Questions and Answers
What is required for whistle-blowing to take place?
The individual must have adequate knowledge of wrongdoing that could damage society.
What characterizes a centralized organization?
Decentralized organizations have a high number of formal rules.
False
What are the two types of groups mentioned in the document?
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What is a major component of an ethics program?
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Which of the following is true about codes of conduct?
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What is an ethics audit?
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A values orientation in ethics programs strives to develop shared ______.
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Ethics programs only focus on compliance with regulations.
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What can ethics programs help avoid?
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What do ethics officers provide in an organization?
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What does ethics mean to you?
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Why is ethics important in business?
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Can you think of an example of a time a business engaged in unethical behavior?
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Morals represent a person's personal philosophies about right and wrong.
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What is business ethics?
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What are the primary reasons for studying business ethics?
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Which of the following is a factor influencing ethical culture in an organization? (Select all that apply)
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What is the stakeholder model of corporate governance?
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The demand for ________ investing is increasing.
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Ethical businesses are always the most profitable.
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Stakeholders are those who have a __________ or claim in some aspect of a company's products or operations.
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All stakeholders engage directly in transactions with a company.
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What type of stakeholders are employees, customers, and shareholders considered?
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What is corporate governance?
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What is one of the four levels of social responsibility?
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What is moral philosophy?
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What is the responsibility of board members concerning the firm's resources?
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What is executive compensation?
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Which statement describes a caring culture?
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Obedience to authority is a reason employees resolve business ethics issues by simply following directives.
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List the three fundamental elements that motivate people to be fair.
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Ethical dilemmas have a right or ethical choice.
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What is an ethical decision-making model intended for?
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Which moral philosophy focuses on producing the greatest good for the greatest number?
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What is considered a conflict of interest?
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What does discrimination refer to in a business context?
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What aspect does distributive justice evaluate?
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Which agency protects against workplace discrimination in the U.S.?
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A culture that emphasizes the importance of ethics can reduce __________.
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Lying can be both commission and omission.
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What is the role of top-level support in ethical decision making?
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What is the Age Discrimination in Employment Act?
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Which is true about compliance culture?
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What is defined as abusive or intimidating behavior in the workplace?
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What does the term whistle-blowing refer to?
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What is instrumental concern in ethics?
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What does insider trading refer to?
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Study Notes
Chapter 1: The Importance of Business Ethics
- Ethics encompasses integrity, fairness, responsibility, and moral judgment.
- Business ethics influences daily decisions, guiding behavior and establishing a framework for just actions.
- Unethical behaviors include gossiping, dishonest sick leaves, and manipulation of work hours.
- Morals refer to personal philosophies, while business ethics is shaped by organizational values and legal norms.
- Ethics impacts workplace integrity, highlighting the pressure to compromise standards and retaliation for reporting misconduct.
- Observed misconduct statistics in the U.S. workforce reveal significant concerns about workplace ethics.
- Ethical dilemmas can arise from conflicts between personal morals and organizational values.
Chapter 2: Stakeholder Relationships, Social Responsibility, and Corporate Governance
- Stakeholders are individuals or groups with a vested interest in a company's operations, including customers, employees, and communities.
- Ethical guidelines for stakeholders can be normative (ideal treatment), descriptive (actual firm behavior), or instrumental (consequences of behavior).
- Primary stakeholders are essential for a firm's survival; secondary stakeholders may influence indirectly.
- Stakeholder orientation measures an organization's understanding and response to stakeholder demands.
- Social responsibility balances maximizing positive impacts and minimizing negatives on stakeholders, operating at economic, legal, ethical, and philanthropic levels.
- Corporate citizenship involves fulfilling responsibilities across all stakeholder-related dimensions.
- Reputation is a valuable corporate asset tied to stakeholder perceptions and trust.
- The stakeholder model enhances accountability and aligns corporate governance with stakeholder interests.
Benefits of Business Ethics
- Ethical practices lead to enhanced employee commitment and lower turnover rates.
- Companies perceived as ethical generate higher customer satisfaction and trust.
- Ethical firms can expect better profits, as ethical conduct intertwines with effective performance in competitive markets.
