MGMT 3880 Test 1

Acceleration of Globalization

--*reasons why globalization has accelerated --Technological innovations --Transportation systems --Rise of major transnational corporations --Cultural convergence --Social and political reforms

Stakeholder Engagement

---Inactive: Does the organization just ignore the concerns?; Common; where ethical issues come from --Reactive: Only after the fact; Example- bp oil spill; Defensive; Common; where ethical issues come from --Proactive: Try to anticipate and engage; Best form --Interactive: Actively engaging them; Asking each stakeholder what they want; Best form

Business Ethics Across Organizational Functions

--Accounting --Financial --Marketing --Information Technology --Production and Operations --Purchasing --*ethics is taught in every function of business

General Systems Theory (GST)

--All organisms are open and engaged/ interacts with their external environment --although most organisms have clear boundaries, they cannot be understood in isolation, but only in relationship to their surroundings --Businesses (social organisms) are embedded in the broader social structure (external environment) --business must adapt to changes in the environment --systems theory helps us understand how business and society, taken together, form an interactive social system; each needs the the other and each influences the other

Stake

--Anything that has interest in a business or anything that is influenced by a business --An interest in, or claim on, a business enterprise

Benefits and Costs of the Globalization Debate

--Benefits: gives developing countries access to foreign investment funds to support economic development; transfers technology; spreads democracy and freedom and reduces military conflict; reduces prices; increases economic productivity; helps other countries economies, customers; more convenient; makes us look at diverse ethical standards --Costs: causes job insecurity due to outsourcing; weakens environmental and labor standards; hinders individual countries from producing on their own; is compatible with despotism...; decreases competition within other countries; impedes on others' cultures

Ethics in a Global Economy

--Bribery: biggest issue with ethics is today's business; questionable or unjust payments often to a government official to ensure or facilitate a business transaction; found in nearly every sector of the global marketplace --Foreign Corrupt Practices Act (FCPA): U.S. based companies have been prohibited by this law from paying bribes to foreign government officials, political parties, or political candidates --Ethics gap: not consistent; no universal ethical standard --Newest issue: white-collar crime; illegal acts committed by individuals, employees or business professionals such as fraud, insider trading, embezzlement, or computer crime; accounts 330,000 arrests a year

Dynamic Business Environment

--Changing societal expectations (society's expectations of business are changing; people expect business to be more responsible) --Growing emphasis on ethical reasoning and actions (public expects business to be more ethical) --Globalization --Evolving governmental regulations of business (government has profoundly constrained how business is allowed to operate) --Dynamic natural environment --Explosion of new technology (technology is one of the most dramatic and powerful forces affecting business and society

History of Corporate Social Responsibility

--Charity principle: wealthy individuals of society took care of the less fortunate --Stewardship principle: now we look at it from a business perspective; businesses now have an obligation to make sure all stakeholders' needs are met and that they benefit from them --Iron law of responsibility/ principle: says if in the long run the organizations that don't follow the stewardship principle or they won't be around; says that in the long run those who do not use power in ways that society considers responsible will tend to lose it

Two Ethics Approaches

--Compliance-based approach: threats and consequences; fear mentality; laws, standards, regulations; abiding by fear --Integrity-based approach: we want to go above what the law wants; people want to be ethical

Introduction to Corporate Citizenship

--Corporate citizenship: a bottom-line of an organization in today's world; involves looking at their action plan --Corporate citizenship involves: proactively building stakeholder partnerships; discovering business opportunities in serving society; transforming a concern for financial performance into a vision of integrated financial and social performance --Citizenship profile: organizations are being ranked and judged; these can differ from region to region; what are they doing to be socially responsible?

Corporate Culture and Ethical Climates

--Corporate culture: vision statements, mission statements, etc; blend of ideas, customs, traditional practices, company values, and shared meanings that help define normal behavior for everyone who works in a company --Ethical climate: the unspoken understanding among employees of what is and is not acceptable behavior; sets the ethical tone in the company --egoism (self-centered approach); --benevolence (concern for others approach, community, etc.); --principle (integrity approach; doing and respecting laws, rules, regulations, etc.) --Levels of culture: national culture--> business culture--> organizational culture & occupational culture--> multinational management

Phases of Corporate Responsibility

--Corporate social stewardship (1950s-1960s): organizations decided they were going to support charities; corporate philanthropy-acts of charity --Corporate social responsiveness (1960s-1970s): social responsibility was going to be a part of the strategic plan, mission, vision, etc; social impact analysis --Corporate/business ethics (1980s-1990s): organizations are going to have ethic policies; want to do good and be good; foster an ethical corporate culture; establish an ethical organizational climate; recognize common ethical principles --Corporate/global citizenship (1990s-2000s): integrate financial, social, and environmental performance; identify globalization impacts

