Final B and S PDF

Chap 10 Scope of government in society: - Architect of economic growth (gov buys stuff like building roads and schools) - Major purchaser of goods and services - Promoter and subsidizer of business - Provides financial capital...

Chap 10 Scope of government in society: - Architect of economic growth (gov buys stuff like building roads and schools) - Major purchaser of goods and services - Promoter and subsidizer of business - Provides financial capital through loans and grants - Saving the say (when companies are in trouble, the gov helps them - Owner of business enterprises(Canada post, via rail) Government influences business ethics in four areas: - Prescribing legal rules of conduct - Protecting interests of business - Protecting interests of stakeholders - Using regulation to manage large areas of business activity Deregulation: reduction of government influence or impact over the economy, allowing a freer and more efficient marketplace Pros: more competitive business environment => higher productivity, lower prices Cons: reduced environmental quality standards, market control by monopolies (big companies) Privatization: strengthening of the market at the expense of the state (Canada post) Self-regulation: regulation imposed by the company, not directly by the government or market forces. Pros: faster, cheaper, and more efficient than the government, allows governments to focus on other things Cons: impairs business competition and innovation Private or civil regulation: non-profit, independent organization that sets standards for responsible business practices Private: non-involvement of government sector Civil: organization that contributes to functioning of society but not related to or support by government Third party certification: like a quality inspector third party who isn’t part of the company or government. They check if a product or service meets specific standards (LIKE SAFETY OR QUALITY) Laissez-faire approach: government does not interfere with business Corporate self-discipline: form of regulation where norms are developed and used by the corporation itself Remediation agreements: voluntary agreement between a government prosecutor and corporation accused of committing an offence that establishes undertakings to avoid criminal charges Ex: - Corporation acknowledging wrongdoing - Paying of penalties - Undertaking anti-corruption policies Tax havens: no tax, or very low rates Governments believe that small businesses are major creator of jobs. Preferential tax: small businesses should be compensated for their limited access to capital, the high costs of compliance to various laws and regulations, and cash flow concerns facing smaller businesses Issues with the Involvement of business in politics: - Moral responsibility to take part in the political system - Lack of transparency - Favouritism Business is involved in politics in several ways - Financing of political parties - Publicly expresses support for a candidate - Publicly expressing views on political issues Lobbying: all attempts to influence directly or indirectly any government activity. It’s when individuals, businesses, trade unions, groups, or charities try to influence the actions, policies, or decisions of government officials Pros: Substitute the influence of other groups, Cons: Unethical, too powerful and one-sided, over-represented. Corporate public affairs: management function responsible for monitoring the governmental environment of the industry Corporate agenda: real or imagined alleged domination of public policy or government programs by business organizations in their own best interests - Deregulation - Reduction of government involvement - Debt reduction - Increasing lobbying, etc.……  Chap 11 Shareholders have certain right based upon voting privileges:- - Dual-class stock: more than one type of share or stock with different voting rights and dividend payments is issued by a single corporation - Non-voting shares: common shares without voting privileges - Restricted shares: some limit on voting Shareholders can be categorized as passive or active:- Passive: those who do not attempt to influence he affairs of the corporation even though they have a legal right to do so Active: those who participate in the governance to the full extent allowed by law Worker capitalism: Worker capitalism means that employees own a part of the company they work for, which can give them a say in how the company is run and a share in its profits. Pros: increases morale, company loyalty, motivates employees, worker capitalism Cons: Jobs and often saving depend on fate of firm Ethical and responsibility - Issues of ownership: - Actions of other stakeholders: for ex governments, other corporations influence the owner stakeholder. Ex: government regulations or policies can impact how a corporation operates ethically and responsibly. - Investor owners have limited influence to make the corporation more socially responsible - Mutual funds (investment to buy stocks and bonds) - Cooperatives have been leaders in institutionalizing ethics and responsibilities - Pension plans manage retirement funds and are increasingly investing in companies with strong social responsibility records. Responsible investment (RI): Responsible investment means investing money in ways that benefit society and the environment, not just making profits Activities that might be considered socially irresponsible or unethical include: - Involvement in the nuclear industry - Use of fossil fuels, especially