Ethical Decision Making Flashcards
(128 cards)
1
Q
Business ethics
A
It comprises the principles, values, and standards that guide behavior in the world of business.
2
Q
What is corporate governance?
A
A formal system of accountability and control of ethical and socially responsible behavior.
3
Q
Where do stakeholders apply values and standards?
A
Through working conditions, consumer rights, environmental conservation, product safety, and proper information disclosure.
4
Q
What are the two kinds of stakeholders and their purposes?
A
Primary stakeholders are those whose continued association is absolutely necessary for a firm’s survival (employees, customers, investors, and shareholders etc.)
Secondary stakeholders do not engage in transactions with a company and are not essential for its survival (AARP or specialty groups)
5
Q
What is a stakeholder orientation?
A
The degree to which a firm understands and addresses stakeholder demands.
6
Q
What are the three activities of the stakeholder orientation?
A
The organization-wide generation of data about stakeholder groups and assessment of the firm’s effects on these groups.
The distribution of this info throughout the firm.
The organization’s responsiveness as a whole to this intelligence.
7
Q
What is social responsibility?
A
An organizational obligation to maximize its positive impact on stakeholders and to minimize its negative impact.
8
Q
What are the four levels of social responsibility?
A
Economic
Legal
Ethical
Philanthropic
9
Q
What is corporate citizenship?
A
The extent to which businesses strategically meet the economic, legal, ethical, and philanthropic responsibilities of it’s stakeholders.
10
Q
Reputation
A
An organization’s greatest intangible asset with tangible value.
11
Q
What are fudiciaries?
A
Persons placed in positions of trust who use due care and loyalty in acting on behalf of the best interests of the organization.
12
Q
What is corporate governance?
A
A formal system to monitor accountability, oversight, and control.
13
Q
The two types of directors?
A
Inside- corporate officers, consultants, major shareholders, or others who benefit directly from the organization’s success.
Outside- Persons who bring mor independence to the monitoring function. They are not bound by past allegiances, friendships, or a current role in the company. This prevents conflict of interest.
14
Q
What is an ethical issue?
A
A situation, problem, or even an opportunity that requires discussion, thought, or investigation to make a decision.
15
Q
What is collusion?
A
A secret agreement between two or more parties for a fraudulent, illegal, or deceitful purpose.
16
Q
What is an ethical dilemma?
A
A problem, situation, or opportunity that requires an individual, group, or organization to choose among several wrong or unethical actions.
17
Q
The two types of bribery?
A
Active- the person who gives the bribe.
Passive- the person who receives or accepts the bribe.
18
Q
What is corporate intelligence?
A
A collection and analysis of information on markets, technologies, customers, and competitors, as well as on socioeconomic and external political trends.
19
Q
The Kyoto Protocol
A
An international treaty on climate change committed to reducing emissions of carbon dioxide and five other greenhouse gases and to engaging in emissions trading if member signatories maintain or increase emissions of these gases.
20
Q
What are the three categories of false or misleading advertisements?
A
Puffery- exaggerated advertising, blustering, and boasting upon which no reasonable buyer would rely on.
Implied Falsity- a tendency to mislead, confuse, or deceive the public.
Literal Falsity- Tests Prove: the advertisement cites a study or test that establishes the claim.
Bald Assertions: a claim that cannot be substantiated.
21
Q
Duplicity and Guile
A
Duplicity- example: a customer who stages an accident and then seeks damages against the store.
Guile- example: a crafty customer who understands right/wrong behavior but uses tricks to obtain an unfair advantage.
22
Q
Insider trading
A
Illegal insider trading is the buying or selling of stocks by insiders who possess material that is still not public.
Legal insider trading involves buying and selling stock in an insider’s own company, but not all the time.
23
Q
Intellectual property
A
Involves the legal protection of intellectual properties such as music, books, and movies.
24
Q
The three types of fraud
A
Accounting
Marketing
Consumer
25
What are the three dimensions required for an effective organizational practice of business ethics?
Legal- society's codification of what is wrong and right.
Voluntary- includes the beliefs, values, and voluntary contractual obligations of a business.
Core practices- appropriate and common practices that help ensure compliance with legal requirements and societal expectations.
26
Norms
Norms dictate and clarify desirable behaviors through principles, rules, policies, and procedures.
27
What is civil law?
The rights and duties of individuals and organizations.
