BA 342 Exam I Review

Right and wrong exercises

Situational factors - My child has cancer; John Q, would you die for a family member?

Sources of values

Sources external to the organization: religious, philosophical, cultural, legal, and professional Sources internal to the organization: respect for the authority structure; loyalty to bosses and the organization; conformity to principles, practices, and traditions; performance counts above all else; and results count above all else

Article: "Creating an Ethical Workplace"

The six elements of an ethics and compliance program: 1) Written standards of ethical workplace conduct 2) Training on standards 3) Company resources that provide advice on ethical issues 4) A process to report potential violations confidentially or anonymously 5) Performance evaluations of ethical conduct 6) Systems to discipline violators Ethical danger zones: 1) Conflicting goals 2) Fear of retaliation 3) Avoidance 4) Rationalization 5) Lowered thresholds 6) Euphemisms ("creative accounting")

Smeal Honor Code

We, the Smeal College of Business Community, aspire to the highest ethical standards and will hold each other accountable to them. We will not engage in any action that is improper or that creates the appearance of impropriety in our academic lives, and we intend to hold to this standard in our future.

Survey Results on What Business People Would Do

1) 74% falsify finances 2) 68% secret dumping of toxic waste 3) 62% blackmail is normal 4) 53% sabotage competition facilities 5) 17% injure / murder if you know too much

Sandusky Stakeholders

1) Administration 2) Fans 3) Students 4) Sponsors 5) Athletic directors / department 6) Hotels 7) Victims 8) Prospective students 9) Donors 10) Big 10 11) Alumni 12) Local businesses 13) Media 14) Football program

Values Framework

1) Awareness - what's the problem 2) Facts - what you know and don't know 3) Stakeholders 4) Standards - is there a policy? 5) Values - do the corporate values apply? 6) Actions

Global issues

1) Bribes & corruption 2) Employee abuse 3) Fraud, lying, and theft 4) Regulatory violations 5) Contracts misconduct

Three Approaches to Ethical Decision-Making

1) Conventional Approach (societal norm focus) - based on how common, everyday society views business ethics today; based on ordinary common sense and prevailing practice (the WEAKEST test) 2) Principles Approach (moral guideline focus) - based on the use of ethics principles or guidelines to justify and direct behavior, actions, policies, and practices 3) Ethical Tests Approach (applied guideline focus) - based on short, practical questions or "tests" to guide ethical decision making, behavior, and practices

Ethical decision-making process

1) Ethical awareness 2) Ethical judgement 3) Ethical behavior

4 Big 342 Topics

1) Ethical issues in business 2) Sustainability 3) Diversity & inclusion 4) Corporate social responsibility (CSR)

Best practice of organizational ethical culture

1) Ethics programs and officers 2) Realistic objectives 3) Ethical decision-making processes 4) Codes of conduct 5) Discipline of violators 6) Whistle-blowing mechanisms (hotlines) 7) Corporate transparency 8) Ethics training 9) Effective communication 10) Ethics audits and risk assessments 11) Board of directors' oversight

Technological determinism and ethical lag

1) Functionality 2) Money 3) Ethics and integrity issues

Society's expectations of business over time

1960s: gap between society's expectations and actual business ethics was smaller 2015: gap between society's expectations and actual business ethics have increased

Domino's case

1973: 30 minutes or free; the drivers had to pay if over 30 min (speeding) 1987: $3 off if 30 min late 2013: slowing down to make a good pizza

Tylenol case

1982: 7 people died of arsenic poisoning, recalled all Tylenol, took responsibility, changed medicinal regulation, rebuilt brand through safety, corporate culture impact, leadership through the credo (a. customers, b. employees, c. communities, d. stockholders) 2009 - today: product contamination in plants, recalled only a portion, no early responsibility; customers are 1st

ERC Data

4% decrease in observed misconduct 2% decrease in reporting of observed misconduct (BAD) 4% decrease in perceived pressure to commit a misconduct 1% decrease in perceived retaliation from misconduct report

Security breaches

43% of companies last year had a data breach - Home Depot - eBay - Target - Macy's - Yahoo! - Heartland - Sony

