Module 4 Flashcards
accepted principles of right or wrong that govern the conduct of a person, the members of a profession, or the actions of an organization
ethics
is a strategy, or course of action, that does not violate these accepted principles
ethical strategy
refers to the idea that business people should take the social benefits into account when making business decisions, and that there should be a belief in decisions that have both good economic and good social benefits.
social responsibility
the roots of unethical behavior
-personal ethics
-decision making processes
-organizational culture
-leadership
-unrealistic performance expectations
Business ethics reflect personal ethics (the generally accepted principles of right and wrong leading the conduct of individuals). Managers may face pressure to violate their personal ethics because they are away from their ordinary social context and supporting culture, and they are psychologically and geographically distant from the parent company
personal ethics
Studies show that business people may behave unethically because they fail to ask the relevant question—is this decision or action ethical? – Decisions are made based on economic logic, without consideration for ethics.
decision making processes
Unethical behavior may exist in firms with an organization culture (the values and standards that are shared among employees of an organization) that does not stress business ethics. – Values and standards shape the culture of a firm, and that culture influences decision making.
organizational culture
If a firm’s leaders fail to act in an ethical manner, other employees may not act ethically – Actions speak louder than words
leadership
Pressure from the parent company to meet performance goals that are unrealistic, and can only be achieved by acting in an unethical manner which causes unethical behavior.
unrealistic performance expectations
ensures awareness and concern for the future and for the right way of action in each particular situation.
ethical behavior
The most common ethical issues in business involve
-employment practices
-human rights
-environmental regulations
-corruption
-the moral obligation of multinational companies
If work conditions in a host nation are clearly inferior to those in a multinational’s home nation, should companies apply: - Home country standards - Host country standards - Something in between
employment practices
Ethical issues arise when environmental regulations in host nations are far inferior to those in the home nation. Environmental questions take on added importance because some parts of the environment are a public good that no one owns, but anyone can despoil. The tragedy of the commons occurs when a resource held in common by all, but owned by no one, is overused by individuals, resulting in its degradation.
environmental pollution
refers to the idea that business people should take the social consequences of economic actions into account when making business decisions, and that there should be a presumption in favor of decisions that have both good economic and good social consequences .
social responsibility
Social responsibility refers to the idea that business people should take the social consequences of economic actions into account when making business decisions, and that there should be a presumption in favor of decisions that have both good economic and good social consequences . People argue that businesses need to recognize their noblesse oblige and give something back to the societies that have made their success possible. BP supports this notion, and has made it company policy to give back to the community. For example, in Algeria the company built two desalination plants to provide drinking water to residents in Salah.
moral obligations
Managers often face situations where the appropriate course of action is not clear Situations in which none of the available alternatives seems ethically acceptable They exist because real world decisions are complex, difficult to frame, and involve various consequences that are difficult to quantify.
ethical dilemmas
suggests that the only social responsibility of business is to increase profits, so long as the company stays within the rules of law.
Friedman doctrine
argues that ethics are culturally determined and that firms should adopt the ethics of the cultures in which they operate, or in other words, “when in Rome, do as the Romans do”.
cultural relativism
claims that a multinational’s home country standards of ethics should be followed in foreign countries.
righteous moralist
asserts that if a manager of a multinational sees that firms from other nations are not following ethical norms in a host nation, that manager should not either .
naïve immoralist
are based on the philosophy of Immanuel Kant who argued that people should be treated as ends and never purely as means to the ends of others. People have dignity and need to be respected, they are not machines.