28
Criminal law
Prohibits specific actions-such as fraud, theft, or securities trading violations-but also imposes fines or imprisonment as punishment.
29
What are the laws and regulations that govern business activities?
Hint: there are five.
```
Regulation of competition
Protection of consumers
Promotion of equity and safety
Protection of the natural environment
Incentives to encourage organizational compliance programs to deter misconduct.
```
30
What is corporate espionage?
The act of illegally taking information from a corporation through computer hacking, theft, intimidation, sorting through trash, and through impersonation of organizational members.
31
Pro competitive legislation
Encourages competition and prevent activities that restrain trade.
32
What is Sustainability?
It meets the present needs without compromising future generations to meet their own needs.
33
What are gatekeepers?
Accountants, lawyers, financial rating agencies, and financial reporting services.
34
What is the Sarbanes-Oxley Act?
Establishes an oversight board to oversee the audit of public companies in order to protect the interests of investors and further the public interest in the preparation of informative, accurate, and independent audit reports for companies.
35
What are the five main duties of the Sarbanes-Oxley Act?
1. Registration of public accounting firms
2. Establishment of auditing, quality control, ethics, independence, and other standards relating to preparation of audit reports.
3. Inspection of accounting firms.
4. Investigations, disciplinary proceedings, and imposition of sanctions.
5. Enforcement of compliance with accounting rules of the board, professional standards, and securities laws relating to the preparation and issuance of audit reports and obligations and liabilities of accountants.
36
Sections 404 has caused companies the most cost. Why?
1. Requires that management create reliable internal financial controls.
2. Management attest to the reliability of those controls and the accuracy of financial statements that result from those controls.
3. That an independent auditor attests to the statements made.
37
The seven steps of the FSGO.
1. A firm must develop and disseminate a code of conduct that communicates required standards and identifies key risk areas for organization.
2. High-ranking personnel in the organization who are known to abide by the legal and ethical standards of the industry must have oversight over the program.
3. No one with a known propensity to engage in misconduct should be put in a position of authority.
4. A communications system for disseminating standards and procedures must also be put into place.
5. Organizational communications should include a way for employees to report misconduct without fearing retaliation, such as an anonymous toll-free hotline or an ombudsman. Monitoring and auditing systems designed to detect misconduct are required.
6. If misconduct is detected, then the firm must take appropriate and fair disciplinary action. Individuals both directly and indirectly responsible for the offense should be disciplined. In addition, the sanctions should be appropriate for the offense.
7. After misconduct has been discovered, the organization must take steps to prevent similar offenses in the future. This usually involves making modifications to the ethical compliance program, additional employee training, and issuing communications about specific types of conduct.
38
The four benefits of philanthropy for society?
1. Philanthropy improves the quality of life and helps make communities places where people want to do business, raise families, and enjoy life.
2. Philanthropy reduces government involvement by providing assistance to stakeholders.
3. It develops employee leadership skills.
4. It also helps create an ethical culture and the values that can act as a buffer to organizational misconduct.
39
What is strategic philanthropy?
It is the synergistic and mutually beneficial use of an organization's core competencies and resources to deal
with key stakeholders.
40
What are the six "spheres" of influence for individuals?
```
Workplace.
Family.
Religion.
Legal system.
Community.
Profession.
```
41
Ethical issue intensity
The relevance or importance of an ethical issue in the eyes of the individual, work group, and/or organization.
42
What are the individual factors?
```
Gender.
Education.
Work experience.
Nationality.
Age.
Locus of control.
```
43
Describe the types of locus of control.
External- future is based on luck, chance, and powerful people in the company. Go with the flow.
Internal- they control their own future. Masters of their universe.
44
The types of organizational factors and their purposes.
Corporate culture- a set of values, norms, and artifacts, including any ways of solving problems that employees share.
Ethical culture- corporate policy on ethics, top management's leadership on ethical issues, the influence of coworkers, and the opportunity for unethical behavior.
Significant others- peers, managers, coworkers, and subordinates.
Obedience to authority- an employee who follows orders from superior employees.
45
What is opportunity?
Describes the conditions in an organization that limit or permit ethical or unethical behavior.
46
What's the immediate job context?
Where they work.
Whom they work with.
The nature of the work.
47
The six types of leadership styles and their purposes?
The coercive leader- demands instantaneous obedience and focuses on achievement, initiative, and self-control.
