chapter 7 - ethics-Quiz

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Questions and Answers

What does goodwill represent in a business context?

The monetary value of products sold

The physical property owned by a business

The value of tangible assets only

The value of a business beyond its tangible assets (correct)

Which statement best defines governance?

The ability to act without external influences

The act of exercising authority in an organizational setting (correct)

The process of maximizing short-term profitability

A process to enhance employee satisfaction

What does independence mean in a business context?

Freedom from market competition

Lack of regulations governing a business

Freedom from conflicting personal interests (correct)

The ability to change business direction at will

What is implied by integrity in a leader?

Trustworthiness and moral values alignment Signup and view all the answers

How is a long-term perspective on business decisions characterized?

Recognizing delayed impacts on profit maximization Signup and view all the answers

Maxims are defined as:

Short, instructive statements guiding behavior Signup and view all the answers

What do morals often derive their authority from?

Societal or higher authority standards Signup and view all the answers

How can moral concepts vary according to the content?

They may vary widely from one society to another Signup and view all the answers

What is the primary purpose of capacity building?

To enhance organizational effectiveness through support activities Signup and view all the answers

What is a common misconception regarding Codes of Conduct and Codes of Ethics?

They can be used interchangeably without any implications Signup and view all the answers

According to the Sarbanes-Oxley Act, which of the following is NOT explicitly part of a Code of Ethics?

Mandating specific employee behaviors in all circumstances Signup and view all the answers

How does a Code of Ethics assist an organization?

By clarifying standards and organizational values Signup and view all the answers

Which of the following best defines 'Code Provisions'?

The behavioral expectations highlighted in a code Signup and view all the answers

What role does resource networking play in capacity building?

It supports collaboration and sharing of resources Signup and view all the answers

Which of the following is NOT an element of Code of Ethics outlined in the Sarbanes-Oxley Act?

Conflict resolution strategies Signup and view all the answers

Which aspect does a Code of Conduct primarily focus on?

Listing required behaviors and conduct Signup and view all the answers

What is the primary purpose of a comprehensive ethics and compliance program?

To ensure operations align with applicable regulations and ethical standards Signup and view all the answers

Which of the following is NOT considered one of the six key elements of an ethics and compliance program?

Increased financial profits Signup and view all the answers

What does corporate social responsibility (CSR) entail?

Viewing the business as part of a larger societal context with responsibilities Signup and view all the answers

What best describes a conflict of interest?

A situation where one's personal interests potentially interfere with professional judgment Signup and view all the answers

Which of the following accurately defines 'corruption'?

Abuse of public power for private benefit or corrupt practices Signup and view all the answers

What role does courage play in ethical decision-making?

Courage entails making choices that may lead to personal loss for the right reasons Signup and view all the answers

Which component is usually included in an ethics and compliance program?

Performance evaluations of ethical conduct Signup and view all the answers

What can be considered guiding principles in a corporate context?

A set of fundamental beliefs shaping business decisions Signup and view all the answers

What is the main role of an ombudsman?

To provide confidential and informal assistance to managers and employees. Signup and view all the answers

Which of the following best describes normative ethical theories?

Theories that indicate how people ought to behave based on reason. Signup and view all the answers

What type of data is considered qualitative?

Descriptive data gathered via interviews and open-ended questions. Signup and view all the answers

What is a potential outcome of a successful ethics and compliance program?

Decline in retaliation against whistleblowers. Signup and view all the answers

What distinguishes quantitative data from qualitative data?

Quantitative data is numeric and suitable for comparisons. Signup and view all the answers

What is the purpose of a reporting system in an organization?

To provide employees with means to report misconduct safely. Signup and view all the answers

What does reputational risk refer to in an organizational context?

The risk of losing stakeholder trust leading to harm. Signup and view all the answers

Who qualifies as a reporter in the workplace context?

Any employee who witnesses workplace misconduct and reports it. Signup and view all the answers

What does a rules-centered code of conduct typically include?

A list of behavioral requirements Signup and view all the answers

How does sample selection in survey research contribute to the accuracy of results?

It ensures results are representative of subgroups Signup and view all the answers

Which term refers to the belief in the safety of one’s person and position within an organization?

Security Signup and view all the answers

What is the primary focus of a short-term perspective in business?

Maximizing quarterly and annual profits Signup and view all the answers

What does the term 'social contract' imply when related to businesses?

An implicit agreement for social benefit Signup and view all the answers

Which of the following best defines stakeholders in a business context?

Individuals and entities affected by a business’s decisions Signup and view all the answers

What is the role of stockholders in a corporation?

To hold shares that represent ownership Signup and view all the answers

Which of the following best describes sustainability in a general context?

An ability to maintain a state over time Signup and view all the answers

What is the primary focus of utilitarianism in ethical decision-making?

An act is ethical if its consequences result in the greatest good for the greatest number. Signup and view all the answers

Which of the following best describes transparency in an organizational context?

Sharing information and acting openly about decisions and processes. Signup and view all the answers

How can values be defined in the context of ethics?

Core beliefs regarding right and fair actions in interactions. Signup and view all the answers

What does a values-centered code of ethics promote within an organization?

Decision-making guided by principles like integrity and trustworthiness. Signup and view all the answers

What is the main role of a whistleblower in the workplace?

To report misconduct that they observe. Signup and view all the answers

Which statement accurately reflects the virtue theory of ethics?

It emphasizes proper conduct shaped by upbringing and character. Signup and view all the answers

What is meant by sustainable development?

Development that meets current needs without compromising the future. Signup and view all the answers

Which of the following is NOT a characteristic of transparency?