Behavioral Ethics

Behavioral ethics: helps us to understand at a deeper level many of the behavioral processes that research has shown that actually are taking place in people and organizations Bounded ethicality: tends to occur when managers and employees find that even when they aspire to behave ethically it is difficult due to a variety of organizational pressures and psychological tendencies that intervene Overconfidence bias: the tendency for people to be more confident of their own moral character or behavior than they have reason to be Conformity bias: the tendency people have to take their cues for ethical behavior from their peers rather than exercising their own independent moral judgement Framing: the fact that people's ethical judgments are affected by how a question or issue is posed (framed) Incrementalism: the predisposition toward the slippery slope; tendency toward making a series of minor ethical misjudgment that can lead to major ethical mistakes

Two types of dilemmas

Corporate and media

Cultural relativism / moral absolutism

Cultural relativism: when in Rome, do as the Romans do; investing MNC's should set aside its home country's ethical standards and adopt the ethical standards of the host country

Social networks and Millennials data

Job Feelings 40% Bad Joke on Boss 26% Work Information 26% Photo of Co-worker Drinking 22% Annoying Habit of Co-worker 20% Opinion on Co-worker Politics 16%

Kolberg's Levels of Moral Development

LEVEL 1: Pre-Conventional (focus self) a) Stage 1: Punish b) Stage 2: Reward LEVEL 2: Conventional (focus others) c) Stage 3: Good d) Stage 4: Law LEVEL 3: Post-Conventional (focus all) e) Social f) Universal

Merck and River Blindess

Merck & Co., a pharmaceutical firm, invested millions of dollars to develop a drug for treating "river blindness" (affects 18M in developing countries); Merck pledged to supply and distribute the drug for free forever

Moral decisions, moral managers, moral organizations

Moral decisions: single or isolated moral acts, behaviors, policies, practices, or decisions made by a manager or managers of an organization Moral manger(s): a manager or managers who have adopted the characteristics of moral management, and this approach dominates all their decision making; make decisions via the use of ethical principles Moral organizations: an organization dominated by the presence of moral managers making moral decisions

Hyper norms

Norms shared by the world - Everyone wants a faire deal on everything you buy

Opt In vs. Opt Out

Opt In - you must agree to our terms and conditions or your can't use our product / service Opt Out - strong, you can check what is being collected

Penn State values

Penn State Community Responsibility Respect Integrity Discovery --> education, learning Excellence

PONG

Personal - MOST IMPORTANT Organizational - every company has a code of conduct National - everybody wants trust Global - are ethics applied the same way across nations?

Poor vs. good ethics culture

Poor: 23% pressure to compromise standards, 62% observed misconduct, 32% reported misconduct, 59% experienced retaliation Good: 3% pressure to compromise standards, 33% observed misconduct, 87% reported misconduct, 4% experienced retaliation

Zuckerberg

Privacy change doesn't interest companies; social norms are already decided

Responsibility & Responsible Leadership

The ability or authority to act or decide on one's own without supervision

Privacy data

- 12.6M identity theft victims - 1 of 4 data breach victims impacted - 1 of 40 children identity theft - $21 billion stolen from victims 2013 Global Privacy Report - 37% consumers uncomfortable sharing personal info - 70% want to know if mobile is sharing their info - Women and 35+ feel least in control of their personal data

Chief Privacy Officer (CPO)

- 76% monitor websites - 65% block bad websites - 55% sort and retrieve email - 43% monitor phone time (and numbers) - 51% tape phone conversations - 51% video surveillance (for theft) - Decides what to do (compliance, policy ethics)

ERC five most frequently observed misconducts

- Abusive behavior 18% - Lying to stakeholder 17% - Conflict of interest 12% - Discrimination 12% - Bad use of internet 12%

Tech and trouble (personal)

- Favor quick fixes - Fear and worship technology - Blurred lines between real and false - Accept violence as normal - Love technology as a toy - We live distanced and distracted - Communication better or worse - Relationships better or worse - Knowledge better or worse - Ethics better or worse

Rita Crundwell case

- Horsebreeder - Stole $54M from the city

Bernie Madoff

- Immoral - "I don't care" - Ponzi scheme: a form of fraud in which belief in the success of a nonexistent enterprise is fostered by the payment of quick returns to the first investors from money invested by later investors

7 Elements of strong ethical culture (slides)

- Leadership - Code of ethics - Ethics officers - Clear communication - Detection / prevention - Company-wide training - Compliance standards

Types of Media Influence

- News (if it bleeds, it leads) - Ads (reinforcing stereotypes) - Internet - Movies (77% of plots involving business are negative) - Television - Social Media (global)

