MGT490 – Chap 9 – Flashcards

Is the application of general ethical principles to the actions and decisions of businesses and the conduct of their personnel. Are not materially different from ethical principles in general because business actions have to be judged in the context of society's standards of right and wrong.

concerns principles of right or wrong conduct.

involves the application of general ethical principles to the actions and decisions of businesses and the conduct of their personnel.

The School of Ethical Universalism The School of Ethical Relativism Integrated Social Contracts Theory

Holds that common understandings across multiple cultures and countries about what constitutes right and wrong give rise to universal ethical standards that apply to all societies, all firms, and all businesspeople. What's ethical in the US, it's ethical in Japan. Doesn't matter where you are. (Eg Truthfulness, Respect, Honor Basic Human rights - safety)

Whether a business-related action is right or wrong is judged by universal standards.

Holds that differing beliefs, customs, and behavioral norms across countries and cultures give rise to multiple sets of standards of what is ethically right or wrong. These differing standards mean that whether business-related actions are right or wrong depends on the prevailing local ethical standards. Codes of conduct based on ethical relativism can be ethically dangerous for multinational companies by creating a maze of conflicting ethical standards. When in Rome do as the Romans (e.g. Child Labor,

Whether business-related actions are right or wrong depends on local ethical standards.

universal ethical principles based on the collective views of multiple societies form a "social contract" that all individuals and organizations have a duty to observe in all situations. Within the boundaries of this social contract, local cultures or groups can specify what additional actions may or may not be ethically permissible. adherence to universal or "first-order" ethical norms should always take precedence over local or "second-order" norms. In instances involving universally applicable ethical norms (like paying bribes), there can be no compromise on what is ethically permissible and what is not.

Provides a middle-ground balance between universalism and relativism. Posits that the collective views of multiple societies form universal (first order) ethical principles that all persons have a contractual duty to observe in all situations. Within the contract, cultures or groups can specify locally ethical (second-order) actions.

Adherence to universal ethical norms takes precedence over local norms. A local custom is not ethical if it violates universal ethical norms. Application of codes of ethics should first follow universal standards with allowance for local ethical diversity and influence.

Utilitarianism - ethical or acceptable if greatest good for the greatest number of people, (benefit programs - some cover adoptions and some don't) Individual Rights - Fundamental entitlementsin society (privacy, respect, dignity, pursuit of happiness, can't discriminate - specific indv rights just because we exist) Distributive Justice - People who are similar should receive similar benefits (union, upper mgmt, handicap, veterans) Care - Favor those with whom we have special relationships (veterans, support your team, family)

Is what we are proposing to do fully compliant with our code of ethics? Are there areas of ambiguity? Is this action in harmony with our core values? Are any conflicts or potential problems evident? Is this action ethically objectionable? Would our stakeholders, our competitors, the SEC under the Sarbanes-Oxley Act, or the news and social media view this action as ethically objectionable?

Sizable civil fines and stockholder lawsuits Devastating image and public relations hits Sharp stock price drops as investors lose confidence Criminal indictments and convictions

Faulty internal oversight allows self-dealing in the pursuit of personal gain, wealth, and self-interest. Short-termism pressure to meet or beat short-term performance targets. A culture that puts profitability and business performance ahead of ethical behavior.

Because a strategy that is unethical is morally wrong and reflects badly on the character of the firm's personnel.

Because an ethical strategy can be both good business and serve the self-interest of shareholders.

Govt fines and penalties Civil penalties from class-action lawsuits and other litigation aimed at punishing the company Cost to shareholders in form of lower stock (and possibly lower dividends)

Legal and investigative costs incurred by the company Cost of providing remedial education and ethics training to company personnel Costs of taking corrective action Admin costs associated with ensuring future compliance

Customer defections Loss of Reputation Lost employee morale and higher degree of employee cynicism Higher employee turnover Higher recruiting costs and difficulty in attracting talented employees Adverse effects on employee productivity Cost of complying with harsher govt regulations

Is a firm's duty to operate in an honorable manner, provide good working conditions for employees, encourage workforce diversity, be a good steward of the environment, and actively work to better the quality of life in the local communities where it operates and in society at large.

CSR initiatives undertaken by companies are frequently directed at improving the company's performance metrics. The goal is for the company to success in all three dimensions. These are often referred to as the three pillars of people, plant and profit People (Social) - various social initiatives Planet (Environmental) - firm's ecological impact & environmental practices Profit (Economic) - profit for shareholders as well as economic impact on society

Is the relationship of a firm to its environment and its use of natural resources.

Are those practices of a firm that meet the needs of the present without compromising the ability to meet the needs of the future.

Consists of the firm's deliberate actions to: Protect the environment. Provide for the longevity of natural resources. Maintain ecological support systems for future generations. Guard against ultimate endangerment of the planet.

Moral Case:Stakeholder Benefits Business Case:Competitive Advantage

CSR strategies and environmental sustainability strategies that both provide valuable social benefits and fulfill customer needs in a superior fashion can lead to competitive advantage. Corporate social agendas that address only social issues may help boost a company's reputation for corporate citizenship but are unlikely to improve its competitive strength in the marketplace. Every action a company takes can be interpreted as a statement of what it stands for. The higher the public profile of a company or its brand, the greater the scrutiny of its activities and the higher the potential for it to become a target for pressure group action. Socially responsible strategies that create value for customers and lower costs can improve company profits and shareholder value at the same time that they address other stakeholder interests. There's little hard evidence indicating shareholders are disadvantaged in any meaningful way by a company's actions to be socially responsible.

Increased reputation and buyer patronage Reduced risk of reputation-damaging incidents (those that place little importance on operating in a socially responsible manner are more prone to scandal and embarrassment.) Lower turnover costs and enhanced employee recruiting and workforce retention (lower cost for recruiting since workers want to work for a company with strong CSR reputation). Increased revenue enhancement opportunities due to support of CSR and sustainability CSR and sustainability best serve long-term interests of shareholders

Increased public awareness of misdeeds of bad behavior by firms Increased legislation and regulation to correct and punish firms Refusal to do business with irresponsible firms