Issues in Social Responsibility
- Social responsibility addresses stakeholder needs and fosters long-term relationships for mutual benefit.
- Key contemporary ethical issues include data privacy, consumer protection, and sustainable practices.
- Corporate governance structures create accountability, oversight, and control mechanisms to prevent unethical decisions.
The Role of Boards of Directors
- Boards of directors must balance stakeholder interests, ensuring ethical culture and compliance within organizations.
- Accountability for corporate governance has intensified, demanding transparency and diverse perspectives among board members.
- Executive compensation must align with company performance, with stakeholders favoring equitable pay practices.
Implementing a Stakeholder Perspective
- Assessing corporate culture involves identifying values and behaviors affecting social responsibility.
- Recognizing stakeholder needs is essential for effective communication and responsiveness.
- Evaluating the urgency of stakeholder issues is reliant on their power and legitimacy.
Conclusion
- Business ethics serves as a critical element in decision-making, fostering integrity and responsible behavior in organizational contexts.
- A strategic approach to stakeholder engagement and corporate governance will promote ethical conduct and business success.### Identifying Resources and Determining Urgency
- Actions assessed based on required financial and organizational investments.
- Urgency dictated by significance of the challenge and stakeholder pressure.
Gaining Stakeholder Feedback
- Satisfaction and reputation surveys gauge general assessments of a firm.
- Analysis of stakeholder-generated media provides insights into firm contributions.
- Formal research methods include focus groups, surveys, and observations.
Recognizing an Ethical Issue
- Ethical awareness crucial for identifying ethical components in situations.
- Dilemmas present negative consequences for all alternatives.
- Collusion involves secret agreements for fraudulent purposes.
Foundational Values for Identifying Ethical Issues
- Integrity: Essential virtue indicating sound and balanced corporate culture.
- Honesty: Refers to truthfulness; business relationships require clarity in rules.
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Fairness: Encompasses justice, equity, and equality through three motivational elements:
- Equality: Fair distribution of resources.
- Reciprocity: Mutual exchange in relationships.
- Optimization: Balancing equity with efficiency.
Emerging Ethical Issues and Dilemmas in Business
- Ethical Issues: Situations requiring evaluation of right vs. wrong actions.
- Ethical Dilemmas: No clear right choice exists; only less harmful alternatives.
- Misuse of company resources, including time theft and personal use of work resources, causes significant losses.
- Abusive behavior includes verbal and physical threats creating hostile work environments.
- Workplace bullying lacks legal protection in the U.S., leading to debates on potential laws to protect employees.
Lying and Conflicts of Interest
- Lying: Can be commission (intentional deception) or omission (withholding critical information).
- Conflicts of Interest: Arise when personal interests conflict with professional obligations.
Bribery and Corporate Intelligence
- Bribery: Offering something to gain advantage; classified into active and passive forms.
- Corporate Intelligence: Involves collecting information about various market factors for strategic decisions.
Discrimination and Harassment
- Discrimination: Illegal prejudices based on numerous factors, including race and gender.
- Sexual Harassment: Includes unwanted behaviors creating a hostile work environment.
- Fraud: Involves deceptive practices harming others, can be accounting or marketing fraud.
Financial Misconduct and Insider Trading
- Financial misconduct played a role in the Great Recession, often linked to subprime lending.
- Insider Trading: Illegal practice of trading stocks based on non-public information; legal if disclosed to the SEC.
Challenge of Determining Ethical Issues
- Stakeholder concerns often highlight ethical problems in business.
- Ethical issues evolve with changing societal values; crisis management requires prompt responses.
Factors Affecting Ethical Decision Making
- Influenced by organizational culture, climate, significant others, power dynamics, and opportunities.
Ethical Issue Intensity and Individual Factors
- Ethical issue intensity underscores the importance assigned to decisions by individuals and groups.
- Individual factors impacting decisions include gender, education, nationality, age, and locus of control.
Organizational Factors
- Corporate Culture: Embodies shared values and norms related to decision-making.
- Ethical Culture: Defined by acceptable behaviors and supported by top management and organizational policies.
