Business Ethics Midterm

Civil law

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

Optimization

Optimization is the trade-off between equity (equality) and efficiency (maximum productivity). The optimal way to hire is to choose the employee who is the most talented, proficient, educated, and able.

Better business bureau

. The Better Business Bureau is a leading self-regulatory body that provides directions for managing customer disputes and reviews advertising cases. Core practices are appropriate and common practices that ensure compliance with legal requirements and societal expectations. Although these practices are not enforced, there are consequences for not engaging in them when misconduct occurs. For example, the Federal Sentencing Guidelines for Organizations (FSGO) suggest the governing authority (board of directors) be responsible for and assess an organization's ethical and compliance activities.

Dodd-frank wall street protection act

. The Dodd-Frank Wall Street Reform and Consumer Protection Act addressed some of the issues related to the financial crisis and recession. The Dodd-Frank Act was the most sweeping financial legislation since the Sarbanes-Oxley Act and possibly since laws put into effect during the Great Depression. It was 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.

Economic value orientation

. The concept of the economic value orientation is associated with values quantified by monetary means; according to this theory, if an act produces more value for its effort, then it should be accepted as ethical.

Equal employment opportunity commission

A company in the United States 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) d ischarges an individual, or (4) d iscriminates against an individual with respect to hiring, employment terms, promotion, or privileges of employment as they relate to the definition of discrimination. M ore than 9 9,000 charges of discrimination were filed with the Equal Employment Opportunity Commission (EEOC) in 2012. 28

Conflict of interest

A 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.

Dual relationship

A dual relationship is defined as a personal, loving, and/ or sexual relationship with someone with whom you share professional responsibilities.

Instrumentalist

A more modern view is expressed in the instrumentalist position. Sometimes called pragmatists, instrumentalists reject the ideas that (1) ends can be separated from the means that produce them and (2) ends, purposes, or outcomes are intrinsically good in and of themselves.

Abusive or intimidating behavior

Abusive or intimidating behavior is another common ethical problem for employees, but what does it mean to be abusive or intimidating? These terms refer to many things— physical threats, false accusations, being annoying, profanity, insults, yelling, harshness, ignoring someone, and unreasonableness—and their meaning differs from person to person

Kohlberg's model of cognitive moral development (CMD)

According to Kohlberg's model of cognitive moral development (CMD), people make different decisions in similar ethical situations because they are in different moral development stages. The six stages identified by Kohlberg are as follows: 1. The stage of punishment and obedience. 2. The stage of individual instrumental purpose and exchange. 3. The stage of mutual interpersonal expectations, relationships, and conformity. 4. The stage of social system and conscience maintenance. 5. The stage of prior rights, social contract, or utility. 6. The stage of universal ethical principles.

Accounting fraud

Accounting fraud usually involves a corporation's financial reports, in which companies provide important information on which investors and others base decisions involving millions of dollars. If the documents contain inaccurate information, whether intentionally or not, lawsuits and criminal penalties may result.

act deontologist

Act deontologists , in contrast, hold that actions are the proper basis to judge morality or ethicalness. Act deontology requires a person use equity, fairness, and impartiality when making and enforcing decisions. 21 For act deontologists, past experiences are more important than rules; rules serve only as guidelines in the decision-making process. In effect, act deontologists suggest people simply know that certain acts are right or wrong, regardless of their consequences. In addition, act deontologists consider the unique characteristics of a particular act or moment in time take precedence over any rule.

Age

Age is another individual factor researched within business ethics. Several decades ago, we believed age was positively correlated with ethical decision making. In other words, the older you are, the more ethical you are. However, recent research suggests there is probably a more complex relationship between ethics and age. We believe older employees with more experience have greater knowledge to deal with complex industry-specific ethical issues. Younger managers are far more influenced by organizational culture than are older managers.

Ethical dilemma

An ethical dilemma is a problem, situation, or opportunity that requires an individual, group, or organization to choose among several actions that have negative outcomes. There is not a right or ethical choice in a dilemma, only less unethical or illegal choices as perceived by any and all stakeholders.

Ethical issue

An ethical issue is 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

Consumer financial protection bureau

Another agency the Dodd-Frank Act created was the Consumer Financial Protection Bureau (CFPB), an independent agency within the Federal Reserve System that "regulate[s] the offering and provision of consumer financial products or services under the Federal consumer financial laws." One of the problems leading up to the 2008-2009 financial crisis was that average investors often did not understand the complex financial products they purchased. The CFPB aims to protect consumers from this problem in the future.

Shoulder surfing

Another common social engineering trick is shoulder surfing, in which someone simply looks over an employee's shoulder while he or she types in a password.

Bribery

Bribery is the practice of offering something (often money) in order to gain an illicit advantage from someone in authority. Gifts, entertainment, and travel can also be used as bribes.

Occupational safety and health administration

Congress passed laws that seek to improve safety in the workplace. By far the most significant of these is the Occupational Safety and Health Act of 1970 that mandates employers provide safe and healthy working conditions for all workers. The Occupational Safety and Health Administration (OSHA) enforces the act and makes regular surprise inspections to ensure businesses maintain safe working environments.

