Ethics Terms

Boundary-spanning departments

departments, or offices, within an organization that reach across the dividing line that separates the company from groups and people in society

Business

any organization that is engaged in making a product or providing a service for a profit.

External stakeholder

Individuals or groups that may important transactions with a firm but are not directly employed by the firm, such as customers or suppliers.

Focal organization

The organization from whose perspective a stakeholder analysis is conducted.

General systems theory

A theory that holds that all organisms are open to, and interact with, their external environments.

Interactive social system

The closely intertwined relationships between business and society.

Internal stakeholder

Individuals who are employed by the firm, such as employees and managers.

Market stakeholder

A stakeholder that engages in economic transactions with a company.

Nonmarket stakeholder

A stakeholder that does not engage in direct economic exchange with a company, but is affected by or can affect its actions.

Shareholder theory of the firm

A theory that holds that the purpose of the firm is to maximize its long-term market value. (Also known as ownership theory of the firm.)

Society

Refers to human beings and to the social structures they collectively create; specifically refers to segments of humankind, such as members of a particular community, nation, or interest group.

Stakeholder

A person or group that affects, or is affected by, a corporation’s decisions, policies, and operations. (See also market stakeholder and nonmarket stakeholder.)

Stakeholder analysis

An analytic process used by managers that identifies the relevant stakeholders in a particular situation and seeks to understand their interests, power, and likely coalitions.

Stakeholder coalitions

Alliances among company’s stakeholders to pursue a common interest; generally are not static relationships.

Stakeholder interests

The nature of each stakeholder group, its concerns, and what it wants from its relationship with the firm.

Stakeholder map

A visual representation of the relationships among stakeholder interests, power, and coalitions with respect to a particular issue.

Stakeholder power

The ability of one or more stakeholders to make an event happen or to secure a desired outcome in their interactions with a company. The five types are voting power, economic power, political power, legal power, and informational power.

Stakeholder salience

A stakeholder’s ability to stand out from the background, to be seen as important, or to draw attention to itself or its issue. Stakeholders are more salient when they possess power, legitimacy, and urgency. (See also salience.)

Stakeholder theory of the firm

A theory that holds that the purpose of the firm is to create value for society.

Anglosphere

Businesses and corporations that speak English and are all connected financially by two major cities; London and New York (London is most powerful)

Spanosphere

Businesses and corporations that speak Spanish and are all connected by Brazil and Argentina

Francosphere

Businesses and corporations that speak French

Sinosphere

Also known as the Asiansphere, businesses and corporations that are Asian, China is first, followed by Japan

Ethics

What is right and what is wrong

Sovereignty

Money belongs to the consumer and it’s their choice on what and how they choose to use it

4Ws model

A theory that identifies the strategy managers will use when confronted with a dispute with stakeholders, and which strategy is most likely to be successful.

Issue Management

a process by which the corporation can identify, evaluate, and respond to those social and political issues which may impact significantly upon it

Performance-expectations gap

The perceived distance between what a firm wants to do or is doing and what the stakeholder expects.

Political issue

situations motivated by actions or concerns of legislators.

Public issue

An issue that is of mutual concern to an organization and its stakeholders, sometimes called a social or sociopolitical issue.

Social issue

A situation that evolves from concerns emerging from the general public.

Stakeholder dialogue

Conversations between representatives of a company and its stakeholders about issues of common concern.

Stakeholder engagement

An ongoing process of relationship building between a business and its stakeholders.

Stakeholder materiality

Adaptation of an accounting term that focuses on the importance or significance of stakeholders for the firm.

Stakeholder network

An assembly of concerned individuals or organizations working collaboratively on a shared issue, problem, or opportunity.

Strategic issue

A situation that directly impacts the financial performance of a firm.

Competitive Advantage

the ability gained through attributes and resources to perform at a higher level than others in the same industry or market

Business Advantage

tangible and intangible economic and other benefits that can be obtained in the course of business

Afrosphere

Businesses and corporations connected to Africa

Competitive Intelligence

serves to improve a company's strategic planning by effectively monitoring and analyzing industry developments and competitor actions.

Management

the conducting or supervising of something (such as a business)

Manager

a person who conducts business or household affairs, the organizer

Social Audit

A systematic evaluation of an organization’s social, ethical, and environmental performance

B Corporation

A business that explicitly seeks to blend its social and environmental objectives with its financial goals.

Corporate Citizenship

This term refers to the actions corporations take to put their commitments to corporate social responsibility into practice worldwide.

Corporate Power

The capability of corporations to influence government, the economy, and society, based on their organizational resources.

Corporate social reporting

The public reporting of information collected by the organization or another party during a social audit.

Corporate Social Responsibility (CSR)

The idea that businesses should act in a way that enhances society and their stakeholders and be held accountable for any of its actions that affect people, their communities, and their environment

Creating Shared Value

The creation of economic value in ways that also generate value for society.

Enlightened Self-Interest

The view that holds it is in a company’s self-interest in the long run to provide true value to its stakeholders.

Integrated Report

An emerging trend in corporate reporting is the integration of legally required financial information with social and environmental information

Iron Law of Responsibility

The belief that those who do not use their power in ways that society considers responsible will tend to lose their power in the long run.

Reputation

The desirable or undesirable qualities associated with an organization or its actors that may influence the organization’s relationships with its stakeholders.