Opportunity and Ethical Behavior
- Opportunity shapes ethical or unethical behaviors based on organizational conditions.
- The immediate context of work impacts ethical decisions and oversight.
Ethical Decision-Making Model
- Provides insights into the processes behind ethical decision-making, distinguishing issues from dilemmas.
- Recognizes the role of individual factors in shaping ethical decision-making behavior.
Normative Considerations in Ethical Decision Making
- Normative approaches dictate ideal conduct within organizations.
- Institutional influences help form values and norms impacting ethical behavior.
Understanding Ethical Decision Making
- Top management support plays a vital role in promoting ethical behavior among employees.
- Knowledge of ethical decision-making enhances overall decision quality and effectiveness.### Moral Philosophy vs. Business Ethics
- Moral philosophy involves individual principles and values to determine right and wrong.
- Business ethics pertains to group decisions and actions within organizational contexts.
- Moral philosophies often defend economic systems like capitalism.
Definitions and Key Theories
- Moral Philosophy: Principles guiding personal judgments about right and wrong.
- Economic Value Orientation: Ethical actions are determined by their economic outcomes.
- Idealism: Emphasizes mental constructs and ideals in moral decision-making.
- Realism: Belief that self-interest guides individual actions.
Major Moral Philosophies
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Teleology: Actions deemed right if they yield desired outcomes (e.g., pleasure or utility).
- Egoism: Focus on self-interest, varying from wealth to personal satisfaction.
- Utilitarianism: Pursuing the greatest good for the greatest number of people.
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Deontology: Focus on equal respect for all individuals, emphasizing individual rights over outcomes.
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Relativist Perspective: Ethical definitions are based on subjective experiences; highlights culture-based differences in moral outlook.
- Descriptive Relativism: Observations of diverse cultural ethics.
- Meta-ethical Relativism: Individual perspectives shape ethical disputes.
- Normative Relativism: All opinions are equally valid.
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Virtue Ethics: Ethical actions are connected to individual character and community roles.
Justice in Ethical Framework
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Justice: Fair treatment and reward according to ethical standards.
- Distributive Justice: Evaluates fairness in outcomes.
- Procedural Justice: Focuses on processes leading to outcomes.
- Interactional Justice: Considers treatment within organizational relationships.
Ethical Decision-Making Influences
- Corporate culture influences ethical decision-making processes.
- Employees may face ethical dilemmas due to conflicting values between personal beliefs and corporate objectives.
- External factors, such as management's tone, affect ethical climate.
Corporate Culture Concepts
- Organizational Culture: Shared values and norms that shape employee behavior.
- Corporate Culture: Beliefs driving management practices within a company.
- Ethical culture promotes integrity and compliance among employees.
Types of Ethical Culture
- Apathetic Culture: Low concern for people and performance.
- Caring Culture: High concern for people, low emphasis on performance.
- Exacting Culture: High focus on performance with minimal people's concern.
- Integrative Culture: Balances high concern for both people and performance.
Compliance vs. Values-Based Programs
- Compliance Culture: Focuses on adherence to laws and regulations; suitable for short-term risk management.
- Values-Based Culture: Centers on shared company values, promoting ethical conduct and decision-making.
Whistle-Blowing
- Whistle-blowing involves exposing wrongdoing to external parties; can be internal or external.
- Legal protections exist for whistle-blowers under laws like SOX and the Dodd–Frank Act.
Organizational Structure and Decision-Making
- Centralized Organizations: Decision-making is limited to top management; suited for routine processes.
- Decentralized Organizations: Allows broader decision-making across all levels; promotes flexibility and quicker responses.
Importance of Ethics Programs
- Effective ethics programs create awareness of legal and ethical challenges.
- Ethics programs are crucial for maintaining public trust and guiding corporate behavior.
- Organizations should monitor ethical standards and encourage employee engagement for ethical practices.
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Description
Prepare for your Business Ethics exam with these comprehensive notes covering multiple-choice questions from all chapters and detailed guidelines for essay responses. Focused study areas include key concepts from Chapter 2 on ethical procedures, Chapter 3 on ethical issues, and comparisons in Chapter 6 between teams and groups.