Consumer fraud

Consumer fraud occurs when consumers attempt to deceive businesses for their own gain. Shoplifting is estimated to cost retailers approximately $ 30 billion annually. Consumers engage in many other forms of fraud against businesses, including price tag switching, item switching, lying to obtain age-related and other discounts, and taking advantage of generous return policies by returning used items, especially clothing that has been worn (with the price tags still attached). Such behavior by consumers affects retail stores as well as other consumers who, for example, may unwittingly purchase new clothing that has actually been worn. Fraudulent merchandise returns are estimated to cost about $ 8.9 billion a year.

Internal control

Conversely, those who believe in internal control (internals) believe they control the events in their lives by their own effort and skill, viewing themselves as masters of their destinies and trusting in their capacity to influence their environment.

Core practices

Core practices are documented best practices, often encouraged by legal and regulatory forces as well as industry trade associations.

Corporate culture

Corporate culture can be defined as a set of values, norms, and artifacts, including ways of solving problems that members (employees) of an organization share. As time passes, stakeholders come to view the company or organization as a living organism with a mind and will of its own. The Walt Disney Co., for example, requires all new employees to take a course in the traditions and history of Disneyland and Walt Disney, including the ethical dimensions of the company. The corporate culture at American Express stresses that employees help customers out of difficult situations whenever possible. This attitude is reinforced through numerous company legends of employees who have gone above and beyond the call of duty to help customers.

Corporate governance

Corporate governance is the fourth major issue of corporate social responsibility. Corporate governance involves the development of formal systems of accountability, oversight, and control. Strong corporate governance mechanisms remove the opportunity for employees to make unethical decisions. Research has shown that corporate governance has a positive relationship with social responsibility.

Criminal law

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. The primary difference between criminal and civil law is the state or nation enforces criminal laws, whereas individuals (generally, in court) enforce civil laws. Criminal and civil laws are 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).

Corporate intelligence

Defined broadly, corporate intelligence is the collection and analysis of information on markets, technologies, customers, and competitors, as well as on socioeconomic and external political trends. There are three distinct types of intelligence models: a passive monitoring system for early warning, tactical field support, and support dedicated to top management strategy. Corporate intelligence (CI) involves an in-depth discovery of information from corporate records, court documents, regulatory filings, and press releases, as well as any other background information about a company or its executives.

Nonconsequentialism

Deontological philosophies regard certain behaviors as inherently right, and the determination of this rightness focuses on the individual actor, not on society. Therefore these perspectives are sometimes referred to as nonconsequentialism , a system of ethics based on respect for persons.

Deontology

Deontology (from the Greek word for "ethics") refers to moral philosophies that focus on the rights of individuals and the intentions associated with a particular behavior rather than its consequences. Fundamental to deontological theory is the idea that equal respect must be given to all persons

Descriptive relativism

Descriptive relativism relates to observations of other cultures. Different cultures exhibit different norms, customs, and values, but these observations say nothing about the higher questions of ethical justification

Discrimination

Discrimination on the basis of race, color, religion, sex, marital status, sexual orientation, public assistance status, disability, age, national origin, or veteran status is illegal in the United States. Additionally, discrimination on the basis of political opinions or affiliation with a union is defined as harassment. Discrimination remains a significant ethical issue in business despite decades of legislation attempting to outlaw it.

Distributive justice

Distributive justice is based on the evaluation of the outcomes or results of a business relationship. If some employees feel they are paid less than their coworkers for the same work, they have concerns about distributive justice. Distributive justice is difficult to effect when one member of the business exchange intends to take advantage of the relationship.

Dumpster diving

Dumpster diving is messy but successful for acquiring trade secrets. Once trash is discarded onto a public street or alley, it is considered fair game. Trash can provide a rich source of information for any CI agent. Phone books can give a hacker names and numbers of people to target and impersonate. Organizational charts contain information about people who are in positions of authority within the organization. Memos provide small amounts of useful information and assist in the creation of authentic-looking fake memos.

Education

Education is also a significant factor in the ethical decision-making process. The important thing to remember about education is that it does not reflect experience. Work experience is defined as the number of years in a specific job, occupation, and/or industry. Generally, the more education or work experience people have, the better they are at making ethical decisions. The type of education someone receives has little or no effect on ethics.

Egoism

Egoism defines right or acceptable behavior in terms of its consequences for the individual. Egoists believe they should make decisions that maximize their own self-interest, which is defined differently by each individual. Depending on the egoist, self-interest may be construed as physical well-being, power, pleasure, fame, a satisfying career, a good family life, wealth, or something else. In an ethical decision-making situation, an egoist will probably choose the alternative that contributes most to his or her self-interest. Many believe egoistic people and companies are inherently unethical, short-term oriented, and willing to take advantage of any opportunity for gain.