Kantian Ethics
approaches to ethics hold that the moral worth of actions or practices is determined by their consequences. Actions are desirable if they lead to the best possible balance of good consequences over bad consequences Problems with this ethics include measuring the benefits, costs, and risks of an action, and the fact that the approach fails to consider justice
Utilitarian Approach
recognize that human beings have fundamental rights and privileges which transcend national boundaries and cultures . It establishes a minimum level of morally acceptable behavior.
rights theories
focus on the attainment of a just distribution of economic goods and services. A just distribution is one that is considered fair and equitable. One theory of justice that is particularly important was proposed by John Rawls who argued that all economic goods and services should be distributed equally except when an unequal distribution would work to everyone’s advantage.
justice theories
An individual or a company can do anything that isn’t illegal. Pro: The law is a good basis for ethical behavior as it embodies cultural values Con: legal justification for behavior may not be sufficient because not everything that is unethical is illegal.
legal justification theory
would be put forward as an appropriate conduct guide for international business ethicsencourages business everywhere to advance and honor the internationally accepted human rights, to uphold the right of collective bargaining, to avoid being involved with human rights’ abuses, to have no part in compulsory human labor, to do away with child labor, to support a caring and cautious approach to the environment, to reduce any kind of employment discrimination, to encourage the creation of technologies that are friendly to the environment, to encourage more significant personal environmental responsibility, and to work to stamp out corruption in all of its many ugly guises, such as bribery and extortion.
United National Global Compact
is defined by the World Bank (2005) as ‘the extent to which public power is exercised for private gain, including petty and grand forms of corruption, as well as “capture” of the state by elites and private interests.’
corruption
Causes of corruption
personal greed
Institutional Regulations and inefficient controls.
Slow judicial processes. Organizational Lack of moral criteria in promotions Downplaying or reacting mildly to corruption charges
Institutional Regulations and inefficient controls.
Decline of personal ethical sensitivity, No sense of service when working in public or private institutions Low awareness or lack of courage to denounce corrupt behavior Cultural Cultural environments that condone corruption Lack of transparency, especially at the institutional level
personal greed
Cultures that are high on masculinity ( assertiveness, ambition, power etc) tends to be more competitive and ambitious.
Low masculinity – less corruption
Corruption tends to decline when information including internet communication becomes more accessible.
High political and economic freedom- less corruption
is the abuse of entrusted power for private gain. It hurts everyone whose life, livelihood or happiness depends on the integrity of people in a position of authority’ - Business principles for Countering Bribery
transparency international corruption
In 2007 SA became the 37th signatory and the first African member to enact anti bribery laws based on this convention. It targets the supply side of corruption(activities of bribe seekers) in cross border deals.
Organization for Economic Cooperation and Development (OECD)
Private sector and demand side of cross border economics, where extortion by public officials is a favorite criminal practice
International Chamber of Commerce
Enacted as a response to an epidemic of well known corporate scandals involving such companies as Enron and Tyco International. Focuses on corporate governance, financial disclosure and oversight of accounting and auditing practices. Aims to protect shareholders and the general public from accounting errors and fraudulent practices in the enterprise, as well as improve the accuracy of corporate disclosures.
Sarbanes Oxley Act (SOX)
means meeting the needs of the present without compromising the ability of future generations to meet their own needs while taking into account what’s best for both people and environment
sustainability
is a result of an increase in carbon dioxide If carbon dioxide emissions are not reduced and controlled , rising temperature could have catastrophic consequences
global warming
It was an extension of the UN Framework Convention on Climate Change of 1994 It was signed in 1997 to require countries to cut their green house gas emissions to 5.2 percent below 1990 levels between 2008 and 2012 By June 2007, 175 nations and regional economic organisations had ratified the protocol The US (25%), initially signed the agreement but withdrew in 2001
The Kyoto Protocol
is concerned with the norms, values, and beliefs embedded in social processes which define right and wrong for an individual or a community
Morality
is concerned with the study of morality and the application of reason to elucidate specific rules and principles that determine right and wrong for a given situation.
Ethics
are the accepted principles of right or wrong governing the conduct of business people
business ethics
the generally accepted principles of right and wrong leading the conduct of individuals
personal ethics
the values and standards that are shared among employees of an organization
organization culture
: In developed countries, basic human rights such as freedom of association, freedom of speech, freedom of assembly, and freedom of movement, are taken for granted In other countries, these rights may not exist
human rights
the practice of paying bribes to foreign government officials in order to gain business.
corruption
argue that fundamental human rights form the basis for the moral compass that managers should navigate by when making decisions which have an ethical component.
moral theorists