Social Entrepreneurs

Like traditional entrepreneurs, individuals who act boldly to pursue opportunities, attract support, and build new organizations to create and sustain social rather than economic value.

Social Entrepreneurship

A person or group of people who identify a social need and use their entrepreneurial skills to address this need.

Social Venture

Organizations founded by social entrepreneurs.

Transparency

Clear public reporting of an organization’s performance to various stakeholders.

Sino-Soviet Split

The big split between the Russian and Chinese communists.

WTO

World Trade Organization, an intergovernmental organization that regulates and facilitates international trade between nations.

IMF

International Monetary Fund, commitment to improving the world we live in and being mindful of the impact of its operations.

Tariff

a tax on goods coming into or leaving a country

Business Ethics

The application of general ethical ideas to business behavior.

Conflicts of Interest

The application of general ethical ideas to business behavior.

Ethical Egoist

A person who puts his or her own selfish interests above all other considerations.

Ethical Principles

Guides to moral behavior, such as honesty, keeping promises, helping others, and respecting others’ rights.

Ethical Relativism

A belief that ethical right and wrong are defined by various periods of time in history, a society’s traditions, the specific circumstances of the moment, or personal opinion.

Human Rights

An ethical approach emphasizing a person or group’s entitlement to something or to be treated in a certain way, such as the right to life, safety, or to be informed.

Justice

An ethical approach that emphasizes whether the distribution of benefits and burdens among people are fair, according to some agreed-upon rule.

Laws

Society’s formal written rules about what constitutes right and wrong conduct in various spheres of life.

Moral Intensity

A person’s perception of how morally severe an ethical issue is.

Sarbanes-Oxley Act

U.S. law enacted in 2002 that greatly expanded the powers of the SEC to regulate information disclosure in the financial markets and the accountability of an organization’s senior leadership regarding the accuracy of this disclosure. (See also Securities and Exchange Commission.)

Spirituality

A personal belief in a supreme being, religious organization, or the power of nature or some other external, life-guiding force.

Stage of Moral Development

A sequential pattern of how people grow and develop in their moral thinking, beginning with a concern for the self and growing to a concern for others and broad-based principles.

U.S. Corporate Sentencing Guidelines

Standards to help judges determine the appropriate penalty for criminal violations of federal laws and provide a strong incentive for businesses to promote ethics at work.

Utilitarian Reasoning

An ethical approach that emphasizes the consequences of an action and seeks the action or decision where the benefits most outweigh the costs.

Virtue Ethics

Focuses on character traits to define a good person, theorizing that values will direct a person toward good behavior.

Bribery

A questionable or unjust payment often to a government official to ensure or facilitate a business transaction.

Corporate Culture

A blend of ideas, customs, traditional practices, company values, and shared meanings that help define normal behavior for everyone who works in a company.

Employees Ethics Training

Programs developed by businesses to further reinforce their ethical expectations for their employees.

Ethical Climate

An unspoken understanding among employees of what is and is not acceptable behavior based on the expected standards or norms used for ethical decision-making.

Ethical Leadership

The demonstration of normatively appropriate conduct through personal action and interpersonal relationships by the leaders of an organization; the tone at the top.

Ethics and Compliance Officer (ECO)

A manager designated by an organization to investigate breaches of ethical conduct, promulgate ethics statements, and generally promote ethical conduct at work.

Ethics Policies or Codes

A written set of rules used to guide managers and employees when they encounter an ethical dilemma.

Ethics Reporting Mechanisms

A program that enables employees, customers, or suppliers to report an ethical concern directly to someone in authority in an organization.

U.S. Foreign Corrupt Practices Act (FCPA)

Federal law that prohibits executives of U.S.–based companies from paying bribes to foreign government officials, political parties, or political candidates.

Antitrust Laws

Laws that seek to preserve competition in the marketplace and prohibit unfair, anticompetitive practices by business.

Central State Control

A socioeconomic system in which economic power is concentrated in the hands of government officials and political authorities. The central government owns the property that is used to produce goods and services, and most private markets are illegal.

Cost-Benefit Analysis

A systematic method of calculating the costs and benefits of a project or activity.

Democracy

A form of government in which power is vested in the people and exercised by them directly or by their elected representatives; refers broadly to the presence of political freedom.

Deregulation

The removal or scaling down of regulatory authority and regulatory activities of government.

Economic Regulations

The oldest form of regulation in the United States, aimed at modifying the normal operations of the free market and the forces of supply and demand.

Fiscal Policy

The patterns of government collecting and spending funds intended to stimulate or support the economy.

Free Enterprise System

A socioeconomic system based on private ownership, profit-seeking business firms, and the principles of free markets and voluntary association and exchange.

Market Failure

Inability of the marketplace to properly adjust prices for the true costs of a firm’s behavior.

Monetary Policy

Government actions that affect the supply, demand and value of a nation’s currency.

Natural Monopolies

Where a concentration of the market is acquired by a few firms due to the nature of the industry rather than because of company practices.

Negative Externalities

When the manufacture or distribution of a product gives rise to unplanned or unintended costs (economic, physical, or psychological) borne by consumers, competitors, neighboring communities, or other business stakeholders.

Predatory Pricing

The practice of selling below cost to drive rivals out of business.

Public Policy

A plan of action undertaken by government officials to achieve some broad purpose affecting a substantial segment of a nation’s citizens.

Regulation

The action of government to establish rules by which industry or other groups must behave in conducting their normal activities.