Enlightened egoism

Enlightened egoists take a long-range perspective and allow for the well-being of others although their own self-interest remains paramount. An example of enlightened egoism is a person helping a turtle across a highway because if it were killed the person would feel distressed

Ethical awareness

Ethical awareness is the ability to perceive whether a situation or decision has an ethical dimension. Costly problems can be avoided if employees are able to first recognize whether a situation has an ethical component.

Ethical issue intensity

Ethical issue intensity can be defined as the relevance or importance of an event or decision in the eyes of the individual, work group, and/or organization. It is personal and temporal in character to accommodate values, beliefs, needs, perceptions, the special characteristics of the situation, and the personal pressures prevailing at a particular place and time. Senior employees and those with administrative authority contribute significantly to ethical issue intensity because they typically dictate an organization's stance on ethical issues.

Gender

Extensive research has been done regarding the link between gender and ethical decision making. The research shows that in many aspects there are no differences between men and women, but when differences are found, women are generally more ethical than men. By "more ethical," we mean women seem to be more sensitive to ethical scenarios and less tolerant of unethical actions. One study found that women and men had different foundations for making ethical decisions: women rely on relationships; men rely on justice or equity. In another study on gender and intentions for fraudulent financial reporting, females reported higher intentions to report them than male participants. As more and more women work in managerial positions, these findings may become increasingly significant.

Fairness

Fairness is the quality of being just, equitable, and impartial. Fairness clearly overlaps with concepts of justice, equity, equality, and morality. There are three fundamental elements that motivate people to be fair: equality, reciprocity, and optimization

Normative relativism

Finally, at the individual level of reasoning, we have normative relativism. Normative relativists assume one person's opinion is as good as another's.

Relativist perspective

From the relativist perspective , definitions of ethical behavior are derived subjectively from the experiences of individuals and groups. Relativists use themselves or the people around them as their basis for defining ethical standards, and the various forms of relativism include descriptive, meta-ethical, and normative.

Goodness Theory

Goodness theories typically focus on the end result of actions and the goodness or happiness created by them.

Hacking

Hacking is considered one of the top three methods for obtaining trade secrets. Currently, there are thousands of websites that offer free downloadable and customizable hacking tools that require no in-depth knowledge of protocols or Internet protocol addresses. Hacking has three categories: system, remote, and physical.

Honesty

Honesty refers to truthfulness or trustworthiness. To be honest is to tell the truth to the best of your knowledge without hiding anything. Confucius defined an honest person as junzi , or one who has the virtue ren. Ren can be loosely defined as one who has humanity. Yi is another honesty component and is related to what we should do according to our relationships with others.

Idealism

Idealism, on the other hand, is a moral philosophy that places special value on ideas and ideals as products of the mind. The term refers to the efforts required to account for all objects in nature and experience and to assign to them a higher order of existence. Studies uncovered a positive correlation between idealistic thinking and ethical decision making.

Implied falsify

Implied falsity means the message has a tendency to mislead, confuse, or deceive the public. Advertising claims that use implied falsity are those that are literally true but imply another message that is false. In most cases, accusations of implied falsity can be proved only through time-consuming and expensive consumer surveys, the results of which are often inconclusive.

Consumers' bill of rights

In 1962 President John F. Kennedy delivered a "Special Message on Protecting the Consumer Interest" that outlined four basic consumer rights: the right to safety, the right to be informed, the right to choose, and the right to be heard. These came to be known as the Consumers' Bill of Rights .

Stakeholder

In a business context, customers, investors and shareholders, employees, suppliers, government agencies, communities, and many others who have a "stake" or claim in some aspect of a company's products, operations, markets, industry, and outcomes are known as stakeholders .

Equality

In business, equality is about the distribution of benefits and resources. This distribution could be applied to stakeholders or the greater society.

Defense industry initiative on business ethics and conduct

In the 1980s, the Defense Industry Initiative on Business Ethics and Conduct (DII) was developed to guide corporate support for ethical conduct. In 1986, 18 defense contractors drafted principles for guiding business ethics and conduct. 24 The organization has since grown to nearly 5 0 members. This effort established a method for discussing best practices and working tactics to link organizational practice and policy to successful ethical compliance.

integrity

Integrity is one of the most important and oft-cited elements of virtue, and refers to being whole, sound, and in an unimpaired condition. Integrity is a value that relates to all business activities, not just ethical issues. Integrity relates to product quality, open communication, transparency, and relationships. Therefore, integrity is a foundational value for managers to build an internal organizational culture of trust.

Intellectual property rights

Intellectual property rights involve the legal protection of intellectual property such as music, books, and movies. Laws such as the Copyright Act of 1976, the Digital Millennium Copyright Act, and the Digital Theft Deterrence and Copyright Damages Improvement Act of 1999 were designed to protect the creators of intellectual property. However, with the advance of technology, ethical issues still abound for websites. For example, until it was sued for copyright infringement and subsequently changed its business model, Napster. com allowed individuals to download copyrighted music for personal use without providing compensation to the artists.

