Business Ethics - Chapter 1

high

A ______ level of personal moral development may not prevent an individual from violating the law in a complicated organizational context where even experienced lawyers debate the exact meaning of the law.

creativity; satisfaction; turnover

A corporate culture that integrates strong ethical values and positive business practices has been found to increase group ______ and job _______ and decrease______

course of action

Although we believe there are many practical benefits to being ethical, many business people make decisions because they believe a particular ___ ____ ____ is simply the right thing to do as responsible members of society.

reputation

Among the rewards for being more ethical and socially responsible in business are increased efficiency in daily operations, greater employee commitment, increased investor willingness to entrust funds, improved customer trust and satisfaction, and better financial performance. The ______ of a company has a major effect on its relationships with employees, investors, customers, and many other parties.

values and support

An ethical culture creates ____ ____ ___ ____for ethical decisions and is driven by the ethical leadership of top management.

customers

An ethical culture that focuses on __________incorporates the interests of all employees, suppliers, and other interested parties in decision and actions.

Corporate social responsibility

An organization's obligation to maximize its positive impact and minimize its negative impact on society

own values and accepted practices within their company.

Another difference between an ordinary decisions and an ethical one relates to the amount of emphasis decision makers place on their

Federal Sentencing Guidelines for Organizations

Approved by Congress in November 1991, set the tone for organizational ethical compliance programs in the 1990s.

corporate social responsibility

As social responsibility becomes more important for companies, _____ ____ ____ may be viewed as a sign of good management and may, according to one study, indicate good financial performance. However, another study indicates the reverse may be true, and companies who have good financial performance are able to spend more money on social responsibility.

preventative action

At the heart of the FSGO is the carrot-and-stick approach- that is, by taking _______ ______ against misconduct, a company may avoid onerous penalties should a violation occur.

goodwill; respect

Because employees spend a considerable, number of their waking hours at work, a commitment by an organization to ______ and ______ for its employees usually increases the employees' loyalty to the organization and their support of its objective.

collective agreement

Because organizations are culturally diverse and personal morals must be respected, ensuring _____ ______on organizational ethics (that is, codes reasonably capable of preventing misconduct) is as vital as any other effort an organization's management may undertake.

pervasive, systemic

Buffet's fears were realized in 2008 when the financial system almost collapsed because of ______, ______ use of instruments such as credit default swaps, risky debt such as subprime lending, and corruption in major corporations.

1970s

Business ethics began to develop as a field of study in the _____

codes, rules, and informal communications for responsible conduct

Business is not just an isolated personal issue; ___, _____, and ___ ___ ___ ____ ___ are embedded in an organization's operations

not discovering

Business leaders should consider the greatest danger to their organizations lies in ____ ____ any serious misconduct or illegal activities that may be lurking.

elemental

Business now know how to better manipulate at an _______ level

serving; valuing; contributing

Businesses with greater resources - regardless of their staff size - have the means to be ethical and practice social responsibility while ________ their customers, ______ their employees, and ________ to society.

New Deal

By the 1950s, the ____ ____ evolved into President Harry S. Truman's Fair Deal, a program that defined such matters as civil rights and relationships, social issues, and economic fairness were major concerns in the first half of the twentieth century.

bribery, deceptive advertising, price collusion, product safety and ecology

By the end of the 1970s, a number of major ethical issues had emerged, including:

satisfaction; loyalty; negatively

Decreased trust leads to a reduction in customer _____ and customer _____, which in turn can ______ impact the firm or industry.

tied; personal sacrifices

Employee commitment comes from workers who believe their future is ____ to that of the organization and from a willingness to make _____ _____ for the organization.

free market capitalists

Not since the Great Depression and President Franklin Delano Roosevelt has the US seen such widespread government intervention and regulation - something most deem necessary but is nevertheless worrisome to ___ ____ _____

cooperative

Successful business provide an opportunity for customer feedback that engages the customer in _______ problem solving

organizational or industry best practices

Such values are often based on

government

The Nixon administration's Watergate scandal focused public interest on the importance of ethics of ________

Sarbanes-Oxley Act

made securities fraud a criminal offense and stiffened penalties for corporate fraud

morals

refers to a person's philosophies about what is right or wrong

Consumers' Bill of Rights

In 1962 President John F. Kennedy delivered a "Special Message on Protecting the Consumer Interest" in which he outlined four basic consumer rights: the right to safety, the right to be informed, the right to choose, and the right to be heard.

