Business Ethics Terms

part of Teleology / Consequentialism.

Defines right or accaptable actions as those that maximize a particular person's self-interest as defined by the individual.

Enlighted Egoism: Allows the well being of others, but self-interst remains paramount.

part of Teleology / Consequentialism.

Defines right or acceptable actions as those that maximize total utility, or the greates good for the greatest number of people.

• Rule utilitarianism: Determine behavior on basis of principles, rules, designed to promot the greates utility.
• Act utilitarianism: Examine specifiv action itself, rather than the general rules governing it.

Based on the behavior of an individual, not society. (respect for persons)

Focuses on the preservation of individual rights and on the intentions associated with a particular behavior rather than on its consequenses.

Greatly influenced by Immanuel Kant: "Act as if thy maxim of thy action were to become by thy will a universal law of nature."

Nature of moral principles are permanent stable and compliance with absolute rights: Freedom of conscience, freedom of consent, freedom of privacy, freedom of speech, due process.

• Rule deontologist: Believe that conformity to general moral principles based on logic determines ethicalness.
• Act deontologist: hold that actions are the proper basis on which to judge morality or ethicalness.

Based on experience of individuals and groups.

• Descriptive relativism: Refers to the existance of moral disagreements between cultures or individuals.
• Meta-ethical relativism: People see situation from their own perspectives = no objective way of resolving ethical disputes between different value systems or individuals.
• Normative relativism: Assumes that one person's opinion is as good as anothers.

Asumes what is moral in a given situation is not only what conventional morality requires but also what the mature person with a "good" moral character deems appropriate.

• Trust
• Self-Control
• Empathy
• Fairness
• Truthfulness
• Learning
• Gratitude
• Vicility
• Moral leadership

Fair treatment with ethical and legal standards. Evaluates ethicalness on the basis of fairness.

• Distributive justice: Based on the evaluation of outcomes or resulsts of the business relationship.
• Procedural justice: Based on the processes and activities that produce the outcome or results.
• Interactional justice: Based on the relationship between organizational members, including the ways that employees and management treat one another.

People pass through six cognitive development stages, divided into three different stages of ethical concern.

1. Punishment and obedience
2. Individual instrumental purposes and exchange
3. Mutual interpersonal expectations, relationships, and conformity
4. Social system and conscience maintenance
5. Prior rights, social contract, or utility
6. Universal ethical principles

The model suggests that people continue to change their decision-making priorities after their formative years, and as a result of time, education, experience, they may change their values and ethical behavior.

The three levels of ethical concerns:

1. Immediate self-interest
2. social expectations
3. general ethical principles

• Compliance orientation: Creates order by requiring that employees identify with, and commit to, specific required conduct.
• Values orientation: Strives to develop shared values, with a focus on core ideals such as accountability (Verantwortung) and commitment (Verpflichtung).

• Code of conduct: A formal statement that describes what an organizationexpects of its employees.
• Code of ethics: The most comprehensive and consists of general statements, sometimes altruistic or inspirational, that serve as principles and the basis for rules of conduct.
• statement of value: Is conceived by management and fully developed with input from all stakeholders.

1. Trustworthiness
2. Respect
3. Responsibility
4. Fairness
5. Caring
6. Citizenship

1. Individualism/Collectivism: Refers to how self-oriented cultural members are in their behavior.
2. Power distance: Refers to the "power inequality" between superios and subordinates.
3. Uncertainty avoidance: Refers to how members of a society respond to uncertainty or ambiguity.
4. Masculinity/femininity

The concept that morality veries from one culture to another and that "right" and "wrong" are defined differently.

"When in Rome, do what the Romans do."

The unconscious reference to one's own cultural values, experiences, and knowledge.

Occurs when various profit centers within corporations are unaware of the consequences of their decisions on the orgnaization as a whole. (no ONE person can be blamed, as problems were systemic)

• Father of modern free market capitalism and economics.
• laissez-faire: "let it be". Market regulates itself without government intervention.
• Believed, that ethical people must guide businesses.
• Invisible hand theory: "invisible" market force that helps the demand and supply of goods in a free market to rech equilibirum automatically.

• Father of 2nd incarnation of capitalism (1930s)
• Believed, that private sector needs help from government intervention (for more stability)
• Friedman and Keynes believed that:
  • People have rational preferences among outcomes that can be identified and associated with value
  • Individuals seek to maximize utility, and firms seek to maximize profits
  • People act independently on the basis of full and relevant information

• Father of the most recent form of capitalism (1980s)
• Return to the self-regulating free market capitalism (laissez-faire)
• Called for widespread deregulation
• Friedman and Keynes believed that:
  • People have rational preferences among outcomes that can be identified and associated with value
  • Individuals seek to maximize utility, and firms seek to maximize profits
  • People act independently on the basis of full and relevant information

Occurs when the middle class shrinks, resulting in highly concentrated wealth amongst the rich and large numbres of poor people with very few resources.

• Rational Economics: Based on the idea that people are rational and independent and will base their decisions on maximizing their utility
• Behavioral Economics: Assumes that humans may not act rationally because of a veriety of influences such as genetics, learned behaviors, and heuristics (rule of thumb)

The practice of charging high prices for products in domestic markets while selling the same product in foregn markets at low prices (often at below cost).

Ein Kartell = Vertrag zwischen zwei Unternehmen um einen Markt komplett zu beherrschen. Die Unternehmen bleiben dabei unabhängig und selbstständig. (--> Verboten! Sherman Antitrsut Act, 1890)

A vertical system is where a channel member (manufacturer, retailer, wholesaler, distributor...) has contorl of the entire business system, via ownership, contract, or through its purchasing ability.

--> MNC's

The belief that consumers, not the interests of coprorations, should dictate the economic structure of society.

• Compliance-based approach: Rules and regulations to ensure compliance.
• Integrity-based approach: Ethics as an opportunity to implement core valules. Leaders take responsibility for the firm's ethical culture and hold employees accountable for their behavior.

• Unethical leader: Egocentric and does whatever it takes to achieve the organization's and his own goals.
• Apathetic leader: Not necessarily unethical, but care little for ethics within the company. Does not listen to employees and does not communicate well.
• Ethical leader: Includes ethics at every operational level and stage.

1. Competing: Highly assertive and not very cooperative (leaders want to win at any cost)
2. Acvoiding: Leaders are not effectice bevause they avoid conflict at any cost. (uncooperative and non-assertive)
3. Accommodating: Highly cooperative but non-assertive. Give up own interests and values, let the other side win.
4. Compromising: in between assertiveness and cooperativeness. Each side give something up to gain something in value.
5. Collaborating: Are both, assertive and cooperative.Collaborate with other side to find a creative way to obtain a beneficial solution. Meet the needs of stakeholders.

1. Interpersonal communication: Two or more people interact with one another.
2. Small group communication: Tends to polarization and groupthink.
3. Nonverbal communication: Expressed through actions, body language, expressions (not written or oral). Is more reliable!
4. Listening: Paying attention to verbal and nonverbal behavior.

occurs when leaders and followers share the same vision, ethical expectations, and objectives for the company.

A leaders ability to manage himself and his relationships with others effectively.

Emotionally intelligent leaders are skilled in self-awareness, self-control, and relationship building.

1. Coercive Leader
2. Authoritative Leader
3. Affiliative Leader
4. Democratic Leader
5. Pacesetting Leader
6. Coaching Leader