Ethics
Sarbanes-Oxley Act (2002)
Increased accounting regulations
Facilitation payments:
Legal as long as they are small
Observed Misconduct In The Workplace
Misuse of company resources, Abusive behavior,Harassment, Accounting fraud, Conflicts of interest, Defective products,Bribery, Employee theft
challenge of determining an ethical issue in business
Most ethical issues become visible through stakeholder concerns Determining ethical issues is a challenge Changing societal standards over time The ethical decision making process starts when ethical issue awareness occurs and a discussion begins
1. Business ethics focuses mostly on personal ethical issues.
No. Business ethics focuses on organizational concerns (legal and ethical—employees, customers,suppliers, society)
6. Investments in business ethics do not support the bottom line.
No. Ethics initiatives create consumer, employee, and shareholder loyalty and positive behavior that contribute to the bottom line.
5. The trend is away from cultural or ethically based initiatives to legal initiatives in organizations
No. Many businesses are communicating their core values to their employees by creating ethics programs and appointing ethics officers to oversee them.
Reciprocity:
Occurs when an action that has an effect upon another is returned
Morals:
Refer to a person's personal philosophies about what is right or wrong Morals are personal and singular
Moral intensity:
Relates to a person's perception of social pressure and the harm his/her decision will have on others
Corporate Governance
Research shows corporate governance has a strong positive relationship with social responsibility
JFK's Consumer Bill of Rights— a new era of consumerism are
Right to safety, to be informed, to choose, and to be heard
The Federal Sentencing Guidelines for Organizations (FSGO) in 1991
Set tone for compliance Preventative actions against misconduct A company could avoid/minimize potential penalties
stakeholder orientation
The degree to which a firm understands and addresses stakeholder demands
Corporate governance
The formal system of accountability and control of ethical and socially responsible behavior
Active bribery:
The person who promises or gives the bribe commits the offense
2. Business ethics deals with right or wrong behavior within a particular organization.
Yes. That stems from the basic definition.
Secondary stakeholders:
do not typically engage in transactions with the firm and are not essential to a firm's survival examples:Media, trade associations, and special interest groups
Aframework for ethical decision making
does not describe how to make ethical decisions
Gatekeepers are
include accountants who are essential to certifying the the accuracy of financial information.
Ethics
is a part of decision making at all levels of work and management
ethical issue
is a problem, situation, or opportunity that requires an individual or group to choose among actions
Commission lying
is creating a false perception with words that deceive the receiver
Omission lying
is intentionally not informing channel members of problems relating to a product that affects awareness, intention, or behavior
Reputation
is one of an organization's greatest intangible assets with tangible value
Interlocking directorate
is the concept of board members being linked to more than one company
Four levels of social
responsibility Economic Legal Ethical Philanthropic
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
Institutionalization of Business Ethics
Continued support for self-regulation and free trade
Stakeholders are
Customers,Investors, Employees,Suppliers, Government agencies,Communities
Values:
Enduring beliefs and ideals that are socially enforced
ethical decision making process includes
Ethical issue intensity Individual factors Organizational factors
Puffery:
Exaggerated advertising claims, blustering, and boasting Can be difficult to distinguish from fraud
conflicts of interest
Exist when an individual must choose whether to advance his/her personal interests, those of the organization, or some other group
Defense Industry Initiative on Business Ethics and Conduct (DII)
Foundation for the Federal Sentencing Guidelines for Organizations to come in the 1990's
Stakeholders role
Helps identify internal and external stakeholders Helps monitor and respond to needs, values, and expectations of stakeholder groups
Normative approaches:
How organizational decision makers should approach an issue
Why study business ethics
1)Having good individual morals is not enough to stop ethical misconduct 2) Helps to identify ethical issues when they arise and recognize the approaches available to resolve them
Literally false:
Claims can be divided into tests prove (establishment claims) and bald assertions (non-establishment claims)
Dodd-Frank Wall Street Reform and Consumer Protection Act (2010)
Aimed at making the financial industry more transparent/responsible
Implied falsity:
An advertising message that misleads, confuses, or deceives the public
Passive bribery:
An offense committed by the official who receives the bribe
Social Responsible
An organization's obligation to maximize its positive impact on stakeholders and minimize its negative impact
abusive and intimidating behavior
Can be physical threats, false accusations, profanity, insults, harshness, ignoring someone, or unreasonableness
misuse of company resources
Can range from unauthorized use of equipment and computers to embezzling company funds Time theft costs organizations hundreds of billions in lost productivity annually
Principles:
Specific and pervasive boundaries for behavior that should not be violated Human rights, freedom of speech and justice
Optimization:
The tradeoff between equity and efficiency
Stakeholders:
Those who have a stake or claim in some aspect of a company's products, operations, markets, industry, and outcomes
Ethical culture:
acceptable behavior as defined by the company and industry
Corporate social responsibility -
an organization's obligation to maximize positive impact and minimize negative impact on stakeholders
Primary stakeholders:
those whose continued association is absolutely necessary for a firm's survival examples:Employees, customers, investors, governments, and communities
4. Business ethics contributes to investor loyalty
yes. Many studies have shown that trust and ethical conduct contribute to investor loyalty.
3. An ethical culture is based upon the norms and values of the company
yes. Norms and values help create an organizational culture and are key in supporting or not supporting ethical conduct.