Technology and trouble (corporate)

- Online scams - identity theft - Invasion of privacy vs. informed consent - Intellectual property rights - Stolen data - Hacking of corporate knowledge - Sharing consumers information - Spam - Behavioral advertising (cookies) - GEO tags with photos - Bio-technology - Company cell phones - Monitoring - Information overload

Article: "The Fraud Triangle & What You Can Do About It"

- Opportunity is created by weak internal controls, poor management oversight, and/or through use of one's position and authority; failure to establish adequate procedures to detect fraudulent activity increases opportunities for fraud to occur

Bounded ethicality

- Organizational pressures and psychological factors - Pressure to conform (external --> like pleasing authority figures) - Humility - People are rational (but don't process information correctly)

Threats to privacy

- Social networks - Hackers - Behavioral advertising - Data stealing - Facial recognition technology - GEO-tags

CISCO

- Sponsors free education for 1 million people - Employment opportunities through partnerships - Women & tech - Disability in Kenya, Mexico, and Russia - Emergency communication aid after the earthquake in Nepal - Sensors detect energy footprint in Malaysia

Models of Management

1) Immoral - an approach devoid of ethical principles or precepts and at the same time implies a positive and active opposition to what is ethical 2) Moral - conforms to the highest standards of ethical behavior or professional standards of conducts 3) Amoral (i.e., Wolf of Wall Street - I want to do the best I can and make the most money I can) - (a) intentional amoral managers do not factor ethical considerations into their decisions, actions, and behaviors because they believe business activity resides outside the sphere to which moral judgement apply; (b) unintentional amoral managers do not think about business activity in ethical terms, but for different reasons - these managers lack ethical perception and moral awareness, they are simply casual about, careless about, or inattentive to the fact that their decisions and actions may have negative or deleterious effects on others

Privacy Bill of Rights

1) Individual control 2) Transparency 3) Respect for context 4) Security 5) Access and accuracy 6) Focused collection 7) Accountability

Security Bill of Rights

1) Individual control 2) Transparency 3) Stolen personal info 4) Respect for context 5) Security 6) Access & accuracy 7) Focused collection 8) Accountability

Privacy examples

1) Instagram - we own the photos you post and can use them whenever 2) GPS tracking - trucking companies, stopping for personal reasons 3) Children identity theft - setting up accounts with SSN at hospitals 4) Fake anything - celebrity deaths

Three components of ethics and technology

1) Intellectual property 2) Privacy 3) Security

Elements of moral judgement

1) Moral imagination 2) Moral identification and ordering 3) Moral evaluation 4) Tolerance of moral disagreement and ambiguity 5) Integration of managerial and moral competence 6) A sense of moral obligation

Fraud Triangle

1) Opportunity - there has to be an environment in which someone can take advantage; the element business owners have the most control 2) Rationalization; i.e., doing it to help others, I deserve more, other people do it, I've got nothing to lose, the company deserves this / doesn't need it, save face if embarrassed 3) Motivation - a pressure or a need to do this; i.e., money, ill family member, high debt, supporting family, prestige, power, blackmail, the thrill of it

Smeal Strategic Plan

1) Providing extraordinary education 2) Highest quality research 3) Building our culture of outreach

Kaspersky's 7 circles of cyber hell

1) Researchers and scientists (1980's) 2) Hooligans and jokers (1990's) 3) Criminals (late 90's) 4) Hacktivists (late 90's, damage personal / corporate reputations) 5) Espionage (bus / nations) 6) Military attacks (cyber warfare) 7) Terrorists (anything)

Ethics defintion

1) Set of principles 2) Right conduct 3) Underlying values TEXTBOOK: business ethics are concerned with morality and fairness; in behavior, actions, policies, and practices that take place within a business context

Intellectual Property

1) Video 2) Photos 3) Writing 4) Music

Wall Street and the Office Videos

1) Wall Street trailer 2) Greed is Good 3) Business is Stupid

Sexual Harassment case

AWARENESS: sexual harassment FACTS: who, how long, is it really abusive, why is she telling me?, are there others, what department, don't know the story, actions, frequency, true?, setting, power STAKEHOLDERS: her, her family, the person harassing her, co-workers, company, customers, supervisor, police, other victims STANDARDS: what does the company's code say VALUES: ACTIONS:you contact your company's EO or ethics office

