Ethics Chapter 1-3, 7-9

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Business
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The collection of private, commercially oriented (profit-oriented) organizations, ranging in size from one-person proprietorships (e.g., DePalma’s Restaurant, Gibson’s Men’s Wear, and Taqueria la Parrilla) to corporate giants (e.g., Coca-Cola, Microsoft, Apple, Google, Delta Airlines, and UPS)
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Society
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A community, a nation, or a broad grouping of people with common traditions, values, institutions, and collective activities and interests
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Macroenvironment
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Includes the total environment outside the firm – the comprehensive societal context in which organizations reside
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Social Environment
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Focuses on demographics, lifestyles, culture, and social values of the society
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Economic Environment
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Focuses on the nature and direction of the economy in which business operates
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Political Environment
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Focuses on the processes by which laws get passed and officials get elected and all other aspects of the interaction between firms, political processes, and government
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Technological Environment
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Represents the total set of technology-based advancements taking place in society and the world
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Pluralism
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Refers to a diffusion of power among society’s many groups and organizations – \”A pluralistic society is one in which there is wide decentralization and diversity of power concentration\”
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Special-Interest Society
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The extreme idea of pluralism in which we have literally tens of thousands of special-interest groups, each pursuing its own limited agenda
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Affluence
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Refers to the level of wealth, disposable income, and standard of living of the society
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Education
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Alongside a relatively high standard of living has been a growth in the average formal _________ of the populace
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Revolution of Rising Expectations
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A belief or an attitude that each succeeding generation ought to have a standard of living higher than that of its predecessor
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Social Problem
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Has been described as a gap between society’s expectations of social conditions and the current social realities
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Entitlement Mentality
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The general belief that someone is owed something (e.g., a job, an education, a living wage, or health care) just because she or he is a member of society
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Rights Movement
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A social trend that emphasizes what rights to which groups and individuals are entitled. A right is something owed someone such as a legal or moral right. A right is sometimes seen as an entitlement
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Victimization Philosophy
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The growing concern that individuals or groups see themselves as having been victimized by society
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Business Power
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Refers to the capacity or ability to produce an effect or to bring influence to bear on a situation or people
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Iron Law of Responsibility
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a concept that addresses this: \”In the long run, those who do not use power in a manner which society considers responsible will tend to lose it\” – Whenever power and responsibility become substantially out of balance, forces will be generated to bring them into closer balance
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Social Control
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A set of reciprocal understandings that characterize the relationship between major institutions — in our case, business and society
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Managerial approach
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Emphasizes three main themes that are of vital importance to managers and organizations today; business ethics, sustainability, and stakeholder management
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Ethics
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Basically refers to issues of fairness and justice the discipline that deal with moral duty and obligation – can also be regarded as a set of moral principles or values
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Business Ethics
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Focuses on ethical issues that arise in the commercial realm – concerned with morality and fairness in behavior, actions, policies, and practices that take place within a business context
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Sustainability
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About business’s ability to survive and thrive over the long term
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Sustainable Development
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A pattern of resource use that aims to meet current human needs while preserving the environment so that these needs can be met not only in the present but also for future generations
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Stakeholders
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Individuals or groups with which business interacts who have a \”stake,\” or vested interest, in the firm
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Business for Social Responsibility (BSR)
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Claims to have been formed to fill an urgent need for a national business alliance that fosters socially responsible corporate policies
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Corporate Citizenship
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Acceptance by an organization of it’s responsibility to stakeholders for its actions and decisions
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Philanthropy
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Contributions to charity and other worth causes
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Community Obligations
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Voluntary work to improve, beautify, and uplift a community
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Paternalism
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The policy or practice of treating or governing people in the manner of a father dealing with his children
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Corporate Social Responsibility (CSR) (four-part definition)
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Encompasses the economic, legal, ethical, and discretionary (philanthropic) expectations that society has of organizations a given point in time
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Economic Responsibilities
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A company’s social responsibility to make a profit by producing a valued product or service
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Legal Responsibilities
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The ground rules–the laws–under which businesses are expected to operate
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Ethical Responsibilities
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Needed to embrace those activities, standards, and practices that are expected or prohibited by society even though they are not codified into law
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Philanthropic Responsibilities
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Perceived as responsibilities because they reflect current expectations of business by the public. The public has an expectation that business will \”give back\”.
