Business Ethics Test 1 Shelton (Fall 2020) {book and video lectures}

workplace integrity

Several desirable or ethical values for business today are teamwork, trust, and integrity. Such values are often based on organizational or industry best practices.

Business ethics contributes to investor loyalty.

Yes

Business ethics deals with right or wrong behavior within a particular organization.

Yes

Stakeholders provide resources that are more or less critical to a firm's long-term success.

Yes

legal (top of economic on the levels of social responsibility )

abiding by all laws and government regulations

1980s

centers for business ethics provided publications, courses, conferences and seminars. DII

C.S. Lewis made the case for God and ultimately the case for Christianity through an appeal to natural law

children quarreling-- "that's not fair" "you promised" when these types of statements are made and they are made by everyone there is an appeal to some standard. what is the standard? Lewis says that the standard is a Law of Nature

1990s

clinton: continued to support self-regulation and free trade gov action with health related social issues such as teenage smoking FSGO

Ethics

defined as behavior or decisions made within a group's value

Lewis' trilemma

Liar, Lunatic, Lord

Descriptive Approach (stakeholder theory approach #2)

The descriptive approach focuses on the firm's behavior and usually addresses how decisions and strategies are made for stakeholder relationships. the way they are.

ethical culture of a company matters to employees

The ethical culture of a company matters to employees. According to a report on employee loyalty and work practices, companies viewed as highly ethical by their employ- ees were six times more likely to keep their workers.43 Also, employees who view their com- pany as having a strong community involvement feel more loyal to their employers and positive about themselves.

Normative Approach (stakeholder theory approach #1)

The normative approach identifies ethical guidelines that dictate how firms should treat stakeholders. Normative stakeholder theory affirms that stakeholders have legitimacy and a right to engage organizations. Principles and values provide direc- tion for normative decisions. How should things be.

value dilemma

defined as a situation where the person is faced with multiple choices, all of which are undesirable as defined by the person--only that the individual's beliefs are grounded in societal norms.

economic ( bottom of the levels of social responsibility)

maximizing stakeholder wealth and/or value

1920s

provide a living wage--income sufficient for education, recreation, health, and retirement

Oversight

provides a system of checks and balances that limit employees' and managers' opportunities to deviate from policies and strategies aimed at preventing unethical and illegal activities.

The Abolition of Man

several similarities cross cultures

Lewis on Knowing Right and Wrong

"If they (Nazis) had had the notion of what we mean by right, then, though we might still have had to fight them, we could no more have the blamed them foe that than the color of their hair"

Points from Mere Christianity

"Now what interests me about all these remarks is that the man who makes them is not merely saying that the other man's behavior does not happen to please him" No one says, "To hell with your standards" Whenever you find a man who says he does not believe in a real Right and Wrong, you will find the same man going back on this a later.

philanthropic (top of the levels of social responsibilities)

"giving back" to society. Philanthropic responsibility refers to activities that are not required of businesses but that contribute to human welfare or goodwill

Shermer's starting point

"the survival and flourishing of sentient beings is my starting point" his argument: 1. morality is about improving the well being of conscious creatures 2. facts about the well-being on conscious creatures are accessible to science 3. therefore science can tell us what's objectively moral--that is is can tell us whether something increases or decreases the well being of conscious creatures. Problem: premise 1 is a philosophical premise. it isn't a fact of science or fact of nature, it is a value judgment.

The analogy of ships- 3 parts of morality

1. ships must not collide with one another and get in each other's way 2. ships must be seaworthy and their engines must be in good order 3. the destination 1. fair play and harmony between individuals. Everyone agrees in general about this. 2. even if we "play by the rules", we should strive to be good on the inside. Integrity. 3. Where does your worldview tell you that you are headed?

implications of naturalism

1. there's no evidence for God 2. there's no life after death 3. there's no absolute foundation for right and wrong 4. there's no ultimate meaning for life 5. people don't really have free will. - william provine, atheist

1950s

By the 1950s, the New Deal evolved into Pres- ident Harry S. Truman's Fair Deal, a program that defined such matters as civil rights and environmental responsibility as ethical issues that businesses had to address. Government relationships, social issues, and economic fairness were major concerns in the first half of the twentieth century.

four interrelated dimensions of corporate citizenship

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.

