Week SEVEN: Institutionalisation of Business Ethics Flashcards
1
Q
What is institutionalisation in business ethics, and what are its three dimensions?
A
- Institutionalisation in business ethics relates to established laws, customs and expected organisational programs that are considered normative in establishing reputation
- Institutions provide requirements, structure and societal expectations to reward and sanction ethical decision-making
Three dimensions:
- > Voluntary practice: beliefs, values and voluntary contractual obligations of a business (eg. philanthropy - giving back to communities and causes)
- > Core practice: documented best practices, often encouraged by legal and regulatory forces and trade associations
- > Mandated boundaries: externally imposed boundaries of conduct (eg. laws, rules and regulations)
2
Q
Outline the three facets of an ethical culture
A
Centre - culture
Outer ring - values, norms, behaviour
Furthest ring - voluntary actions, governance, core practices, legal compliance
3
Q
What are the mandated requirements for legal compliance?
A
- Regulation of competition
- Protection of consumers
- Promotion of equity and safety
- Protection of the natural environment
- Incentives to encourage organisational compliance programs to deter misconduct
4
Q
Outline some of the laws to regulate competition
A
- Rivalry (Porter’s 5 forces)
- > Rivalry among existing competitors + threat of new entrants + bargaining power of buyers + bargaining power of suppliers + threat of substitute
- Laws passed to prevent monopolies, inequitable pricing and other practices that reduce/restrict competition
- > Aka Pro-competitive legislation because they encourage competition and prevent activities that restrain trade
- Laws regulating competition in Australia include the Competition and Consumer Act 2010
- > Overseen by ACCC, ASX (large number of laws), Consumer Affairs Victoria & Corporations Law
5
Q
Outline the reasons and examples of laws protecting consumers
A
- Laws protecting consumers require businesses to provide accurate information about products/services and follow safety standards
- > First consumer protection law was passed in 1906
- > FTC’s Bureau of Consumer Protection protects consumers against unfair, deceptive or fraudulent practices
- > FDA regulates food safety, human drugs and tobacco
- > Groups with specific vulnerabilities have higher levels of legal protection
6
Q
Outline the reasons and examples of laws promoting equality and safety
A
- Laws promoting equity in the workplace protect the rights of minorities, women, older perons and disabled persons
- > Civil Rights Act
- > Equal Employment -> Opportunity Commission
- > Equal Pay Act
- > Human Rights & Equal
- > Opportunity Commission
eg. Race Discriminiation Act
eg. Privacy Act
eg. Native Title Act - > OHS Administration makes inspections to ensure safe working environment
eg. Many people still working in unsafe environments
eg. Companies may underreport accidents to avoid inspection and regulation
7
Q
Outline the Dodd-Frank Wall Street reform and Consumer Protection Act
A
- to overhaul the financial regulatory system
- Important to Australian businesses as it influences legislation eg. Corporations Act and impacts Australian companies with US exposure
- Seeks to improve financial regulation, increase oversight and prevent excessive risk-taking, deceptive practices and lack of oversight and instituted whistle-blower bounty program
8
Q
Outline the Sarbanes Oxley Act and its benefits
A
- established a system of federal oversight of corporate accounting practices
- Public Company Accounting Oversight Board authority to monitor accounting firms that audit public companies
- Reduces conflict of interest and increases accountability
- Some legal protection for whistleblowers
- > Greater accountability of top managers
- > Renewed investor confidence
- > Greater protection of retirement plans
- > Greater penalties for senior managers
- > Improved info from stock analysts
- > Clear explanation by CEOs as to why their compensation package is in the best interest of the company
9
Q
Outline the Federal Sentencing Guidelines for Organisations
A
- Urges organisations to develop and implement compliance programs
- Guidelines apply to all felonies and class-A misdemeanors committed by employees
- Philosophy that legal violations can be prevented through organisational values and commitment to ethical conduct
10
Q
What are the highly appropriate Core Practices and how do they differ from other performance standards
A
- focus on sound organisational practices and integrity for performance measures
- Not focus on individual morals
- Most ethical issues are non-financial -> Integrity Institute developed model that standardises measures of non-financial performance vs Sarbanes-Oxley and Dodd-Frank that are financial performance standards
11
Q
What is the Environmental Protection Agency and what does it do?
A
- Created to coordinate environmental agencies involved in;
- > Conducting environmental research
- > Providing assistance in fighting pollution
- > Enforcing nation’s environmental laws
- number of environmental regulations including Endangered Species Act, Clean Water Act