Authoritative- inspires employees to follow a visor, facilitates change, and creates a strongly positive performance climate.
Affiliative- values people, their emotions, and their needs and relies on friendship and trust to promote flexibility, innovation, and risk taking.
Democratic- relies on participation and teamwork to reach collaborative decisions.
Pacesetting- attains or expects quick results from highly motivated individuals who value achievement and initiation.
Coaching- develops skills to foster long-term success, delegates responsibility, and skillfully issues challenging assignments.
48
What is the other way to classify leaders and their purposes?
Transactional- creates employee satisfaction through negotiating for desired behaviors or job performance.
Transformational- strives to raise employees' level of commitment and to foster trust and motivation.
49
What are the seven habits of an ethical leader?
A strong personal character.
A passion to do right.
Are proactive.
Consider stakeholders' interests.
Are role models for the organization's values.
Are transparent and actively involved in organizational decision making.
Are competent managers who take a holistic view of the firm's ethical culture.
50
What is moral philosophy?
Refers to the specific principles or rules that people use to decide what is wrong or wrong.
51
What is the concept of the economic value orientation?
It is associated with values that can be quantified by monetary means.
52
What is idealism?
A moral philosophy that places special value on ideas and ideals as products of the mind, in comparison with the world's view.
53
What are the five types of moral philosophies?
```
Teleology
Deontology
Relativist perspective
Virtue ethics
Justice theories
```
54
What are the two concepts of goodness?
Monism- only one thing is intrinsically good.
| Pluralism- two or more things are intrinsically good.
55
What is hedonism and its included components?
Hedonism is one's pleasure being the ultimate intrinsic good or that the moral end, or goodness, is the greatest balance of pleasure over pain.
Quantitative: those who believe that more pleasure is better
Qualitative: those who believe that it is possible to get too much of a good thing or pleasure.
56
Plato argues that the good of life is a mixture of what?
```
Moderation and fitness.
Proportion and beauty.
Intelligence and wisdom.
Sciences and arts.
Pure pleasures of the soul.
```
57
What do instrumentalists reject?
Ends that can be separated from the means that produce them.
| Ends, purposes, or outcomes are intrinsically good in and of themselves.
58
What are the obligation theories and their purposes?
Teleology- a moral philosophy in which an act is considered morally right or acceptable if it produces some desired result such as pleasure, knowledge, career growth, the realization of self-interest, utility, wealth, or even fame.
Deontology- a moral philosophy that focuses on the right of individuals and on the intentions associated with a particular behavior rather than on its consequences.
59
What are the two teleological philosophies?
Egoism- defines right or acceptable behavior in terms of its consequences for the individual.
Utilitarianism- believes that they make decisions that result in the greatest total utility, that achieve the greatest benefit for all those affected by a decision.
60
Enlightened egoism
A long-range perspective and allows for the well-being of others although their own self-interest remains paramount.
61
What are rule and act utilitarians?
Rule: determine behavior on the basis of principles, or rules, designed to promote the greatest utility rather than on an examination of each particular situation.
Act: examine a specific action itself, rather than the general rules governing it, to assess whether it will result in the greatest utility.
62
What are the five absolute right of deontologists?
```
Freedom of conscience
Freedom of consent
Freedom of privacy
Freedom of speech
Due process
```
63
What are rule and act deontologists?
Rule: believe that conformity to general moral principles determines ethicalness.
Act: hold that actions are the proper basis on which to judge morality or ethicalness. It also requires that a person use equity, fairness, and impartiality when making and enforcing decisions.
64
Define the relativist perspective.
Ethical behavior that is derived subjectively from the experience of individuals and groups.
65
The three types of relativism and definitions.
Descriptive- related to observing cultures that exhibit different norms, customs, and values.
Metaethical- believes that people naturally see situations from their own perspective and argue that there is no objective way of resolving ethical disputes.
Normative- believes that one person's opinion is as good as another's.
66
What is the problem with relativism?
It places too much emphasis on people's differences while ignoring their basic similarities.
67
What are virtue ethics?
Believes that what is moral in a given situation is not only what conventional morality or moral rules require but also what the mature person with a good moral character would deem appropriate.
68
How are virtue ethics summarize in business?
1. Individual virtue and integrity count, but good corporate ethics programs encourage individual virtue and integrity.
2. By the employee's role in the community, these virtues associated with appropriate conduct form a good person.
3. The ultimate purpose is to serve society's demands and the public good and to be rewarded in one's careers.
69
What is the difference between deontology, teleology, and virtue ethics?
