Business Ethics Final

compliance-based accounting professional model has two problems:

1) lack of long-term focus on values and integrity 2) does not teach employees to navigate ethical gray areas

Behavioral economics

Assumes humans act irrationally because of genetics, emotions, learned behavior, and heuristics, or rules of thumb.

Transactional leaders

Attempt to create employee satisfaction through negotiating, or "bartering," for desired behaviors or levels of performance.

Rational economics

Based on the assumption that people are predictable and will maximize the utility of their choices relative to their needs and wants.

Socialism

Economic theories advocating the creation of a society when wealth and power are shared and distributed evenly based on the amount of work expended in production

Adam Smith

Laissez faire

Which of the following is NOT a characteristic of a centralized organization?

a. Few and informal rules

With regards to benefits of ethical leadership, which statement is incorrect?

working for a company with ethical leaders can raise costs for the firm as well as serve to decrease employee productivity.

Goals of the Environmental Protection Agency (EPA)

1)reduce air pollution 2)improve access to clean and safe water 3) promote materials management, waste management, and clean sites 4) enhance joint preparedness for environmental response 5) enhance compliance assurance and environmental stewardship

Undesirable common values

: Ignorance, pride and egoism, selfish desires, lust, greed, adultery, theft, deceit, lying, murder, hypocrisy, slander, and addiction

Corporate Social Responsibility (CSR) Report:

A sustainability agenda that can create long-term favorable stakeholder responses. Sustainability, social responsibility and business ethics should not be used interchangeably.

World Trade Organization

Administers its own trade agreements, facilitates trade negotiations, settles trade disputes, and monitors the trade policies of member nations.

Social democracy

Allows private ownership of property and also features a large government equipped to offer such services as education and health care to its citizens

Self-reference criterion (SRC):

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

Which type of culture shows minimal concern for either people or performance?

Apathetic

National culture

Broader concept than organizational culture. Includes everything—both tangible items, such as artifacts, and intangible entities, such as concepts and values.

Apathetic leader

Cares little for ethics. Views ethics as relative/optional in a business context. Often display no passion for firm/mission of the organization. Employees don't see sacrifices in them that other managers or leaders display.

A _____ organizational structure is best for organizations in which processes are routine and the division of labor is very well-defined. These organizations have a lot of formal rules, policies, and procedures.

Centralized

U.S. Environmental Regulations

Clean Air Act Endangered Species Act Toxic Substances Control Act Clean Water Act Pollution Prevention Act Food Quality Protection Act Energy Policy Act

Laissez-faire capitalism occurs when various profit centers within corporations are unaware of the consequences of their actions on the firm as a whole.

False

U.K. Anti-Bribery Act

Foreign companies with operations in the United Kingdom, can be held liable for bribery, no matter where the offense is committed or who in the company commits the act, even if the bribe itself has no connection with the United Kingdom.

Which organization was developed by the UN and asks businesses to adhere to human rights and labor standards defined in international treaties?

Global Compact.

Uncertainty avoidance

How members of a society respond to uncertainty or ambiguity.

Individualism/collectivism

How self-oriented members of a culture are in their behavior. Individualist cultures place high value on individual achievement and self-interest.

Ethical leader

Includes ethics at every operational level. Addresses issues as soon as they appear. Tries to create participative organizational cultures. Views employee collaboration as an important resource.

Sustainability

Includes the assessment and improvement of business strategies, economic sectors, work practices, technologies, and lifestyles in the maintaining of the natural environment.

A(n) _____ culture combines a high concern for people with a high concern for performance.

Integrative

Desirable common values

Integrity, family and community unity, equality, honesty, fidelity, sharing, and unselfishness

Who was one of the fathers of capitalism that believed the state could stimulate economic growth and improve stability in the private sector through such measures as controlling interest rates, taxation, and public projects?

John Maynard Keynes.

One attempt at addressing global warming was _______, created in 1997. It was an international treaty meant to curb global greenhouse gas emissions by having countries voluntarily reduce national outputs.

Kyoto Protocol.

Leader-follower congruence

Leaders and followers share same vision, ethical expectations, and objectives for the company.