Interactional justice

Interactional justice is based on the relationships between organizational members, including the way employees and management treat one another. Interactional justice is linked to fairness within member interactions. It often involves an individual's relationship with the accuracy of the information a business organization provides. Although interactional justice often refers to how managers treat their subordinates, employees can also be guilty in creating interactional justice disputes

Justice

Justice is fair treatment and due reward in accordance with ethical or legal standards, including the disposition to deal with perceived injustices of others. The justice of a situation is based on the perceived rights of individuals and on the intentions of the people involved in a business interaction. In other words, justice relates to the issue of what individuals feel they are due based on their rights and performance in the workplace.

Utilitarianism

L ike egoism, utilitarianism is concerned with consequences, but unlike the egoist, the utilitarian seeks the greatest good for the greatest number of people. Utilitarians believe they should make decisions that result in the greatest total utility, or the greatest benefit for all those affected by a decision. For instance, one might use a utilitarianism perspective to argue for companies who legally sell harmful products, such as tobacco, guns, or alcohol. It has been argued that despite their drawbacks, allowing them to be sold legally is less harmful than having them sold illegally and unregulated

Labeling issue

Labeling issues are even murkier. For example, Monster Beverage Corp. decided to change its label to indicate it is a beverage rather than a dietary supplement. Rather than putting "Supplement Facts" on its cans, the company will replace it with "Nutrition Facts." This may seem like a small change, but it is intended to stave off the increasing scrutiny of critics who believe that energy drink caffeine levels are unsafe. As part of the labeling change, Monster labels now display the drink's caffeine content.

Consumer protection law

Laws that protect consumers require businesses to provide accurate information about their products and services and follow safety standards ( Table 4-3 ). The first consumer protection law was passed in 1906, partly in response to a novel by Upton Sinclair. The Jungle describes, among other things, the atrocities and unsanitary conditions of the meatpacking industry in turn-of-the-century Chicago

Locus of control

Locus of control relates to individual differences in relation to a generalized belief about how you are affected by internal versus external events or reinforcements. In other words, the concept relates to how people view themselves in relation to power.

Mandated boundaries

Mandated boundaries are externally imposed boundaries of conduct, such as laws, rules, regulations, and other requirements. Antitrust and consumer protection laws create boundaries that must be respected by companies.

Marketing fraud

Marketing fraud— the process of dishonestly creating, distributing, promoting, and pricing products—is another business area that generates potential ethical issues. False or misleading marketing communications destroys customers' trust in a company. Lying, a major ethical issue involving communication, is a potentially significant problem.

meta-ethical relativism

Meta-ethical relativism proposes that people naturally see situations from their own perspectives, and there is no objective way of resolving ethical disputes between different value systems and individuals. Simply put, one culture's moral philosophy cannot logically be preferred to another's because no meaningful basis for comparison exists.

Monist

Monists believe only one thing is intrinsically good. Monists are often characterized by hedonism

Moral intensity

Moral intensity relates to individuals' perceptions of social pressure and the harm they believe their decisions will have on others.

Quantitative hedonist

Moral philosophers describe those who believe more pleasure is better as quantitative hedonists

Moral philosophy

Moral philosophy, on the other hand, refers to the specific principles or values people use to decide what is right and wrong. It is important to understand the distinction between moral philosophies and business ethics. Moral philosophies are person-specific, while business ethics is based on decisions made by groups or when carrying out tasks to meet business objectives. A moral philosophy is a person's principles and values.

Philanthropy

Most firms engage in philanthropy —giving back to communities and causes. There is strong evidence to suggest both the law and a sense of ethics increase voluntary corporate social responsibility practices. In addition, research has demonstrated that when both ethical and legal responsibilities are respected through core practices, economic performance benefits.

Nationality

Nationality is the legal relationship between a person and the country in which he or she is born. Research about nationality and ethics appears to be significant in how it affects ethical decision making; however, just how nationality affects ethics is somewhat hard to interpret. 21 Because of cultural differences, it is impossible to state that ethical decision making in an organizational context will differ significantly among individuals of different nationalities. The reality of today is that multinational companies look for business people that make decisions regardless of nationality. Perhaps in 20 years, nationality will no longer be an issue because the multinational individual's culture will replace national status as the most significant factor in ethical decision making.

Obedience to authority

Obedience to authority is another aspect of the influence significant others can exercise. Obedience to authority helps explain why many employees resolve business ethics issues by simply following the directives of a superior. In organizations that emphasize respect for superiors, employees may feel they are expected to carry out orders by a supervisor even if those orders are contrary to the employees' sense of right and wrong.

Obligation theory

Obligation theories emphasize the means and motives by which actions are justified, and are divided into the categories of teleology and deontology.

Executive compensation

One of the biggest issues corporate boards of directors face is executive compensation . In fact, most boards spend more time deciding how much to compensate top executives than they do ensuring the integrity of the company's financial reporting systems. 69 How executives are compensated for their leadership, organizational service, and performance has become a controversial topic.

opportunity

Opportunity describes the conditions in an organization that limit or permit ethical or unethical behavior. Opportunity results from conditions that either provide rewards, whether internal or external, or fail to erect barriers against unethical behavior. Examples of internal rewards include feelings of goodness and personal worth generated by performing altruistic acts. External rewards refer to what an individual expects to receive from others in the social environment in terms of social approval, status, and esteem.

