MGMT 320 with Tod - Final Exam

Ernst & Young (lecture story)

big four accounting firm fined $100 million by federal regulators after admitting that its employees cheated on their ethics exams

ethics

a conception of right and wrong conduct; different than laws, which are formal, written rules or codes

business ethics

the application of general ethical ideas to business behavior—it is the application of existing rules to specific settings

theory of amorality

the belief that business should be conducted without references to the full range or ethical standards, restraints, and ideals in society

the conventions ethic

business is a game, where special, lower ethics are permissible

Backpage.com (lecture story)

website that functioned as an online brothel, getting around the law by not directly promoting prostitution, only being a medium for transactions to occur

theory of moral unity

holds that businesses should be judged by the same moral/ethical considerations that apply throughout society

ethical relativism

the idea that there are no fixed, static ethical rules, but that ethics rules depend upon time, place, and circumstances

Why should businesses act ethically?

1) to enhance performance—there is a positive link to being perceived as an ethical company

2) to comply with legal requirements

3) to prevent or minimize harm

4) to meet demands of business stakeholders

5) to promote personal morality

6) how do you value "trust" within a relationship

Kohlberg's 6 stages of moral development

Pre-conventional

1) to avoid punishment

2) to satisfy self-centered needs and elicit a positive external response

Conventional

3) to conform to the group interest to please others in the group

4) to accept legal restrictions as being in the best interest of society

Post-conventional

5) to accept legal restrictions balanced with individual rights as being in the best interests of society and the individual

6) to find satisfaction in being ethical and moral for personal reasons

UN Diplomat Corruption Study Findings (lecture story)

This finding suggests that cultural or social norms related to corruption are quite persistent: even when stationed thousands of miles away, diplomats behave in a manner highly reminiscent of officials in the home country. Norms related to corruption are apparently deeply ingrained, and factors other than legal enforcement are important determinants of corruption behavior.

competitive presssures

when companies are squeezed for profits, they sometimes engage in unethical behavior

conflicts of interest

exist whenever a person or organization is incentivized in a away that compromises that person's, or organization's loyalty, or objectivity, vis-à-vis another party

heart surgeons in Elyria, Ohio (lecture story)

A team of surgeons were preforming an unusually high number of angioplasties covered by medicare. They were performing then as opposed to a less expensive and invasive option purely for profit exploitation

finance ethics

whenever you trust another person to make a decision for you, involving spending any of your money, or investing any of your money, you run certain risks such as kickbacks, self-dealing, and conflicts of interest

the fiduciary rule

requires the fiduciary to act solely in the interest of that other person's property and interests

cross-cultural contradictions

company's interests vs. diverse cultural traditions and values; ethnocentric mentality

rationalization

ethical failures are justified via this; distortion of utilitarianism (i.e. the ends justify the means)

compliance-based programs

seek to avoid legal sanctions through detection and punishment

integrity-based program

combines an concern for the law with an emphasis on personal integrity

duty-based (deontological) models

pre-existing rules guide you to deterring what is ethical; it is not the consequence of an act, but the nature of the act itself, that determines if it is ethical

strengths: a strong foundation in which to guide people

weaknesses: occasionally, difficult to consistently apply

result-oriented (consequentialist) models

has number of permutations, but all essentially look to the end results to determine whether conduct is ethical; utilitarianism, or cost-benefit analysis, is the best known form of this reasoning

strategic defaults

when a borrower who can afford to keep making payments on their loan attempts to force the lender or investor into modification, short sale or foreclosure due to unfavorable circumstances for the borrower (think Mortgage Bankers Association)

Immanuel Kant

took the golden rule—a duty-based paradigm—and riffed on it by cleverly combing elements of consequentialism, creating the categorial imperative

categorical imperative

a person should not act unless he or she is willing to have the rule or conduct on which one acts become universal law; the rational person will consider the consequences of their act being universalized, and then act accordingly, based on how society would be affected

virtue ethics

time tested, aspirational, and as relevant today as they have been in the past; personal values can be excellent guides to acting in an ethically correct way; for business culture, they pull us away from merely considering profits, to considering other qualities that stands apart from the bottom line

virtue ethics examples

honesty/truthfulness, generosity & charity, humility/modesty, justice (knowing what is right), prudence (being cautious, careful), courage (ability to stand up for what you know is right rather than fold under pressure), trust (honoring one's word)

The Ford Pinto (lecture story)

Ford decided to continue to pay the lawsuits of serious injury and death from burning Pintos for a total of $49.5 million instead of fixing the cars for $137 million; when stakeholders found out, Ford was punished with a $200 million fine

utilitarianism

the idea that the goal of society should be to bring about the greatest happiness for the greatest number of people; it is outcome determinative and could justify the violation of basic human rights in the service of the greater good; among its problems is that it is almost always impossible to know ahead of time what the actual consequences of a decision will be