Leader-exchange theory

Leaders form unique relationships with followers through social interactions.

Integrity-Based Approach

Leaders take responsibility for the firm's ethical culture and hold employees accountable. Usually have chief officers, human resource managers, and board member committees involved with ethics and compliance. Approach empowers employees. Can help the firm understand where questionable practices are occurring and where possible new ethical issues are arising.

Global reporting initiative (GRI):

Mainstreaming of disclosure on environmental, social, and governance performance.

International Monetary Fund

Makes short-term loans to member countries with deficits. Provides foreign currencies for its members. Provides information about countries that might default on their debts. Member states provide resources to fund the IMF through a system of quotas proportional to the size of their respective economies.

Social responsibility

Maximizing positive and minimizing negative impacts on stakeholders

Cultural relativism

Morality varies from one culture to another and "right" and "wrong" are defined differently

Normative myopia

Occurs when leaders overlook/stifle important core values in decisions. Believe normative values do not apply to managerial decisions. Facts/values can be separated in decision making. Normative values are outside the realm of business. ***Result: Ethical blindness/propensity to rationalize an unethical action/turn a blind eye.

Bimodal wealth distribution

Occurs when the middle class shrinks, resulting in highly concentrated wealth among the rich and increased numbers of poor people with few resources.

Authentic leaders

Passionate about company, live out corporate values daily, form long-term relationships with employees and other stakeholders.

The U.S. Foreign Corrupt Practices Act (FCPA):

Prohibits American companies from making payments to foreign officials for the purpose of obtaining or retaining business.

United Nations Global Compact

Promote worldwide peace, establish beneficial relationships between countries, and support the creation of better standards and human rights on a global scale. Set of 10 principles that promote human rights, sustainability, and the eradication of corruption.

Environmental Legislation & the EPA

Protecting Americans from significant health and environmental risks. Managing environmental risks based on empirical information. Ensuring the fairness and effectiveness of laws protecting human health and the environment. Ensuring environmental protection is an integral consideration in U.S. policies. Making available access to accurate information that allows participation in managing health and environmental risks. Making sure environmental legislation contributes to diverse, sustainable, and economically productive communities and ecosystems.

Multinational corporations (MNC):

Public companies that operate on a global scale without significant ties to any one nation or region. Represent the highest level of international business commitment and are characterized by a global strategy focusing on opportunities throughout the world.

Steps in Strategic Implementation of Environmental Responsibility

Recycling initiatives Stakeholder assessment Risk analysis

Transformational leaders

Strive to raise employees' level of commitment and foster trust and motivation.

Psychopathic leader/corporate psychopath: Research suggests 1% could qualify.

Superficial charm. No conscience. Grandiose self-worth. Little/no empathy. Enjoy flouting rules. **Companies with this leader have: Heightened level of conflict. Lower employee commitment. Higher organizational constraints. Heavier workloads. Poor levels of training. Lower job satisfaction. Increased employee absenteeism.

Six values desirable for code of ethics

TRRFCC 1)trustworthiness 2)respect 3)responsibility 4)fairness 5)caring 6)citizenship

Triple bottom line:

Takes into account social, environmental, and financial impacts of decisions made within an organization

Power distance

The power inequality between superiors and subordinates.

Six Sigma

To reduce defects in products and strive for continual improvement

Corporate culture is exhibited through the behavioral patterns, concepts, documents such as codes of ethics, and rituals that emerge in an organization.

True

Wal-Mart's annual revenues are greater than the GDPs of most of the countries in the world.

True

The balanced scorecard:

Uses elements that contribute to organizational performance and success (financial, customer, market, and internal processes

Unethical leader

Usually egocentric. Searches for legal loopholes. Perceive ethics codes, compliance regulations, and industry standards as optional. Justification for breaking laws: Serves a greater good; risk of getting caught is low.

Risk compartmentalization

When profit centers within corporations are unaware of the overall consequences of their actions on the firm as a whole.

Alternative Energy Sources

Wind Power Geothermal Power Solar Power Nuclear Power Biofuels Hydropower

What results when the middle class shrinks, leaving a nation with its wealth concentrated among the very rich and with large numbers of poor people?

a. Bimodal wealth distribution

To be effective, ethics training first must start with a foundation that includes

a. a code of ethics.