Immediate job context

Opportunity relates to individuals' immediate job context— where they work, whom they work with, and the nature of the work. The immediate job context includes the motivational "carrots and sticks" superiors use to influence employee behavior. Pay raises, bonuses, and public recognition act as carrots, or positive reinforcements, whereas demotions, firings, reprimands, and pay penalties act as sticks, or negative reinforcements.

Passive bribery

Passive bribery is an offense committed by the official who receives the bribe. It is not an offense, however, if the advantage was permitted or required by the written law or regulation of the foreign public official's country, including case law.

Password guessing

Password guessing is another easy social engineering technique. If a person can find out personal things about someone, he or she might be able to use that information to guess a password. For example, a child's name, birthdays, anniversaries, and Social Security numbers are all common passwords and are easy to guess.

Phone eavesdropping

Phone eavesdropping is yet another tool for CI agents. A person with a digital recording device can monitor and record a fax line. By playing the recording back an intruder can reproduce an exact copy of a message without anyone's knowledge. Even without monitoring a fax line, a fax sent to a "communal" fax machine can be read or copied. By picking up an extension or by tapping a telephone, it is possible to record the tones that represent someone's account number and password using a tape recorder. The tape recording can then be replayed over the telephone to gain access to someone else's account.

Physical hacking

Physical hacking requires the CI agent enter a facility personally. Once inside, he or she can find a vacant or unsecured workstation with an employee's login name and password. Next, the CI agent searches for memos or unused letterheads and inserts the documents into the corporate mail system. CI agents could also gain physical access to a server or telephone room, look for remote-access equipment, note any telephone numbers written on wall jacks, and place a protocol analyzer in a wiring closet to capture data, user names, and passwords.

Pluralist

Pluralists , often referred to as non-hedonists, take the opposite position that no one thing is intrinsically good. For example, a pluralist might view beauty, aesthetic experience, knowledge, and personal affection as ultimate goods.

Primary stakeholder

Primary stakeholders are those whose continued association is absolutely necessary for a firm's survival. These include employees, customers, investors, and shareholders, as well as the governments and communities that provide necessary infrastructure.

Procedural justice

Procedural justice considers the processes and activities that produce a particular outcome. A climate that emphasizes procedural justice positively influences employees' attitudes and behaviors toward work-group cohesion. The visibility of supervisors and the work group's perceptions of its own cohesiveness are products of a climate of procedural justice. 34 When there is strong employee support for decisions, decision makers, organizations, and outcomes, procedural justice is less important to the individual.

Puffery

Puffery can be defined as exaggerated advertising, blustering, and boasting upon which no reasonable buyer would rely and is not actionable under the Lanham Act

Realism

Realism is the view that an external world exists independent of our perceptions. Realists assume humankind is not naturally benevolent and kind, but instead inherently selfcentered and competitive. According to realists, each person is ultimately guided by his or her own self-interest. Research shows a negative correlation between realistic thinking and ethical decision making. The belief that all actions are ultimately self-motivated seems to lead to a tendency toward unethical decision making.

Reciprocity

Reciprocity is an interchange of giving and receiving in social relationships. Reciprocity occurs when an action that has an effect upon another is reciprocated with an action that has an approximately equal effect. Reciprocity is the return of favors approximately equal in value.

Active bribery

Related to the ethics of bribery is the concept of active corruption or active bribery , meaning the person who promises or gives the bribe commits the offense.

Remote hacking

Remote hacking involves attempting to remotely penetrate a system across the Internet. A remote hacker usually begins with no special privileges and tries to obtain higher level or administrative access.

Reputation

Reputation is one of an organization's greatest intangible assets with tangible value. The value of a positive reputation is difficult to quantify, but it is important. A single negative incident can influence perceptions of a corporation's image and reputation instantly and for years afterward. Corporate reputation, image, and brands are more important than ever and are among the most critical aspects of sustaining relationships with constituents including investors, customers, employees, media, and regulators.

rule deontologist

Rule deontologists believe conformity to general moral principles based on logic determines ethicalness.

Secondary stakeholder

Secondary stakeholders do not typically engage in transactions with a company and are therefore not essential to its survival. These include the media, trade associations, and special interest groups like the American Association of Retired People (AARP), a special interest group working to support retirees' rights such as health care benefits.

Sexual harassment

Sexual harassment is a form of sex discrimination that violates Title VII of the Civil Rights Act of 1964. Title VII applies to employers with 1 5 or more employees, including state and local governments. Sexual harassment can be defined as any repeated, unwanted behavior of a sexual nature perpetrated upon one individual by another. It may be verbal, visual, written, or physical and can occur between people of different genders or those of the same gender.

Facilitation payment

Small facilitation payments made to obtain or retain business or other improper advantages do not constitute bribery payments for U.S. companies in some situations. Such payments are often made to induce public officials to perform their functions, such as issuing licenses or permits.

