Business Ethics Test 2 Padgett

duplicity

a fraudulent activity that could involve a consumer staging an accident to seek damages

Institutionalization Ethics

-Involves embedding values, norms, and artifacts in organizations, industries, and society. -Reasons why this has progressed in recent decades includes; stake holders have recognized the need for improving business ethics; the government has stepped in when scandals and misconduct have damaged key constituents of businesses; gatekeepers have been questioned as to their contributions in major scandals; and highly ethical companies tend to be more profitable than those suffering from misconduct issues.

Voluntary Responsibilities

-Relate to a business's contributions to stakeholders. -include: helping to create an ethical culture and values that can act as a buffer to organizational misconduct; reducing government involvement by providing assistance to stakeholders; developing employee leadership skills; and improving the quality of life in communities. -Donation of computer equipment to schools by companies such as Toshiba

Public Accounting Oversight Board

-Sarbanes-Oxley Act created this to oversee the accounting firms that audit public corporations and to establish rules and standards for auditing.

stakeholder model of corporate governance

-a broader view of the purpose of business -entails creating governance systems that consider those who have claims in a business's welfare in tandem with corporate needs and interests -many businesses evolve into this model as a result of government initiatives, consumer activism, industry activity, and other external forces

fraud

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

shareholder model of corporate governance

-founded in classic economic precepts, including the goal of maximizing wealth for investors and owners -should drive a firm's decisions toward serving the best interests of investors -has been criticized for its singular purpose and focus because there are other ways of "investing" in a business -more restrictive

affirmative action

-help build workforces that reflect their customer base -involve efforts to recruit, hire, train, and promote qualified individuals from groups that have traditionally been discriminated against on the basis of race, gender, and other characteristics

voluntary practices

-include the beliefs, values, and voluntary contractual obligations of a business -all businesses engage in some level of this -can benefit not internal and external steakholders

intellectual property rights

-involve the legal protection of intellectual property such as music, books, and movies

corporate governance

-involves the development of formal systems of accountability, oversight, and control (the process of and improving organizational decisions and actions.) -if strong, removes the opportunity for employees to make unethical decisions

Sarbanes Oxley legislation

-largely in response to widespread corporate accounting scandals -made to establish a system of federal oversight of corporate accounting practices -requires corporations to establish codes of ethics

consumer protection law

-laws that require businesses to provide accurate information about their products and services and follow safety standards -the first law was passed in 1906 in response to "The Jungle"

abusive or intimidating behavior

-most common ethical problem -The concepts can mean any- thing—physical threats, false accusations, being annoying, profanity, insults, yelling, harshness, ignoring someone, and unreasonableness—and the meaning of these words can differ by person.

hacking

-one of the top three methods for obtaining trade secrets that involves breaking into a computer network to steal information -three types: system, remote, and physical

integrity

-refers to being whole, sound, and in an unimpaired condition -in an organization, means uncompromising adherence to a set or group of values -a foundational value that relates to product quality, open communication, transparency, and relationships

honesty

-refers to truthfulness or trustworthiness -issues arise in business because some think it to be a game governed by its own rules rather than the rules of society

fairness

-the quality of being just, equitable, and impartial -three fundamental elements that motivate people to take part: equality (distribution of benefits and resources), reciprocity (interchange of giving and receiving in relationships), and optimization (the trade-off between equity and efficiency)

consumer fraud

-when consumers attempt to deceive businesses for their own gain -involves intentional deception on the part of an individual or group in order to derive an unfair economic advantage over an organization

Equal Employment Oportunity Commission - EEOC

-where charges of discrimination are filed

a company in the US can be sued if it

1) refuses to hire an individual 2) maintains a system of employment that unreasonably excludes an individual from employment 3) discharges an individual or 4) discriminates against an individual with respect to hiring, employment terms, promotion, or privileges of employment as they relate to the definition of discrimination

internal employee theft

Among retail stores ___________, is a larger problem than customer shoplifting

What is the first step in implementing a stakeholder perspective in an organization?