Codes of conduct and codes of ethics

a. are formal statements that describe what an organization expects of its employees.

All of the following are responsibilities of an ethics officer EXCEPT:

a. making government laws related to business ethics

All of the following represent steps in the RADAR model EXCEPT:

a. realize.

When various profit centers within corporations become unaware of the overall consequences of their actions on the firm as a whole it is called:

a. risk compartmentalization.

The strategic importance of ethics auditing includes all of the following EXCEPT

avoidance of fines in case of an infraction.

Which of the following is the international coordinator of regulatory policy for the world and makes short-term loans to member countries with deficits and provides foreign currencies to its members?

b. International Monetary Fund

Which of the following statements is correct?

b. The caring culture exhibits high concern for people but minimal concern for performance issues.

Which of the following items do NOT have a strong impact on whether an ethics program is successful?

b. The level of employee compensation

Ethical leaders generally adopt one of two approaches to leadership: a _________-based approach or a(n) ________-based approach.

b. compliance, integrity

The most controversial form of alternative energy is:

biofuels

Companies such as Coca-Cola, Hewlett-Packard, and Walmart support a globally based resource system called __________, which tracks emerging issues and trends, provides information on corporate leadership and best practices, conducts educational workshops and training, and assists organizations in developing practical business ethics tools.

business for social responsibility.

The FSGO utilizes a "carrot and stick" philosophy to encourage organizational compliance. What is the ultimate "stick" the FSGO uses?

c. Being fined or put on probation

The Better Business Bureau's International Torch Award for Marketplace Ethics may be useful to help what type of companies with their ethics audit?

c. Companies with fewer resources

What did the Sarbanes-Oxley Act put more pressure on ethics officers to monitor?

c. Financial reporting

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

c. Leader-follower congruence

Which of the following is a means of measuring process variations that cause defects considered unacceptable deviations from the mean or target?

c. Six sigma

Alternative sources of energy include all of the following EXCEPT:

c. gas power.

All of the following are major global ethical risks EXCEPT:

c. increasingly global affluence and consumer desire for quality products.

Keys to successful ethics training include all but:

c. leaving clear opportunities for employees to engage in unethical behaviors.

A common mistake that U.S.-based multinational firms make when developing an ethics and compliance program for international offices is:

c. transferring their "American" programs to the firm's international operations.

Milton friedman

capitalism

_____ power is essentially the opposite of reward power in that it penalizes actions or behavior instead of rewards it.

coercive.

Which of the following utilizes a legalistic approach to ethics and uses laws and regulations to create its codes and requirements?

compliance.

Employee turnover is a useful indicator for assessing employee issues.

correct

Which is NOT a characteristic of culture?

culture can be changed easily and quickly.

Which of the following is NOT an aspect of the Open Compliance Ethics Group (OCEG) framework?

customers.

Which of the following is not a category of communication?

d. Coercive communication

Which is not a benefit of a firm "going green"?

d. Firms can focus more upon their own efforts as a distinct unit rather than on the entire supply chain.

Which of the following reporting methods is a point of contact within an organization where employees and managers can voice their concerns and receive assistance from the most appropriate person in the firm to handle the situation?

d. Help desk

Which of the following is based on the assumption that people are predictable and will seek to maximize the utility of their choices relative to their needs and wants?

d. Rational economics

What do values orientation strives to develop?

d. Shared values

Traits of strong leaders include all of the following EXCEPT:

d. authority

All of the following are sustainable business practices that show social commitment EXCEPT:

d. reducing alternative energy sources.

The unconscious reference to one's own cultural values, experiences, and knowledge is called:

d. the self-reference criterion.

Which of the following is NOT a responsibility of an ethics officer?

e. Developing and implementing marketing strategy

What is one of the greatest organizational benefits of conducting an ethics audit?

e. Improved relationships with stakeholders who desire transparency

Which type of leader inspires employees to follow a vision, facilitates change, and creates a strongly positive performance climate? This type of leader is considered to be the most effective.

e. The authoritative leader

Which of the following is not part of the framework for an ethics audit?

e. Verify the results yourself or by a co-worker

Many of the day-to-day decisions in a firm are made by:

employees.