Boundary-Spanning Departments

--Departments, or offices, within an organization that reach across the dividing line that separates the company from groups and people in society --Building positive and mutually beneficial relationships across organizational boundaries is a growing part of management's role

Stakeholder Dialogue

--Each group describes their core issues and concerns --Together groups reach common definition of problems --Together groups invent innovative solutions that involve mutual gain --Together establish procedures for implementing solutions --*Time and money keep organizations from doing this process

Multiple Responsibilities of Business

--Economic responsibilities --Social responsibilities (examples- xerox has a program where you go work for a non profit for a year and they still pay you your salary; texas roadhouse has 21 different non profits that they support every year that their employees choose) *these are now both expected --Legal responsibilities (this has always been a factor)

Stages of Corporate Citizenship

--Elementary stage: obeying the law/bare minimum; doing what we are required to by law --Engaged stage: actually decide to come up with formal policies --Innovative stage: specifically try to report what they're doing; launching new programs to help the community --Integrated stage: organizations start actively collaborating with a community; partnering together --Transforming stage: when they would have a department or corporate citizenship; organization has put a lot of resources into this --*these 5 stages are based on: citizenship content; strategic intent; leadership; structure; issues management; stakeholder relationship; transparency

Principles of Global Corporate Citizenship

--Ethical business behavior --Stakeholder commitment --Community --Consumers --Employees --Investors --Suppliers --Environmental commitment

How Should the Manager Decide?

--Ethical relativism: ethics is relative to situations --Ethical universalism: ex- no matter what, stealing is wrong --Cultural imperialism: ex- this is ethical in our culture, so it should be everywhere, or vice versa --Convenient relativism:....... --Businesses look at the legality (legal analysis); organizational ethical analysis; cultural sensitivity ethical analysis; personal ethical analysis

The Meaning of Ethics

--Ethics: Right and wrong; tells us whether our behavioral is moral or immoral; What you ought to do --Ethical Principles: guides to moral behavior --Business Ethics: Application of ethics in an organization --Ethical Relativism: Ethics is relevant to a time and a place; ethical principles should be defined by various periods of time in history, a society's traditions; the special circumstances of the moment, or personal opinion

Ownership Theory of the Firm

--Firm's sole purpose is to maximize the profits of the shareholder/ owners and to maximize its long-term market value --aka property or finance theory --the firm is seen as the property of the owners --owners interests are paramount and take precedence over others

Debate of Corporate Social Responsibility

--For: balances corporate power with responsibility; discourages government regulation; promotes long-term profits for business; improves stakeholder relationships; enhances business reputation --Against: lowers economic efficiency and profits; imposes unequal costs among competitors; imposes hidden costs passed onto stakeholders; requires skills businesses lack; places responsibility on business rather than individuals

Stockholder

--Individuals or organizations who owns shares or stocks of a company --This is a kind of stakeholder in the organization

Collaborative Partnerships for Global Problem-Solving

--Involves 3 sectors: ----Business (for-profit organizations) ----Government ----Civil Society (social responsibility; philanthropic causes they have to think about as well)

Doing Business in a Diverse World

--Issues: democracy (not everywhere); military dictatorships (sometimes have total power); free enterprise systems (not everywhere); central state control (who is controlling; how involved is the government); constructive engagement (what does this culture want, not just what we want to do for them); global codes of conduct

Core Elements of Ethical Character

--Managers' values: Influence the type of ethical decisions that are made; values held by managers will serve as models for others who work at the company; a majority of people believe big business has poor ethical standards --Virtue ethics: Character traits --Personal spirituality --Managers' moral development --We grow during our time at organizations

Five Key Reasons Business Should Be Ethical

--Meet demands of business stakeholders (when a company upholds ethical standards, consumers may conduct more business with the firm, which helps the stakeholders) --Enhance business performance (integrity capital: the financial benefit a company reaps from promoting a culture of integrity among its workforce) --Comply with legal requirements (ex- U.S. Corporate Sentencing Guidelines; Sarbanes-Oxley Act: seeks to ensure that firms maintain high ethical standards in how they conduct and monitor the accuracy of a firm's financial reports) --Prevent or minimize harm --Promote personal morality

