CBA 400 - Test #2

People make ethical decisions when they find an ethical component in a particular issue or situation

Failure to acknowledge or be aware of ethical issues is hazardous to on organization

integrity

One of the most important elements of virtue; Refers to being whole, sound, and in an unimpaired condition

Fairness

FairnessThe quality of being just, equitable, and impartial; Overlaps with concepts of justice, equity, and equality

Ethical Issue

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.

ETHICAL DILEMMA

A problem, situation, or opportunity that requires an individual, group, or organization to choose among several actions that have negative outcomes.

CONFLICT OF INTEREST

When an individual must choose whether to advance his or her own interests, those of the organization, or those of some other group.

BRIBERY

The practice of offering something (often money) in order to gain an illicit advantage from someone in authority.

CORPORATE INTELLIGENCE

The collection and analysis of information on markets, technologies, customers, and competitors, as well as on socioeconomic and external political trends.

DISCRIMINATION

Prejudices based on race, color, religion, sex, marital status, sexual orientation, public assistance status, disability, age, national orgin, or veteran status; illegal in the United States.

EQUAL EMPLOYMENT OPPORTUNITY COMMISSION (EEOC)

Federal agency that protects against workplace discrimination

SEXUAL HARASSMENT

Any repeated, unwanted behavior of a sexual nature perpetrated upon one individual by another

Hostile Work Environment

The conduct was unwelcome

The conduct was severe, persuasive, and regarded by the claimant as so hostile or offensive as to alter his or her conditions of employment

The conduct was such that a reasonable person would find it hostile or offensive

FRAUD

Any purposeful communication that deceives, manipulates, or conceals facts in order to harm others

CONSUMER FRAUD

When consumers attempt to deceive businesses for their own gain

Consumer Fraud

Price tag switching, item switching, lying to obtain age-related or other discounts, taking advantage of return policies

INSIDER TRADING

The buying or selling of stocks by insiders who possess information that is not yet public

Insider Trading

Buying or selling stocks using information that is not yet public is illegal

Insider Trading

legal if the individual legally buys or sells stocks in an insider's own company as long as the transaction(s) are reported to the SEC within two business days

PUFFERY

Exaggerated advertising, blustering, and boasting upon which no reasonable buyer would rely upon— is not actionable under the Lanham Act.

CRISIS MANAGEMENT

The process of handling a high-impact event characterized by ambiguity and the need for swift action to access and respond to potential damage.

ETHICAL AWARENESS

the ability to perceive whether a situation or decision has an ethical dimension

ETHICAL ISSUE INTENSITY

The relevance or importance of an event or decision in the eyes of the individual, work group, and/or organization

ETHICAL ISSUE INTENSITY

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

MORAL INTENSITY

Individuals' perceptions of social pressure and the harm they believe their decisions will have on others

LOCUS OF CONTROL

Individual differences in relation to a generalized belief about how one is affected by internal vs. external events or reinforcements

EXTERNAL CONTROL

Individuals with this focus of control see themselves as going with the flow because that is all they can do (life events are due to uncontrollable forces)

INTERNAL CONTROL

Individuals with this locus of control believe they control the events in their lives by their own effort and skill; they view themselves as masters of their destinies and trust in their capacity to influence their environment.

CORPORATE CULTURE

A set of values, norms, and artifacts, including ways of solving problems that members (employees) of an organization share. Mission statements and objectives

ETHICAL CULTURE

Accepted behavior, defined by the company and industry

ETHICAL CULTURE

Reflects the integrity of decisions made and is a function of factors, including corporate policies, top management's leadership on ethical issues, the influence of coworkers, and the opportunity for unethical behavior.

SIGNIFICANT OTHERS

Those who have influence in a work group, including peers, managers, coworkers, and subordinates.

OBEDIENCE TO AUTHORITY

A reason employees resolve business ethics issues by simply following the directives of a superior.