Corporate governance

Corporate governance involves the development of formal systems of accountability, oversight, and control

performance-enhancing outcomes

Employees' perceptions that their firm has an ethical culture lead to performance-enhancing outcomes within the organization.

DII (Business Ethics and Conduct) explanation

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.22 The organization has since grown to nearly 50 members. This effort established a method for discussing best prac- tices and working tactics to link organizational practice and policy to successful ethical compliance.

Morality

Lewis says morality are "directions for running the human machine"

Head, Chest, Belly

Lewis says the head must rule the belly through the chest. (head=intellect, belly=instict/drive, chest=seed of emotions)

Business ethics focuses mostly on personal ethical issues.

No

Investments in business ethics do not support the bottom line.

No

Social responsibility in business refers to maximizing the visibility of social involvement.

No

The most significant influence on ethical behavior in an organization is the opportunity to engage in unethical behavior.

No

The trend is away from cultural or ethically based initiatives to legal initiatives in organizations.

No

Three primary stakeholders are customers, special interest groups, and the media.

No

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. How executives are compensated for their leadership, organizational service, and performance has become a controversial topic.

less pressure to compromise ethical standards

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

Primary stakeholders

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

Principles

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 the fundamentals of justice.

The 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 the special interest groups with which it interacts.

Values

Values are 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.

An ethical culture is based upon the norms and values of the company.

Yes

The stakeholder perspective is useful in managing social responsibility and business ethics.

Yes

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.

corporate social responsibility

an organization's obligation to maximize its positive impact on stakeholders and minimize its negative impact. Philosophers increased their involvement, applying ethical theory and philosophical analysis to structure the disci- pline of business ethics.

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,26 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 compli- ance programs.27 Provisions in the guidelines mitigate penalties for businesses striving to root out misconduct and establish high ethical and legal standards.28 On the other hand, under FSGO, if a company lacks an effective ethical compliance program and its employees violate the law, it can incur severe penalties. The guidelines focus on firms taking action to prevent and detect business misconduct in cooperation with govern- ment regulation. At the heart of the FSGO is the carrot-and-stick approach—that is, by taking preventive action against misconduct, a company may avoid onerous penalties should a violation occur.

1970s

business ethics becomes common expression academic researchers seek to identify ethical issues and describe how business people might choose to act in particular situations Ethical/illegal issues defined: bribery, deceptive advertising, price collusion, product safety and ecology.

five types of deviations from truth

conflicting duties mutual deceit no right to the truth exaggeration ambiguity

moral dilemma

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

four levels of social responsibility

economic, legal, ethical, and philanthropic

ethical (top of legal on the levels of social responsibility)

following standards of acceptable behavior as judged by stakeholders

free will

free will is the only thing which makes any love, joy, or goodness worth having if my wife only loved me because she had to, it wouldn't be worth much free will is also what makes evil possible

Shermer's Claims

he wants to say he has bridged the is/ought chasm -David Hume -Hume's law The witch theory of causality Voltaire- "those who can make you believe absurdities can make you commit atrocities" Essentially says we can deduce moral laws from the facts

Mere Christianity ch 2 objection

herd instinct social convention morality and differences of opinion about facts--excuting witches

Sarbanes-Oxley Act

in 2002 Congress passed the 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.

men without chests

intellects/celebrities/persons of interest who look down on virtues. Can't laugh at virtue then look around and be surprised that there are no virtuous people around moral truth and virtues is old-timey.

Accountability

is an important part of corporate governance. Accountability refers to how closely workplace decisions align with a firm's stated strategic direction and its com- pliance with ethical and legal considerations.

Reputation

is one of organization's greatest intangible assets with tangible value. The value of a positive reputation is difficult to quantify, but it is important. A single nega- tive 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 con- stituents including investors, customers, employees, media, and regulators.

Control

is the process of auditing and improving organizational decisions and actions.

Lewis Paradox of repentance

it takes a good person to repent well the more evil a person is, the harder it is for him to repent the worse you are, the worse you need it, the harder it is for you to do it.

Rebuttal to Carr's Arguments

legality= morality defies common sense and is a dangerous position to hold the holocaust was legal under German law adultery is immoral but not illegal Laws and ethics are two separate domains. Good laws are moral laws but not all laws are good laws eg Letter from a Birmingham Jail-MLK

morals

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.