Deontology and teleology are applied deductively to problems whereas virtue ethics are applied inductively.
70
What are the important elements of virtue in business?
```
Trust
Self-control
Empathy
Fairness
Truthfulness
```
71
Define justice
Applies in business ethics by involving evaluations of fairness or the disposition to deal with perceived injustices of others.
72
What are the three types of justice and their purposes?
Distributive- based on the evaluation of the outcomes or results of the business relationship.
Procedural- based on the processes and activities that produce the outcome or results.
Interactional- based on evaluating the communication processes used in the business relationship.
73
What are the six stages in the Kohlberg's model of cognitive moral development?
1. Stage of punishment and obedience.
2. Stage of individual instrumental purpose and exchange.
3. Stage of mutual interpersonal expectations, relationships, and conformity.
4. Stage of social system and conscience maintenance.
5. Stage of prior rights, social contract, or utility.
6. Stage of universal ethical principles.
74
What is a WCC?
A white collar crime which is defined as a non-violent criminal act involving deceit, concealment, subterfuge, and other fraudulent activity.
75
The focus of criminology.
The behavior of the individual and discovery of the reasons why people commit such crimes.
76
What is a facesitter?
The forty percent of business people who could be persuaded to be ethical or unethical.
77
What does Machiavelli argue in The Prince?
He argues that against the relevance of morality in political affairs and holds that craft and deceit are justified in pursuing and maintaining political power.
78
What does the West Point model focus on?
For character development, it focuses on the fact that competence and character must be developed simultaneously.it assumes that ethical reasoning has to be approached in the context of a specific profession.
79
What is corporate culture?
A set of values, norms, and artifacts including ways of solving problems that members of an organization share
80
How is corporate culture exhibited?
Through the behavioral patterns concepts documents such as codes of ethics and rituals that take place in the organization
81
What are the three common elements of culture?
1. Culture shared among individuals born into a group or society 2.cultures formed over relatively long period of time and
3. culture is relatively stable
82
What are formal expressions of an organizations culture?
Memos,written codes of conduct, handbooks, manuals, forms, and ceremonies.
83
What are two basic dimensions to describe an organization's culture?
1. concern for people
| 2. Concern for performance
84
What are the four types of organizational cultures?
Apathetic, carrying, exacting, and integrative.
85
Apathetic culture
It shows minimal concern for either people or performance.
86
Caring culture
Exhibits high concern for people but minimal concern for performance issues
87
Integrative culture
Combines high concern for people and for performance
88
Exacting culture
Shows little concern for people but a high concern for performance
89
What is a cultural audit?
It is an assessment of the organizations values.
90
Compliance culture
It uses their legal departments to determine Ethics.
91
What is a value-based ethics culture?
It relies upon an explicit mission statement that defines the firm as well as how customers and employees should be treated.
92
What is differential association?
It refers to the idea that people learn ethical or unethical behavior while interacting with others who are part of their role sets or belong to other intimate personal groups
93
Whistle-blowing
It means exposing an employers wrongdoing to outsiders.
94
What are the five power bases that influence another person?
1. Reward power, it refers to a person's ability to influence the behavior of others by offering them something desirable
2. Coercive power, it penalizes actions or behavior instead of rewarding the person.
3. Legitimate power, it stems from the belief that a certain person has the right to exert influence and that certain others have an obligation to accept it.
4. Expert power, it is derived from a person's knowledge.
5. Referent power, one person perceives that his or her goals or objectives are similar to another's.
95
What is a decentralized organization?
It is an organization that has decision-making authority delegated as far down as a chain of command as possible.
96
What is a centralized organization?
It is when an organization has a decision-making authority concentrated in the hands of top-level managers and little authority is delegated to lower levels.
97
What are the two types of groups and their functions?
1. A formal group can be divided into committees, work groups, and teams.
2. Informal groups are usually composed of individuals often from the same department who have similar interests and band together for companionship or for purposes that may or may not be relevant to the goals of the organization
98
What are group norms?
Standards of behavior that groups expect of their members.
99
What should be included in a strong ethics program?
A written code of conduct, and ethics officer to oversee the program, careful delegation of authority; formal ethics training; and rigorous auditing, monitoring, enforcement, and revision of program standards.
100
Define codes of conduct?