Social engineering

Social engineering is the tricking of individuals into revealing their passwords or other valuable corporate information. Tactics include casual conversations with relatives of company executives and sending e-mails claiming to be a system administrator and asking for passwords under the guise of "important system administration work."

Privacy issue

Some privacy issues that must be addressed by businesses include the monitoring of employees' use of available technology and consumer privacy. Current research suggests that even when businesses use price discounts or personalized services, consumers remain suspicious. However, certain consumers are still willing to provide personal information despite the potential risks. 62

Strategic philanthropy

Strategic philanthropy is 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. It uses the profit motive, but argues that philanthropy must have at least a long-term positive impact.

System hacking

System hacking assumes the attacker already has access to a low-level, privileged-user account

Consequentialism

Teleological philosophies assess the moral worth of a behavior by looking at its consequences, and thus moral philosophers today often refer to these theories as consequentialism. Two important teleological philosophies that often guide decision making in individual business decisions are egoism and utilitarianism.

Teleology

Teleology (from the Greek word for "end" or "purpose") refers to moral philosophies in which an act is considered morally right or acceptable if it produces some desired result, such as pleasure, knowledge, career growth, the realization of self-interest, utility, wealth, or even fame.

Age discrimination on employment act

The Age Discrimination in Employment Act specifically outlaws hiring practices that discriminate against people 40 years of age or older, as well as those that require employees to retire before the age of 70. The act prohibits employers with 20 or more employees from making employment decisions, including decisions regarding the termination of employment, on the basis of age or as a result of policies requiring retirement after the age of 40 .

Literally false

The characterization of an advertising claim as literally false can be divided into two subcategories: tests prove ( establishment claims) , when the advertisement cites a study or test that establishes the claim; and bald assertions ( nonestablishment claims ), when the advertisement makes a claim that cannot be substantiated, as when a commercial states a certain product is superior to any other on the market. Another form of advertising abuse involves making ambiguous statements; when the words are so weak or general that the viewer, reader, or listener must infer the advertiser's intended message. These "weasel words" are inherently vague and enable the advertiser to deny any intent to deceive. The verb help is a good example (as in expressions such as "helps prevent," "helps fight," "helps make you feel"). 47 Consumers may view such advertisements as unethical because they fail to communicate all the information needed to make a good purchasing decision or because they deceive the consumer outright.

Interlocking directorate

The concept of board members being linked to more than one company is known as interlocking directorate

Shareholder model of corporate governance

The shareholder model of corporate governance is founded in classic economic precepts, including the goal of maximizing wealth for investors and owners. For publicly traded firms, corporate governance focuses on developing and improving the formal system for maintaining performance accountability between top management and the firm's shareholders. 59

Stakeholder model of corporate governance

The stakeholder model of corporate governance adopts a broader view of the purpose of business. Although a company certainly has a responsibility for economic success and viability to satisfy its stockholders, it must also answer to other stakeholders, including employees, suppliers, government regulators, communities, and special interest groups with which it interacts.

Act utilitarian

These act utilitarians examine specific actions, rather than the general rules governing them, to assess whether they will result in the greatest utility. Rules such as "Bribery is wrong" serve only as general guidelines for act utilitarians. They would likely agree that bribery is generally wrong, not because there is anything inherently wrong with bribery, but because the total amount of utility decreases when one person's interests are placed ahead of those of society.

Rule utilitarian

These rule utilitarians determine behavior on the basis of principles or rules designed to promote the greatest utility, rather than on individual examinations of each situation they encounter. One such rule might be "Bribery is wrong." If people felt free to offer bribes whenever they might be useful, the world would become chaotic; therefore, a rule prohibiting bribery would increase utility. A rule utilitarian would not bribe an official, even to preserve workers' jobs, but instead would adhere strictly to the rule. Rule utilitarians do not automatically accept conventional moral rules, however; if they determined an alternative rule would promote greater utility, they would advocate its use instead.

white-collar crime

These violent crimes are devastating, but they are no less destructive than crimes perpetrated every year by nonviolent business criminals. So-called white-collar crime (WCC) does more damage in monetary and emotional loss in one year than violent crimes do over several years combined. White-collar criminals tend to be highly educated people in positions of power, trust, respectability and responsibility within a business or organization. They commit illegal acts for personal and/or organizational gains by abusing the trust and authority normally associated with their positions. The victims of WCC are often trusting consumers who believe businesses are legitimate.

External control

Those who believe in external control (externals) see themselves as going with the flow because that is all they can do. They believe the events in their lives are due to uncontrollable forces. They consider what they want to achieve depends on luck, chance, and powerful people in their company. In addition, they believe the probability of being able to control their lives by their own actions and efforts is low.

Significant other

Those who have influence in a work group, including peers, managers, coworkers, and subordinates, are referred to as significant others . They help workers on a daily basis with unfamiliar tasks and provide advice and information in both formal and informal ways. Coworkers, for instance, can offer help in the comments they make in discussions over lunch or when the boss is away. Likewise, a manager may provide directives about certain types of activities employees perform on the job. Indeed, an employee's supervisor can play a central role in helping employees develop and fit in socially in the workplace.