What type of culture shows little concern for individual people, but a high concern for performance?

exacting.

Ethical leaders need both knowledge and ___________ to make the right decisions.

experience.

Alternative energy sources have significantly increased the carbon footprint of communities, cities, and even countries.

false

Companies that experience ethical misconduct disasters almost never recover from them.

false

Environmental advocates ensure that shoppers are adequately informed about the environmental impact of the products they buy.

false

Ethical leadership is possible without effective communication.

false

Unfortunately, in today's competitive world, a company's history and unwritten rules are not part of its corporate culture.

false

Which of the following brings together people with different cultures, values, laws, and ethical standards?

global business.

___________ involves misleading a consumer into thinking that a product or service is more environmentally friendly than it really is. It can range from making environmental claims that are required by law and are therefore irrelevant (CFC-free) to puffery, or exaggerating environmental claims, to fraud.

greenwashing.

Conflict management styles include all of the following EXCEPT:

guarding.

Fostering ethical decisions within an organization requires eliminating unethical persons and

improving the firm's ethical standards.

Ethical leaders use an _____ combination.

integrity/compliance

Which of the following best describes an ethics audit?

it is a major component of an ethics program.

Business is not static

it is dynamic

The ability or authority to guide and direct others toward a goal is called:

leadership

What kind of power stems from a belief that a certain person has the right to exert power over others?

legitimate power.

Both ethics auditing and financial auditing employ:

objective reporting

Which of the following statements best describes the primary implication of "bad apple-bad barrel" theory?

organizations can influence ethical behavior by hiring people with high ethical standards and developing an ethical corporate culture.

The _______ focuses on reducing pollution through cost-effective changes in production, operation, and raw materials use. Practices include recycling, source reduction, sustainable agriculture, and other practices that increase efficiency in the use of energy, water, or other natural resources and protect resources through conservation.

pollution prevention act.

RADAR

recognize avoid discover answer recover

_____________ is the reprocessing of materials, especially steel, aluminum, paper, glass, rubber, and some plastics, for reuse.

recycling.

Which of these powers may exist when a person believes that his/her goals are similar to another's?

referent power.

When should ethics audits and financial audits be conducted?

regularly.

What is the first step in conducting an ethics audit?

securing the commitment of the firm's top management and board of directors.

___________ includes the assessment and improvement of business strategies, economic sectors, work practices, technologies, and lifestyles while maintaining the natural environment.

sustainability.

An ethics audit is a:

systematic evaluation of an organization's ethics program and/or performance to determine its effectiveness.

In 2010, most of the world's nations agreed to a package of climate initiatives called ________. This agreement called for industrialized countries to cut their greenhouse gas emissions and pay into a $100 billion a year green fund to help poorer countries.

the Cancun package.

What is the definition of corporate culture?

the shared beliefs top managers in a company have about how they should manage themselves and other employees, and how they should conduct their business.

John Maynard Keynes

the state

With regards to leadership styles that influence ethical decisions, the challenge for leaders is _______________________, which is essential if organizational leaders are to steer their companies toward success.

to gain trust and commitment of organizational members.

_________ provide a blueprint for what a firm's corporate culture should be.

top management.

Organizational culture emerges whether or not there is effective leadership.

true

Programs designed to foster ethical behavior are more controversial today because unethical and illegal business conduct continues to occur, even in organizations that have implemented the programs.

true

Software is becoming popular in helping to prevent misconduct because it provides reports of employee concerns, complaints, or observations of misconduct that can then be tracked and managed.

true

Of the following statements, which is correct?

when companies charge high prices for products sold in their home markets while selling the same products in foreign markets at low prices that do not cover all the costs of exporting the products, the practice is known as dumping.

Which of the following scenarios is unethical but not illegal?

while having a latte at Starbucks, you run into a friend who works as a salesperson at a competing firm. Your friend winds up chatting about how there is going to be a change in management at her firm. When you get back to your office, you tell your supervisor what you heard.