coal - Repressive regimes - Violation of human rights - Child labour - Use of animals in testing Challenges to achieve a socially responsible investment: - Data relied upon are sketchy - Ratings not completely objective (topical) Shareholder democracy: exercise of power of owners to make sure they are treated fairly and enjoy equally the privileges and duties of ownership Basic shareholder rights: - Voting power on major decisions - Transfer to ownership - Entitlement to dividends (receive a portion of company profits) Several stakeholders attempt to ensure shareholder rights:- - Governments - Self-regulatory agencies and organizations - Shareholder activists Corporate governance: is like the rules that guide how a company is managed and overseen to ensure it operates ethically, responsibly, and in the best interests of shareholders and stakeholders Board of Directors: group of individuals elected by shareholders to govern or oversee the corporation’s affairs Fiduciary duties: obligations owed by directors to shareholders that are prescribed by laws or regulations Independent director: is someone who is not closely connected to the company or its leaders, so they can provide unbiased advice and oversight Say on pay: means shareholders can vote on how much money executives should earn as salaries, bonuses, and other benefits. CEO pay ratio: shows how much more the CEO earns compared to the average employee in the company. Audit committee: a team within a company's board that makes sure the company's financial records are accurate and that proper procedures are followed during audits. Disclose of “Ethical Business Conduct”: - Disclose whether the board has adopted written code - Describes steps the board takes to ensure directors exercise independent judgement - Describes steps the board takes to encourage and promote a culture of ethical business conduct  Chap 5 Business ethics: rules, standards, codes, or principles that provide guidelines for morally right behaviour. Value judgements: subjective evaluations of what is considered important Moral standards: the means by which individuals judge their actions and the actions of others Influences – Five categories: - Influence of individuals - Corporate or organizational influences - Economic efficiency influences - Government and legal system influences - Social influences Ethical relativism: belief that ethical answers depend on the situation and no universal standard or rules exist to guide or evaluate morality. Moral problems should be defined as resulting in harms to some and benefits to others Seven most cited principles of ethical analysis:- self-interest, personal values, caring, utilitarian benefits, universal rules, individual rights, and justice 1. Self-interest ethic- Ethical egoism: believing that people should always do what benefits themselves the most, even if it doesn’t benefit others. Problems with self-interest ethic: - Considered easy way out cos person relies on own beliefs without more complicated analysis - Selfish behaviour - Leads to absolutism Enlightened egoist: somewhat attentive to needs of others Maximization of profits is acceptable as long as interests of relevant stakeholders are considered 2. Personal values ethic: a individual or corporation’s behaviour is based upon being a good person or corporate citizen - Emphasizes traits such as courage, honesty - People should act in ways to convey honour, pride and self-worth 3. Ethics of caring: gives attention to specific individuals or stakeholders harmed or disadvantaged and their particular circumstances - responsibility for reducing harm Advantages: responsive to immediate suffering or harm Problems: Lose sight of the bigger picture 4. Utilitarian ethic: Seeks to maximize overall benefits and minimize harms for all stakeholders 5. Universal rules ethic: ensures that managers or corporations have the same moral obligations in morally similar situations Categorical imperative ethics: rules and morals should be fair to everyone Problems: - Not possible to always work to universal rules - No scale between actions that are considered morally right or wrong 6. Individual rights ethic: Based on protecting fundamental rights that apply to everyone. Ex: rights to safety, information, privacy, property Problems: - Determining and agreeing upon the list of rights 7. Ethic of justice: Focuses on achieving fair outcomes and balancing conflicting rights or interests. Ethical dilemma: is a conflict among rights that can be resolved by the impartial application of some general principle Types of justice: - Procedural justice: It's about fairness in the rules and processes used to make decisions. Ex: In a fair workplace, promotion decisions are based on clear criteria that apply equally to everyone. - Corrective justice: This focuses on fixing or making up for harms or wrongs that have happened. Ex: doctor who sterilized woman without consent. - Retributive justice: It involves punishment for wrongdoing to restore balance or uphold societal rules. Ex: Courts impose penalties like fines or jail time on criminals to serve retributive justice for their actions. - Distributive justice: It's about ensuring fair distribution of benefits and burdens in society. Ex: Policies that provide equal access to healthcare and education aim for distributive justice by reducing disparities among people. Ethic of justice advantages: - Looks at dilemmas logically - All are perceived to have an equal right to equitable treatment Problems: - Difficult to