3 approaches to stakeholder theory

normative, descriptive, and instrumental approaches.

Aldous Huxley

not wanting the world to have meaning... he is concerned to prove there is no valid reason why he personally should not do as he wants to do... the philosophy of meaninglessness was essentially an instrument of liberation... and liberation from a certain system of morality.

Ford Pinto Case

pinto was to weigh no more than 2000 lbs, and cost no more than $2000. compressed drafting to showroom from 43 months to 25months consequences- any design changes would have to come AFTER the car was in production not before. while being produced it was illegal, later no in the 1960s and early 1970s, firetrap engineering of gas tanks on Ford Pintos resulted in the death and injury of hundreds of victims

Is Business Bluffing Ethical? carr's arguments

premise 1 : business is a game, similar to poker premise 2: in a game there are certain rules and if one follows the rules of the game one acts permissibly premise 3: business also has its own rules including rules that allow for bluffing conclusion: therefore, it is permissible to bluff in business

issues generally associated with social responsibility can be separated into four general categories:

social issues, consumer protection, sustainability, and corporate governance.

stakeholder interaction model

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.

Utilitarianism

the idea that the goal of society should be to bring about the greatest happiness for the greatest number of people teleological comes from the Greek word meaning "end" the end often justifies the means Jeremy Bentham: father of utilitarianism the goal was to maximize welfare

1960s

the rise of social issues in business development of anti-business trend decay of inner cities; growth of ecological problems bill of rights (JFK) Lyndon B Johnson: the great society extended national capitalism with the US gov's responsibility to provide all citizens with some degree of economic stability, equality and social justice 1964 civil rights act

the witch theory of causality

the townspeople burned "witches" out of a utilitarian calculus, better to kill a few to save many.

Global Compact

to create openness and alignment among business, government, society, labor, and the United Nations.

Science Reason and Moral Progress, Michael Shermer

-science can determine human values -moral progress has been the result od secular forces and the most important of these came from reason and the enlightenment -governance: rise of democracy -economics: property rights and free trade -rights: life, liberty , marriage, reproduction, voting, speech... -prosperity: less people are impoverish -health -war: smaller percentages of populations die -slavery: outlawed everywhere -homicide: rates have fallen since the middle ages -rape and sexual assault: trending downward -judicial equality -civility

Mere Christianity two fundamental facts about human nature

1st: that human beings, all over the earth, have this curious idea that they ought to behave in a certain way and cannot really get rid of it 2nd: that they do not in fact behave in that way.

stakeholder framework/steps to manage responsibility and business ethics

An organization that develops effective corporate governance and understands the importance of business ethics and social responsibility in achieving success should develop a process for managing these important concerns. Although there are different approaches, steps have been identified that have been found effective in utilizing the stakeholder framework to manage responsibility and business ethics. These steps are (1) assessing the corporate culture, (2) identifying stakeholder groups, (3) identifying stakeholder issues, (4) assessing organizational commitment to social responsibility, (5) identifying resources and determining urgency, and (6) gaining stakeholder feedback.

Deontology

Approach to ethics that judges the morality of an action based on the action's adherence to rules. Described as duty or obligation, because rules 'binds you to your duty'

companies viewed as socially responsible increase customer trust and satisfaction.

As mentioned earlier, high levels of perceived corporate misconduct decreases customer trust. On the other hand, companies viewed as socially responsible increase customer trust and satisfaction. Trust is essential to a good long-term relationship between a business and consumers. The perceived ethicality of a firm is positively related to brand trust, emotional identification with the brand, and brand loyalty.

Business Ethics

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.

4 most important social and ethical issues

First, data privacy is one of the most important social and ethical issues facing market- ing today. The Federal Trade Commission regulates issues related to data privacy. Cyber- crimes, such as identity theft and online fraud, are major concerns. The second major issue is consumer protection, which often occurs in the form of laws passed to protect consumers from unfair and deceptive business practices. Issues involving consumer protection usually have an immediate impact on the consumer after a purchase The third major issue is sustainability. We define sustainability as the potential for the long-term well-being of the natural environment, including all biological entities, as well as the mutually beneficial interactions among nature and individuals, organizations, and business strategies. 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.