Formal statement that describe what an organization expects of its employees.
101
What are the six values suggested as being desirable for codes of ethics?
1. Trustworthiness
2. Respect
3. Responsibility
4. Fairness
5. Caring
6. Citizenship
102
Name the responsibilities of an ethics officer.
1) assessing the needs and risks that an organization-wide ethics program must address
2) developing and distributing a code of conduct or ethics
3) conducting training programs for employees
4) establishing and maintaining a confidential service to answer employees questions about ethical issues
5) making sure that the company is in compliance with government regulation
6) monitoring and auditing ethical conduct
7) taking action on possible violations of the company's code
8) reviewing and updating the code
103
What is ethical decision-making influenced by?
Corporate culture by coworkers and supervisors and by the opportunities to engage in unethical behavior
104
What is an ethics audit?
A systematic evaluation of an organization's ethics program and performance to determine whether it is effective
105
What is a social audit?
It is the process of assessing and reporting of business's performance in fulfilling economic, legal, ethical, and philanthropic responsibilities expected of it by its stakeholders
106
What is Six Sigma?
A methodology to manage process variations that caused defects defined as unacceptable deviations from the mean or target and to systematically work for managing variation to eliminate those defects
107
What is a Balanced Scorecard?
A management system that focuses on all the elements that contribute to organizational performance and success including financial, customer, market, and internal processes
108
What is the Triple Bottom Line?
A perspective that takes into account the social, environmental, and financial impact of decisions made within the organization
109
Framework for an Ethics Audit
- Secure commitment of top managers and Board of Directors
- Establish a committee to oversee the ethics
- Define the scope of the audit process including subject matter areas important to the ethics audit
- Review the organizations mission, policies, goals, and objectives and define its ethical priorities
- Collect and analyze relevant information in each designated subject matter area
- Have the results verified by an Independent Agent
- Report the findings to the audit committee and if approved to managers and stakeholders
110
Define global business
A practice that brings together people from countries that have different cultures, values, laws, and ethical standards
111
What is risk compartmentalization?
It occurs when various profit centers within corporations become unaware of the overall consequences of their actions on the firm as a whole
112
Who was Adam Smith?
A professor of logic and moral philosophy during the late 18th century
113
Define laissez-faire
It is critical to capitalism in that is it assumes the market through its own inherent mechanisms will keep commerce in equilibrium
114
What does John Maynard Keynes argue?
That government policies could be used to increase aggregate demand thus increasing economic activity and reducing unemployment and deflation
115
What does Milton Friedman believe?
He believed in deregulation because he thought that the system could reach equilibrium without government intervention
116
What does both Keynes and Friedman agree with?
1) people have rational preferences among outcomes that can be identified and associated with the value.
2) individuals maximize utility and firms maximize profits
3) people act independently on the basis of full and relevant information
117
What is bimodal wealth distribution?
It occurs when the middle-class shrinks resulting in highly concentrated wealth amongst the rich and large numbers of poor people of very few resources
118
What is rational economics based upon?
The assumption that people are predictable and will maximize utility of their choices relative to their needs and wants
119
What does behavioral economics assume?
That humans may not act rationally because of genetics, learned behavioral, and heuristics, or rules of thumb.
120
What are desirable global common values?
Integrity,family and community unity, equality, honesty, fidelity, sharing, and unselfishness
121
What are undesirable global common values?
Ignorance, pride and egoism, selfish desires, lust, greed, adultery, theft, deceit, lying, murder, hypocrisy, slander, and addiction
122
Define culture
It consisted everything in our surroundings that is made by people- all tangible items and intangible things including values, norms, and artifacts. Language, law, politics, technology, education, social organizations, general values, and ethical standards are all included within this definition.
123
What is the self reference criterion? Otherwise known as SRC.
An unconscious reference to one's own culture values, experiences, and knowledge
124
Define cultural relativism
The concept that morality varies from one culture to another and that business practices are therefore differentially defined as right or wrong by particular cultures
125
Define consumerism
The belief that consumers rather than the interests of producers should dictate the economic structure of society
126
What are human rights?
Codified into a United Nations document and defined as an inherent dignity with equal and inalienable rights as the foundation of freedom, justice, and peace in the world
127
Define sustainable development
A systematic approach to achieving human development in such a way that the earth's resources are preserved for future generations
128
What is gross domestic product?
The sum of all the goods and services produced in a country during one year