decide - Distributing benefits fairly is challenging Ethical dilemmas: situation where a person has to make a difficult decision Moral reasoning: refers to the process of making decisions about what is right or wrong based on ethical principles or values Steps: - Define moral issue or decision - Gather all information - Identify the stakeholders involved - Develop alternative solutions - Identify harms/benefits to stakeholders - Decide on action [Kohlberg’s Stages] of Moral Development:- Individuals have identifiable cognitive skill levels that they use in resolving moral dilemmas Six stages of moral development: Level 1: Pre-conventional (Self) - Stage 1: Punishment and obedience orientation (avoid punishment) - Stage 2: Individual instrumental purpose/exchange (self interest and seeking rewards) Level 2: Conventional level (others) - Stage 3: Mutual interpersonal expectations (meet social expectations – maintain relationships) - Stage 4: Law and order orientation (follow laws ex: pay tax) Level 3: Post-conventional level (humankind) - Stage 5: Social contract orientation (agreed-upon laws that benefit society) - Stage 6: Universal ethical principle orientation (societal norms) Challenges: - Too simplistic approaches - Myths - Lack of awareness (four biases: prejudice, favouritism, overclaiming credit and conflict of interest) Chap 6 Research on leadership identifies three possible forms Ethical: Leaders who set ethical standards and encourage their team to follow them. Responsible: narrow orientation focused on financial performance and extended orientation with stakeholder view (ex: A CEO who not only aims for profit growth but also ensures the company invests in employee development, customer satisfaction, and community welfare.) Servant leadership: Leaders who prioritize serving others, including their employees and the community. Code of conduct: Tells employees what behaviors are okay and not okay. Code of ethics: a statement of principles and values (States the important values and principles the company believes in) Types of codes: - Corporate or business enterprise - Professional organizations - Industry and sector - Single issue - Codes from national and international bodies Content of codes over time First generation: conflict of interest Second generation: proper business practices and fair dealings. Third generation: employee rights and motivation of the workforce Fourth generation: wider responsibility, attention on the environment and respect for communities Fifth generation: international concerns, human rights Criticisms: - Unnecessary - Convincing everyone isn’t easy - Penalties may be insignificant Conflict of interest: A situation where someone's personal interests could influence their professional decisions. Systematic effort to discover actual or potential unethical behaviour in an organization Ethics officer: independent manager who reports to the board of directors or CEO, review complaints, and study situations and recommends action if necessary Compliance officer: ensures all employees are familiar with company’s policies and codes, etc. Ethics committees: group of directors, managers formed to monitor ethical standards and behaviour Whistleblowing: when someone inside a company reports wrongdoings like fraud or safety violations Issues with whistleblowing: he be snitching or a hero? Who is responsible regarding ethics? Board of directors have two tasks in relation to ethics: - Identify values that determine good behaviour - Put in place a process Classification of programs: approaches Formal approach: based on organizational norms that are written as code of conduct (company has a handbook for policies) Monological approach: determine for themselves what’s right or wrong Dialogical approach: emphasizes communication before decision is made Benefits of programs to manage ethics: - Business practices more beneficial to society - Increased awareness Four types of executive ethical leadership: 1. Hypocritical leader = strong moral manager and weak moral person (mounafi9 – promotes honesty and transparency at work, but is known for evading taxes) 2. Unethical leader = weak moral manager and weak moral person (a manager who falsifies company records and lies to customers for personal gain) 3. Ethical leader = strong moral manager and strong moral person (a CEO who leads by example) 4. Ethically silent leader = weak moral manager and either a weak or strong moral person Chap 12 The work ethic: set of values which holds what work is important to member of society Gig economy: persons whose participation in labour force is short-term, temporary jobs, and self- employment How to improve employee loyalty: - Managers must communicate - Employees who demonstrate loyalty must be rewarded - Must be a corporate priority - Persons at all levels of the organization must be involved - Process takes time Workplace Privacy:- Privacy of employee’s personal information - Personal Information Protection and Electronic Documents Act (PIPEDA) Discrimination: preferential treatment on bases not directly related to qualification of the job or job performance (such as race, gender, age, etc.) Employment equity: fair and equal treatment of employees Managing employment diversity: diversity management voluntary initiative beyond what’s required by law to eliminate discrimination Management and boards of directors must be proactive in addressing sexual harassment and issues involved: - Implement procedures - Establish independent helplines - Increase training