Sources of Ethics

--Notions of right and wrong come from many sources: Religious beliefs; Family background; Education; Community/neighborhood; Media influences; Environment; Culture; Society --*52% of employees observed at least one type of misconduct in the workplace in the last year --Types of misconduct: Abuse; Lying to employees, customers, etc.;Violation of safety regulations; Misreporting of actual time worked; Stealing or theft; Sexual harassment; Discrimination

Stakeholder

--Person or group that has interest in a business or that is influenced by a business; persons or groups that affect, or are affected by, an organization's decisions, policies, and operations --Market stakeholders: those that engage in economic transactions with the company as it carries out its purpose of providing society with goods and services (exe-employees working for wages; creditors loaning money and collecting interest payments); have a direct or primary stake in an organization; Usually a two-way exchange --Non-market stakeholders: Don't have direct economic exchange but is still affected by the firm (exs- the community, various levels of government, nongovernmental organizations, the media, business support groups, competitors, and the general public); exchanges with these can be critical to a firm's success of failure --Internal stakeholders (those who are employed by the firm) vs. External stakeholders (not directly employed by the firm) ----Internal market stakeholders (employees; managers) ----Internal non-market stakeholders (there are none) ----External market stakeholders (stockholders, customers, creditors, suppliers, wholesalers and retailers) ----External non-market stakeholders (governments, communities, nongovernmental organizations, business support groups, media, competitors)

Why Ethical Problems Occur

--Personal gain and self-interest: Egotistical mentality (ethical egoist: a manager or employee who puts his or her own self-interest above all other considerations); selfish interest versus others' interests; "I want it" --Competitive pressure on profits: Bottom-line mentality; Only focuses on money/ profit; firm's interest versus other's interests; "we have to beat the others at all costs"; when companies are squeezed by tough competition, they sometimes engage in unethical activities to protect their profits --Conflicts of interest: Favoritism mentality; multiple obligations or loyalties; " help yourself and those closest to you"; happens when an individual's self-interest conflicts with acting in the best interest of another --Cross-cultural contradictions: Ethnocentric mentality; company's interests versus diverse cultural traditions and values; "foreigners have a funny notion of what's right and wrong"

Social Performance Auditing

--Social performance audit: systematic evaluation of the organizations social, ethic, and environment performance --Types of audits that exist: global social audit standards; social and environmental reports; balanced scorecard (more complex; looks at employees and their knowledge; looks internally at what is done for employees from a social perspective; looks at it financially; and looks at how the customer is affected); triple bottom line (looks at financial, social, and environment); transparency (on behalf of the organization, how open they are about what they're doing) --100 best corporate citizens list (these have been on in it consistently for the last 11 years): Intel, Starbucks, and Cisco

Corporate Social Responsibility

--Social responsibility: a corporation should act in a way that enhances society and its inhabitants and be held accountable for any of its actions that affect people, their communities, and their environment --Corporate power: refers to the capability of corporations to influence government, the economy, and society, based on their organizational resources; it used to be that individuals were the main contributors to charities; now corporations and organizations are doing it and have philanthropic causes; corporate power is defined by their level of influence

Stakeholder Salience and Mapping

--Something is salient when it stands out form a background, is seen as important, or draws attention; stakeholders stand out to managers when they have power, legitimacy, and urgency --A stakeholder map is a graphical representation of the relationship of stakeholder salience to a particular issue

Stages of Moral Ethics

--Stage 1: Childhood; punishment avoidance (avoid harm, obedience to power); ego-centered reasoning --Stage 2: Adolescence, youth; reward seeking (self-interest, own needs, reciprocity); ego-centered reasoning --Stage 3: Early adulthood, adolescence; social groups (friends, school, coworkers, family); group-centered reasoning --Stage 4: Adulthood; society at large (customs, traditions, laws); society-and law-centered reasoning --Stage 5: Mature adulthood; moral beliefs above and beyond specific social custom (human rights, social contract, broad constitutional principles); principle-centered reasoning --Stage 6: Mature adulthood; universal principles (justice, fairness, universal human rights); principle-centered reasoning --*Many ethical decisions are made in stage 3 and 4

Caveats and Cautions

--Stereotypes --Ethnocentrism: believing your way is the best and everyone else should follow them --Cultural relativism

Stakeholder Analysis

--The point is to identify relevant stakeholders and to understand both their interests and the power they may have to assert these interests --Focal organization: the organization from whose perspective the analysis is conducted --Asks 4 questions: ----Who are the relevant stakeholders? ----What are the interests of each stakeholder? (the stakeholders interests are essentially the nature of each group's stake) ----What is the power of each stakeholder? (stakeholder power is the ability to use resources to make an event happen or to secure a desired outcome; stakeholders have 5 different kinds of power= voting power, economic power, political power, legal power, and informational power) ----How/what are coalitions likely to form?