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Pyramid of Corporate Social Responsibility
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Useful way of graphically depicting the four-part definition of CSR – envision it as a pyramid with four layers
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Social Entrepreneurship
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A large part of their initial mission was to bring about social change or to reflect certain social values as a part of their organization’s character
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Social Intrapreneurship
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Companies that did not have a specific social agenda as part of their initial formation but later developed a highly visible social agenda or program
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Mainstream Adopters
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Includes all other conventional businesses that have adopted, practiced, and achieved some degree of excellence or recognition for socially responsible policies and practices
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Corporate Social Responsiveness
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Represents an action-oriented variant of CSR
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Corporate Social Performance (CSP) model
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Suggests that what really matters is what companies are able to achieve–the results or outcomes of their acceptance of social responsibility and the adoption of a responsiveness viewpoint. Performance is a bottom-line concept
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Stages of Corporate Citizenship Model
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Reflects a stage-by-stage process in which seven dimensions (citizenship concept, strategic intent, leadership, structure, issues management, stakeholder relationships, and transparency) evolve as companies move through five stages and become more sophisticated in their approached to corporate citizenship
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Triple Bottom Line
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Concept seeks to encapsulate for business the three key spheres of sustainability that it must attend to–economic, social, and environmental
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Corporate Sustainability
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The goal of the triple bottom line approach. The goal of sustainability is to create long-term shareholder value by taking adavtange of opportunities and managing risks related to economic, environmental, and social developments
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Socially Responsible, Sustainable or Ethical Investing Movement
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Comprehensive investing approach complete with social and environmental screens, shareholder activism, and community investment
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Stake
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An interest in or a share in an undertaking
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Stakeholder
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An individual or a group that has one or more of the various kinds of stakes in the organization
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Production View of the Firm
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Owners thought of stakeholders as only those individuals or groups that supplied resources or bought products or services
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Managerial View of the Firm
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Business firms began to see their responsibilities toward other major constituent groups to be essential if they were to be successful
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Stakeholder View of the Firm
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Radical conceptual shift in how they perceived the firm and its multilateral relationships with constituent or stakeholder groups
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Stakeholder Map
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Charts out a firm’s stakeholders
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Primary Social Stakeholders
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Have a direct stake in the organizations and its success and, therefore, are most influential
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Secondary Social Stakeholders
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May be extremely influential as well, especially in affecting reputation and public standing, but their stake in organization is more indirect. Therefore, a firm’s responsibility toward them may be less, but it is not avoidable
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Legitimacy
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The perceived validity or appropriateness of a stakeholder’s claim to a stake
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Power
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The ability or capacity to produce an effect — to get something done that otherwise may not be done
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Urgency
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The degree to which the stakeholder claim on the business calls for the business’s immediate attention or response
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Strategic Approach
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Views stakeholders primarily as factors to be taken into consideration and managed while the firm pursues profits for its shareholders
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Multifiduciary Approach
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Views stakeholders as more than just individuals or groups who can wield economic or legal power
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Synthesis Approach
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Is preferred because it holds that business does have moral responsibilities to stakeholders but that they should not be seen as part of a fiduciary obligation
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Descriptive Value
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Provides language and concepts to describe effectively the corporation or organization in inclusive terms
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Instrumental Value
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It is instrumental in portraying the relationship between the practice of stakeholder management and the resulting achievement of corporate performance goals
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Normative Value
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Stakeholders are seen as possessing value irrespective of their instrumental use to management
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Stakeholder Responsibility Matrix
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Management faces this when assessing the firm’s responsibilities to stakeholders
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Supportive Stakeholder
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Has a high potential for cooperation and a low potential for threat. The ideal stakeholder
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Marginal Stakeholder
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Low on both potential for threat and potential for cooperation
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Nonsupportive Stakeholder
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Has a high potential for threat but a low potential for cooperation
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Mixed-Blessing Stakeholder
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High on both potential for threat and potential for cooperation
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Stakeholder Thinking
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Undergirds stakeholder management and is the process of always reasoning in stakeholder terms throughout the management process, and especially when organization’s decisions and actions have important implications for others
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Stakeholder Culture
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Embraces the beliefs, values, and practices that organization have developed for addressing stakeholder issues and relationships — A major factor supporting successful stakeholder management
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Stakeholder Management Capability (SMC)
