Business Ethics and Corporate Governance Practice Flashcards

A comprehensive set of vocabulary flashcards derived from lecture notes on capitalism, distributive justice, corporate responsibility theories, and governance frameworks.

Capitalism

An economic system in which private individuals or businesses own capital goods and employ workers who receive wages while labor does not own the means of production.

Laissez faire

The purest form of capitalism; a French term meaning “let be” or “leave things alone”.

Corporations (Key Features)

Includes perpetual lifetime, legal identity, and limited liability.

Private Property

Ownership consisting of tangible assets like land and offices, and intangible assets like shares and bonds.

Profit Motive

The lifeblood of the capitalist system where corporations and private property serve as means to generating profits.

Competition

Arises in capitalism because everyone is free to pursue their own interests, motivated by profit.

Distributive Justice

Refering to the fair allocation, division, and use of limited resources, goods, and opportunities among members of a society.

Utilitarian Theory of Justice

A theory where justice is equated with overall societal well-being.

Libertarian Theory of Justice

A theory where justice is associated with the ideal of liberty.

Egalitarian Theory of Justice

A theory where justice concerns fairness.

Corporation (Definition)

A structure established where different parties provide capital, labor, or expertise to maximize profits for all, relating to constituents like investors, employees, and the community.

Milton Friedman (Corporate Social Responsibility)

Argued in 1970 that social responsibility is making as much money as possible while conforming to the basic rules of society.

Christopher Stone (Corporate Social Responsibility)

Rejected Friedman's arguments, stating managers have moral obligations to all stakeholders and need self-initiated moral responsibility.

Peter French (Corporate Moral Agency)

Endorses the concept of moral responsibility for corporations based on linking specific events to an action intended by the agent.

Corporate Internal Decision (CID) Structure

Consists of the process of decision-making/organizational flow and policies that transform decisions made on behalf of the corporation into corporate actions.

Shareholder Primacy Theory

Requires that management, acting as agents, should maximize the return on investment for shareholders.

Edward Freeman (Stakeholder Theory)

Argued for the rights of other stakeholder groups based on legal developments, economic externalities, and the Kantian principle that people are ends, not means.

Kenneth Goodpaster (Stakeholder Theory)

Argued that managers have a fiduciary obligation to shareholders and a moral obligation to other stakeholders, even when interests are contradictory.

Company as an Entity

A focus on the best interest of the company itself, rather than solely serving the interests of the property owners (shareholders).

Financial Capital

Funds utilized to run the company.

Manufactured Capital

Infrastructure and equipment owned or used by a company.

Intellectual Capital

The knowledge and ideas required to run the company.

Human Capital

The competency and experience of the company's staff.

Social & Relationship Capital

Trust and reputation required for a company's legitimacy.

Natural Capital

Environmental resources required for a company to operate.

Corporate Governance

The system of responsibilities among stakeholders to ensure companies operate ethically, accountably, and in the best interests of all involved.

King IV Code Parts

Includes Leadership, ethics and corporate citizenship; Strategy, performance and reporting; Governing structures and delegation; Governance functional areas; and Stakeholder relationships.