Business Ethics
Business Ethics
Business Ethics
Set of flashcards Details
| Flashcards | 51 |
|---|---|
| Language | English |
| Category | Religion/Ethics |
| Level | University |
| Created / Updated | 11.01.2020 / 04.01.2024 |
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Business Ethics in 1920s
In the 1920s, the progressive movement sought to provide citizens with a “living wage”, or income enough for education, recreation, health, and retirement
Business Ethics in 1930s
In the 1930s, the New Deal specifically blamed business for the country’s economic woes. Businesses were asked to work more closely with the government to raise family income
Business Ethics by the 1950s
By the 1950s, the New Deal had evolved into the Fair Deal, defining such matters as civil rights an environmental responsibility as ethical issues that businesses had to address
Business Ethics in the 1960s
The Rise of Social Issues in Business
- military-industrial complex: antibusiness attitude
- Growth of ecological problems
- Rise of consumerism -> J.F. Kennedy: Consumers' Bill of Rights: right to safety, to be informed, to choose, to be heard
- President Johnson's Great Society: Responsibility to provide economic stability, equality and social justice
Business Ethics in the 1970s
Business Ethics as an Emerging Field
- Start to teach about corporate social responsibility (max. positiv impact on stakeholders, min. negative impact on stakeholders)
- Foreign Corrupt Practices Act (Jimmy Carter): Prohibits bribery in the US
- Business issues emerged: Bribery, deceptive advertising, price collusion, product safety, environment
Business Ethics in the 1980s
Consolidation
- Business Ethics became a field of study
- The Stakeholder Theory (R. Edward Freeman): Create value for all stakeholders not only shareholders
- Defense Industry Initiative on Business Ethics and Conduct (DII): 6 principles
- Reagan/Bush era: More self-regulation, less regulation by government
What are the 6 principles of the Defense Industry Initiative on Business Ethics and Conduct (DII)?
- Development and distribution of understandable, detailed codes of conduct.
- Provision of ethics training and development of communication tools
- creation of an open atmosphere (comfortable reporting of violations wihtout fear of retribution)
- Internal audits and reportings
- Preservation of the integrity of the defense industry
- Adoption of a philosophy of public accountability
Business Ethics in the 1990s
Institutionalization of Business Ethics
- Clinton: Still supports more self-regulation (prior Reagan/Bush)
- Federal Sentencing Guidelines for Organizations (FSGO) based on DII (1980s):
- Penalties if violation of the law
- Mitigation of penalties for business that strive to minimize misconduct and establish high ethical standards
Business Ethics in Twenty-First Cenutry
- Sarbanes-Oxley Act (2002):
- Fraud became illegal by law
- Increased penalties
- Creation of an Accounting Oversight Board to establish and overview accounting laws
- Requirement of top executives to sign off financial reports
- Prohibits companies from giving loans to executives
- Disclosure of a companies stock sales
Dodd-Frank Wall Street Reform and Consumer Protection Act: After financial crisis in the US. Major changes in the financial law in the US.
The three approaches to the stakeholder theory are:
- Normative Approach
- Descriptive Approach
- Instrumental Approach
The _______ identifies ethical guidelines that dictate how firms ought to threat stakeholders. Principles and values provide direction.
The _______ focuses on the actual behavior of the firm and usually addresses how decisions and strategies are made for stakeholder relationships.
The _______ describes what will happen if firms behave in a particular way
_______ refer to a person’s personal philosophies about what is right or wrong
_____ comprises organizational principles, values, and norms that may originate from individuals, organizational statements, or from the legal system that primarily guide individual and group behavior in the world of business.
_____ are specific and pervasive boundaries for behavior that should not be violated.
_____ are enduring beliefs and ideals that are socially enforced
Definition of Stakeholder Orientation
A stakeholder orientation involves activities and processes within a system of social institutions that facilitate and maintain value through exchange relationships with multiple stakeholders
The four levels of social responsibility are:
- economic: max. stakeholder wealth/value
- legal: abide by laws / governmental regulations
- ethical: follow behavioral standards
- philantrophic: "giving back" to society
Definition of social responsibility
An organization's obligation to max. its positive impact on stakeholders and min. negative impacts.
The term corporate citizenship describes...
how business meets the 4 levels of social responsibility (economic, legal, ethical, philantrophic)
Issues generally associated with social responsibility can be separated into four general categories:
- social issues
- consumer protection
- sustainability
- corporate governance.
What is corporate governance?
A formal system of accountability, oversight, and control for the goodwill of all stakeholders.
- Accountability: How closely workplace decisions align with firm's strategic direction
- Oversight: Limits employees' and managers' opportunities to prevent unethical or illegal activities.
- Control: Auditing and improving organizational decisions and actions.
There are two main forms of corporate governance: Shareholder and Stakeholder Orientation
The concept of board members being linked to more than one company is known as:
interlocking directorate
What is veil of ignorance?
Veil of ignorance is a thought experiment that examined how individuals would formulate principles if they did not know what their future position in society would be.
What is the liberty principle or equality principle
The liberty principle, also known as the equality principle, states that each person has basic rights that are compatible to the basic liberties of others.
What is the difference principle?
The difference principle states that economic and social equalities (or inequalities) should be arranged to provide the most benefit to the least-advantaged members of society
What is a corporate culture?
A corporate culture is a set of values, beliefs, goals, norms, and ways of solving problems that members (employees) of an organization share. Corporate culture involves norms that prescribe a wide range of behavior for the organization’s members
What is an ethical culture?
The term ethical culture is acceptable behavior as defined by the company and industry. Its goal is to minimize the need for enforced compliance of rules and maximize the use of principles.
_____ refers to being whole, sound, and in an unimpaired condition. In an organization, it means uncompromising adherence to ethical values
_____ refers to truthfulness or trustworthiness. Issues related to _____ also arise because business is sometimes regarded as a “game”, governed by its own rules rather than those of society.
_____ is a lack of integrity, incomplete disclosure, and an unwillingness to tell the truth.
_____ is the quality of being just, equitable, and impartial
_____ is about the distribution of benefits and resources. This distribution could be applied to stakeholders or the greater society
_____ is an interchange of giving and receiving in a social relationship. It is the return of small favors of approximately equal value.
_____ is the trade-off between equity (that is, equality of fairness) and efficiency (that is, maximum productivity)
___ is creating a perception or belief by words that intentionally deceive the receiver of the message.
_____ is intentionally not informing other of any differences, problems, safety warnings, or negative issues related to the product or company that significantly affects awareness, intention, or behavior.
_____ means that the person who promises or gives the bribe commits the offense
_____ is an offense committed by the receiver of the bribe
