Business Ethics Chapters 1-3

When did the Sarbanes-Oxley Act get passed by congress?

2002

How is business ethics important?

A guiding principle; this increases productivity and overall employee morale. When employees complete work in a way that is based on honesty and integrity, the whole organization benefits.

A moral dilemma is?

A situation where the person is faced with multiple choices, all of which are undesirable as defined by the person

What does a stakeholder orientation involve?

A stakeholder orientation involves "activities and processes within a system of social institutions that facilitate and maintain value through exchange relationships with multiple stakeholders." This orientation comprises three sets of activities: the organization-wide generation of data about stakeholder groups and assessment of the firm's effects on these groups, the distribution of this information throughout the firm, and the responsiveness of the organization as a whole to this information.

The Sarbanes-Oxley Act stops companies from doing what?

Additionally, the law requires top executives to sign off on their firms' financial reports and risk fines and long prison sentences if they misrepresent their companies' financial positions. The legislation further requires company executives to disclose stock sales immediately and prohibits companies from giving loans to top managers.

Before the 1960's, business ethics was viewed in what way?

Before 1960, business ethics issues were discussed primarily from a religious perspective

What is Hacking?

Breaking into a computer network to steal information

When did business ethics started to be studied as a separate field?

Business ethics began to develop as an independent field of study in the 1970s, with academics and practitioners exploring ethical issues and attempting to understand how individuals and organizations make ethical decisions.

What is business ethics?

Business ethics 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 business.

What are the four corporate citizenship dimensions?

Corporate citizenship has four interrelated dimensions: strong sustained economic performance, rigorous compliance, ethical actions beyond what the law requires, and voluntary contributions that advance the reputation and stakeholder commitment of the organization. A firm's commitment to corporate citizenship indicates a strategic focus on fulfilling the social responsibilities its stakeholders expect.

What is Dumpster diving?

Digging through trash to find trade secrets

What happens when a company has a strong corporate social responsibility?

Employees who feel their firms' corporate social responsibility programs are authentic are more likely to identify and connect with the organization

Values are?

Enduring beliefs and ideals that are socially enforced

What is the Consumers Bill Of Rights?

In 1962, President John E. Kennedy delivered a "Special Message on Protecting the Consumer Interest" that outlined four basic consumer rights: the right to safety, the right to be informed, the right to choose, and the right to be heard. These came to be known as the Consumers' Bill of Rights.

What is executive compensation?

In fact, most boards spend more time deciding how much to compensate top executives than they do ensuring the integrity of the company's financial reporting systems. How executives are compensated for their leadership, organizational service, and performance has become a controversial topic.

When did business ethics started to become popular among businesses?

In the 1980s, centers of business ethics provided publications, courses, conferences, and seminars, and many companies established ethics committees and social policy committees. The Defense Industry Initiative on Business Ethics and Conduct was developed to guide corporate support for ethical conduct; its principles had a major impact on corporate ethics.

What are foundation values for ethical issues?

Integrity, honesty, and fairness. Ethical issues can emerge from almost any decision made in an organization. Understanding these foundation values can help identify and develop discussions and a constructive dialogue on appropriate conduct.

What are the four categories associated with social responsibility?

Issues generally associated with social responsibility can be separated into four general categories: social issues, consumer protection, sustainability, and corporate governance.

What are Labeling issues?

Labels used to deceive the customer by telling them positive information about the product and not showing the negative impacts it can have.

What is Friendly fraud

Making a big purchase with a credit card and then filing a fraud claim with the credit card company

What are principles?

Principles are specific and pervasive boundaries for behavior that should not be violated. Principles often become the basis for rules.

What is the Equal Employment Opportunity Commission?

Race, gender, and age discrimination are major sources of ethical and legal debate in the workplace. Once dominated by European American men, the U.S. workforce today includes significantly more women, African Americans, Hispanics, and other minorities, as well as disabled and older workers. These groups traditionally faced discrimination and higher unemployment rates and were denied opportunities to assume leadership roles in corporate America.

What is Returning stolen goods?

Receiving a full refund on goods that had been stolen

What is Return fraud?

Replacing an item with something different and returning it for a full refund

What are secondary stakeholders?

Secondary stakeholders do not typically engage directly in transactions with a company and are therefore not essential to its survival. These include the media, trade associations, and special interest groups like the American Association of Retired People (AARP), a special interest group working to support retirees' rights such as health care benefits.

What is the difference between business ethics and social responsibility?

