Ethics and Social Responsibility Chapter

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Questions and Answers

What action is required by the Sarbanes-Oxley Act concerning financial reporting?

All shareholders must approve financial statements.

Chief financial officers must guarantee the accuracy. (correct)

Organizations must disclose all expenses.

Companies must conduct regular audits.

Which organizational stance does the least in terms of social responsibility?

Accommodative stance

Proactive stance

Defensive stance

Obstructionist stance (correct)

What do defensive stance managers typically prioritize?

Corporate social responsibility initiatives

Innovation in sustainability

Development of new products

Profit generation and legal compliance (correct)

How can the government indirectly influence corporate social responsibility?

By adjusting tax codes and incentives Signup and view all the answers

What type of stance do firms take when they meet and exceed legal and ethical requirements?

Accommodative stance Signup and view all the answers

What is typically the focus of obstructionist organizations?

Denial and cover-up of wrongdoing Signup and view all the answers

What do political action committees allow companies to do?

Influence government actions indirectly Signup and view all the answers

Which approach involves taking corrective actions after admitting mistakes?

Defensive stance Signup and view all the answers

What is defined as behavior that conforms to individual beliefs about what is right and good?

Ethical behavior Signup and view all the answers

Which of the following is NOT a category of behavior relevant to business ethics?

Behavior toward the Environment Signup and view all the answers

What is the first step in applying ethical judgment to business activities?

Gather the relevant factual information Signup and view all the answers

Which ethical norm asks if an act optimizes the benefits to those affected by it?

Utility Signup and view all the answers

Which ethical norm focuses on respecting the rights of all individuals involved?

Rights Signup and view all the answers

What distinguishes ethical from unethical behavior?

Subjective interpretations Signup and view all the answers

Which action is primarily related to behavior toward the organization in a business ethics context?

Hiring practices Signup and view all the answers

What do many companies implement to express their commitment to ethical conduct?

Written codes of ethics Signup and view all the answers

What is a primary cause of air pollution?

Carbon monoxide from cars Signup and view all the answers

Which city is often cited as having the most polluted air in the world?

Mexico City Signup and view all the answers

What significant environmental incident occurred in Cleveland?

The Cuyahoga River caught fire Signup and view all the answers

Which aspect describes the first key issue of land pollution?

How to restore damaged land quality Signup and view all the answers

What is consumerism primarily focused on?

Protecting consumer rights Signup and view all the answers

What illegal practice occurs when firms fix prices together?

Collusion Signup and view all the answers

Who was the first to formally declare consumer rights protection?

John F. Kennedy Signup and view all the answers

How many basic consumer rights were identified by Kennedy?

Four Signup and view all the answers

What has driven the rise in the number of companies with written codes of ethics in recent decades?

A growing emphasis on corporate social responsibility Signup and view all the answers

Which group is NOT typically prioritized by businesses striving to be responsible to their stakeholders?

Global competitors Signup and view all the answers

What is a core principle that organizations should maintain according to the content?

Steadfast core principles and values Signup and view all the answers

What should businesses do to show responsibility toward their customers?

Treat customers fairly and honor warranties Signup and view all the answers

In terms of social responsibility, how should managers treat investors?

By following proper accounting procedures and managing investments Signup and view all the answers

What challenges do large corporations face in their relationships with suppliers?

Imposing unrealistic delivery schedules on suppliers Signup and view all the answers

What is the purpose of a corporate ethics statement?

To define core principles and values of the organization Signup and view all the answers

What is meant by price gouging in the context of corporate ethics?

Raising prices excessively in response to high demand Signup and view all the answers

What is the primary purpose of political action committees (PACs)?

To solicit and distribute money to political candidates Signup and view all the answers

Which of the following best describes the role of lobbying?

To represent organizations before political bodies Signup and view all the answers

What does ethical compliance refer to in an organization?

Adhering to both ethical and legal standards Signup and view all the answers

How does philanthropic giving benefit organizations like Target Corporation?

By lowering tax liabilities through charitable donations Signup and view all the answers

What is the main goal of conducting a corporate social audit?

