, productivity, and profits.
Unethical issues can harm the company and long-term viability.
What issues foster the development of an ethical culture for employees?
Absence of abusive behavior
Safe work environment
Competitive salary
Fulfillment of contractual obligations
When do employees feel less pressure to compromise ethical standards?
When honesty, trust and respect are applied frequently in the workplace