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Describes an organization’s integration of stakeholder thinking into its processes and it may reside at one of three levels of increasing sophistication: rational, process, transactional
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Rational Level
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Level 1 — Is descriptive and somewhat analytical, because the legitimacy of stakes, the stakeholders’ power, and urgency are identified
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Process Level
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Level 2 — Organizations go a step further than Level 1 and actually develop and implement processes –approaches, procedures, policies, and practices — by which the firm may scan the environment and gather pertinent information about stakeholders which is then used for decision-making purposes
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Transactional Level
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Level 3 — The highest and most developed of the three levels — the highest goal for stakeholder management — the extent to which managers actually engage in transactions (relationships) with stakeholders
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Stakeholder Engagement
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May be seen as an approach by which companies successfully implement the transactional level of strategic management capability
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Stakeholder Dialogue
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Is primarily focused on exchanging communications with stakeholder groups and thus it is one form of engagement
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Stakeholder Corporation
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Ultimate form the stakeholder approach or stakeholder management might take; central element of this concept is stakeholder inclusiveness; advocates of this would embrace the idea of stakeholder symbiosis
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Stakeholder Inclusiveness
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The primary element in developing a stakeholder-oriented corporation. The basic idea is that all stakeholders have to be included in all important management decisions
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Stakeholder Symbiosis
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Recognizes that all stakeholders depend on each other for their success and financial well-being
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Principles of Stakeholder Management
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Developed for use by managers and organizations; intended to provide managers with guiding precepts regarding how stakeholders should be treated; also known as Clarkson principles
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Morality
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A doctrine or system of moral conduct
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Descriptive Ethics
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Concerned with describing, characterizing, and studying the morality of people, an organization, a culture, or a society
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Normative Ethics
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Concerned with supplying and justifying a coherent moral system of thinking and judging – seeks to uncover, develop, and justify basic moral principles that are intended to guide behavior, actions, and decisions
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Conventional Approach
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Based on how common, everyday society (the average person) views business ethics today – based on ordinary, common sense and prevailing practice
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Priniciples Approach
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Based on the use of ethics principles or guidelines to justify and direct behavior, actions, policies, and practices
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Ethical Tests Approach
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Based on short, practical questions or \”tests\” to guide ethical decision making, behavior, and practices
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Ethical Relativism
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Where we pick and choose which source of norms we wish to use on the basis of what will justify our current actions or maximize our freedom
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Immoral Management
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An approach that is devoid of ethical principles or precepts and at the same time implies a positive and active opposition to what is ethical
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Moral Management
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Conforms to the highest standards of ethical behavior or professional standards of conduct
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Integrity Strategy
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Characterized by a conception of ethics as the driving force of an organization
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Intentional Amoral Management
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Managers of this type do not factor ethical considerations into their decisions, actions, and behaviors because they believe business activity resides outside the sphere to which moral judgments apply
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Unintentional Amoral Management
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These managers are simply casual about, careless about, or inattentive to the fact that their decisions and actions may have negative or deleterious effects on others
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Compliance Strategy
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More focused on submission to the law as its driving force – is lawyer driven and is oriented not toward ethics or integrity but toward conformity with existing regulatory and criminal law
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Population Hypothesis
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The distribution of the three models of management ethics might approximate a normal curve, with the amoral group occupying the large middle part of the curve and the moral and immoral categories occupying the smaller tails of the curve
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Individual Hypothesis
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Within the individual manager, these 3 models of management ethics may operate at various times and under various circumstances; slide into different types of management depending on the situation
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Kohlberg’s Levels of Moral Development
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There is a general sequence of three levels (each with two stages) through which individuals advance in learning to think or develop morally
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Preconventional Level of Moral Development
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Typically characteristic of how people behave as infants and children – the focus is mainly on the self
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Conventional Level of Moral Development
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The individual learns the importance of conforming to the conventional norms of society – this is the level at which social relationships form and become dominant
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Postconventional, Autonomous, Principled Level of Moral Development
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Argued that few people reach (and those who do reach it have trouble staying there) – the focus moves beyond those \”others\” who are of immediate importance to the individual to humankind as a whole
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Bottom-Line Mentality
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While achieving performance goals is important, companies often get so focused on achieving the desired numbers that they encourage employees to do whatever it takes, no matter what
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Elements of Moral Judgment
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Include (1) moral imagination, (2) moral identification and ordering, (3) moral evaluation, (4) tolerance of moral disagreement and ambiguity, (5) integration or managerial and moral competence, and (6) a sense of moral obligation
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Teleological Theories
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Focus on the consequences or results of the actions they produce