OPPORTUNITY

The conditions in an organization that limit or permit ethical or unethical behavior

IMMEDIATE JOB CONTEXT

where they work, whom they work with, and the nature of the work

An ethical decision-making model does not help in determining if a business decision is right or wrong

It is intended to provide insights about ethical making in businesses

Business ethics involves value judgements and collective agreement about acceptable patterns of behavior

Ethical Decision Making

Gaining an understanding of the factors that make up ethical decisions helps in differentiating between an ethical issue and a dilemma

NORMATIVE APPROACHES

How organizational decision makers should approach an issue

INSTRUMENTAL CONCERN

Focuses on positive outcomes, including firm profitability and benefits to society

INSTITUTIONAL THEORY

Theory that organizations operate according to taken-for-granted institutional norms and rules

VEIL OF IGNORANCE

A thought experiment that examined how individuals would formulate principles if they did not know what their future position in society would be

EQUALITY PRINCIPLE

States that each person has basic rights that are compatible to the basic liberties of others

DIFFERENCE PRINCIPLE

States that economic and social equalities or inequalities should be arranged to provide the most benefit to the least-advantaged members of society

Understanding Ethical Decision Making

Top-level support for ethical behavior is instrumental in helping employees engage in their personal approaches to ethical decision making

MORAL PHILOSOPHY

The specific principles or values use to decide what is right or wrong;

- Determining how conflicts in human interests are to be settled

- Optimizing mutual benefit of people living together in groups

Adam Smith

father of free-market capitalism, believed business was and should be guided by morals of good people

Some managers view profit maximization as the ultimate goal

Economist Milton Friedman supported this viewpoint, contending the market will reward or punish companies for unethical conduct without the need for the government regulation

ECONOMIC FREEDOM

A concept based on self-ownership, the right to choose, voluntary exchange, open markets, and clearly defined and enforced property rights

IDEALISM

A moral philosophy that places special value on ideas and ideals as products of the mind

REALISM

The view that an external world exists independent of our perception

MONISTS

Believe only one this is intrinsically good

HEDONISM

The idea that pleasure is the ultimate good, or the best moral end involves the greatest balance of pressure over pain

Quantitative Hedonists

Those who believe more pleasure is better

Qualitative Hedonists

Those who believe it is possible to get too much of a good thing

PLURALISTS

Often referred to as NONHEDONISTS, take the opposite position that no one thing is intrinsically good

Plato argued that the good life is a mixture of

(1) moderation and fitness, (2) proportion and beauty, (3) intelligence and wisdom, (4) sciences and arts, and (5) pure pleasures of the soul

INSTRUMENTALISTS

Reject the ideas that (1) ends can be separated front the means that produce them and (2) ends purposes or outcomes are intrinsically good in and of themselves

GOODNESS THEORIES

Focus on the end result of actions and the goodness of happiness created by them

OBLIGATION THEORIES

Emphasize the means and motives by which actions are justified, and are devoted into the categories of technology and deontology

TELEOLOGY

Refers to moral philosophies in which an act is considered morals right or acceptable if it produces some desired result, such as please, knowledge, career grother, the realization of self interest, utility, wealths, or even fame

EGOISM

Defines right or acceptable behavior in terms of its consequences for the individual

UTILITARIANISM

Seeks the greatest good for the greatest number of people

RULE UTILITARIANS

Argue that general rules should be followed to divide which action is best

ACT UTILITARIANS

The rightness of each individual action must be evaluated to determine whether it produces the greatest utility for the greatest number of people

DEONTOLOGY

Refers to moral philosophies that focus on the rights of individuals and the intentions associated with a particular behavior rather than its consequences

RELATIVIST PERSPECTIVE

Definitions of ethical behavior are derived subjectively from the experiences of individuals and groups

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

Teleology

Differences between teleology and deontology?

Ends justifies the means

What's good for the person/community/society/world

Deontology

Differences between teleology and deontology?

