Business Ethics #3

CSR

Ethical responsibilities that a business has to the society in which it operates

Ethical Responsibility Levels

To do good (volunteering), Prevent harm (Good Samaritan), Do not cause harm to others (enforced by legal punishment)

Strongest Sense of Responsibility

To not cause harm

Economic Model CSR

Business's sole social responsibility is to fulfill economic functions, places shareholders at the center, managers pursue profit within the law

Stakeholder Model of CSR

Considers the wide impact of business decisions, balances interests of affected parties, similar to utilitarianism

Integrative Model of CSR

Organizations pursue social ends as core mission, integrate social and economic goals

Sustainability

Balancing financial goals with environmental considerations

Corporate Sustainability Report

Provides stakeholders with economic, environmental, and social performance information

Corporate Governance

Structure managing corporations with fairness, accountability, and transparency objectives

Gatekeepers

Watchdogs ensuring marketplace compliance (auditors, lawyers, accountants, financial analysts)

Conflict of Interest

Personal interests conflicting with exercising judgment on behalf of others

Fiduciary Duties

Legal duty to act in others' interests

SOX 2002

Applies to publicly held companies, enhances accountability and responsibility

European 8th Directive of 2005

Similar to SOX but lacks whistleblower protection

Internal Control

Mechanisms for compliance with financial reporting laws and regulations

COSO

Private sector initiative improving financial reporting quality through governance, ethical practices, and internal controls

Elements of Internal Control Structure

Control environment, risk assessment, control activities, information & communication, ongoing monitoring

Legal Duties of Board Members

Duty of care, duty of good faith, duty of loyalty

Insider Trading

Trading securities with private inside information for personal benefit

Marketing

Creating, communicating, delivering value to customers, managing customer relationships

4Ps

Price, product, place, promotion

Prima Facie

Market exchange respecting autonomy & mutual benefit

Contract Law

Caveat emptor or implied warranty

Tort Law

Central principle is negligence