safety; informed; choose; heard

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

insurance

In fact, ethical disasters can be significantly more damaging to a company's reputation than risks managed through ______ and other methods

Defense Industry Initiative (DII)

In the 1980s, the _______ _____ ____ ___ was developed to guide corporate support for ethical conduct

1980s

In the _____, business academics and practitioners acknowledged business ethics as a field of study, and a growing and varied group of institutions with diverse interests promoted it.

reputation; stock

Investors today are increasingly concerned about the ethics and social responsibility that creates the _____ of companies in which they invest, and various socially responsible mutual funds and asset management firms help investors purchase _____ in ethical companies.

absence; safe; competitive; fulfillment

Issues that foster the development of an ethical culture form employees include the _______ of abusive behavior, a ______work environment, ________ salaries, and the _________ of all contractual obligations toward employees.

ethical; legal

It is worth noting, however, that most of these companies learned from their mistakes and recovered after they implemented programs to improve ________and ______ conduct.

accounting scandals

Levitt unsuccessfully pushed for many reforms that, if passed, could have prevented the _____ ______ exemplified by Enron and WorldCom in the early twenty-first century.

close calls; ethics and compliance

Many business ethics decisions are ____ _____. In addition, managerial responsibility and ethical leadership for the conduct of others requires knowledge of ____ ___ ____ processes and systems.

human rights; social responsibility

Many companies demonstrate their commitment toward acceptable conduct by adopting globally recognized principles emphasizing _____ _____ and ______ ______

fairness, honesty, integrity, and trust

NiSource has four values - - that it puts into action in what it calls the Ni Source Way.

morals; performance

Normally, a business does not dictate a person's _____. Such policies would be illegal. Only when a person's moral influence his or her _______ on the job does it involve a dimension within business ethics.

morals

Personal philosophies that define right and wrong.

stakeholders

R Edward Freeman was among the first scholars to pioneer the concept of _______ as a foundational theory for business ethics decisions.

competitive advantage

Rather than being a function of compliance, ethics is becoming an integral part of management's efforts to achieve ___ _____

personal or singular

The important point is that when one speaks of morals, it is

ethical culture

acceptable behavior as defined by the company and industry

Dodd-Frank Wall Street Reform and Consumer Protection Act

addressed some of the issues related to the financial crisis and recession; designed to make the financial services industry more ethical and responsible

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

values

enduring beliefs and ideals that are socially enforced

ethical blindness

results from individuals who fail to sense the nature and complexity of their decisions.

the 1980s

•Many companies established ethics committees and social policy committees.

the 2000s

•Penalties were stiffened for corporate fraud and an accounting oversight board was established. The financial system was reformed.

First, the DII supports codes of conduct and their widespread distribution. These codes 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. Sixth, member companies must adopt a philosophy of public accountability.

6 principles of DII

six

According to a report on employee loyalty and work practices, companies viewed as highly ethical by their employees were ___ times more likely to keep their workers.

stock sales; top managers

Additionally, Sarbanes 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 ____ ____ immediately and prohibits giving loans to ____ ______.

customers; stakeholders

Although a company continues to develop and adapt products to keep pace with customers' changing desires and preferences, it must also develop long-term relationships with its _____ and _____

ethical standards

Although business ethics appeared to become more institutionalized in the 1990s, new evidence emerged in the early 2000s that not all business executives and managers had fully embraced the public's desire for ____ ____ ____

regulatory oversight

Although the Bush administrations tried to minimize government regulation, there appeared to be no alternative to developing more _____ _____of business.

complex; detailed

Although truthfulness, honesty, fairness, and openness are often assumed to be self-evident and accepted, business-strategy decisions involve ______ and ______ discussions.

