Business Ethics Test 2 Padgett
duplicity
a fraudulent activity that could involve a consumer staging an accident to seek damages
Institutionalization Ethics
-Involves embedding values, norms, and artifacts in organizations, industries, and society. -Reasons why this has progressed in recent decades includes; stake holders have recognized the need for improving business ethics; the government has stepped in when scandals and misconduct have damaged key constituents of businesses; gatekeepers have been questioned as to their contributions in major scandals; and highly ethical companies tend to be more profitable than those suffering from misconduct issues.
Voluntary Responsibilities
-Relate to a business's contributions to stakeholders. -include: helping to create an ethical culture and values that can act as a buffer to organizational misconduct; reducing government involvement by providing assistance to stakeholders; developing employee leadership skills; and improving the quality of life in communities. -Donation of computer equipment to schools by companies such as Toshiba
Public Accounting Oversight Board
-Sarbanes-Oxley Act created this to oversee the accounting firms that audit public corporations and to establish rules and standards for auditing.
stakeholder model of corporate governance
-a broader view of the purpose of business -entails creating governance systems that consider those who have claims in a business's welfare in tandem with corporate needs and interests -many businesses evolve into this model as a result of government initiatives, consumer activism, industry activity, and other external forces
fraud
-any purposeful communication that deceives, manipulates, or conceals facts in order to harm others -can be a crime and convictions may result in fines, improsonment, or both
shareholder model of corporate governance
-founded in classic economic precepts, including the goal of maximizing wealth for investors and owners -should drive a firm's decisions toward serving the best interests of investors -has been criticized for its singular purpose and focus because there are other ways of "investing" in a business -more restrictive
affirmative action
-help build workforces that reflect their customer base -involve efforts to recruit, hire, train, and promote qualified individuals from groups that have traditionally been discriminated against on the basis of race, gender, and other characteristics
voluntary practices
-include the beliefs, values, and voluntary contractual obligations of a business -all businesses engage in some level of this -can benefit not internal and external steakholders
intellectual property rights
-involve the legal protection of intellectual property such as music, books, and movies
corporate governance
-involves the development of formal systems of accountability, oversight, and control (the process of and improving organizational decisions and actions.) -if strong, removes the opportunity for employees to make unethical decisions
Sarbanes Oxley legislation
-largely in response to widespread corporate accounting scandals -made to establish a system of federal oversight of corporate accounting practices -requires corporations to establish codes of ethics
consumer protection law
-laws that require businesses to provide accurate information about their products and services and follow safety standards -the first law was passed in 1906 in response to "The Jungle"
abusive or intimidating behavior
-most common ethical problem -The concepts can mean any- thing—physical threats, false accusations, being annoying, profanity, insults, yelling, harshness, ignoring someone, and unreasonableness—and the meaning of these words can differ by person.
hacking
-one of the top three methods for obtaining trade secrets that involves breaking into a computer network to steal information -three types: system, remote, and physical
integrity
-refers to being whole, sound, and in an unimpaired condition -in an organization, means uncompromising adherence to a set or group of values -a foundational value that relates to product quality, open communication, transparency, and relationships
honesty
-refers to truthfulness or trustworthiness -issues arise in business because some think it to be a game governed by its own rules rather than the rules of society
fairness
-the quality of being just, equitable, and impartial -three fundamental elements that motivate people to take part: equality (distribution of benefits and resources), reciprocity (interchange of giving and receiving in relationships), and optimization (the trade-off between equity and efficiency)
consumer fraud
-when consumers attempt to deceive businesses for their own gain -involves intentional deception on the part of an individual or group in order to derive an unfair economic advantage over an organization
Equal Employment Oportunity Commission - EEOC
-where charges of discrimination are filed
a company in the US can be sued if it
1) refuses to hire an individual 2) maintains a system of employment that unreasonably excludes an individual from employment 3) discharges an individual or 4) discriminates against an individual with respect to hiring, employment terms, promotion, or privileges of employment as they relate to the definition of discrimination
internal employee theft
Among retail stores ___________, is a larger problem than customer shoplifting
What is the first step in implementing a stakeholder perspective in an organization?
Assessing the corporate culture
Sherman Antitrust Act of 1890
Can be classified as procompetitive legeslation. This act prohibits organizations from holding monopolies in their industry.
