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Flashcards in Ethics Deck (29)
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1
Q

What is ethics and why is it important in IB?

A
  • The accepted principles of right or wrong that govern the conduct of a person, profession or organisation
  • It is often argued that inward investment by a MNC can be a force for economic, political and social progress that ultimately improves the rights of people
2
Q

What are the philosophical approaches to ethics?

A
  • Straw Men
  • Utilitarian and Kantian ethics
  • Rights theories
  • Justice theories
3
Q

What are the aspects of the Straw Men approach?

A
  • Friedman doctrine
  • Cultural relativism
  • The righteous moralist
  • The naive moralist
4
Q

What is the Friedman doctrine and what is it?

A
  • Aspect of the Straw Men philosophical approach to ethics
  • Only social responsibility is to increase profits so long as the company obeys the law
  • Explicitly rejects the idea that companies should undertake social expenditures beyond those mandates by the law and required for efficient running of the business
  • If stockholders wish to use their proceeds to make social investments that is their right, but managers shouldn’t make that decision for them
5
Q

What is cultural relativism and what is it?

A
  • Aspect of the Straw Men philosophical approach to ethics
  • Belief that ethics are nothing more than the reflection of a culture, and accordingly a firm should adopt the ethics of the culture in which it is operating
6
Q

What is the righteous moralist and what is it?

A
  • Aspect of the Straw Men philosophical approach to ethics
  • Claim that a MNC’s home country’s standards of ethics are the appropriate ones for companies to follow in foreign countries
  • Typical of managers in developed nations
7
Q

What is the naive moralist and what is it?

A

Assertion that MNC’s should imitate the ethics of other MNC’s operating in the same foreign country

8
Q

What is Utilitarian and Kantian ethics?

A
  • Hold that the moral worth of actions or practices are determined by their consequences
  • An action is judged desirable if it leads to the best possible balance of good consequences over bad consequences
  • Kantian ethics holds that people should be treated as ends and never purely as means to the ends of others
9
Q

What are rights theories?

A

Recognise that human being have fundamental rights and privileges that transcend national boundaries and cultures

10
Q

What are Justice theories?

A
  • Focus on the attainment of a just distribution of economic goods and services
  • A just distribution is one that is considered fair and equitable
  • John Rawls
11
Q

What was John Rawl’s contribution to and what was it?

A
  • Justice theory
  • Argues that all economic goods and services should be distributed equally except when an unequal distribution would work to everyone’s advantage
  • Under the ‘veil of ignorance’ all people would agree that 1. each person should be permitted the maximum amount of basic liberty compatible with a similar liberty for others and 2. that once equal basic liberty is ensured, inequality in basic social goods (income & wealth distribution, and opportunities) is to be allowed only if such inequalities benefit everyone
  • One can therefore argue that a market based system that produces unequal distribution is just as it in itself benefits the least advantaged members of society,
12
Q

What kinds of organisational stakeholders are there?

A
  • Internal

* External

13
Q

Who are the internal organisational stakeholders?

A
  • Shareholders (ROI)

- Employees (compensation)

14
Q

Who are the external organisational stakeholders?

A
  • Suppliers (demand stability/price)
  • Consumers (quality/price)
  • Society at large (social contribution)
  • Governments (taxes, legal compliance)
  • Environment (sustainability)
15
Q

What are the approaches to the legal foundation of ethical behaviour?

A
  • The law is inadequate

* Legal justification is appropriate

16
Q

What is the argument for the law being inadequate as a foundation of ethical behaviour?

A
  • Some things that are unethical are not illegal
  • Laws are slow to develop in emerging areas of concer
  • Laws may be based on imprecisely defined moral concepts
  • The law often needs to undergo scrutiny by the courts
  • The law is not very efficient
17
Q

What is the argument for the law being adequate as a foundation of ethical behaviour?

A
  • The law embodies many of a country’s moral principles
  • The law provides a clearly defined set of rules
  • The law contains enforceable rules that apply to everyone
  • The law reflects careful and wide-ranging discussions
18
Q

What are the problems surrounding bribery?

A
  • Affects performance of the company and the country
  • Erodes government authority
  • Damages reputations when disclosed
  • Increases cost of doing business
19
Q

What are the steps to creating an ethical corporation?

A
  • Business must explicitly articulate values that emphasis ethical behaviour i.e. code of ethics
  • Leaders must repeatedly emphasise their imporantce and then act on them
  • Incentive and rewards systems, including promotions and sanctions
20
Q

What are the social activism approaches used?

A
  • Developing campaigns against business
  • Attempting to build market intelligence
  • Engaging businesses
  • Strive to make market mechanisms more intelligent
    • Setting standards, fair trade goods etc
  • Disrupting markets
21
Q

What have been the trends towards social activism towards business?

A
  • 80s
    • Concerns about the role of companies in repressive regimes
  • 90s
    • Attention to operational and supply chain issues
    • Shift from pushing governments to introduce stronger regulations to direct targeting of companies
  • 2000s
    • Using social media to raise awareness of specific issues and targeting highly visible corporations
    • Targeting companies and industries with poor labour, product or environmental standards
    • Targeting companies that proclaim high levels of social
      responsibility
22
Q

What is CSR?

A
  • Social responsibility refers to the idea that business people should consider the social consequences of economic actions when making
    business decisions and that there should be a presumption in favour of decisions that have both good economic and social consequences
  • CSR is about understanding and managing and organisations influences on and relationships with the rest of society in a way that minimises the negative and maximises the positive
  • Shift from the shareholder model to the stakeholder model
23
Q

What are the important aspects of CSR?

A
  • Triple Bottom Line

* Carrolls CSR Pyramid

24
Q

What is the triple bottom line?

A
  • Financial viability, social acceptability and environmental
    sustainability
  • Places new demands on managers to
    • Engage in actives that create value for society and minimise harm to the environment
    • Satisfy the competing interests of diverse stakeholders
    • Evaluate and report these activites - social accounting
25
Q

What is Carrolls CRS pyramid?

A
  • Philanthropic responsibilty
  • Ethical responsibility
  • Legal responsibility
  • Economic responsibility
26
Q

Why do firms undertake CSR initiatives?

A
  • Ethical motivations
  • Re-defining the purpose of business to include external stakeholders
  • Managers personal values
  • Visible and confronting social needs, particularly in developing countries
27
Q

What institutional factors affect CSR?

A
  • Reputation risk management
  • “License to operate” in the community gives the firm legitimacy in society
  • Increased demand from consumers, NGOs, investors, governments, media
28
Q

What strategic motivations for CSR?

A
  • “Business case” - capturing growing demand by socially and environmentally aware consumers
  • Defensive strategy to forestall more stringent government regulation
29
Q

What are the critques of CSR?

A
  • Threats to profitablity
    • Problems reconciling social and commercial objectives, market distortions
  • Unrealistic expectations
    • Trying to appease diverse stakeholders
  • Global “salvationism”
    • Should firms decide the best interests of society?
  • “Greenwash” and “Bluewash”
    • A smokescreen for deflecting criticism of firm behaviour
  • Burden of monitoring and auditing
    • Higher costs on SMEs and developing countries
  • Need for a development-oriented approach
    • CSR agenda focused too heavily on TNCs in developed countries