Business Ethics: Chapters 1&2
Dodd-Frank Wall Street Reform and Consumer Protection Act
Required regulators to create hundreds of rules to promote financial stability, improve accountability and transparency, and protect consumers from abusive financial practice.
Dodge v. Ford Motor Co.
Ruled that a business exists for the profit if stakeholders, and the board of directors should focus on the objective.
Social responsibility
An organization's obligation to maximize its positive impact on stakeholders and minimize its negative impact.
Descriptive approach
Focuses on the actual behavior of the firm and usually addresses how decisions and strategies are made for stakeholder relationships.
Stakeholder model of corporate governance
Has a responsibility for economic success and viability to satisfy its stockholders.
Normative approach
Identifies ethical guidelines that dictate how firms should treat stakeholders.
Fifth Dll Principle
Insists member companies preserve the integrity of the defense industry.
Federal Sentencing Guidelines of Organizations (FSGO)
Made it almost mandatory for businesses to have an third training because if they didn't, they would be held accountable for their employees actions.
Sarbanes-Oxley Act
Made securities fraud a criminal offense and stiffened penalties for corporate fraud.
Duty of loyalty
Means all of their decisions should be in the best interests of the corporation and its stakeholders.
Second Dll Principle
Member companies are expected to provide ethics training for their employees as well as continuous support between training periods.
Sixth Dll Principle
Member companies must adopt a philosophy of public accountability.
Three approaches to stakeholder theory:
Normative, descriptive, and instrumental
Three types of activities that orientation encompasses
Organization, distribution, and responsiveness
Morals
Refer to a person's personal philosophies about what is right or wrong.
Major issues surrounding social responsibility
Social issues, consumer protection, sustainability, and corporate governance
Compensation
Something, typically money, awarded to someone as a recompense for loss, injury, or suffering.
Principles
Specific and pervasive boundaries for behavior that should not be violated.
First Dll Principle
Supports codes of conduct and their widespread distribution. Must be understandable and cover substantive areas in detail.
Reputation
The beliefs or opinions that are generally held about someone or something.
Ethical culture
The component of corporate culture that captures he values and norms an organization defines and is compared to by its industry as appropriate conduct.
Interlocking directorate
The concept of board members being linked to more than one company.
Stakeholder orientation
The degree to which a firm understands and addresses stakeholder demands.
Corporate governance
The development of formal systems of accountability, oversight, and control.
Duty of diligence
The duty to make informed and prudent decisions.
Federal Sentencing Guidelines for Organizations
The guidelines focus on firms taking action to prevent and detect business misconduct in cooperation with government regulation.
Stakeholder interaction model
The model that explains the reciprocal relationships between the firm and a host of stakeholders.
Four basic consumer rights
The right to safety, the right to be informed, the right to choose, and the right to be heard
Consumers'' Bill of Rights
The right to safety, the right to be informed, the right to choose, and the right to be heard.
Primary stakeholder
Those whose continued association is absolutely necessary for a firm's survival. Like employees, customers, and investors.
Fiduciaries
Trustees
Corporate citizenship
Used to express the extent to which businesses strategically meet the economic, legal, ethical, and philanthropic responsibilities placed on them by various stakeholders.
Stakeholder
Customers, investors, shareholders, and many others who have a "stake" or claim in some aspect of a company's products and outcomes.
Executive compensation
CEO compensation
Fourth Dll Principle
Companies need to perform extensive internal audits and develop effective internal reporting and voluntary disclosure plans.
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.
Third Dll Principle
Defense contractors must create an open atmosphere in which employees feel comfortable reporting violations without fear of retribution.
Instrumental approach
Describes what happens if firms behave in a particular way.
Defense Industry Initiative on Business Ethics and Conduct (Dll)
Developed to guide corporate support for ethical conduct.
Secondary stakeholder
Do not typically engage in transactions with a company and are therefore not essential to its survival.
Four levels of social responsibility
Economic, legal, ethical, and philanthropic
Values
Enduring beliefs and ideals that are socially enforced.
Shareholder model of corporate governance
Focuses on developing and improving the formal system for maintaining performance accountability between top management and the firms shareholders.