Week 1 Flashcards
what is business ethics?
The study of business situations, activities, and decisions where issues of right and wrong are addressed.
what is ethics?
Ethics is concerned with the study of morality and the application of reason to elucidate specific rules and principles that determine morally acceptable courses of action. Ethical theories are the codifications of these rules and principles.
what is morality?
Morality is concerned with the norms, values, and beliefs embedded in social processes which define right and wrong for an individual or a community.
why do firms consider ethics?
- business has huge power in society
- business has lots of potential to contribute to massively to societies: eg employment, products and services
- Business malpractice has the potential to inflict enormous harm on individuals, communities, and the environment = humanise business
- The demands being placed on business to be ethical by its various stakeholders are becoming more complex and challenging.
what is sustainability?
The long-term maintenance of systems according to environmental, economic, and social considerations.
what is triple bottom line?
The triple bottom line (TBL) was a term coined by the sustainability thought leader John Elkington many years ago. His view of the TBL is that it represents the idea that business does not have just one single goal—namely adding economic value—but that it has an extended goal which necessitates adding environmental and social value too (Elkington 1999)
what the environmental, economic and social perspectives of TBL?
- environmental: The basic principles of sustainability from an environmental perspective concern the effective management of physical resources so that they are conserved for the future.
- economic: The recognition that continued growth in population, industrial activity, resource use, and pollution could mean that standards of living would eventually decline led to the emergence of sustainability as a way of thinking about ensuring that future generations would not be adversely disadvantaged by the activities and choices of the present generation.
- social: related to concerns regarding the impacts of business activities on indigenous communities in less-developed countries and regions.
what is a corportation?
A corporation is essentially defined in terms of legal status and the ownership of assets.
what are the features of a corporation?
- Legally, corporations are regarded as independent from those who work in them, manage them, invest in them etc. Corporations are separate entities in their own right.
- Rather than shareholders or managers owning the assets associated with a corporation, the corporation owns its own assets
what are the implications of the features of a corporation and so their responsibilities?
- Corporations are typically regarded as ‘artificial persons’ in the eyes of the law. so, they have certain rights and responsibilities in society, just as an individual citizen might
- Corporations are notionally ‘owned’ by shareholders, but exist independently of them. Shareholders are not responsible for the debts or damages caused by the corporation (they have limited liability).
- Managers and directors have a ‘fiduciary’ responsibility to protect the investment of shareholders. This means that senior management is expected to hold shareholders’ investment in trust and to act in their best interests.
what are Karnani’s (2010) three arguments for why corporate cant have social responsibilities?
- Only human beings have a moral responsibility for their actions - since corporations are set up by individual human beings, it is those human beings who have moral responsibility for the actions of the corporation.
- It is managers’ responsibility to act solely in the interests of shareholders - Acting for any other purpose constitutes a betrayal of their responsibility to shareholders and thus, essentially, represents a ‘theft’ from shareholders’ pockets.
- Social issues and problems are the proper province of the state rather than corporate managers. Karnani’s third point is that managers should not, and cannot, decide what is in society’s best interests.
what is corporate social responsibility?
The attempt by companies to meet the economic, legal, ethical, and philanthropic demands of a given society at a particular point in time.
what is the business case for CSR?
- enhance long-term revenues: socially responsible firms may be rewarded with more satisfied customers and employees are more committed
- reduce costs: CSR can reduce costs as encouraging positive environmental and social changes may result in energy being saved
- manage risk and uncertainty
- maintaining the social license to operate: a main driver for CSR is the necessity to gain and maintain the consent of local communities, employees etc
what is stakeholder theory of the firm?
according to freeman (1984) it is where stakeholders can affect or are affected by the achievement of the organisations objectives.