To assess and improve the effectiveness of social performance Signup and view all the answers

Study Notes

Introduction

This chapter examines ethics and social responsibility
It covers how these apply to environmental issues, customer/employee/investor relations
It also discusses approaches and implementation steps for social responsibility programs

Learning Objectives

Explain how individuals develop personal ethics codes, and why they're important in the workplace
Distinguish social responsibility from ethics, identify stakeholders, and describe social consciousness
Explain social responsibility's application to environmental issues, customer/employee/investor relationships

Learning Objectives (Page 4)

Identify four general approaches to social responsibility in small businesses
Explain the role of government in social responsibility, and how governments/businesses interact
Discuss how businesses manage social responsibility and how organizations can evaluate their social responsibility

Ethics in the Workplace

Ethics are beliefs about right/wrong/good/bad that affect others
Business ethics refers to ethical/unethical employee behaviors in a work context

Ethics in the Workplace (cont.)

Ethical behavior follows individual & social norms of right/good
Unethical behavior follows norms of wrong/bad

Business and Managerial Ethics

Managerial ethics are standards of behavior guiding individual managers
Behaviors toward employees, the organization, and other economic agents (customers, competitors, stakeholders, suppliers, dealers, unions) are parts of managerial ethics

Assessing Ethical Behavior

Gather pertinent factual information
Analyze facts to determine appropriate moral values
Make an ethical judgment based on right/wrong aspects of the activity/policy

Ethical Norms

Utility: does an act maximize benefits for those impacted?
Rights: does the act respect the rights of all involved?
Justice: is the act consistent with fairness?
Caring: is the act in line with people's responsibilities to each other?

Model of Ethical Judgment Making

Gather factual information on the act/policy
Analyze facts to determine appropriate moral values
Make an ethical judgment using the four ethical norms; If not ethical, consider if any ethical norms should be overridden, prioritizing one over others, or whether external pressures influenced the activity or policy

Company Practices and Business Ethics

Key formalizing methods include adopting written codes and instituting ethics programs

Core Principles and Organizational Values

Organization's core principles and values should remain steady despite changes to strategy/practices and objectives

Social responsibility is the overall way a company balances commitments to relevant groups/individuals in its social environment

Organizational Stakeholders

Stakeholders are groups, individuals, and organizations directly affected by an organization's practices and have a stake in its performance

Major Corporate Stakeholders

Major corporate stakeholders include employees, investors, local communities, business organizations, customers, suppliers

The Stakeholder Model of Responsibility

Most responsible companies prioritize customers, employees, investors, suppliers, and local communities.

The Stakeholder Model of Responsibility (cont.)

Treating customers fairly and honestly, fairly treating employees, following accounting procedures to inform shareholders about financial performance are key for stakeholder satisfaction

Responsibility toward Customers

Consumer rights: social activism protecting consumer rights in business dealings
Unfair pricing: includes collusion (collaboration by firms to fix prices) and price gouging (unwarranted price increases)

Responsibility toward Employees

Providing opportunities to balance work/life, help employees maintain job skills, and treating terminated employees with respect are essential.

Responsibility toward Employees (cont.)

Companies that provide equal opportunity without regard to things like race/sex are meeting ethical/legal obligations.

Responsibility toward Suppliers

Establishing mutually beneficial partnership arrangements and involvement in programs/charitable events are parts of responsible supplier relations

Responsibility toward the Environment

Pollution prevention (air, water, land) and waste disposal are vital for environmental responsibility
Recycling plays a large role in environmental responsibility

Consumerism

Consumerism is social activism that protects consumer rights.
Collusion is an illegal agreement between companies to engage in wrongful acts

Accountability is expected of business in protecting and increasing society's welfare

Formal Organizational Dimensions

Legal compliance: adhering to local/state/federal/international laws
Ethical compliance: members of the organization following basic ethical/legal standards of behavior
Philanthropic giving: donating funds/gifts to worthy causes

Corporate social audit is analyzing a business's success in using funds to meet its social responsibility goals

Applying What You've Learned

This section includes 5 key steps for applying learned concepts

Applying What You've Learned (cont.)

Identifying social responsibility approaches and analyzing the impact of government/business interactions are part of applying learned concepts

Regulation: laws & rules dictating organization actions, typically evolved from societal beliefs and enforced by special government agencies
Direct & indirect forms of regulation; such as tax codes, shape organizational social responsibility

How Organizations Influence Government

PACs (Political Action Committees) solicit money and donate to candidates
Lobbying is representing organizations before political bodies to influence policy

Formal Organizational Dimensions (cont.)

Philanthropic giving is providing funds/gifts to charities

Corporate social audits systematically assess a firm's success in meeting social responsibility goals

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Description

This chapter quiz delves into the concepts of ethics and social responsibility, particularly within environmental contexts and stakeholder relations. It covers individual ethics development, the distinction between ethics and social responsibility, and various approaches for businesses. Additionally, it discusses the role of government and methods for evaluating social responsibility in organizations.