programs - Revise code of conduct Feminist ethics: diverse set of gender-focused approaches to ethical theory and practice Connection exists between CSR and employee engagement: can positively impact how engaged employees feel at work. Defining consumer sovereignty - Characteristics of consumer sovereignty: - Consumers decide what products businesses should make based on what they want. - Voting through purchase decisions - Consumers free to make their own choices - When businesses make what consumers want, it helps the economy work better by reducing waste and using resources wisely. Consumerism: social movement seeking to protect and augment the rights and powers of buyers in relation to sellers. (ex: When consumers demand clearer product information or safer products, it shows consumerism in action, pushing companies to improve how they treat and serve their customers) Ethical consumerism: form of activism where consumers buy products, goods, and services that are ethically produced and not harmful to environment or society Three factors motivate consumers to make ethical or socially responsible purchases: - CSR information must be available - Consumers are more likely to buy from companies whose actions and values match their own beliefs about what is right or wrong.  - Products must be considered affordable Competition is necessary for an effective market economy and benefits the consumer Encourages innovation, productivity, entrepreneurship, and efficiency In context of business, competition is a struggle or rivalry for supremacy => market share Competitors are a stakeholder group that managers must recognize and respond to Competition Act: establishes basic principles for the conduct of business in Canada so that competition is encouraged and maintained (prevents companies from forming monopolies) Regulations of suppliers:- Competition Act contains provisions to ensure suppliers do not take advantage of their customers Supplier diversity: reaching out to groups underrepresented in the supply chain or within the purchasing process of major corporations or governments Supply chain: A supply chain is the path that a product follows from its raw materials stage, through various stages of production, to its final form, and then to consumers, and then to disposal. Sustainability purchasing: focus on ethics and responsibility in purchasing Extended producer responsibility: environmental policy approach in which a producer’s responsibility, physical and financial, for a product is extended to the post-consumer stage of a product’s life cycle (If a company makes batteries, they might have to collect and recycle old batteries to protect the environment, rather than letting them be thrown away) Fair trade: used to identify products that are involved with sustainability purchasing; usually focuses on the beginning of the product chain (Buying fair trade chocolate ensures that cocoa farmers are paid fairly and work in safe conditions, promoting better livelihoods and environmental practices in their communities.) Criticisms of fair trade: - Little of the extra paid - Problems exist with certification; fair trade may actually impoverish farmers - Exploitation of labour still exists Chap 14 Environmental issues confront virtually all aspects of the corporation, from: - Input of resources - Workplace conditions Commons: any resource used as though it belongs to all (public parks) Extensive government involvement exists through public policy formulation and the regulation of all aspects of the natural environment Government departments established to: - Regulate the activities of corporations - Assist corporations in meeting environmental performance targets - Ex: Environment Canada Environmental NGOs (ENGOs): groups that hold shared values or attitudes about environmental changes to improve the condition of environment ENGOs select corporations to target based on: - Environmental Impact: They target firms that cause significant environmental harm. - Consequences: They prioritize firms whose actions have widespread environmental effects. - Size and Influence: Larger firms with more industry influence are often targeted. - Consumer Connection: Companies closely linked to consumers through products are focused on. - Brand Visibility: Well-known brands are targeted to raise awareness about environmental issues. Standard environmentalism: believes that government rules are needed because businesses don’t do enough to protect the environment on their own. Market environmentalism: Market environmentalism thinks that letting businesses earn money by being eco-friendly works better than making laws. (giving rewards to companies like tax breaks) Carbon pricing: Carbon pricing is a way for businesses and governments to reduce carbon emissions by putting a price on them, which can be done in three ways: - Cap-and-Trade: governments set a limit on how much carbon companies can emit. Companies can trade/sell permits to stay under this limit - Carbon Pricing: Government impose tax on every ton of carbon (Fixed cost) - Output-based price system: Companies pay a price based on the amount of carbon they produce per unit of output (Variable cost) Carbon capture and storage (CCS): carbon emissions are captured and injected into underground formation Different approaches to environmental concerns - Token response: This approach reacts to environmental problems as they occur and tries to fix them only when necessary. (A company may install pollution control measures only after being