Chapter 2: Understanding Business Ethics and Social Responsibility

Ethics

Beliefs about what is right and wrong or good and bad in actions that affect others

Business ethics

refers to ethical or unethical behaviors by employees in the context of their jobs

Ethical behavior

behavior that conforms to individual beliefs and social norms about what's right and good

Unethical behavior

behavior that conforms to individual beliefs and social norms about what is defined as wrong and bad

Managerial Ethics

standards of behavior that guide individual managers in their work, behavior toward Employees, Organization, and other Economic Agents

Assessing Ethical Behavior

1. Gather relevant factual information

2. Analyze facts to determine most appropriate moral values

3. Make ethical judgment based on how right/wrong policy is

Utility

Does a particular act optimize the benefits to those who are affected by it? (That is, do all relevant parties receive "fair" benefits?)

Rights

Does it respect the rights of all individuals involved?

Justice

Is it consistent with what's fair?

Caring

Is it consistent with people's responsibilities to each other?

How do companies commit to ethics programs?

Adopting written codes, instituting ethics programs

Social responsibility

the overall way in which a business attempts to balance its commitments to relevant groups and individuals in its social environment

Organizational Stakeholders

those groups, individuals, and organizations that are directly affected by the practices of an organization and who therefore have a stake in its performance

Consumerism

social activism dedicated to protecting the rights of consumers in their dealings with businesses

Collusion

two or more firms collaborate on such wrongful acts as price fixing

Price gouging

responding to increased demand with overly steep price increases

Whistleblowers

employee who detects and tries to put an end to a company's unethical, illegal, or socially irresponsible actions by publicizing them

Suppliers

Create mutually beneficial partnership arrangements with suppliers

Local and International Communities

Involvement in programs and charities

The Concept of Accountability

The expectation of an expanded role for business in protecting and enhancing the general welfare of society

Insider trading

using confidential information to gain from the purchase or sale of stocks

Misrepresentation of finances

Conform to GAAP, Sarbanes-Oxley Act, 2002

Obstructionist Stance

involves doing as little as possible and may involve attempts to deny or cover up violations

Defensive Stance

company meets only minimum legal requirements in its commitments to groups and individuals in its social environment

Accommodative Stance

a company, if specifically asked to do so, exceeds legal minimums in its commitments to groups

Proactive Stance

a company actively seeks opportunities to contribute to the well-being of groups and individuals in its social environment

Regulation

the establishment of laws and rules that dictate what organizations can and cannot do

Political Action Committees (PACs)

special organizations created to solicit money and then distribute it to political candidates

Lobbying

the use of persons or groups to formally represent an organization or group of organizations before political bodies

Legal Compliance

the extent to which the organization conforms to local, state, federal, and international laws

Ethical Compliance

the extent to which the members of the organization follow basic ethical (and legal) standards of behavior

Philanthropic giving

the awarding of funds or gifts to charities or other worthy causes

Corporate Social Audit

systematic analysis of a firm's success in using funds earmarked for meeting its social responsibility goals

Conflict of Interest

a conflict between self-interest and professional obligation

Compliance Model

adopting written codes (ex: amazon)

Integrity Model

Instituting ethics programs (ex: Nordstrom)

underemployment

switching from a higher to a lower job (working in a big company, now working at McDonalds

When was the last depression in the U.S.?

The Great Depression (1929)