DII (Business Ethics and Conduct) Six Principles

First, the DII supports codes of conduct and their widespread distribution. These codes of conduct must be understandable and cover their more substantive areas in detail. Second, member companies are expected to pro- vide ethics training for their employees as well as continuous support between training periods. Third, defense contractors must create an open atmosphere in which employees feel comfortable reporting violations without fear of retribution. Fourth, companies need to perform extensive internal audits and develop effective internal reporting and voluntary disclosure plans. Fifth, the DII insists that member companies preserve the integrity of the defense industry. And sixth, member companies must adopt a philosophy of public accountability.

Federal Sentencing Guidelines for Organizations (FSGO)

For public corporations, boards of directors hold the ultimate responsibility for their firms' success or failure, as well as the ethics of their actions. This governing authority is held responsible by amendments to the Federal Sentencing Guidelines for Organizations (FSGO) for creating an ethical culture that provides leadership, values, and compliance.

C. S. Lewis

Gained fame with The Screwtape Letters (1942), about demons and temptation. Most effective advocates for Christianity in the 20th century Radio talks before the book Mere Christianity

21st century

George W Bush: misconduct at Enron, WorldCom, Halliburton, and the accounting firm Arthur Andersen caused the gov to encourage ethical behavior 2002 congress passed the Sarbanes-Oxley Act

The Moral Argument for God is the existence of God necessary for objective morality

If God does not exist, objective moral values and duties do not exist objective moral duties and values do exist evil exists Therefore, objective moral values exist

Bill of Rights, 1962, Kennedy

In 1962, President John E. 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.

The Dodd-Frank Wall Street Reform and Consumer Protection Act

In 2009, Barack Obama became president in the middle of a great recession caused by a meltdown in the global financial industry. The Dodd-Frank Wall Street Reform and Consumer Protection Act addressed some of the issues related to the financial crisis and recession. It was designed to make the financial services industry more ethical and responsible.

stakeholders

In a business context, customers, 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. Businesses engage and influence these groups, but these groups also have the ability to engage and influence businesses; thus, the relationship between companies and their stakeholders is a two-way street.

Secondary stakeholders

Secondary stakeholders do not typically engage directly 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. Both primary and secondary stakeholders embrace specific values and standards that dictate acceptable and unacceptable corporate behaviors. It is important for managers to recognize that while primary groups may present more day-to-day concerns, secondary groups cannot be ignored or given less consideration in the ethical decision-making process because they have legitimacy. Sometimes a secondary stakeholder can have as much—if not more—power to influence outcomes than a primary stakeholder.

Social issues

Social issues are associated with the common good. The common good is the idea that because people live in a community, social rules should benefit the community. This supports the premise that all people have the right to try and obtain the basic necessi- ties of life.3

1950s

The Fair Deal (President Harry S Truman)-- defined such matters as environmental responsibility as ethical issues that businesses had to address.

1930s

The New Deal (President Franklin Roosevelt)--blamed business as the cause for US problems. An expansion of gov spending and gov programs. Programs to deal w joblessness

interlocking directorate

The concept of board members being linked to more than one company is known as an interlocking directorate. The practice is not considered illegal unless it involves a direct competitor.

stakeholder orientation

The 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."

first business ethic book-1937

The first book on business ethics was published in 1937 by Frank Chapman Sharp and Philip G. Fox. The authors separated their book into four sections: fair service, fair treatment of competitors, fair price, and moral progress in the business world. This early textbook discusses ethical ideas based largely upon economic theories and moral philosophies. However, the section's titles indicate the authors also take different stakeholders into account. Most notably, competitors and customers are the main stakeholders emphasized, but the text also identifies stockholders, employees, business partners such as suppliers, and government agencies.19 Although the theory of stakeholder orientation would not evolve for many more years, this earliest business ethics textbook demonstrates the necessity of the ethical treatment of different stakeholders.

Instrumental Approach (stakeholder theory approach #3)

The instrumental approach to stakeholder theory describes what happens if firms behave in a particular way.5 This approach is useful because it examines relationships involved in the management of stakeholders including the processes, structures, and practices that implement stakeholder relationships within an organization. what happens if a company does this or that

The 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.

corporate citizenship

The 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. 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.

orientation comprises three sets of activities

This orientation comprises three sets of activities: (1) the organization-wide generation of data about stakeholder groups and assessment of the firm's effects on these groups, (2) the distribution of this informa- tion throughout the firm, and (3) the responsiveness of the organization as a whole to this information.