Assessing the corporate culture

Sherman Antitrust Act of 1890

Can be classified as procompetitive legeslation. This act prohibits organizations from holding monopolies in their industry.

Civil and Criminal Law

Derived from four sources: the U.S. Constitution (constitutional law), precedents established by judges (common law), federal and state laws or statutes (statutory law), and federal and state administrative agencies (administrative law).

Carroll's four levels of social responsibility

IN ORDER economic, legal, ethical, philanthropic

Institutionalization of Social Responsibility

Includes voluntary practices, legal responsibilities, core practices, and strategic philanthropy.

Why do critics argue that high compensation for boards of directors is a bad thing?

It could cause conflicts of interest between the directors and the organization

Federal Sentencing Guidelines for Organizations

Passed by Congress in 1991, these guidelines created incentives for organizations to develop and implement ethical compliance programs.

Compliance Programs for Due Diligence

Steps that the U.S. Sentencing Commission requires for an effective compliance program include: developing a code of conduct, providing oversight by high-ranking personnel, creating a communication system for disseminating standards and procedures, and monitoring and auditing systems designed to detect misconduct.

Cause-Related Marketing

Ties an organization's products directly to a social concern through a marketing program. Can affect consumer buying patterns, if consumers are sympathetic to the cause and the brand and cause are seen as a good fit.

Milton Friedman

Which economist's theory are they following most closely with the belief in the idea that the mission of business is to produce goods and services at a profit, thus maximizing its contribution to society. Some economists also believe that if companies address economic and legal issues, they are satisfying the demands of society and that trying to anticipate and meet additional needs would be almost impossible.

facilitation payment

_______________ made to obtain or retain business or other improper advantages do not constiture bribery payments for U.S. companies in some situations Often made to induce public officials to perform their functions.

discrimination

_________________ on the basis of race, color, religion, sex, marital status, sexual orientation, public assistance status, disibility, age national origin, or veteran status is illegal in the U.S.

collusion

a fraudulent activity involves an employee who assists a consumer in fraud

ethical dilemma

a problem, situation, or opportunity that requires an individual, group, or organization to choose among several actions that have negative outcomes

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

unethical dual relationship

a relationship that could potentially cause a direct or indirect conflict of interest

U.S. Foreign Corrupt Practices Act (FCPA)

an act that state it is illegal for individuals, firms, or third parties doing business in American Markets to "make payments to foreign government officials to assist in obtaining or retaining business" (applies to all firms transacting business with operations in the U.S.)

puffery

an exaggerated advertising, blustering, and bloating upon which no reasonable buyer would rely upon, and is not actionable under the Lanham Act(protects and regulates brand/trademarks)

Consumer Financial Protection Bureau

an independent agency within the federal Reserve System that "regulates the offering and provision of consumer financial products or services under the Federal consumer financial laws."

reputation

an organization's greatest intangible assets with tangible value

bullying

behavior associated with a hostile workplace where an individual or a group considered a target is threatened, harassed, belittled, or verbally abused or overly criticized

interlocking directorate

board members being linked to more than one company and is not considered illegal unless it involves a direct competitor

examples of primary stakeholders

customers, employees, shareholders, suppliers, community, government regulatory agencies

stakeholder

customers, investors and shareholders, employees, suppliers, government agencies, communities, and many others who have a claim in some aspect of a company's products, operations, markets, industry, and outcomes

dual relationship

defined as a personal, loving, and/or sexual relationship with someone whom you share professional resposibilities

civil law

defines the rights and duties of individuals and organizations (including businesses)

stakeholder orientation

degree to which a firm understands and addresses stakeholder demands, a value of and tending to the relationship; continuum

equality

distribution of benefits and resources

core practices

documented best practices, often encouraged by legal regulatory forces as well as industry trade associations

secondary stakeholder

does not typically engage directly in transactions with a company and are not essential to its survival, includes the media, trade associations, and special interest groups

