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Chapter 4: Demanding ethical and social responsible behavior

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Ethics
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society’s accepted standards of moral behavior, that is, behavior accepted by society as right rather than wrong.
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Compliance-based ethics code: Ideal: Objective: Leaders: Methods:
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emphasizes preventing unlawful behavior by increasing control and penalizing wrongdoers. Ideal: conform to outside standards (laws and regulations) Objective: avoid criminal misconduct Leaders: lawyers Methods: education, reduced employee discretion, controls, penalties
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Integrity-based ethics codes: Ideal: Objective: Leaders: Methods:
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define the organizations guiding values, creating an environment that supports ethically sound behavior, and stress shared accountability. Ideal: Conform to outside standards (laws and regulations) and chosen internal standards. Objective: enable responsible employee conduct Leaders: Managers with aid of lawyers and others Methods: Education, leadership, accountability, decision processes, controls, and penalties
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Corporate philanthropy
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includes charitable donations to nonprofit groups of all kinds.
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Corporate social initiatives
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enhanced forms of corporate philanthropy. Corporate social initiatives differ from traditional philanthropy in that they are more directly related to the company’s competencies.
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Corporate responsibility
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everything from hiring minority workers to making safe products, minimizing pollution, using energy wisely, and providing a safe environment- essentially everything that has to do with acting responsibly within society.
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Corporate policy
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the position a firm takes on social and political issues.
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Insider trading
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uses private company information to further insiders’ own fortunes of their family and friends.
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Social audit
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a systematic evaluation of an organization’s progress towards implementing socially responsive programs. One of the major problems of conducting a social audit is establishing procedures for measuring a firms activities and their effects on society.
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Socially conscious investors
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insist that a company extend its own high standards to its suppliers.
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Socially conscious research organizations
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such as Ethisphere, analyze and report on corporate social responsibility efforts.
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Environmentalists
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apply pressure by naming companies that don’t abide by environmentalists’ standards.
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Union officials
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hunt down violations and force companies to comply to avoid negative publicity.
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Customers
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make buying decisions based on their social conscience. Many companies surveyed are adjusting their environmental and social responsibility strategies because of the number of customers that factor these into their buying decisions.
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Whistleblower
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an insider who reports illegal or unethical behavior.
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How is legality different from ethics?
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Ethics does beyond obeying laws to include abiding by the moral standards accepted by society. Ethics reflects people’s proper relationships with one another. Legality is more limiting; it refers only to laws written to protect people from fraud, theft, and violence.
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How can we tell of our business decisions are ethical?
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We can put our business decisions through an ethics check by asking three questions: 1. Is it legal? 2. Is it balanced? 3. How will it make me feel?
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What is management’s role in setting ethical standards?
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Managers often set formal ethical standards, but more important are the messages they send through their actions. Management’s tolerance or intolerance of ethical misconduct influences employees more than any written ethics codes.
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What is the difference between compliance-based and integrity-based ethics codes?
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Whereas compliance-based ethics codes are concerned with avoiding legal punishment, integrity-based ethics codes define the organization’s guiding values, create an environment that supports ethically sound behavior, and stress a shared accountability among employees.
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What is corporate social responsibility?
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Corporate social responsibility is the concern businesses have for society.
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How do businesses demonstrate corporate responsibility towards stakeholders?
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Businesses demonstrate responsibility to stakeholders by: 1. Satisfying customers with goods and services of real value 2. Making money for investors 3. Creating jobs for employees, maintaining job security, and seeing that hard work and talent are fairly rewarded 4. Creating new wealth for society, promoting social justice, and contributing to making the businesses’ own environment a better place.
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How are company’s social responsibility efforts measured?
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A corporate social audit measures an organization’s progress toward social responsibility. Some people believe that audit should ass together the organization’s positive actions an then subtract the negative effects to get a net social benefit.
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How can U.S. companies influence ethical behavior and social responsibility in global markets?
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Many U.S. businesses are demanding socially responsible behavior from their international suppliers by making sure their suppliers do not violate U.S. human rights and environmental standards. Companies such as Sears, PVH, and Dow Chemical will not import products from companies that do not meet their ethical and social responsibility standards.
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__________ is a communication tool many companies use to inform diverse groups of their social responsibility efforts at little cost.
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Social media
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The concern businesses have for the welfare of society, not just for their owners is:
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– Corporate social responsibility – Based on a commitment to integrity and respect
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Defining the concept of ethics more narrowly and making the definition closer to the definition of legality would be __________ to restore the trust of the American public in the free-market system.
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least likely
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Ethical behavior begins with:
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Ourselves
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Organization ethics begins _____.
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At the top level of management
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Government and business leaders are being held to ____.
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Higher ethical standards than in the past
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American businesses are:
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Demanding socially responsible behavior from international suppliers, particularly in areas of environmental standards and human rights issues.
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What reflects upon the difficulty companies face when requiring international suppliers to follow environmental and human rights standards set by U.S. firms?
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Both economics and culture enter into the discussion of fairness concerning international suppliers who do business with U.S. firms.