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Deontological Theories
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Focus on duties
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Aretaic Theories
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A third, less-known category of ethics, put forth by Aristotle – term comes from the Greek word arete \”goodness\” (of function), \”excellence\” (of function, or \”virtue\”
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Principle of Utilitarianism
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\”We should always act so as to produce the greatest ratio of good to evil for everyone.\”
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Categorical Imperative
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\”Act only according to that maxim by which you can at the same time will that it should become a universal law.\”
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Moral Rights
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Rights that people ought to have based on moral reasoning
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Legal Rights
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Rights of individuals or groups that are established and guaranteed by law
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Principle of Rights
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Rights cannot simply be overridden by utility, but only by another, more basic or important right
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Negative Right
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The right to be left alone – the right to think and act free from the coercion of others
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Positive Right
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The right to something, such as the right to food, to healthcare, to clean air, to a certain standard of living, or to education
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Principle of Justice
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Involves the fair treatment of each person – often called the \”fairness principle\”
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Distributive Justice
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Refers to the distribution of benefits and burdens in societies and organizations
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Compensatory Justice
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Involves compensating someone for a past injustice
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Procedural Justice/Ethical Due Process
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Refers to fair decision making procedures, practices, or agreements
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Process Fairness
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Also been used to describe ethical due process
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Ethics of Care/Principle of Caring
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Virtue Ethics
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Rooted in the thinking of Plato and Aristotle, is a school of thought that focuses on the individual becoming imbued with virtues
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Servant Leadership
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An increasingly popular approach to organizational leadership and thinking today – a model of ethical management – an approach to ethical excision making based on the idea that serving others such as employees, customers, community and other stakeholders is the first priority
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Golden Rule
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\”Do unto others as you would have them do unto you\”
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Ethic of Reciprocity
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Argues that if you want to be treated fairly, treat others fairly; if you want your privacy protected, respect the privacy of others
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Ethical tests
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More practical in orientation and do not require the depth of moral thinking that the principles do – the answers to the questions should provide ethical guidance
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\”Smell\” test
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Test of common sense – if a proposed course of action stinks, don’t do it
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Organizational Sentencing Guidelines
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Began a partnership between companies and the federal government to prevent and deter corporate illegal/unethical practices
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Compliance orientation
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Creates order by requiring employees identify with and commit to specific required conduct
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Ethics orientation
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(Compliance orientation)
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Ethical leadership
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Model ethical behavior in your organization and act as an example and guide to develop other ethical leaders
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Core ethical values
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Trustworthiness, respect, responsibility, fairness, caring, and citizenship
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Formal ethics program
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Includes a code of ethics, ethics training and ethics offer and ethics training
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Ethics programs
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Frequently embrace broth compliance and ethics initiatives and responsibilities – typically organizational units, people, or departments that have been assigned the responsibility for ethics in the organization
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Ethics officer
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Often head the ethics programs – in charge of implementing the array of ethics initiatives in the organization
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Ethics screen
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Consists of several select standards against which the proposed course of action is to be compared – idea is the unethical alternatives will be \”screened out\” and ethical ones will be \”screened in\”
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Code of ethics/code of conduct
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The single most important element of the ethics and compliance program – it sets the tone and direction for the entire function
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Ethics audits
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Mechanisms or approaches by which a company may asses or evaluate its ethical climate or programs – intended to carefully review such ethics initiatives as ethics programs, codes of conduct, hotlines, and ethics training programs to determine their effectiveness and results
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Sustainability audit
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More and more companies today employ this approach for identifying and managing sustainability issues within their organizations
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Fraud risk assessments
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Review processes designed to identify and monitor conditions and events that may have some bearing in the company’s exposure to compliance/misconduct risk and to review company’s methods for dealing with these concerns
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Corporate transparency
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Refers to a quality, characteristic, or state in which activities, processes, practices, and decisions that take place in companies become open or visible to the outside world
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Opacity
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Opposite of transparency – an opaque condition in which activities and practices remain obscure or hidden from outside scrutiny and review
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Behavioral ethics
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Helps us to understand at a deeper level many of the behavioral processes that research has shown actually are taking place in people and organizations
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Bounded ethicality