Social Enterprise

--This term refers to an organization that uses business strategies for the purpose of improving human and environmental well-being --Their primary purpose is not to maximize return to shareholders --Social entrepreneurs: individuals who (like traditional entrepreneurs) act boldly to pursue opportunities, attract support, and build new organizations; unlike traditional entrepreneurs, however, these individuals are typically driven by a core mission to create and sustain social rather than economic value --Social entrepreneurship: when a person or a group of people identify a social need and use their entrepreneurial skills to address this need; their goal is to use the power of enterprise to drive social change and help society --B Corporation: benefit corporation; type of social enterprise; new type of corporation that seeks to blend its social objectives with financial goals; assessed on the impact it has on its communities, employees, consumers, and the environment

Ethics Programs and Policies

--Top management commitment and involvement (the key to this is the see if they have a chief ethics officer) --Ethics codes or policies; many U.S. business have these, especially large firms --Ethics officers --Ethics help lines --Ethics training programs --Ethics audits

Three Approaches to Ethical Reasoning

--Utilitarian: Cost-benefit approach; greatest good for the greatest number; if it doesn't hurt the majority of people its ok; comparing costs and benefits; an action is ethical when net benefits exceed net costs; limitations (difficult to measure some human and social costs, majority may disregard rights of the minority) --Rights: Does it hurt human rights?; if it doesn't, its ok; due process, safety, security, etc; respecting entitlements; an action is ethical when basic human rights are respected; limitations (difficult to balance conflicting rights) --Justice: Is it fair?; is there an equal cost-benefit?; distributing fair shares; an action is ethical when benefits and costs are fairly distributed; limitations (difficult to measure benefits and costs, lack of agreement on fair shares) --We look at all three of these; if it passes all three then it is ethical --There is no universal ethical standard, but values are universal (*top 5: do no harm; be fair and just; be honest; respect others rights; act responsibly) --Virtue ethics: focuses on character traits that a good person should possess; values and characters; an action is ethical when it aligns with good character; limitations (subjective or incomplete set of good virtues)

The Business and Society Relationship

--What is business?: any organization (profit or nonprofit) that is engaged in making a product or a service for a profit; There are over 5 million businesses in the U.S. (about 6 million) and is arguably the most dominant institution in the world --What is a Society?: The human beings and the social structures that they collectively create; used to refer to segments of humankind, such as members of a particular community, nation, or interest group --Business and Society are highly interdependent; They are dependent on one another; They must interact; Businesses are imbedded in the social structure

Global Corporate Citizenship

--What is it?: internationally what they are doing to be a corporate citizen; it is possible to be in both corporate and global corporate citizenship --Consistent with several themes: they must be responsive to all their stakeholders; they go above a beyond the legal minimum requirements; companies forecast and respond to stakeholder expectations and organizations voluntarily take action that is consistent with what stakeholders want; involves both the corporation and the processes and structures

Globalization

--What is it?: seen as the increase of goods and services across national borders; it's a process that is evolving and changing --Entering the global marketplace: develop global market channels (export to other countries); establish global operations (specifically manufacture goods and services in other places in the world); develop global supply chains (one product is manufactured one place and one in another; multiple supply chains) --Transnational corporations: operate and control assets in other countries and across national borders

Whistle-Blowing

--What is it?: when someone discloses illegal or unethical actions in organizations --Consequences of whistle-blowing: fears of getting fired, demoted, etc --Reasons employees don't whistle-blow: for fear of retaliation; people don't do it because of these fears

International Financial and Trade Institutions

--World Bank: about economic development; wanted to set up funds for organizations, education, healthcare, etc; set up to provide economic development loans to its member nations; its main motivation was to rebuild the war-torn economies of Europe; today it is one of the world's largest sources of economic development assistance --International Monetary Fund: formed out of the world bank; purpose was to make currency exchange easier for member countries so that they can participate in global trade --World Trade Organization: doesn't lend money; sets individual standards and policies; establishes ground rules for trade among nations; major objective is to promote free trade by eliminating trade barriers such as tariffs. --*these have set ethical standards from a global standpoint

The Stakeholder Theory of the Firm

--argues that corporations serve a broad public purpose: to create value for society --Focuses on the firm creating value for all its stakeholders (community, the environment, owners, etc.) --Firm has multiple obligations --Most organizations are trying to move in this direction