Civil and Criminal Law
Derived from four sources: the U.S. Constitution (constitutional law), precedents established by judges (common law), federal and state laws or statutes (statutory law), and federal and state administrative agencies (administrative law).
Carroll's four levels of social responsibility
IN ORDER economic, legal, ethical, philanthropic
Institutionalization of Social Responsibility
Includes voluntary practices, legal responsibilities, core practices, and strategic philanthropy.
Why do critics argue that high compensation for boards of directors is a bad thing?
It could cause conflicts of interest between the directors and the organization
Federal Sentencing Guidelines for Organizations
Passed by Congress in 1991, these guidelines created incentives for organizations to develop and implement ethical compliance programs.
Compliance Programs for Due Diligence
Steps that the U.S. Sentencing Commission requires for an effective compliance program include: developing a code of conduct, providing oversight by high-ranking personnel, creating a communication system for disseminating standards and procedures, and monitoring and auditing systems designed to detect misconduct.
Cause-Related Marketing
Ties an organization's products directly to a social concern through a marketing program. Can affect consumer buying patterns, if consumers are sympathetic to the cause and the brand and cause are seen as a good fit.
Milton Friedman
Which economist's theory are they following most closely with the belief in the idea that the mission of business is to produce goods and services at a profit, thus maximizing its contribution to society. Some economists also believe that if companies address economic and legal issues, they are satisfying the demands of society and that trying to anticipate and meet additional needs would be almost impossible.
facilitation payment
_______________ made to obtain or retain business or other improper advantages do not constiture bribery payments for U.S. companies in some situations Often made to induce public officials to perform their functions.
discrimination
_________________ on the basis of race, color, religion, sex, marital status, sexual orientation, public assistance status, disibility, age national origin, or veteran status is illegal in the U.S.
collusion
a fraudulent activity involves an employee who assists a consumer in fraud
ethical dilemma
a problem, situation, or opportunity that requires an individual, group, or organization to choose among several actions that have negative outcomes
ethical issue
a problem, situation, or opportunity that requires an individual, group, or organization to choose among several actions that must be evaluated as right or wrong, ethical or unethical
unethical dual relationship
a relationship that could potentially cause a direct or indirect conflict of interest
U.S. Foreign Corrupt Practices Act (FCPA)
an act that state it is illegal for individuals, firms, or third parties doing business in American Markets to "make payments to foreign government officials to assist in obtaining or retaining business" (applies to all firms transacting business with operations in the U.S.)
puffery
an exaggerated advertising, blustering, and bloating upon which no reasonable buyer would rely upon, and is not actionable under the Lanham Act(protects and regulates brand/trademarks)
Consumer Financial Protection Bureau
an independent agency within the federal Reserve System that "regulates the offering and provision of consumer financial products or services under the Federal consumer financial laws."
reputation
an organization's greatest intangible assets with tangible value
bullying
behavior associated with a hostile workplace where an individual or a group considered a target is threatened, harassed, belittled, or verbally abused or overly criticized
interlocking directorate
board members being linked to more than one company and is not considered illegal unless it involves a direct competitor
examples of primary stakeholders
customers, employees, shareholders, suppliers, community, government regulatory agencies
stakeholder
customers, investors and shareholders, employees, suppliers, government agencies, communities, and many others who have a claim in some aspect of a company's products, operations, markets, industry, and outcomes
dual relationship
defined as a personal, loving, and/or sexual relationship with someone whom you share professional resposibilities
civil law
defines the rights and duties of individuals and organizations (including businesses)
stakeholder orientation
degree to which a firm understands and addresses stakeholder demands, a value of and tending to the relationship; continuum
equality
distribution of benefits and resources
core practices
documented best practices, often encouraged by legal regulatory forces as well as industry trade associations
secondary stakeholder
does not typically engage directly in transactions with a company and are not essential to its survival, includes the media, trade associations, and special interest groups
OSHA- occupational safety and health administration
enforces the Occupational Safety and Health Act of 1970 that mandates employers provide safe and healthy working conditions for all workers, and makes regular suprise inspections to ensure businesses maintain safe working environments
McCarran-Ferguson Act of 1944
exempted the insurance industry from antitrust legislation
conflict of interest
exists when an individual must choose whether to advance his or her own interests, those of the organization, or those of some other group
mandated boundaries
externally imposed boundaries of conduct, such as laws, rules, regulations, and other requirements
Core Practices
focuses on developing sound organizational practices and integrity for financial and nonfinancial performance measures, rather than on an individual's morals
philanthropy
giving back to communities and causes
misuse of company resources
identified by the Ethics Resource Center as the leading form of observed misconduct in organizations
reciprocity
interchange of giving and receiving in relationships
legal insider training
involves legally buying and selling stock in an insider's own company, but not all the time. Insiders are required to report their insider transactions within two business days of the date the transaction occured
competitive dimension
involves the rivalry among businesses for customers and profits
An activity is probably ethical if it
is approved of by most individuals in the organization and is customary in the industry.
