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Flashcards in Ethics Deck (29):
1

What is ethics and why is it important in IB?

- 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

What are the philosophical approaches to ethics?

* Straw Men
* Utilitarian and Kantian ethics
* Rights theories
* Justice theories

3

What are the aspects of the Straw Men approach?

* Friedman doctrine
* Cultural relativism
* The righteous moralist
* The naive moralist

4

What is the Friedman doctrine and what is it?

- 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

What is cultural relativism and what is it?

- 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

What is the righteous moralist and what is it?

- 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

What is the naive moralist and what is it?

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

8

What is Utilitarian and Kantian ethics?

- 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

What are rights theories?

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

10

What are Justice theories?

- 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

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

- 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

What kinds of organisational stakeholders are there?

* Internal
* External

13

Who are the internal organisational stakeholders?

- Shareholders (ROI)
- Employees (compensation)

14

Who are the external organisational stakeholders?

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

15

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

* The law is inadequate
* Legal justification is appropriate

16

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

- 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

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

- 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

What are the problems surrounding bribery?

- Affects performance of the company and the country
- Erodes government authority
- Damages reputations when disclosed
- Increases cost of doing business

19

What are the steps to creating an ethical corporation?

- 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

What are the social activism approaches used?

- 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

What have been the trends towards social activism towards business?

- 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

What is CSR?

- 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

What are the important aspects of CSR?

* Triple Bottom Line
* Carrolls CSR Pyramid

24

What is the triple bottom line?

- 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

What is Carrolls CRS pyramid?

- Philanthropic responsibilty
- Ethical responsibility
- Legal responsibility
- Economic responsibility

26

Why do firms undertake CSR initiatives?

- 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

What institutional factors affect CSR?

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

28

What strategic motivations for CSR?

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

29

What are the critques of CSR?

- 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