fined for exceeding emission limits.) - Compliance with laws and regulations: concern about lawsuits has motivated managers to adopt strategies of compliance (A factory installs equipment to meet government standards for waste disposal to comply with environmental regulations.) - Comprehensive environmental management: Companies actively manage environmental issues to gain a competitive edge and improve their reputation. - Sustainable development: corporations integrate concepts of sustainable development into their business strategies and environmental policies (A company invests in renewable  energy sources and eco-friendly materials to minimize its environmental footprint while ensuring profitability and growth.) Environmental management systems (EMS): to ensure that environmental practices become an important component of the corporation’s overall strategy EMS helps corporations to: - Reduce costs - Respond to investor demands - Hire best employees - Meet customer demand for green products and services Green marketing: selling environmentally friendly goods and services to consumers (a clothing brand advertises using organic cotton) Human resources practices for greener workplace: - Offering a recycling program (used office furniture - Saving energy like lighting systems - Reducing consumption (paper, packaging) - Encouraging employees to walk, bike, or use public transport) - Reduce emissions (less travel) - Purchasing renewable energy credits - Using natural lights, with windows Examples of indicators used to evaluate environmental performance: - Type and amount of materials used - Source of energy and efficiency of use - Biodiversity - Reduction of emissions and waste - Use of efficient transportation mode Not everyone agrees that business should play leading role in protecting environment Criticisms of sustainability: - Concept difficult to define and understand - Stopping and constraining economic development - Lacks understanding of markets - Executives are being misled Opportunities to attempt to practice sustainable development: - Reputations likely enhanced - Customers attracted - Investors attracted - Staff attracted - Costs reduced through recycling Challenges to attempt to practice sustainable development: - Corporate image may deteriorate - Revenues may suffer - Investors may decide not to invest - Production costs may increase Linear economy: raw materials used to produce goods or products that are used and not recycled or may be even non-recyclable (ex: A traditional plastic water bottle is made from raw materials (like petroleum), used once by a consumer, and then typically thrown away as waste) Reuse economy: after use some goods are recycled and reused in production but the remainder is still waste Circular economy: restorative and regenerative by design so materials constantly flow around a closed loop system preserving value rather than being used once and then discarded (100% recyclable) Chap 15 Globalization: process of decreasing constraints on the interactions among the nations and peoples of the world Economic globalization: integration of fragmented markets into a global economy Political globalization: process by which world power relationships change, and there is a loss of sovereignty by the states Social or cultural globalization: emergence of a worldwide cultural system Globalization increases business economic, social, and environmental responsibilities, including: - Damage to environment - Support to oppressive regimes - Arms trade - Treatment of employees in developing countries - Corruption Globalists arguments: - Everyone gain - Opportunities for employment and higher incomes in developing countries - Standard of living increased in developing countries - Open markets provide better good and services Anti-globalists arguments: - Unemployment in developed countries - Poverty and inequality increases in the developing economies  - Human rights are violated - Questionable payments to governments to facilitate business - Profit-making or greed World economy increasing as a result of expanding global trade relationships World Trade Organization (WTO): the only global international organization dealing with the rules of trade between nations International Non-governmental Organizations (INGOs): groups that hold shared values and attitudes about the issues relating to globalization to improve conditions in developing countries - Put pressure on businesses and governments - Often opposed to globalization Supranational institution: is an international organization where multiple countries work together and make decisions on certain issues that affect all member countries. (Usually viewed as economic agencies, but also have impact on ethical, social, and environmental responsibilities) Five important supranatural institutions: - World bank - International Monetary Fund (IMF) - International Labour Organization (ILO) - World Trade Organization (WTO) - World Economic Forum (WEF) Canadian business influenced by globalization: - Pressure to forge international links - Must meet the challenges of global market - Must attract more investment - Must be competitive - More direct investment abroad Challenges confront Canadian business as it participates in the global economy: - Presence of corruption - Respect for human rights - Use of sweatshop production - Reduction of poverty (ensuring that developing countries are paid fair wages) Corruption: abuse of entrusted power for private gain Bribery: making questionable payments to