10; annual; broader

Companies that adopt this code agree to integrate the __ principles into their business practices, publish their progress toward these objectives on an ______ basis, and partner with others to advance _____ objectives of the UN.

consumer protection

Consumer activists also helped secure passage of ____ _______ laws such as the Wholesome Meat Act of 1967, the Radiation Control for Health and Safety Act of 1968, the Clean Water Act of 1972, and the Toxic Substance Act of 1976.

no longer applied

Corporations that once were nationally based began operating internationally and found themselves mired in value where accepted rules of business behavior ___ ____ ___

values

Enduring beliefs and ideals that are socially enforced (trust and integrity).

competitive; postitively

Ethical conduct toward customers build a strong ______ position shown to ________affect business performance and product innovation.

positively

Ethical culture is_________related to workplace confrontation over ethics issues, reports to management of observed misconduct, and the presence of ethics hotlines.

less

Even the cost of equity and financing for firms that are socially responsible is _____ than for firms that do not engage stakeholders.

lowest; recession

Financial services have some of the _______ ratings, indicating that the financial sector has not been able to restore its reputation since the most recent ______

profit; profits

First, to survive and contribute to society, businesses must earn a ____. There is no conflict or trade-offs between _____ and business ethics.

objectives

Freeman defined stakeholders as "any group or individual who can affect or is affected by the achievement of the organizations_______

strategic management; responsibilities

Freeman's defense of stakeholder theory had a major impact on ___ _____ and corporations' views of their _______

financial stability

Gaining investors' trust and confidence is vital to sustaining the ______ ______ of the firm.

Nader's Raiders

His consumer protection organization, popularly known as ____ _____, fought successfully for legislation requiring automobile makers to equip cars with safety belts, padded dashboards, stronger door latches, head restraints, shatterproof windshields, and collapsible steering columns.

compliance management

ISO 19600 is a global compliance management standard that addresses risks, legal requirements, and stakeholder needs. Companies that choose to abide by ISO 19600 can use these standards to improve their approaches to _____ ______ which can reassure stakeholders of their commitment toward ethics and compliance.

"the point where the accepted rules no longer serve, and the decision maker is faced with the responsibility for weighing values and reaching a judgment in a situation which is not quite the same as any he or she has faced before."

One difference between an ordinary decision and an ethical one lies in

less; more

One survey found that when employees see values such as honesty, respect, and trust applied frequently in the workplace, they feel _____ pressure to compromise ethical standards, observe less misconduct, are more satisfied with their organizations overall, and feel ______ valued as employees.

business ethics

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.

moral dilemmas

Our concern, however, is with the application of principles, values, and standards in the business context. Many important issues are not related to a business context, although they remain complex _____ ______in a person's own life.

personal; administrative

President Jimmy Carter attempted to focus on ______ and ______ efforts to uphold ethical principals in government.

rules

Principles often become the basis for

good behavior

Regulators want firms to focus on their culture to avoid excessive risk taking and unethical behavior. There is a fundamental belief that an ethical culture will lead to _____ _____

fair wages, labor practices, and the morality of capitalism

Religious leaders raised questions about _____ before the 1950s

stakeholders; superior

Second, to be successful, businesses must address the needs and desires of ______. The good news is that the world's most ethical companies often have ______ stock performance.

teamwork, trust, and integrity

Several desirable or ethical values for business today are

human rights, freedom of speech, and the fundamentals of justice

Some examples of principles could include

principles

Specific boundaries for behavior that often become the basis for rules (human rights, freedom of speech).

•Identify ethical issues. •Recognize approaches for resolving ethical issues. •Cope with conflicts between your own personal values and those of the organization in which you work. •Gain knowledge to make more ethical business decisions.

Steps for studying business ethics

True

T/F: By its very nature, the field of business ethics is controversial, and there is no universally accepted approach for resolving its dilemmas.

Great Society

The "_____ ______" was a series of programs that extended national capitalism and told the business community in the US government's responsibility was to provide all citizens with some degree of economic stability, equality, and social justice

decay; growth

The 1960s saw the _____ of inner cities and the _____ of ecological problems such as pollutions and the disposal of toxic and nuclear wastes.

self-regulation

The 1980s ushered in the Reagan-Bush era, with the accompanying belief that ________ ______, rather than regulation by government, was in the public's interest.

Foreign Practices Act; highest

The _____ ____ ____ was passed during his administration, making it illegal for U.S. businesses to bribe government officials of other countries. Today, this law is the ______ priority of the US Department of Justice.

teenage smoking

The administration of President Bill Clinton continued to support self-regulation and free trade. However, it also took unprecedented government action to deal with health-related social issues such as _____ _______. Its proposals included restricting cigarette advertising, banning cigarette vending machine sales, and ending the use of cigarette logos in connection with sports events.

discovery of risks

The board is required to provide resources to oversee the _____ ____ ____ and to design, implement, and modify approaches to deal with those risks.

values, beliefs; patterns

The ethical component of a corporate culture relates to the _______, _______, and established and enforced _______ of conduct employees use to identify and respond to ethical issues.

