Chapter 3 BLAW Flashcards

What is business ethics?

The study of right and wrong behavior in a business context, applying moral and ethical principles to workplace decisions.

Why should ethics be part of a company’s core values?

Embedding ethics into a company’s mission ensures decisions are guided by consistent values, building trust and resilience.

How does leadership affect business ethics?

Leaders set the tone for ethical behavior, influencing the entire organization.

What kind of duties do directors and officers owe?

A complex set of ethical duties to both internal and external stakeholders.

What is the 'moral minimum'?

Merely complying with the law, considered the bare minimum for ethical behavior.

Why might legal actions still be unethical?

Legality does not guarantee fairness, justice, or moral integrity.

What is the issue with short-run profit maximization?

It may offer immediate gains but disregard long-term ethical or reputational consequences.

Why are gray areas in law challenging for businesses?

They create uncertainty and complicate ethical decision-making.

Example of unethical salary practice according to Anna Spooner?

CEO raises salary while laying off employees.

Example of potentially unethical wage practice?

Paying minimum wage in a high-cost area.

What are benefits of ethical business practices?

Better employee morale, improved customer trust, and positive public relations.

Example of ethical leadership improving business?

Dan Price raised employee wages and saw increased revenue and retention.

What are the consequences of unethical behavior?

Reputation damage, low employee morale, hiring/retention challenges, and loss of trust.

What is corporate governance?

A system of rules and policies that guide how companies operate ethically.

Why did corporate governance rise in the 21st century?

Due to economic downturns, corporate greed, and scandals.

Which company started the first ethics office?

General Dynamics in 1985.

What are the steps in ethical decision-making?

1. Understand the issue & facts; 2. Separate facts from assumptions; 3. Identify affected parties and laws; 4. Propose solutions; 5. Evaluate ethically; 6. Recommend and implement.

Purpose of a code of conduct?

Sets clear behavioral expectations and educates employees on ethics.

What law encourages reporting systems?

Sarbanes-Oxley Act.

Key elements of a code of conduct?

Legal considerations, value-based ethics, regulatory standards, and professional behaviors.

What is the rationale behind corporate stock buybacks?

Belief that stock is undervalued, boosting share value instead of issuing dividends.

Key elements of an ethical whistleblower policy?

Confidentiality, no retaliation, step-by-step reporting procedures.

What is CSR?

The use of corporate resources to give back to society through donations, sustainability, and volunteerism.

What is the stakeholder approach?

A company’s duty extends beyond shareholders to all affected parties.

What is corporate citizenship?

A company supporting societal goals and solving societal issues.

Example of CSR?

TOMS Shoes donates a pair for every one sold, supports clean water and maternal health.

Research-backed CSR benefits?

Boosts investor confidence, improves operations, increases stock value, enhances brand image.

Other benefits of CSR?

Attracts younger talent, builds consumer loyalty, encourages volunteering.

What are the 6 CSR decision-making guidelines?

1. The law; 2. Rules & procedures; 3. Values; 4. Conscience; 5. Promises; 6. Heroes.

What is the 5-step ethical evaluation model?

1. Inquiry; 2. Discussion; 3. Decision; 4. Justification; 5. Evaluation.

What is Duty-Based Ethics?

Derived from religious/philosophical beliefs, focusing on rules rather than outcomes.

What are Religious Ethical Standards?

Actions judged by their adherence to moral rules, regardless of motives.

What is Kantian Ethics?

Moral principles based on human reason, includes the categorical imperative.

What is the Principle of Rights?

Ethical actions that protect others' rights correspond to duties.

What is Outcome-Based (Utilitarian) Ethics?

Morality judged by the outcome — the greatest good for the greatest number.

How is Utilitarianism applied?

1. Identify affected parties; 2. Conduct cost-benefit analysis; 3. Choose the best outcome.

What is the difference between CSR and social marketing?

CSR is a long-term commitment; social marketing involves specific campaigns.

Requirements of effective social marketing?

Ethical & sustainable, employee-supported, aligned with societal needs.

What are the three components of the Triple Bottom Line (TBL)?

1. Profit; 2. People; 3. Planet.

What’s a TBL challenge?

Difficulty in accurately measuring non-financial benefits.

What challenges arise in global business ethics?

Cultural differences, foreign supplier practices, and monitoring standards.

What does the Foreign Corrupt Practices Act (FCPA) prohibit?

Bribing foreign officials while allowing minor greasing for routine actions.

What are the FCPA penalties?

Companies face up to $2M fines; individuals face up to $100K fines and 5 years in prison.

Why are ethics and CSR important to business success?

They build internal accountability, legal compliance, social/environmental stewardship, and competitive advantage.