Important terms business ethics
Chapter 1
Morals
a person’s personal philosophy about what is right or wrong
Business ethics
organizational principles, values, and norms
Principles
specific and pervasive boundaries for behavior that should not be violated / basis for rules /
human rights, freedom of speech, fundamentals of justice
Values
beliefs and ideals that are socially enforced / teamwork trust, integrity
Workplace integrity (measured by GBES)
pressure to compromise organizational standards, observed misconduct, reporting of
misconduct when observed, and relation against reports
Moral dilemma
a situation, where the person is faced with multiple choices, all of which are undesirable as
defined by the person.
Value dilemma
same, but the individual’s beliefs are grounded in societal norms
Customers’ Bill of Rights
four basic consumer rights: the right to safety, the right to be informed, the right to choose,
and the right to be heard
Corporate social responsibility
an organization’s obligation to maximize its positive impact on stakeholders and minimize
its negative impact
Defense Industry Initiative in Business Ethics and Conduct (DII)
to guide corporate support for ethical conduct
Federal Sentencing Guidelines for Organizations
guidelines regarding organizations for taking action to prevent misconduct, for example,
developing effective internal legal and ethical compliance programs
Sarbanes-Oxley Act
made securities fraud a criminal offense and stiffened penalties for corporate fraud; codes
of ethics for financial reporting; develop greater transparency in financial reports to
investors; top executives must sign off on their firm’s financial reports and risk fines and
,long prison sentences if they misrepresent their companies’ financial positions; disclose
stock sales immediately and prohibit companies from giving loans to top managers ->
responsibility is on the firm’s leadership
The Dodd-Frank Wall Street Reform
to make the financial services industry more ethical and responsible
Ethical culture
the acceptable behavior as defined by the company and industry
Global Compact
to create openness and alignment among business, government, society, labor, and the
United Nations with a set of 10 principles
Chapter 2
Stakeholders
customers, employees, suppliers, government agencies, communities, and many others who
have a “stake” or claim in some aspect of a company’s products, operations, markets,
industry, and outcomes (the relationship between companies and their stakeholders is a
two-way street, stakeholders provide resources critical to a firm’s long-term success)
Primary stakeholders
their continued association and resources are necessary for a firm’s survival, including
employees, customers, shareholders, governments, and communities that provide the
necessary infrastructure
Secondary stakeholders
do not typically engage directly in transactions with a company and are therefore not
essential to its survival, including the media, trade associations, and special interest groups
Stakeholder interaction model
, Stakeholder orientation
the degree to which a firm understands and addresses stakeholder demands
It involves activities and processes within a system of social institutions that facilitate and
maintain value through exchange relationships with multiple stakeholders.
The three sets of activities: 1. the organization-wide generation of data about stakeholder
groups and assessment of the firm’s effects on these groups 2. the distribution of this
information throughout the firm 3. the responsiveness of the organization to this
information
Corporate citizenship
the extent to which businesses strategically meet the economic, legal, ethical, and
philanthropic responsibilities placed on them by stakeholders
It has four interrelated dimensions: strong sustained economic performance, rigorous
compliance, ethical actions beyond what the law requires, and voluntary advance of the
reputation and stakeholder commitment of the organization.
Reputation
one of the organization’s greatest intangible assets with tangible value
Corporate governance
development of formal systems of accountability, oversight, and control
The shareholder model of corporate governance
the goal of maximizing wealth for investors and owners
The stakeholder model of corporate governance
stakeholders, including employees, suppliers, government regulators, communities, and
special interest groups
Interlocking directorate
board members being linked to more than one company is known as an interlocking
directorate
Executive compensation
one of the biggest issues corporate boards of directors face
It is questionable if the amount they get paid is fair, but executives assume so much risk on
behalf of the company, it can be argued that they deserve the rewards that follow from
strong company performance. An issue is whether performance-linked compensation
encourages executives to focus on short-term performance at the expense of long-term
growth.