OSHA- occupational safety and health administration

enforces the Occupational Safety and Health Act of 1970 that mandates employers provide safe and healthy working conditions for all workers, and makes regular suprise inspections to ensure businesses maintain safe working environments

McCarran-Ferguson Act of 1944

exempted the insurance industry from antitrust legislation

conflict of interest

exists when an individual must choose whether to advance his or her own interests, those of the organization, or those of some other group

mandated boundaries

externally imposed boundaries of conduct, such as laws, rules, regulations, and other requirements

Core Practices

focuses on developing sound organizational practices and integrity for financial and nonfinancial performance measures, rather than on an individual's morals

philanthropy

giving back to communities and causes

misuse of company resources

identified by the Ethics Resource Center as the leading form of observed misconduct in organizations

reciprocity

interchange of giving and receiving in relationships

legal insider training

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 occured

competitive dimension

involves the rivalry among businesses for customers and profits

An activity is probably ethical if it

is approved of by most individuals in the organization and is customary in the industry.

procompetitive legislation

laws passes to prevent the establishment of monopolies, inequitable pricing practices, and other practices that reduce or restrict competition among businesses.

precompetitive legislation

laws that have been passed to prevent the establishment of monopolies, inequitable pricing practices and other practices that reduce or restrict competition among businesses

Better Business Bureau

leading self-regulatory body that provides directions for managing customer disputes and reviews advertising cases

One policy to address the issue of executive pay was implemented by J.P. Morgan, it stated that

managers should earn no more than twenty times the pay of other employees.

primary stakeholder

necessary to firms survival, includes employees, customers, shareholders, and government and committees that provide necessary infrastructure

criminal law

not only prohibits specific actions, such as fraud, theft, or securities trading violations, but also imposes fines or imprisonment as punishment for breaking the law

social entrpreneurship

occurs when an entrepreneur founds an organization w the purpose of creating social value.

executive compensation

one of the biggest issues corporate boards of directors face

social responsibility

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

Pure Food and Drug Act of 1906

passed in response to public outrage over conditions described in Upton Sinclair's The Jungle, was the first consumer protection legislation

Antitrust Laws

primary objective is to protect employees.

EPA - Equal Pay Act

prohibits sex-based discrimination in the rate of pay to men and women doing the same or similar jobs

stakeholder interaction model

reciprocal relationships between the firm and a host of stakeholders

sexual harrassment

repeated, unwanted behavior of a sexual nature perpetrated upon one individual by another

examples of secondary stakeholders

special interest groups, the mass media, competitors, trade associations

Age Discrimination Act

specifically outlaws hiring practices that discriminate against people 40 yrs of age or older, as well as those that require employees to retire before the age of 70

the ethical decision making process begins when

stakeholders trigger ethical issue awareness and individuals openly discuss it with others

Major corporate governance issues normally involve

strategic-level decisions.

illegal insider trading

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

corporate intelligence (CI)

the collection and analyisis of information on markets, technologies, customers, and competitors, as well as on socioeconomic and external political trends

corporate citizenship

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

organization-wide generation of data

the first of the three activities that are associated with the stakeholder orientation

Ethical issue awareness

the first step toward understanding business ethics

sustainability

the potential for the long-term well-being of the natural environment, including all biological entities, as well as the mutally beneficial interactions among nature and individuals, organizations, and business strategies

bribery

the practice of offering something in order to gain an illicit advantage from someone in authority. (active: promises or gives; passive: accepts or recieves)

strategic philanthropy

the synergistic and mutually beneficial use of an organization's core competencies and resources to deal with key stakeholders so as to bring about organizational and societal benefits

optimization

the trade-off between equity and efficiency

social engineering

the tricking of individuals into revealing their passwords or other valuable corporate information

accountants must abide by a strict code of ethics that defines their responsibilities to

their clients and to the public interest

hostile work environment

three criteria: -the conduct was unwelcome -the conduct was severe, pervasive, and regarded by the claimant as so offensive as to alter his or her conditions of employment -the conduct was such that a reasonable person would find it offensive

lying

three types: -joking without malice -by commission -by omission