Fair service Fair treatment of competitors Fair price Moral progress in the business world

The first book on business ethics was published in 1937 by Frank Chapman Sharp and Philip G. Fox. The authors separated their book into four sections:

enforced compliance; ethical reasoning

The goal of an ethical culture is to minimize the need for _______ _______ of rules and maximize the use of principles that contribute to _____ ______in difficult or new situations.

Federal Sentencing Guidelines for Organizations (FSGO)

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.

departments

The influence of higher levels of trust is greatest on relationships within departments or work groups, but trust is significant factor in relationships among _________as well.

profit; style

The modern consumer movement is generally considered to have begun in 1965 with the publication of Ralph Nader's Unsafe at Any Speed that criticized the auto industry as a whole, and General Motors Corporation (GM) in particular, for putting _____ and _____ ahead of lives and safety.

Sarbanes-Oxley Act

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.

misuse of company resources, abusive behavior, harassment, accounting fraud, conflicts of interest, defective products, bribery, product knockoffs, and employee theft

There are a number of ethical issues that must be addressed to prevent misconduct. ________ _____ are all problems cited as potential risk areas.

consumerism

This period (the 1960s) also witnessed the rise of _________ - activities undertaken by independent individuals, groups, and organizations to protect their rights as consumers.

the publicity and debate surrounding highly publicized legal and ethical lapses at well-known firms

What highlights the need for businesses to integrate ethics and responsibility into all business decisions?

puffery

While misleading advertising violates the law, ______ - or an exaggerated claims that customers should not take seriously - is considered acceptable.

30%; 33%; 73%

While observed misconduct was ___ in the US, it was ___ globally. Globally, ____ of employees that felt pressure also witnessed misconduct.

•Misconduct can and will occur. •Ethical failure is a huge business concern. •Negative publicity can be very damaging. •Being a good person and having high moral development may not prevent ethical failures in companies. •Big differences exist in the values and philosophies influencing individuals making the decisions in companies.

Why study business ethics?

experience

Years of _______ in a particular industry may be required to know what is acceptable.

questionable consumer practices

You should be aware that the public is more tolerant of _____ _____ _____ than of similar business practices.

big data

_____ ____ deal with massive data files obtained from structured and unstructured databases.

social programs

_____ ______ improving the ethical culture range from work-family programs to stock ownership plans to community service

failure

_____ to establish shared values and ethics codes will result in a wide range of conduct when faced with the same ethical issues.

investors, employees, customers, suppliers, and society

decisions in business have implications for

moral dilemma

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

Dodd-Frank Wall Street Reform and Consumer Protection Act

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.

Defense Industry Initiative on Business Ethics and Conduct

developed to guide corporate support for ethical conduct

understanding and identifying issues, areas of risk, and approaches to making choices in an organizational environment

ethical behavior in business requires

ethics

is defined as behavior or decisions made within a groups' value

the 1960s

saw the emergence of many social issues involving business and the concept of social conscience as well as a rise in consumerism, which culminated with Kennedy's Consumers' Bill of Rights.

principles

specific and pervasive boundaries for behavior that should not be violated

Corporate integrity

the alignment between a corporation's explicit intention to define its values and its role in society, and its manifestation of this organizational intention in the commitments and actions of corporate personnel

acceptable

the field of business ethics deals with questions about whether specific conduct and business practices are

group

the important concept in business ethics is that right and wrong behavior is defined by the

value dilemma

the individual's beliefs are grounded with societal norms

workplace integrity

the pressure to compromise organizational standards, observed misconduct, reporting of misconduct when observed, and retaliation against reports

Global Compact

to create openness and alignment among business, government, society, labor, and the UN

current

trend is away from legally based ethical initiatives in organizations and toward cultural initiatives that make ethics a part of core organizational values.

before 1960

•- business ethics issues were discussed primarily from a religious perspective.

the 1970s

•Business ethics began to develop as an independent field of study.

employee commitment, investor loyalty, customer satisfaction, profits

•Ethics Contributes to

the 1990s

•Government continued to support self-regulation.