government officials to influence their decisions Human rights: fundamental rights and freedoms to which all individuals, groups and societies are entitles In order to prevent abuses of sweatshop:  - Corporations and industries develop policies and codes - INGOs monitor production facilities - Consultants specialize in verifying conditions and practices Bottom of the Pyramid: it means that businesses should consider the large segment of the world’s population living in poverty as potential customers rather than ignoring them. Other business approaches to addressing globalization issue: - Fair trade: Helps disadvantaged producers by offering fair prices and promoting sustainable practices. - Microfinance: provision of financial products, such as micro-credit, micro-insurance, and savings account, to persons living in areas of poverty without access to banking services Chap 16 Socialization of capitalism: process through which the business system conforms to the expectations of society resulting in desired, socially responsible outcomes. (ex: Think of a large fast-food chain. Traditionally, they might focus only on selling the most food at the lowest cost. Through the socialization of capitalism, they start offering healthier options, use sustainable packaging, and donate to local food banks. These changes are made because society expects businesses to be more responsible and care about public health and the environment, not just profits) Social purpose: corporation is responsible to society and is aware and concerned about ethical, social and environmental issues Fourth sector: sector of the economy in addition to the traditional private, social, and public sectors (The fourth sector is a part of the economy that combines elements of the private sector (businesses), the public sector (government), and the social sector (non-profits). These organizations aim to make a profit while also having a positive social or environmental impact.) Private sector: that part of economy NOT controlled by government Social sector: includes charities and non-profit organizations and is also referred to as the non- profit or voluntary sector Public sector: operated by government departments, agencies and organizations usually not to operate businesses or make profits Public-private partnership (PPP): cooperative venture between public and private sectors, built on the expertise of each partner Sustainability strategy: plan that views economic, ethical, social, and environmental responsibilities more intensively and integrates CSR into all facets of business operations 10 things new sustainability managers need to know: 1. Understand if spending money on sustainable practices will save money or make more money in the long run 2. How to make sustainability part of corporate culture (encourage employees to recycle) 3. How to make supply chain competitive and sustainable 4. Whether customers will pay more for sustainable products 5. How to best engage stakeholders 6. How to identify best measurements of corporation’s environmental impact 7. Understand if having strong CSR policies helps in hiring and keeping employees (many employees prefer to work for companies that care about social and environmental issues) 8. How a corporation can mitigate and adapt to climate change (Implementing energy- saving technologies and developing plans to cope with extreme weather events.) 9. The meaning of business sustainability 10. How to identify resources about sustainability and related issues (Find reliable information and tools to stay informed about sustainability.) Strategic management: process through which a corporation: - Establishes its mission and objectives - Analyzes the environment and resource capabilities - Creates the organizational systems and processes needed - Evaluating performance Social enterprise: a model of business operation where some or all profits are deliberately used to further social aims. Social entrepreneurship: involves activities undertaken to enhance social wealth in some innovative way - Social entrepreneur : innovative leader of non-profit business - Social intrapreneurship : process of addressing social challenges from inside established organizations - Social extrapreneurship: process of inter-organizational action B-corporation (B-Corp): variation of a for-benefit (make profits but has commitment on social and environmental problems) corporation Social license: like a public trust license (acceptable) Social innovation: novel solution to a social problem Social impact investing: when people invest their money in companies, organizations, or projects that aim to make a positive social or environmental impact, as well as generate financial returns. Sharing economy: sustainable social and economic system involving the sharing of human and physical resources (car-sharing service) Philanthrocapitalism: philosophy of capitalist style (A billionaire entrepreneur invests in education projects in underprivileged communities. Instead of just donating money, they use their business skills to create sustainable educational programs that benefit the community long-term. This approach aims to solve social problems effectively while also generating positive returns on investment for society.) Social capital: value that comes from relationships and networks within a community. Sustainable capitalism: maximize long-term value creation, accounting for all material ESG metrics Service learning: method of teaching combining classroom learning with service to the community