procompetitive legislation
laws passes to prevent the establishment of monopolies, inequitable pricing practices, and other practices that reduce or restrict competition among businesses.
precompetitive legislation
laws that have been passed to prevent the establishment of monopolies, inequitable pricing practices and other practices that reduce or restrict competition among businesses
Better Business Bureau
leading self-regulatory body that provides directions for managing customer disputes and reviews advertising cases
One policy to address the issue of executive pay was implemented by J.P. Morgan, it stated that
managers should earn no more than twenty times the pay of other employees.
primary stakeholder
necessary to firms survival, includes employees, customers, shareholders, and government and committees that provide necessary infrastructure
criminal law
not only prohibits specific actions, such as fraud, theft, or securities trading violations, but also imposes fines or imprisonment as punishment for breaking the law
social entrpreneurship
occurs when an entrepreneur founds an organization w the purpose of creating social value.
executive compensation
one of the biggest issues corporate boards of directors face
social responsibility
organization's obligation to maximize its positive impact on stakeholders and minimize its negative impact
Pure Food and Drug Act of 1906
passed in response to public outrage over conditions described in Upton Sinclair's The Jungle, was the first consumer protection legislation
Antitrust Laws
primary objective is to protect employees.
EPA - Equal Pay Act
prohibits sex-based discrimination in the rate of pay to men and women doing the same or similar jobs
stakeholder interaction model
reciprocal relationships between the firm and a host of stakeholders
sexual harrassment
repeated, unwanted behavior of a sexual nature perpetrated upon one individual by another
examples of secondary stakeholders
special interest groups, the mass media, competitors, trade associations
Age Discrimination Act
specifically outlaws hiring practices that discriminate against people 40 yrs of age or older, as well as those that require employees to retire before the age of 70
the ethical decision making process begins when
stakeholders trigger ethical issue awareness and individuals openly discuss it with others
Major corporate governance issues normally involve
strategic-level decisions.
illegal insider trading
the buying or selling of stocks by insiders who possess information that is not yet public
corporate intelligence (CI)
the collection and analyisis of information on markets, technologies, customers, and competitors, as well as on socioeconomic and external political trends
corporate citizenship
the extent to which businesses strategically meet the economic, legal, ethical, and philanthropic responsibilities placed on them by various stakeholders
organization-wide generation of data
the first of the three activities that are associated with the stakeholder orientation
Ethical issue awareness
the first step toward understanding business ethics
sustainability
the potential for the long-term well-being of the natural environment, including all biological entities, as well as the mutally beneficial interactions among nature and individuals, organizations, and business strategies
bribery
the practice of offering something in order to gain an illicit advantage from someone in authority. (active: promises or gives; passive: accepts or recieves)
strategic philanthropy
the synergistic and mutually beneficial use of an organization's core competencies and resources to deal with key stakeholders so as to bring about organizational and societal benefits
optimization
the trade-off between equity and efficiency
social engineering
the tricking of individuals into revealing their passwords or other valuable corporate information
accountants must abide by a strict code of ethics that defines their responsibilities to
their clients and to the public interest
hostile work environment
three criteria: -the conduct was unwelcome -the conduct was severe, pervasive, and regarded by the claimant as so offensive as to alter his or her conditions of employment -the conduct was such that a reasonable person would find it offensive
lying
three types: -joking without malice -by commission -by omission