Business & Society Test #1

greenwashing

the practice of making false or misleading statements to trick the public into believing a company's products, policies, or actions are environmentally friendly

legal responsibility

the most basic expectation that a company must comply with the law

stakeholder orientation

companies consider the diverse perspectives of constituents in their daily operations and strategic planning

interorganizational networks

a set of organizations that are associated through shared or mutual affiliations and interests (philanthropy)

can you have a conflict of interest on the board

yes

agency problem

a conflict of interest that happens when one person or group (the agent) is hired to work in the best interest of another person or group (the principal), but instead chases their own personal gain

pass-through entity

business structure where profits pass straight to the owners and face taxes only on personal income returns

pierce the corporate veil

a legal action where a court ignores a business structure's liability protection and holds the owners or shareholders personally responsible for the company's debts or illegal actions

liability shield

a legal boundary that separates your personal assets from the debts and lawsuits of your business

proxy

a person, authority, or system that stands in and acts on behalf of another (only way you can make a change)

golden parachute

a special contract clause that gives top executives massive financial benefits if they lose their jobs during a company merger or takeover

LLC

This is a business entity that has features of both a partnership & corporation, and is often represented by the letters LLC 

general partnership

a business structure where two or more people agree to share ownership, profits, and management responsibilities of a for-profit company

bylaws

This document sets forth a set of rules and regulations that govern the corporation’s internal management

stakeholder vs shareholder

a shareholder owns equity (stock) in a company, while a stakeholder is anyone affected by or interested in the company’s operations

direct lawsuit

is a legal claim filed by an individual or entity to address a personal injury or specific harm suffered directly by them, rather than harm done to a group or a corporation as a whole

business judgement rule

a legal principle that protects a company's board of directors and officers from personal liability when honest business decisions result in financial harm or failure

profit maximization

the short- or long-run process by which a firm determines the optimal price, input, and output levels to achieve the highest possible total profit

enlightened capitalism

theory of capitalism purposed as promoting the happiness of mankind, emphasizing stakeholder concerns & issues

Crisis Communication Plan

guides an organization on how to share clear, fast, and accurate information during an emergency

conflict of interest

when a person uses their position to obtain personal gain, usually at the expense of the organization (need full disclosure)

inside trading

the act of purchasing or selling a public company’s security with access to nonpublic information about the company

board of directors

group of members who represent shareholders & oversee the firm’s operations and compliance (act in the best interest of those they serve)

internal controls

safeguard corporate assets/resources, protect reliability of organizational info, ensure compliance w/ regulations, laws & contracts

The most basic principles have been codified into ________________ to require that companies conduct themselves in ways that conform to society’s expectations

laws and regulations

How did Covid-19 pandemic affect employee commitment

fueled exodus (moving ppl from place to place) from workforce

resource advantage theory

the value of a resource is viewed relative to its potential to create competitive differentiation/customer value

crisis management

process of preparing for, responding to, and recovering from unexpected events that threaten a company’s operations or reputation.

internal control and risk management

help prevent fraud, errors, and unethical behavior while protecting company assets, ensuring accountability, and maintaining stakeholder trust.