Inalienable rights

Some things are inherently right/wrong

WHITE-COLLAR CRIME

Crimes perpetrated every year by nonviolent business criminals

More damage in monetary and emotional loss are caused by white-collar crime in one year than by violent crimes over several years combined

White-Collar Crime

Offenders tend to be highly educated, in positions of power trust, respectability, and responsibility

White-Collar Crime

Corporate culture can transcend the individual's beliefs; With time, patterns become institutionalized, sometimes encouraging unethical behaviors

White-Collar Crime

For companies with a high number of ethical or unethical employees, people who are undecided about their behavior are more likely go along with their coworkers

White-Collar Crime

White-collar crime occurs when highly trusted and educated individuals commit criminal misconduct

CORPORATE CULTURE

The shared beliefs top managers in a company have about how they should manage themselves and other employees, and how they should conduct their business(es)

SARBANES-OXLEY 404

Requires firms to adopt a set of values that forms a portion of the company's culture

Characteristics of an ethical corporate culture were codified within its compliance

Includes a requirement that management assess the effectiveness of the organization's internal controls and commission audits of these controls bu an external auditor in conjunction with the audit of its financial statements

An ethical corporate culture is measured in the following ways:

Management and board demonstrate commitment to integrity, care values, ethics codes through communication and actions

Employees encouraged and required to have hands-on involvement in compliance, especially internal control systems and reporting systems

Ethical leadership starts with the tone at the top

Employees leadership starts with the tone at the top

Employees expected to receive communication through resolutions and corrective actions related to ethical issues

Employees can report policy exceptions anonymously to any member of the organization

Two basic dimensions to describe an organization's culture:

Concern for people

Concern for performance

APATHETIC CULTURE

Minimal concern for either people or performance

CARING CULTURE

High concern for people but minimal concern for performance issues

EXACTING CULTURE

Little concern for people but a high concern for performance

INTEGRATIVE CULTURE

High concern for people and performance

CULTURAL AUDIT

Assessment of an organization's values

The ethical component of corporate culture is a significant factor in ethical decision making

If the company's primary objective is to make as much profit as possible through whatever means, its culture may foster behavior that conflicts with stakeholders' ethical values

COMPLIANCE CULTURE

A legalistic approach to ethics

Codes of conduct established with compliance as their focus

VALUE-BASED ETHICS CULTURE

Relies on an explicit mission statement that defines core values of the firm and how customers and employees should be treated

Top-down integrity approach with shared values, norms that provide guides for behavior, and visible artifacts such as codes of ethics that provide a standard of conduct

DIFFERENTIAL ASSOCIATION

The idea that people learn ethical or unethical behavior while interacting with others who are part of their role-set or belong to other intimate personal groups

WHISTLE-BLOWING

Exposing an employer's wrongdoing to outsiders such as the media or government regulatory agencies

CENTRALIZED ORGANIZATION

Decision-making authority is concentrated in the hands of top-level managers, and little authority is delegated to lower levels

Typically have little upward communication

Strict formalization, may be more ethical than decentralized

DECENTRALIZED ORGANIZATION

Decision-making authority is delegated as for down the chain of command as possible

FORMAL GROUP

An assembly of individuals with an organized structure that is explicitly accepted by the group

COMMITTEE

Formal group of individuals assigned to a specific task

WORK GROUPS

Subdivide duties within specific functional areas of a company

TEAMS

Bring together the enterprise of employees from several different areas of the organization

INFORMAL GROUP

Two or more individuals with a common interest but without an explicit organizational structure

GROUP NORMS

Standards of behavior groups expect of their members

An ethical issue is defined as problem, situation, or opportunity that_____________.

a. has no correct answer

b. Harms the environment

c. requires society as a whole to choose among several actions that must be evaluated as right or wrong

d. requires an individual, group, or organization to choose among several actions that must be evaluated as right

or wrong, ethical or unethical

e. is a trade-off between equity and efficiency

d. requires an individual, group, or organization to choose among several actions that must be evaluated as right

or wrong, ethical or unethical

Insider trading can be defined as which of the following?

a. The practice of offering something (often money) in order to gain an illicit advantage from someone in authority

b. The collection and analysis of information on markets, technologies, customers, and competitors, as well as on

socioeconomic and external political tread

c. The process of dishonestly creating distributing, promoting, and pricing products

d. Exaggerated advertising, blustering, and boasting upon which no reasonable buyer would rely

e. The buying or selling of stocks by insiders who possess information that is not yet public

e. The buying or selling of stocks by insiders who possess information that is not yet public