Chapter 4- Business Ethics and Corporate Social Responsibility

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Ethics
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Rule or standards governing the conduct of a person or group
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Transparency
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Degree to which affected parties can observe relevant aspects of transactions or decisions
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Insider trading
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Use of unpublicized info that an individual gains from the course of his/her job to benefit from fluctuations in stock market
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Code of ethics
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Written statement setting forth principles that guide an organization’s decisions
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Whistleblowing
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Disclosure of info by company insider that exposes illegal or unethical behavior by others within the organization
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What is ethical behavior?
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Competing fairly and honestly, communicating truthfully, and not causing harm to others
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Factors that Influence Ethical Behavior
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Cultural Differnces, Knowledge, and Organizational Behavior
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Cultural Differences
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Managers need to consider unethical practices that are accepted in some cultures and not in others and a wide range of issues, such as working conditions, minimum wage levels, product safety issues, and environmental protection
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Knowledge
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The responsibility not only to pay attention but to actively seek out information regarding potential ethical issues
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Organizational Behavior
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Company must be shown with string ethical practices creating a reward of good behavior. Follow code of ethics
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Ethical laspe
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Situations where a person or group makes a decision that is morally wrong , illegal, or unethical
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Ethical dilemma
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Situation where more than one side of an issue can be supported with valid argument
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Conflicts of interest
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Situation where competing loyalties can lead to ethical lapses
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Corporate Social Responsibility (CSR)
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idea that business has obligations to society beyond pursuit of profits
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4 factors of Relationship between Business and Society
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1.) Consumers require money for wide range of benefits 2.) Profit-seeking companies are the economic engine that powers modern, generating vast majority of the money in a nations economy. 3.) Profit seeking companies assess in society’s standards of living. 4.) Companies cannot operate profitably without benefits provided by a safe and predictable business enviroment
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Philanthropy
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Donations of money, time, goods, or serves to charitable, humanitarian, or educational instituitions
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Strategic CSR
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Social contributions that directly aligned with a company’s business strategy
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Perspective on Corporate Social Responsibility (CSR)
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– to encourage ethical behavior and promote mutually beneficial relationships between business and society – must establish expectations about how business should conduct themselves – can be categorized in 4 perspectives
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4 perspectives if Corporate Social Responsibility (CSR)
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Minimalist, Cynical, Defensive, and Proactive
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Minimalist
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Companies do not have social responsibilties beyond earning money and obeying the law
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Cynical
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Companies use CSR as a marketing ploy to distract attention from their self-centered behavior
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Defensive
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Companies engage in CSR only after being shamed or forced into it
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Proactive
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Companies have a responsibility to help society beyond simply paying taxes and obeying the law
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Resolve CSR Dilemma
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– Companies take responsibility for the consequences of their actions and limit the negative impact of their operations – Companies can choose to help in whatever way that investors, managers, and employees see fit, but choices are a matter of free will.

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