Session 4 - corporate ethics

Question 1

what is puffery in marketing?

Answer 1

• making exaggerated or hyperbolic claims about a product or service that are not meant to be taken literally but are instead designed to attract attention or create a positive impression.
• often subjective and not meant to be factual

Question 2

Is puffery ethical? (pro and cons of it)

Answer 2

Pro:
- business gives consumer what they want, to stay in business
- humankind cannot bear too much reality

Con:
- manipultaion and control
- loss of decision autonomy
- consumers wants a function of advertising

Question 3

Why is vulnerability an issue to talk about when looking at marketing?

Answer 3

certain individuals might lack the full ability to engage in typical market activities due to specific challenges
-> characteristics such as cognitive (children), motivational (grieving), social (poor) or physical (allergies) might make individual susceptible to harm his or her own interest

Question 4

What are things that parties that participate in market transactions should consider to not take advantege of vulnerabilities?

Answer 4

• ability to shop around
• competency to determine quality/price
• awarness of legal rights
• knowledge of the product and their characteristics
• resources to enter market relation

Question 5

how does the food industry usually use marketing in an ethically quetionable way?

Answer 5

• focus on personal responsibility
• vilify critics with extreme language
• criticise scientific studies to plant doubt
• emphasise physical activity over diet

Question 6

What effect does unethical behaviour have on the oganization’s survival? (5 steps/ key events)

Answer 6

1. unethical bhevaiour
2. legitimacy threat
3. lack of stakeholder support
4. lack of resource acquisition
5. organizational failure?

Question 7

What is legitimacy?

Answer 7

Legitimacy:
- perception that actions are desirable or appropriate within socially constructed system of norms, values and beliefs
- conformity with social norms, values and expectations

Question 8

What are the three types of organizational legitimacy?

Answer 8

1. Pragmatic
2. cognitive
3. moral

Question 9

What is the pragmatic type of organizational legitimacy?

Answer 9

individuals related to the organization grant legitimacy to the organization because they see it as providing value or benefits to them

Question 10

what is the cognitive type of organizational legitimacy?

Answer 10

• accpetance based on broadly shared taken-for granted assumptions (subconscious)
• societal context regards organization’s outputs, procedures and behavior as inevitable and necessary

(example: utility company)

Question 11

what is the moral type of organizational legitimacy?

Answer 11

• conscious moral judgements (what is right and wrong) on the organiztaion’s output, prodcured, strcutures and leaders
• socially constructed by giving and receiving reasons to justify certain actions and practices

Question 12

WHat is the lgitimacy spill over effect?

Answer 12

Example: VW scandal, the entire industry suffered and gained a lack of trust

Question 13

What are the different ways to manage legimitacy? (think line graph)

Answer 13

Symbolic actions:
- denial
- justification
- apology
- pro-social claim
- symbolic alignemnt

Substantive
- substantive alignment (real changes)
- stakeholder engagement

Question 14

Give an example of communication of symbolic alignement?
(imagine your drug has caused deaths)

Answer 14

“we have already defined a plan and set up a committee to analyze the problem”

Question 15

What are characterstics of symbolic actions?

Answer 15

• low ethical expectations
• high ifnromation assymetry
• low stake and low commitment
• short-term expectations

Question 16

What are characteristics of substantive actions?

Answer 16

• high ethical expectations
• Low information asymmetry
• high stake, commitment
• long-term expectations