Ethics Flashcards
Ethics vs. Compliance
Ethics: Standards we hold ourselves to
Compliance: How extensively a business operates in accordance to regulations/statutes/laws
Fraud Triangle
Motivated to commit fraud when there is:
Pressure
Opportunity
Rationalization of the fraud
GVV
Giving Voice to Values: Leadership approach; most people want to act on their values, but also want their actions to be successful
GVV components
Values (what are everyone’s values?)
Purpose (what am I working for?)
Choice (do I have a choice in voicing my values?)
Normalization (are values conflicts normal or not?)
Self-Knowledge and Alignment (can I effectively voice my values?)
Voice (how can I voice my values?)
Reasons and Rationalizations (what pushback might I face if I voice my values?)
Case Study: Follow Dubious Orders or Speak Up? Takeaways
Susan asked to misrepresent herself; violates personal values, but risks damaging personal and company’s reputation
Expected or Standard Practice: “Everyone does this, so it’s standard practice”
Materiality: “This isn’t that significant”
Locus of Responsibility: “This isn’t my responsibility, I’m just following orders”
Locus of Loyalty: “I don’t want to hurt my reports/team/boss/company”
Enron Fraud
Used existing rules to commit “legal fraud”; misled investors/public on its success
Theranos Fraud
Claimed to have developed technology that could run hundreds of tests from 1 drop of blood; WSJ expose reveals lying about tech -> Founder net wroth dropped -> Company, Founder, and President charged for fraud by SEC in 2018
FTX Fraud
CEO siphoned money from FTX in order to fund personal expenditures, cover losses from hedge fund, and support political allies; filed for bankruptcy à guilty of fraud
Business Ethics
Determining right from wrongs in the business context
Identifying defensible reasons for actions
Determining how we should conduct ourselves/interact w/ others
Understanding the broader context of ethical conduct
Business Case
What can be done to make/save a company money?
Ethics Case
What’s the morally correct thing to do?
Separation Fallacy
Separating the business case from the ethics case; shouldn’t happen
Integration Thesis
Ethics is about benefiting, not harming, ourselves and businesses
Legal vs. Ethical
Legal: An act is in accordance with the law
Ethical: An act is in accordance with what’s considered morally right and wrong