Social responsibility can be viewed as a contract with society, whereas business ethics involves carefully thought-out rules or heuristics of business conduct that guide decision making.

What is Price arbitrage?

Substituting differently priced but similar items for a higher return

What is the Dodd-Frank Wall Street Reform and Consumer Protection Act?

The Dodd-Frank Act was the most sweeping financial legislation since the Sarbanes-Oxley Act and possibly since laws put into effect during the Great Depression. It was designed to make the financial services industry more ethical and responsible. This complex law required regulators to create hundreds of rules to promote financial stability, improve accountability and transparency, and protect consumers from abusive financial practices. regulates the financial markets and protects consumers. Its eight components help prevent a repeat of the 2008 financial crisis. It's the most comprehensive financial reform since the Glass-Steagall Act.

What is the Foreign Corrupt Practices Act?

The Foreign Corrupt Practices Act was passed during his administration, making it illegal for U.S. businesses to bribe government officials of other countries. Today, this law is the highest priority of the U.S. Department of Justice.

What is the common good?

The common good is the idea that because people live in a community, social rules should benefit the community.

What is a stakeholder orientation?

The degree to which a firm understands and addresses stakeholder demands

A value dilemma is?

The same as a moral dilemma, only that the individuals beliefs are grounded in societal norms

What are the four levels of social responsibility?

There are four levels of social responsibility—economic, legal, ethical, and philanthropic (see Figure 2-3).33 At the most basic level, companies have a responsibility to be profitable at an acceptable level to meet the objectives of shareholders and create value.

What are the six codes the Defense Industry Initiative on Business Ethics and Conduct (DII) enforce?

These codes of conduct must be understandable and cover their more substantive areas in detail. Second, member companies are expected to provide ethics training for their employees as well as continuous support between training periods. Third, defense contractors must create an open atmosphere in which employees feel comfortable reporting violations without fear of retribution. Fourth, companies need to perform extensive internal audits and develop effective internal reporting and voluntary disclosure plans. Fifth, the DII insists that member companies preserve the integrity of the defense industry. And sixth, member companies must adopt a philosophy of public accountability.

What is Social engineering?

Tricking individuals into revealing their passwords or other valuable corporate information

What is Phone eavesdropping?

Using a digital recording device to monitor and record a fax line

What is Whacking?

Using wireless hacking to break into a network

What is Wardrobing?

Wearing an expensive item once for an event and then returning it for a full refund

What is Accounting Fraud?

a corporation's financial reports, in which companies provide important information on which investors and others base decisions involving millions of dollars. If the documents contain inaccurate information, intentional or not, lawsuits and criminal penalties may result.

What is an Ethical Dilemma?

a problem, situation, or opportunity that requires an individual, group, or organization to choose among several actions that have negative outcomes. There is not a right or ethical choice in a dilemma, only less unethical or illegal choices as perceived by any and all stakeholders.

What is an 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.

What is Reciprocity?

an interchange of giving and receiving in social relationships. Reciprocity occurs when an action that has an effect upon another is reciprocated with an action that has an approximately equal effect.

What is corporate social responsibility?

an organization's obligation to maximize its positive impact on stakeholders and minimize its negative impact

What is Fraud

any purposeful communication that deceives, manipulates, or conceals facts in order to harm others. Fraud can be a crime and convictions may result in fines, imprisonment, or both.

What is Sexual harassment?

any repeated, unwanted behavior of a sexual nature perpetrated upon one individual by another. It may be verbal, visual, written, or physical and can occur between people of different genders or those of the same gender. Displaying sexually explicit materials "may create a hostile work environment or constitute harassment, even though the private possession, reading, and consensual sharing of such materials is protected under the Constitution."

What is Federal Sentencing Guidelines for Organizations?

approved by Congress in November 1991, set the tone for organizational ethical compliance programs in the 1990s. The guidelines, which were based on the six principles of the DII, broke new ground by codifying into law incentives to reward organizations for taking action to prevent misconduct, such as developing effective internal legal and ethical compliance programs. Provisions in the guidelines mitigate penalties for businesses striving to root out misconduct and establish high ethical and legal standards.

What is Integrity?

being whole, sound, and in an unimpaired condition. Integrity is a global value that relates to all activities, not just business issues. Integrity relates to product quality, open communication, transparency, and relationships.