Czech smoking story

it was leaked by the media that the Czech Republic benefited financially from the premature deaths of smokers; the government saved between $24 and $30 million in health care, pensions, and public housing costs due to the early deaths of smokers—one of the 'positive' benefits of smoking, according to the study

rights

its model emphasizes individuals' rights to life, safety, free speech, freedom, property, and due process; cannot be selectively applied, rather they must be applied without regard to race, gender, etc.; often made into laws

types of justice

1) procedural

2) distributive

3) compensatory

procedural justice

duty-based; it's not really concerned about the end result; if we follow the pre-existing rules and procedures, which are agreed to ahead of time, then the result is just

distributive justice

a form of consequentialism because the results matter; it focuses on the end result, and whether it is "fair"

veil of ignorance

theory presented by John Rawls; you can only make fair decisions concerning "distributive justice" if you have no stake in the outcome (or are blind to your own circumstances), if you have a stake, your bias will prevent you from being fair

compensatory justice

refers to the pre-set rules concerning how we compensate those who have been wronged in the past

comparative negligence

a theory in tort law under which the liability for injuries resulting from negligent acts is shared by all parties who were negligent (including the injured party), on the basis of each person's proportionate negligence

the disclosure rule

test an ethical decision by asking how you would feel explaining it to a wider audience such as newspaper readers, television viewers, or your family

5 Whys

an iterative interrogative technique used to explore the cause and effect of a problem

sustainable development

development that meets the needs of the present without compromising the ability of future generations to meet their own needs

sustainability as fairness

1) the current benefits (and costs) from the use of natural resources should be fairly distributed cross various countries

2) the current benefits (and costs) from the use of natural resources, should be fairly distributed across generations

tragedy of the commons

situation in which people acting individually and in their own interest use up commonly available but limited resources, creating disaster for the entire community

the Anthropocene period

the modern era so named to reflect the dominant impact of humans on Earth

ecological footprint

the biologically productive area needed to provided for everything people use

climate refugees

people displaced by environmental changes brought about by climate change, such as rising sea levels, drought, and increased exposure to hurricanes and floods

triple bottom line

recognition of the need for organizations to improve the state of people, the planet, and profit simultaneously if they are to achieve sustainable, long-term growth

green-washing

the exaggerated or false marketing of a product, good, or service as environmentally friendly

life cycle analysis

involves collecting information the lifelong environmental impact of a product, all the way from extraction of raw materials to design, manufacturing, distribution, use, and ultimate disposal

extended products/producer responsibility laws

require manufacturers of products and packaging to take responsibility for collection, recycling, reuse, or disposal of their products, including e-waste

Environmental Protection Agency (EPA)

founded in 1970 under Richard Nixon, authorized to make rules using a complex formula of cost benefit analysis that takes into account the risks associated with industry "doing something," and then measures these perceived risks against the costs of abating/minimizing the risks

EPA risk characterization

the overall conclusion about the dangers of a substance; it takes the form of a detailed, written narrative describing the scientific evidence, and identifies areas of ambiguity

1) hazard assessment

2) dose-response assessment

3) exposure assessment

hazard assessment

established a link between a substance, such as a chemical, and human disease

dose-response assessment

a qualitative estimate of how toxic a substance is to humans or animals at increasing levels of exposure

exposure assessment

the study of how much of a substance humans absorb through inhalation, ingestion, or skin absorption

EPA risk management

not concerned with "hard science," but is based upon law, economics, politics, and ethics

cost-benefit analysis (CBA)

the systematic calculation and comparison of the costs and benefits of a proposed action, plus an assessment of alternatives; if benefits exceed costs, the action is desirable, other things being equal

CBA costs

enforcement costs, capital and compliance costs to industry, foregone net benefits such as a lowered crop yield or the costs of a substitute for a banned substance, potential job losses

CBA benefits

lives saved, reduced medical costs, increased tourism, and heightened aesthetic appeal

command and control

the idea that the government will set a "rule" that applies to all industries in the same way; the primary difficulty is that not all actors within a specific industry are the same, and not all industries are the same

flexible enforcement

has the same goals as "command and control" but allows business discretion in how to get there (i.e. don't pollute more than X, we don't care how you get there)

market incentives

makes use of carrots (incentives) and sticks (penalties); plans requiring market participants to certify that they have reduced total consumption by a certain amount

extended producer responsibility laws

laws that require product manufacturers to "take back" a large percentage of the products they manufacture at the end of the product's life in order to reduce the amount of waste ending up in landfills and the environment

required disclosure

each year, industries releasing any of 650 pollutants must report the amount of those emissions; since the program began in 1987, emissions of the 650 chemicals have declined by 49%, because corporations don't like the bad public relations associated with being on the list

voluntary regulations

companies and industries doing things voluntarily to stave off government regulations

Black cabs vs Uber (lecture story)

there were barriers to entry for those wishing to become black cab drivers in London, they had to take the difficult Knowledge test; in contrast, Zahra Bakkali was able to become a registered Uber driver in one day.