Chapter 3
Integrity
refers to being whole, sound, and in an unimpaired condition, it relates to product quality,
open communication, transparency, and relationships
Chapter 1
Morals
a person’s personal philosophy about what is right or wrong
Business ethics
organizational principles, values, and norms
Principles
specific and pervasive boundaries for behavior that should not be violated / basis for rules /
human rights, freedom of speech, fundamentals of justice
Values
beliefs and ideals that are socially enforced / teamwork trust, integrity
Workplace integrity (measured by GBES)
pressure to compromise organizational standards, observed misconduct, reporting of
misconduct when observed, and relation against reports
Moral dilemma
a situation, where the person is faced with multiple choices, all of which are undesirable as
defined by the person.
Value dilemma
same, but the individual’s beliefs are grounded in societal norms
Customers’ Bill of Rights
four basic consumer rights: the right to safety, the right to be informed, the right to choose,
and the right to be heard
Corporate social responsibility
an organization’s obligation to maximize its positive impact on stakeholders and minimize
its negative impact
Defense Industry Initiative in Business Ethics and Conduct (DII)
to guide corporate support for ethical conduct
Federal Sentencing Guidelines for Organizations
guidelines regarding organizations for taking action to prevent misconduct, for example,
developing effective internal legal and ethical compliance programs
Sarbanes-Oxley Act
made securities fraud a criminal offense and stiffened penalties for corporate fraud; codes
of ethics for financial reporting; develop greater transparency in financial reports to
investors; top executives must sign off on their firm’s financial reports and risk fines and
,long prison sentences if they misrepresent their companies’ financial positions; disclose
stock sales immediately and prohibit companies from giving loans to top managers ->
responsibility is on the firm’s leadership
The Dodd-Frank Wall Street Reform
to make the financial services industry more ethical and responsible
Ethical culture
the acceptable behavior as defined by the company and industry
Global Compact
to create openness and alignment among business, government, society, labor, and the
United Nations with a set of 10 principles
Chapter 2
Stakeholders
customers, employees, suppliers, government agencies, communities, and many others who
have a “stake” or claim in some aspect of a company’s products, operations, markets,
industry, and outcomes (the relationship between companies and their stakeholders is a
two-way street, stakeholders provide resources critical to a firm’s long-term success)
Primary stakeholders
their continued association and resources are necessary for a firm’s survival, including
employees, customers, shareholders, governments, and communities that provide the
necessary infrastructure
Secondary stakeholders
do not typically engage directly in transactions with a company and are therefore not
essential to its survival, including the media, trade associations, and special interest groups
Stakeholder interaction model
, Stakeholder orientation
the degree to which a firm understands and addresses stakeholder demands
It involves activities and processes within a system of social institutions that facilitate and
maintain value through exchange relationships with multiple stakeholders.
The three sets of activities: 1. the organization-wide generation of data about stakeholder
groups and assessment of the firm’s effects on these groups 2. the distribution of this
information throughout the firm 3. the responsiveness of the organization to this
information
Corporate citizenship
the extent to which businesses strategically meet the economic, legal, ethical, and
philanthropic responsibilities placed on them by stakeholders
It has four interrelated dimensions: strong sustained economic performance, rigorous
compliance, ethical actions beyond what the law requires, and voluntary advance of the
reputation and stakeholder commitment of the organization.
Reputation
one of the organization’s greatest intangible assets with tangible value
Corporate governance
development of formal systems of accountability, oversight, and control
The shareholder model of corporate governance
the goal of maximizing wealth for investors and owners
The stakeholder model of corporate governance
stakeholders, including employees, suppliers, government regulators, communities, and
special interest groups
Interlocking directorate
board members being linked to more than one company is known as an interlocking
directorate
Executive compensation
one of the biggest issues corporate boards of directors face
It is questionable if the amount they get paid is fair, but executives assume so much risk on
behalf of the company, it can be argued that they deserve the rewards that follow from
strong company performance. An issue is whether performance-linked compensation
encourages executives to focus on short-term performance at the expense of long-term
growth.
Chapter 3
Integrity
refers to being whole, sound, and in an unimpaired condition, it relates to product quality,
open communication, transparency, and relationships