What is one of the most important social and ethical issue facing the market today?

data privacy. Cybercrimes, such as identity theft and online fraud, are major concerns. There is a need to address the ethical and legal responsibilities to determine risks and develop protection to consumers. All organizations need to understand how to develop cybersecurity and have contingency plans to respond if a data breach happens. With big data and the need to collect consumer data come the responsibility to establish a data privacy ethical culture as a top priority.

What is affirmative action programs?

efforts to recruit, hire, train, and promote qualified individuals from groups that have traditionally been discriminated against on the basis of race, gender, or other characteristics. Such initiatives may be imposed by federal law on an employer that contracts or subcontracts for business with the federal government, as part of a settlement agreement with a state or federal agency, or by court order.

What are the three fundamental elements that motivate people to be fair?

equality, reciprocity, and optimization

What is Puffery?

exaggerated advertising, blustering, and boasting upon which no reasonable buyer would rely upon and is not actionable under the Lanham Act.

What is Legal insider trading?

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 occurred.

What is social responsibility

social responsibility is focused on the company's impact on the environment and community.

What is the Age Discrimination in Employment Act

specifically outlaws hiring practices that discriminate against people 40 years of age or older, as well as those that require employees to retire before the age of 70. The act prohibits employers with 20 or more employees from making employment decisions, including decisions regarding the termination of employment, on the basis of age or as a result of policies requiring retirement after the age of 40.

What is Illegal insider trading?

the buying or selling of stocks by insiders who possess information that is not yet public.

What is Corporate governance?

the development of formal systems of accountability, oversight, and control. Strong corporate governance mechanisms remove the opportunity for employees to make unethical decisions. Research has shown that corporate governance has a positive relationship with social responsibility

What is Equality?

the distribution of benefits and resources. This distribution could be applied to stakeholders or the greater society.

What are Intellectual property rights?

the legal protection of intellectual property such as music, books, and movies. Laws such as the Copyright Act of 1976, the Digital Millennium Copyright Act, and the Digital Theft Deterrence and Copyright Damages Improvement Act of 1999 were designed to protect the creators of intellectual property.

What is Implied falsity?

the message has a tendency to mislead, confuse, or deceive the public. Advertising claims that use implied falsity are those that are literally true but imply another message that is false. In most cases, accusations of implied falsity can be proved only through time-consuming and expensive consumer surveys, the results of which are often inconclusive.

What does the Sarbanes-Oxley Act do?

the most far-reaching change in organizational control and accounting regulations since the Securities and Exchange Act of 1934. The new law made securities fraud a criminal offense and stiffened penalties for corporate fraud. It also created an accounting oversight board that requires corporations to establish codes of ethics for financial reporting and to develop greater transparency in financial reports to investors and other interested parties

What is Bribery?

the practice of offering something (often money) in order to gain an illicit advantage from someone in authority. Gifts, entertainment, and travel can also be used as bribes.

What is Marketing fraud?

the process of dishonestly creating, distributing, promoting, and pricing products—is another business area that generates potential ethical issues. False or misleading marketing communications destroy customers' trust in a company. Lying, a major ethical issue involving communication, is a potentially significant problem.

What is Fairness?

the quality of being just, equitable, and impartial. Fairness clearly overlaps with the concepts of justice, equity, and equality.

What is Optimization?

the trade-off between equity (equality) and efficiency (maximum productivity). Discriminating on the basis of gender, race, or religion is generally considered unfair because these qualities have little bearing upon a person's ability to do a job.

What are stakeholders?

those individuals, groups, and organizations who have a "stake" in the success of the organization including owners, employees, customers, suppliers, the community at large and so on

What are primary stakeholders?

those whose continued association and resources are absolutely necessary for a firm's survival. These include employees, customers, and shareholders, as well as the governments and communities that provide necessary infrastructure.

What is the global compact?

to create openness and alignment among business, government, society, labor, and the United Nations. Companies that adopt this code agree to integrate the 10 principles into their business practices, publish their progress toward these objectives on an annual basis, and partner with others to advance broader objectives of the UN

What is corporate citizenship?

to express the extent to which businesses strategically meet the economic, legal, ethical, and philanthropic responsibilities placed on them by various stakeholders

What is Defense Industry Initiative on Business Ethics and Conduct (DII)?

to guide corporate support for ethical conduct

What is Honesty?

truthfulness or trustworthiness. To be honest is to tell the truth to the best of your knowledge without hiding anything.

What is Consumer fraud?

when consumers attempt to deceive businesses for their own gain. Shoplifting comprises 37.4 percent of retail shrinkage (losses incurred from employee theft, shoplifting, administrative errors, and supplier fraud) in the United States.