Music data

Album sales down 70% By 2015, 1.2M industry jobs lost 1999 - 2009 a 17% in U.S. musicians 31% decline in value of recorded music 2011 - digital services available in 23 countries 2013 - digital services available in 100 countries Today - global music revenue 70% from digital

Technology defintion

All the ways people use inventions and discoveries to meet needs and wants

Enron case

Andy Fastow - CFO, jail Ken Lay - Founder, died Jeff Skilling - CEO, jail sentence reduced FACTS: two companies merge (power plants, energy, utilities), set up 500 offshore companies to take up the debt, hid losses and the executives sold stock - Sherron Watkins exposed the accounting fraud

Influences on behavior

BIG FOUR - Behavior of superiors - Behavior of one's organizational peers - Ethical practices of one's industry - Personal financial need ADDITIONAL: - Society's moral climate - Formal organizational policy (or lack thereof)

The Nexus of Ethics

BOEING: Harry Stonecipher, CEO of Boeing, was forced to resign after having an extramarital affair with a Boeing executive. The facts reflected poorly on Stonecipher's judgement and would impair his ability to lead the company. INSIGHT THROUGH INTERVIEWS: This type of interview is composed of carefully selected, open-ended questions. The interviewer first asks the job candidate about past ethical behavior, on the assumption that it's the best predictor of future conduct. The interviewer then asks probing follow-up questions to illuminate the thinking behind the reported behavior. Three questions, two-three interviewers, questions about things people have actually done when faced with a work-related ethical dilemma. Ex. "Have you ever had to bend the rules to exaggerate a little bit when trying to make a sale?"

Drug use in the values framework

Awareness: drug use Facts: you know who is taking the drugs, time (on the job or at home), true or false report, type (prescription or illegal), overdoing it, is the performance impacted Stakeholders: the user, the coworkers, management, friends, company, clients, media Standards: drug laws, company policy, standard practices Values Actions

Phantom Expense case

Awareness: falsifying expenses = theft Facts: true or not, the amount of padding, who is everyone else?, managers?, lower-level employees?, what is Ann's role?, monitoring the system Stakeholders: company, auditors, clients, family, investors, management, other employees, media, government Standards: law, company policy Values

Facebook case

BENEFITS: birthdays, connected globally, keeping in touch with others, sharing photos, lost love, instant news, jobs (advertise companies), find events SIDE EFFECTS: cyberbullying, ignorant posts, catfishing, robberies, anti-social, fake news, easier to be mean, political mudslinging, stalking, puts a filter on your life, privacy, hacking

Benefits vs. side effects

BENEFITS: increase in goods / services, decrease in labor to produce, labor is safer and easier, increase in living standards SIDE EFFECTS: depletion of natural resources, technological unemployment, environmental pollution, creation of unsatisfying jobs?

Done case

BENEFITS: mapping, surveys, spying on enemies, accessing remote areas, sports, filmmakers (low cost), delivery, medicine delivery SIDE EFFECTS: stalking, lack of privacy, accidents, battery life

Ethical Tests

COMMON SENSE: if the proposed course of action violates your "common sense", don't do it; if it doesn't pass the "smell" test, don't do it BEST SELF: if the proposed course of action is not consistent with your perception of yourself at your "best" don't engage in it VENTING OTHERS: expose your proposed course of action to others' opinions; don't keep your ethical dilemma to yourself; get a second opinion PURIFIED IDEA: don't think that others, i.e., an accountant, lawyer, or boss, can "purify" your proposed action by saying they think it is okay; it still may be wrong; you will still be held responsible GAG TEST: if you "gag" at the prospect of carrying out a proposed course of action, don't do it BIG FOUR: don't compromise your action or decision by factors such as greed, speed, laziness, or haziness GOING PUBLIC: MOST important, if you would not be comfortable with people knowing you did something, don't do it; don't take a course of action if you think your grandma might disapprove

Descriptive vs. Normative Ethics

DESCRIPTIVE: concerned with describing, characterizing, and studying the morality of people, an organization, a culture, or a society; focuses on "what is" - the prevailing set of ethical standards and practices in the business community, in specific organizations, or on the part of specific managers NORMATIVE: concerned with supplying and justifying a coherent moral system of thinking and judging; seeks to uncover, develop, and justify basic moral principles that are intended to guide behavior, actions, and decisions; it deals more with "what ought to be" or "what should be" in terms of business practices

