Lecture 3

Question 1

Ethics

Answer 1

• A set of principles or moral code or a system or theory of such
• Or the study

Question 2

-קְדֹשִׁים תִׁהְיּו:

Answer 2

והנה יהיה נבל

Question 3

Fair Trade

Answer 3

Ex: People pay more to have a standard of fairness

Question 4

Corporate Social Responsibility

Answer 4

Practicing business in a way that uses high ethical
standards and benefits people, their
communities, and the environment
EX Community involvement, charity, and
volunteerism
– Environment
– Human Rights

Question 5

100 best corporate citizens

Answer 5

EX:
Microsoft
Intel
Hasbaro
J&J

Question 6

The Global 100 starting universe

Answer 6

All publicly traded companies with a
market capitalization of at least US$
2 billion
Four qualifications, climate, product, success, sanctions

Question 7

Criticism of CSR

Answer 7

Are they ranking the right things?
– Are they ranking relevant things?
– How do they measure? Is there an accepted standard?
– Is there a charge for participation?
– Is ranking relative to competing firms in the same
industry?

Question 8

Milton Friedman

Answer 8

The point of a company is to be successful in a fair way

Question 9

Tnuva law suit

Answer 9

Price fixing

Question 10

CSR Con

Answer 10

The goal of businesses is to make
money. Period.
Involvement in social projects give
business too much power
Conflict of interest?
Businesses don’t have the
expertise to engage in social
initiatives

Question 11

CSR Pro

Answer 11

Businesses create the problems,
they should solve them as well
Corporations are members of
society, they have obligation like
citizens
Corporations have the resources to
solve the problems
The business sector is a partner in
society, along with government and
the citizenry

Question 12

Different types of CSR

Answer 12

Proactive: Take initiative
Accommodating: Don’t oppose, don’t initiate
Defensive: Fighting
Opposition: Avioding

Question 13

CSR standards

Answer 13

By home country or when in Rome…

Question 14

Examples of Ethical Issues

Answer 14

“Hiding” debt from investors
• Moving corporate HQ to country with lower
corporate taxes
• Using contract workers with lower wages and
fewer benefits (outsourcing)
• Moving production and other functions
overseas (offshoring)
• Pollution
• Marketing harmful products

Question 15

To whom is the firm “responsible”?

Answer 15

• Shareholders: Point is to make the most amount of money

- Stakeholders: Ensure its longtime survival by satisfying stakeholders

Question 16

Stakeholders

Answer 16

1. Shareholders
2. Employees
3. Customers
4. Suppliers
5. Local community
6. Broader community (national,
   international)

Question 17

Is it really unethical?

Answer 17

כל מקום שאסרו חכמים משום מראית העין אפילו בחדרי
(חדרים אסור (שבת ס”ד ב
• The headline test:
– Will I be embarrassed if they hear about it or
read about it?

Question 18

Ways to improve Ethical Decision

Making

Answer 18

1. Employee selection
2. Code of ethics
3. Ethical training
4. Ethical Climate (lead by
   example)
5. Protection for
   whistle blowers (Swiss guy with the banks)

Question 19

What are the factors that influence ethics

of the firm?

Answer 19

– Degree of competition in the industry
– Profitability
– External business environment in general
– Key people in the organization
– Other factors???

Question 20

What do the experts say?

Answer 20

Porter and Kramer advise firms to
engage in ethical activities in their
own industry