7 broad phases of technology

nomadic, agrarian, industrial, service, information, semantic/metadata, biotechnology

government censorship in the US

true threats, civil lawsuits relating "libel and slander," obscene material, IP infringement

Kim Kardashian Crypto (lecture story)

Kim Kardashian posted several tweets about a crypto service but did not disclose that they were paid advertisements, resulting in her paying millions of dollars in fines

social influencer and the FTC guidebook

endorsers are legally responsible to communicate with their followers and disclose their financial, employment, and personal relationships with paid advertisements and companies

Sunday Riley (lecture story)

the FTC charged Sunday Riley Skincare and Sunday Riley individually with making false or misleading claims and with failure to disclose a material connection with endorsers, in violation of Section 5 of the FTC Act

non-disparagement clause

cannot write negative reviews about a company, Consumer Review Fairness act outlawed similar "gag" clauses

Consumer Review Fairness Act

protect people's ability to share in any forum their honest opinions about a business' products, services, or conduct

viewpoint discrimination

unconstitutional government regulation of speech expressing a particular view on a subject based on the content or message/ ideas being communicated

terms and conditions

a form of self-regulation; website hosts are free to create their own terms and conditions for what they allow others to post on their websites; the government cannot tell them that they must allow certain contact to be posted

Facebook 2011 and 2019 (lecture story)

Facebook settled for $5 billion with the FTC after failing to further protect the privacy of its users as a result of information coming out of what Cambridge Analytica was receiving from Facebook

payday lending (lecture story)

May 2016, Google announced on Wednesday that it would ban all advertisements for payday loans and related products on its website because they often lead to unaffordable repayment terms and financial harm to consumers

TripAdvisor (lecture story)

An employee at a resort in Mexico posted a review on TripAdvisor about her rape experience that the hotel tried to remove; as a result, TripAdvisor has launched a new feature that alerts travelers to hotels and other businesses that have received reports of safety violations or discrimination issues; Three hotels in Mexico, all in Playa del Carmen, received the security message — the Grand Velas Riviera Maya, the Iberostar Paraiso Lindo and the Iberostar Paraiso Maya.

addiction treatment (lecture story)

Google acknowledged the problem — and started restricting ads that come up when someone searches for addiction treatment on its site; "We found a number of misleading experiences among rehabilitation treatment centers that led to our decision," Google spokeswoman Elisa Greene said in a statement on Thursday

Yelp (lecture story)

The online review site Yelp can lower or raise the rating of a business depending on whether it advertises with the company, a federal appeals court ruled in a lawsuit filed by small businesses claiming Yelp used the tactic to try to extort ads from them. Yelp has denied doing that, saying it uses an automated system to cull reviews that determine ratings.

The court said businesses did not have a right to positive reviews on Yelp, and that the San Francisco-based company can seek payments for its advertising.

Christian Times (lecture story)

Cameron Harris posted a fake news story that was shared with 6,000,000 people claiming that fake ballots voting for Hillary were found in Ohio; the publisher earned $22,000 in Google Ad revenue from it

Globalization

is a process in which international trade and financial flows integrate the world economy, leading to the spread of technology, culture, and politics

5 recent events/trends that have impeded globalization

Covid, Ukraine, Trump's Trade Wars, Political polarity and the rise of "friend-sourcing," Climate Change—disrupting supplies

free trade agreements

these agreements make it easier and cheaper for US businesses to export goods and services—by lowering or abandoning tariffs and quotas—and provides similar benefits to the counterparty, exporting their goods to the US

law of comparative advantage

the individual, firm, region, or country with the lowest opportunity cost of producing a particular good should specialize in that good

tariff uses

1) protect local industries and jobs from less costly foreign competition

2) to punish foreign producers where local government assist manufactures in producing product below the price of production (sometimes referred to as anti-dumping tariff)

3) to address indirect government support of local businesses through tax policy (consider Boeing, and Washington State); this is known as a countervailing tariff

quotas

limit the amount or number of specific products that a country will allow to be imported each year

Costly truth about auto import quotas (lecture story)

Wharton Econometrics calculated that the average price per new car has risen by $2,600 since the market restrictions were imposed. The low supply of imported cars mandated by the quotas added $1,000 to the price tag of every Japanese car sold in the U.S., a total of $1.85 billion in extra consumer costs.

The total 1984 bill for U.S. consumers due to auto trade restraints: was $5 billion.

three sector world

state actors, private sector acts, and civil society

state actors

governments representing defined, recognized countries

private sector actors

businesses

civil society

not the government, and not private businesses, but entities like social organizations that are neither the government, nor pro-making enterprises

challenges to MNCs

1) lack of predictability; capital demands a higher return for risk

2) lack of an independent judiciary able to make decisions, and then have their decisions enforced

3) corruption; small bribes to government officials may be acceptable, but American corporations are forbidden

4) the host country's laws may make operating there problematic

5) business capital diverted from the business

6) the environment

7) technology transfers

The Foreign Corrupt Practices Act

prohibits US business and their agents from bribing foreign officials to influence an act, to gain, or to retain business

forced technology transfer

when companies are made to give up technological knowledge in exchange for market access

positives of MNCs for a host country

employment, retain a fair share of profits made by MNCs in the host country, train and educate the local workforce, retain control over the economy, protect the natural environment, maintain social and political stability

negatives of MNCs for a host country

destruction of the environment, political interference, and exploiting weak local regulations protecting indigenous workers