J&J, Tylenol in Ethical Principles

DUTIES: 1st to recall major product RIGHTS / JUSTICE: customers have a right to a safe product UTILITARIANISM: Chicago, one place VIRTUE: the credo

Ethical principles

DUTIES: Kant, categorical imperative, deontological; every action you take, everyone will do as you do RIGHTS / JUSTICE: John Rawls, John Locke, fairness to people, deontological; what are the rights to the people, fairness? (civil rights, women's rights, minorities' rights, disabled people's rights, etc.) UTILITARIANISM: Jeremy Bentham, John Stuart Mill, consequences and results, teleological VIRTUE: Aristotle, Plato, who are you?, teleological; reflection of me

Doritos

Dog killed cat, gives witness Doritos to remain silent

Adam Smith

Economist and ethicist "The Wealth of Nations" (1776) "Theory of Moral Sentiments" (1759)

Speed of technology

Everything is progressing at an exponential speed 1) The demands on us as leaders are greater than the generation before 2) Ethics and integrity around IT is huge

EAP

Excellent performance Academic integrity Professional behavior

Survey statistics how business viewed

GENERAL PUBLIC: 75% say that the corporate moral compass is negative, D or F for an honesty grade, 53% agree that the investment industry is negative (D or F), 75% say that business people can operate ethically, 28% think that business people's ethics are the same at home BUSINESS LEADERS: 58% say that the corporate moral compass is negative, C or B for an honesty grade, 67% agree that the investment industry is negative (D or F), 94% say that business people can operate ethically, 44% think that business people's ethics are the same at home

Economic eras

Hunter-gatherer: from beginning, one in one out Agrarian: from 2000 BC, one in fifty out Industrial: 1760's - 1940's, one in two thousand five hundred out Information: 1940's - 1990's, one in ? out Knowledge (Big Data): 1990's - today, one in ? out

License to Operate

Intangibles - reputation, trust Consumers - 85% want a responsible reputation Risk Management - government, NGOs, legal Employees - 3 of 5 want to work for a values company Investors - 86% institutional investors Operations - innovation, energy

Moral engagement vs. moral disengagment

MORAL ENGAGEMENT: community service, relationships, clubs, dance marathon, sports, orgs, mentoring, coaching, tutoring, research, faith activities MORAL DISENGAGEMENT: cheating, party culture (underage), riots, destroying property, drug use, skipping class, procrastination, sexual assault, social media bullying, buying papers on the internet

Responsible Leadership (Financial Times)

Making business decisions that takes into account all other stakeholders, such as workers, clients, suppliers, the environment, the community and future generations

Martha Stewart case

Martha Stewart was running Omni Living, arrested for IMclone (cancer drugs) insider trading (selling stock) and LIED to prosecutors

Snapshot Cases

SPORT: stepping out of bounds ASHLEY MADISON: affair service WELLS FARGO: fake accounts, 5300 employees CHIPOTLE: tainted food, measures taken to improve food care VOLKSWAGEN: lied about diesel emissions

Types of misconduct

Sexual harassment, fraud, lying, tweaking the numbers, discrimination, hazing, bribery / corruption, blackmailing, stealing, getting into petty cash

Teleological and Deontological

TELEOLOGICAL: focused on consequences or results; utilitarianism (greatest ratio), good to evil DEONTOLOGICAL: duties to society; Kant - act as if to will it as a universal law

Millennial (1981-2000) Data

TRENDS - Report just as much as other generations - More likely to experience retaliation - Report more to informal sources than formal POTENTIAL ISSUES - Using social network to spy - Posting negative info about company - Keeping copies of confidential documents - Working less when losing benefits - Buying personal items with company cards

Honest Tea

Take 1 tea, leave a dollar

Blue pill / red pill

The Matrix Blue pill - stay in the bubble Red pill - learn everything

Spiderman

With great power comes great responsibility

Foreign Corrupt Practices Act (1977)

With the passage of the FCPA, it became a criminal offense for a representative of an American corporation to offer or give payments to the officials of other governments for the purpose of getting or maintaining business; specifies fines and prison terms for violations; differentiates between bribes (large amounts of money to influence officials to make a decision) and grease payments (small sums of money to get someone to do something like expediting)