Hostile work environment

To establish sexual harassment, an employee must understand the definition of a hostile work environment, for which three criteria must be met: the conduct was unwelcome; the conduct was severe, pervasive, and regarded by the claimant as so hostile or offensive as to alter his or her conditions of employment; and the conduct was such that a reasonable person would find it hostile or offensive.

Affirmative action program

To help build workforces that reflect their customer base, many companies have initiated affirmative action programs, which involve efforts to recruit, hire, train, and promote qualified individuals from groups that have traditionally been discriminated against on the basis of race, gender, or other characteristics.

Unethical dual relationship

Unethical dual relationships are those where the relationship could potentially cause a direct or indirect conflict of interest or a risk of impairment to professional judgment. Another important factor in these cases is intent. If the sexual advances in any form are considered mutual, then consent is created. The problem is unless the employee or employer gets something in writing before the romantic action begins, consent can always be questioned, and when it comes to sexual harassment, the alleged perpetrator must prove mutual consent.

Virtue ethics

Virtue ethics argues that ethical behavior involves not only adhering to conventional moral standards but also considering what a mature person with a "good" moral character would deem appropriate in a given situation.

Voluntary practices

Voluntary practices include the beliefs, values, and voluntary contractual obligations of a business. All businesses engage in some level of commitment to voluntary activities to benefit both internal and external stakeholders.

Whacking

Whacking is wireless hacking. To eavesdrop on wireless networks, all a CI agent needs is the right kind of radio and to be within range of a wireless transmission. Once tapped into a wireless network, an intruder can easily access anything on both the wired and wireless networks because the data sent over networks are usually unencrypted. If a company is not using wireless networking, an attacker can pose as a janitor and insert a rogue wireless access node into a supposedly secure hard-wired network.

Fraud

When individuals engage in intentional deceptive practices to advance their own interests over those of the organization or some other group, they are committing fraud. In general, fraud is any purposeful communication that deceives, manipulates, or conceals facts in order to harm others. Fraud can be a crime and convictions may result in fines, imprisonment, or both. Global fraud costs organizations more than $3.5 trillion a year; the average company loses about 5 percent of annual revenues to fraud.

Ethical culture

acceptable behavior as defined by the company and industry. Ethical culture is the component of corporate culture that captures the values and norms an organization defines and is compared to by its industry as appropriate conduct. The goal of an ethical culture is to minimize the need for enforced compliance of rules and maximize the use of principles that contribute to ethical reasoning in difficult or new situations. Ethical culture is positively related to workplace confrontation over ethics issues, reports to management of observed misconduct, and the presence of ethics hotlines. 33 To develop better ethical corporate cultures, many businesses communicate core values to their employees by creating ethics programs and appointing ethics officers to oversee them. An ethical culture creates shared values and support for ethical decisions and is driven by top management

Social Responsibility

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

Principles

are specific and pervasive boundaries for behavior that should not be violated. Principles often become the basis for rules. Some examples of principles could include human rights, freedom of speech, and fundamentals of justice.

procompetitive legislation

aws have been passed to prevent the establishment of monopolies, inequitable pricing practices, and other practices that reduce or restrict competition among businesses. These laws are sometimes called procompetitive legislation because they were enacted to encourage competition and prevent activities that restrain trade (T able 4-2) . The Sherman Antitrust Act of 1890, for example, prohibits organizations from holding monopolies in their industry, and the Robinson-Patman Act of 1936 bans price discrimination between retailers and wholesalers.

Categorical imperative

categorical imperative : "Act as if the maxim of thy action were to become by thy will a universal law of nature." 14 Simply put, if you feel comfortable allowing everyone in the world to see you commit an act and if your rationale for acting in a particular manner is suitable to become a universal principle guiding behavior, then committing that act is ethical. People who borrow money and promise to return it with no intention of keeping that promise cannot "universalize" their act.

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. Several desirable or ethical values for business today are teamwork, trust, and integrity. Such values are often based on organizational or industry best practices. Investors, employees, customers, interest groups, the legal system, and the community often determine whether a specific action or standard is ethical or unethical.

Federal sentencing guidelines for Organizations

he Federal Sentencing Guidelines for Organizations (FSGO), approved by Congress in November 1991, set the tone for organizational ethical compliance programs in the 1990s. The guidelines, which were based on the six principles of the DII, 28 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.

Stakeholder orientation

he degree to which a firm understands and addresses stakeholder demands can be referred to as a stakeholder orientation. A stakeholder orientation involves "activities and processes within a system of social institutions that facilitate and maintain value through exchange relationships with multiple stakeholders." 17 This orientation comprises three sets of activities: (1) t he organization-wide generation of data about stakeholder groups and assessment of the firm's effects on these groups; (2) t he distribution of this information throughout the firm; and (3) the responsiveness of the organization as a whole to this information. 18 9

Cause-related marketing

he first attempts by organizations to coordinate organizational goals with philanthropic giving emerged with cause-related marketing in the early 1980s. Cause-related marketing ties an organization's product(s) directly to a social concern through a marketing program. With cause-related marketing, a percentage of a product's sales is donated to a cause that appeals to the target market. Yoplait, for example, generates proceeds for the Susan G. Komen for the Cure cause with its Save Lids to Save Lives program.