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Tends to occur when managers and employees find that even when they aspire to behave ethically it is difficult due to a variety of organizational pressures and psychological tendencies that intervene
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Conformity bias
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The tendency people have to take their cues for ethical behavior from their peers rather than exercising their own independent ethical judgment
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Overconfidence bias
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The tendency for people to be more confident of their own moral character or behavior than they have objective reason to be
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Self-serving bias
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The propensity people have to process information in a way that serves to support their predicting beliefs and their perceived self-interest
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Framing
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Refers to the fact that people’s ethical judgments are affected by how a question or issue is posed (framed)
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Incrementalism
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The predisposition toward the slippery slope – has been noted that there is a tendency toward making a series of minor ethical misjudgments that can lead to major ethical mistakes
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Role morality
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The tendency some people have to use different ethical standards as they move through different roles in life
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Moral equilibrium
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The tendency for people to keep an ethical scoreboard in their heads and use this information when making future decisions
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Ill-conceived goals
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Poorly set goals that encourage negative behaviors such as sales goals emphasized too much or set too high
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Motivated blindness
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The process of overlooking the questionable actions of others when it is in one’s own best interest
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Indirect blindness
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Occurs when one holds others less accountable for unethical behaviors when they are carried out through third parties
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Slippery slope
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Causes people to not notice others’ unethical behavior when it gradually occurs in small increments
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Overcoming values
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The act of letting questionable behaviors pass if the outcome is good – can occur when managers put more emphasis on results than how the results are achieved
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Big Data
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An \”infinite sea of facts, products, books, maps, conversations, reference, opinions, trends, videos, advertisements, surveys\”-which is \”literally at your fingertips 24-7 every day from now on\”
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Technological Envrionment
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Represents the total set of technology-based advancements or progress taking place in society
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Technological Determinism
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The imperative that \”what can be developed will be developed\”
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Ethical Lag
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Occurs when the speed of technological change far exceeds that of ethical development
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Information Technology
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Computer-driven information technology
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Biotechnology
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Involves using biology to discover, develop, manufacture, market, and sell products and services – striving to heal, fuel, and feed the world
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Electronic Commerce
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Often referred to as e-commerce, e-business, or web-based market – primarily affects consumer stakeholders and competitors of the e-commerce firms
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Online Scams
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A general way to define the different types of fraud that consumers face when using the Internet
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Cookies
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Little identification tags that web sites drop on our personal computer hard drives so they can recognize repeat visitors the next time we visit their web sites
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Spam
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Unsolicited commercial e-mail that is sent through \”open-relays\” to millions of persons
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Identity Theft
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Someone tampering with one’s financial accounts
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Botnet Scams
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One of the latest techniques by which hackers get access to personal and corporate information
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Social Networking Sites
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Another way many individuals lose privacy and get personal information stolen – ex: Facebook, Twitter, LinkedIn, Pinterest, and others
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Chief Privacy Officer (CPO)
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An innovative approach to protecting consumers’ privacy
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Phishing
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Lures prey (computer users) with convincing bait into revealing passwords and other private data
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Biometrics
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The use of body measurements, such as eye scans, fingerprints, or palm prints for determining and confirming identity
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Genetic Engineering
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A technology that includes the process of manipulating or altering the genetic material of a cell resulting in desirable functions or outcomes that would not occur naturally
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Embryonic Stem Cells
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The raw materials with which a human body is built
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Therapeutic Cloning
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Uses the same laboratory procedures as reproductive cloning but its aim is not procreation but rather the creation of a source of stem cells whose properties make them a possible source of replacement tissue for a wide range of degenerative diseases
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Genetic Testing
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The use of methods to determine if someone has a genetic disorder, will develop one, or is a carrier – has many downside risks, especially from a legal and an ethical perspective
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Genetic Profiling
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One result of genetic testing – provides a perfect means for identifying a person and thus raises questions of privacy and possible discrimination based on genetic factors
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Genetically Modified Foods (GMOs)/Genetically Engineered foods(GEFs)
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Foods that are mostly products or organisms that have their genes altered in a laboratory for specific purposes, such as disease resistance, increased productivity, or nutritional value allowing growers greater control, predictability, and efficiency
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Bioethics
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A field that deals with the ethical issues embedded in the commercial use of biotechnology

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