Keeping all decision-making hidden from the public. Signup and view all the answers

Study Notes

Introduction

Each subject uses specific terms
Different meanings in other contexts
Common terms in Business Ethics

Agency

Belief one has power to change
Critical in decisions as most people will only report if they believe their action can make a difference

Aspirational

Strong desire to achieve great things
Code intended to aim higher than mere compliance with the law

Benchmarking

Comparing to established best practices, peer organizations or past results to understand strengths, challenges & progress

Business Ethics

Conduct by which companies abide by the law & respect stakeholder rights (customers, clients, employees & community)

Capacity Building

Developing organizational core skills (leadership, management, finance & fundraising) & capabilities
Programs & evaluation to build effectiveness & sustainability

Code of Conduct

Listing required behaviors with disciplinary action for violation
Used interchangeably with Code of Ethics

Code of Ethics/Conduct

Central guide for decision-making
Clarifies mission, values & principles, linking them to standards of professional conduct

Code Provisions

Specific standards of behavior and performance
Expectations of the organization to highlight & address

Compliance

Extent a company conducts business operations in accordance with regulations & statutes

Comprehensive Ethics & Compliance Program

Six key elements: standards, training, company resources, confidential reporting, performance evaluations, and disciplinary systems for violators
Includes guiding values & principles

Conflict of Interest

Exists when a person entrusted to exercise judgment on behalf of others, also has interests or obligations which could interfere with judgment
Should either be avoided or acknowledged openly

Corporate Culture

Shared beliefs, values & behaviors forming organizational context where employees & managers interact

Business views itself within a broader context with implicit social obligations
Responsibility for business's effects on environmental and social well-being

Corruption

Abuse of public power for private benefit
Perversion of integrity in public duties, through bribery or favor, or corrupt practices

Courage

Choosing to do what's right regardless of the result

Credo

Fundamental beliefs or guiding principles

Deontology

Ethical theory focusing on rights and duties owed to others

Effective (or Well-Implemented) Ethics and Compliance Program

Living part of a company's ethos with ethical conduct & support for employees to uphold standards
Six hallmarks: freedom to question management, rewards, no rewards for questionable actions, positive feedback, employee preparedness to address misconduct, employee willingness to seek ethics advice

Empathy

Caring about consequences of choices affecting others
Being concerned with the impact on those without a say in the decision

Ethical Congruence

Decision consistent with applicable values
Harmonizing with values and perceptions

Ethical Decision Making

Involves ethical considerations
Considering impact e.g., impact on others and relationships/ determination of the right thing to do

Ethical Differences

Situations where individuals agree on a value but disagree on the action

Ethical Dilemmas

Challenging situations requiring conflicting values

Ethical Relativism

Ethics depends entirely on context, with standards varying by personal and professional lives

Ethics Culture

Extent to which employees uphold values & standards
Includes ethical leadership, supervisor reinforcement & peer commitment

Ethics Risk

Potential harm from misconduct which goes undetected

Focus Group

Small group representing a larger population to share opinions & experiences
Used to gather information for organizational culture assessments

Good Faith

Belief in the accuracy of reported information

Goodwill

Business value beyond tangible assets
Includes reputation, brand attitude, workforce and customer relations

Governance

Act, process or power exercising authority in an organizational setting

Independence

Freedom to act without control from others

Integrity

Adherence to moral values ensuring trustworthiness and incorruptibility

Long-term Perspective

Broad view of profit maximization recognizing that decisions impact the long run

Maxims

Short, pithy statements used to instruct and guide behavior

Morals

Values or beliefs defining right/wrong and good/bad
Typically derived from a higher authority

Normative Ethical Theories

Philosophical theories describing how people should behave based on reason

Ombudsman

Neutral/impartial dispute resolution to assist managers/employees/clients with confidential informal assistance

Outcomes

Results of actions taken
Expected ethical outcomes are reduced misconduct, increased rate of reporting, and decrease in retaliation for whistleblowing

Qualitative Data

Descriptive data, not numerical
Collected through focus groups, interviews & open-ended questions

Quantitative Data

Numerical data easily compared
Collected through surveys

Reporter

Employee observing workplace misconduct and informing an appropriate authority

Reporting System

Mechanism (e.g., helpline, hotline or website) for agents to report misconduct without fear

Reputational Risk

Potential harm from loss of stakeholder trust

Rules-Centered Code of Conduct

Listing of behavioral requirements with disciplinary actions for violations

Sample

Small selection representing the whole
Can be randomly selected or stratified

Security

Belief in the safety and position as a driving factor in employee reporting

Stakeholder

Individual/institution owning stock or shares in corporation

Short-term Perspective

Focus on goal of maximizing periodic profits (e.g., quarterly or annual)

Implicit agreement where members cooperate for social benefit
Businesses have responsibility to give back to the society that allows their operations

Stakeholders

Individuals/entities affected by a business's decisions, including customers, suppliers, investors, employees, the community, and the environment

Sustainability

Maintaining a state or condition over an indefinite period

Survey

Set of questions to examine a condition, situation, or value

Transparency

Sharing information and acting openly
Mechanisms and processes being visible, predictable, and understandable

Utilitarianism

Normative theory where ethical acts maximize good for the greatest number of people

Values

Core beliefs regarding right and fair actions and interactions with others

Values-Centered Code of Ethics

Set of principles grounding in ideals (such as integrity, trustworthiness)

Virtue Theory

Normative theory emphasizing proper conduct guided by our upbringing

Whistleblower

Employee reporting observed misconduct

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Description

Test your knowledge of key terms used in Business Ethics including Agency, Aspirational goals, Benchmarking, and more. This quiz will help reinforce your understanding of the foundational concepts that guide ethical conduct in organizations.