Corporate citizenship

he term corporate citizenship is often used to express the extent to which businesses strategically meet the economic, legal, ethical, and philanthropic responsibilities placed on them by various stakeholders. 31 Corporate citizenship has four interrelated dimensions: strong sustained economic performance, rigorous compliance, ethical actions beyond what the law requires, and voluntary contributions that advance the reputation and stakeholder commitment of the organization. A firm's commitment to corporate citizenship indicates a strategic focus on fulfilling the social responsibilities its stakeholders expect. Corporate citizenship involves acting on the firm's commitment to corporate citizenship philosophy and measuring the extent to which it follows through by actually implementing citizenship initiatives.

Hedonism

hedonism —the idea that pleasure is the ultimate good, or the best moral end involves the greatest balance of pleasure over pain. Hedonism defines right or acceptable behavior as that which maximizes personal pleasure.

Lying

lying relates to distorting the truth. We mentioned three types of lies, one of which is joking without malice. The other two can become troublesome for businesses: lying by commission and lying by omission. Commission lying is creating a perception or belief by words that intentionally deceive the receiver of the message. Lying by commission can involve complex forms, procedures, contracts, words that are spelled the same but have different meanings, or refuting the truth with a false statement. Forms of commission lying include puffery in advertising. For example, saying a product is "homemade" when it is made in a factory is lying. Omission lying is intentionally not informing others of any differences, problems, safety warnings, or negative issues relating to the product or company that significantly affect awareness, intention, or behavior. A classic example of omission lying was in the tobacco manufacturers' decades-long refusal to allow negative research about the effects of tobacco to appear on cigarettes and cigars.

Insider trading

n insider is any officer, director, or owner of 1 0 percent or more of a class of a company's securities. There are two types of insider trading : illegal and legal. Illegal insider trading is the buying or selling of stocks by insiders who possess information that is not yet public. This act, that puts insiders in breach of their fiduciary duty, can be committed by anyone who has access to nonpublic material, such as brokers, family, friends, and employees. In addition, someone caught "tipping" an outsider with nonpublic information can also be found liable. Legal insider trading 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 occurred.

Normative approach

normative approaches , we are talking about how organizational decision makers should approach an issue. This is different from a descriptive approach that examines how organizational decision makers approach ethical decision making. A normative approach in business ethics revolves around the standards of behavior within the firm as well as within the industry. These normative rules and standards are based on individual moral values as well as the collective values of the organization. The normative approach for business ethics is concerned with general ethical values implemented into business. Concepts like fairness and justice are highly important in a normative structure. Strong normative structures in organizations are positively related to ethical decision making. Normative considerations also tend to deal with moral philosophies such as utilitarianism and deontology

Morals

refer to a person's personal philosophies about what is right or wrong. The important point is that when one speaks of morals, it is personal or singular. Morals, your philosophies or sets of values of right and wrong, relate to you and you alone. You may use your personal moral convictions in making ethical decisions in any context

Ethical culture

s. It also gives an organization an idea of how an ethical or unethical culture may look. A n important component of corporate or organizational culture is the company's ethical conduct. Corporate culture involves values and norms that prescribe a wide range of behavior for organizational members, while ethical culture reflects the integrity of decisions made and is a function of many factors, including corporate policies, top management's leadership on ethical issues, the influence of coworkers, and the opportunity for unethical behavior. Communication is also important in the creation of an effective ethical culture.

Public company accounting oversight board

t the heart of the Sarbanes-Oxley Act (SOX) is the Public Company Accounting Oversight Board that monitors accounting firms auditing public corporations and establishes standards and rules for auditors in accounting firms. The law gave the board investigatory and disciplinary power over auditors and securities analysts who issue reports about corporate performance and health. The law attempts to eliminate conflicts of interest by prohibiting accounting firms from providing both auditing and consulting services to the same client companies without special permission from the client firm's audit committee; it also places limits on the length of time lead auditors can serve a particular client. The Sarbanes-Oxley Act requires corporations to take greater responsibility for their decisions and to provide leadership based on ethical principles.

Sarbanes-Oxley Act

the most far-reaching change in organizational control and accounting regulations since the Securities and Exchange Act of 1934. 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. Additionally, the law 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 stock sales immediately and prohibits companies from giving loans to top managers. 32

Stakeholder interaction model

there are reciprocal relationships between the firm and a host of stakeholders. In addition to the fundamental input of investors, employees, and suppliers, this approach recognizes other stakeholders and explicitly acknowledges that dialogue exists between a firm's internal and external environments. Corporate social responsibility actions that put employees at the center of activities gain the support of both external and internal stakeholders. 16

Qualitative hedonist

those who believe it is possible to get too much of a good thing (such as pleasure) as qualitative hedonists