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Ethics Chapter 3

Ethical issue awareness
The first step toward understanding business ethics is to develop this. It is recognizing an ethical issue.
People make ethical decisions only after they recognize a particular issue or situation has an ethical component.
ethical dilemma
Business decisions, like personal decisions, may involve this. In this, all of the alternatives have negative consequences, so the less harmful choice is made.
A problem, situation, or opportunity that requires an indidivual, group, or organization to choose among several actions that have negative outcomes
Ethical issue
A situation involving a group, a problem, or even an opportunity that requires thought, discussion, or investigation before a decision can be made.
A problem, situation, or opportunity that requires an individual, group, or organization to choose among several actions that must be evaluated as right or wrong, ethical or unethical.
A secret agreement between two or more parties for a fraudulent, illegal, or deceitful purpose.
Values for identifying ethical issues
1. Integrity
2. Honesty
3. Fairness
One of the values for identifying ethical issues. It is one of the most important and oft-cited elements of virtue. It refers to being whole, sound, and in an unimpaired condition.
In an organization, this means uncompromising adherence to a set or group of values.
One of the values for identifying ethical issues. Refers to truthfulness or trustworthiness. It is to tell the truth to the best of your knowledge without hiding anything.
One of the values for identifying ethical issues. IT is the quality of being just, equitable, and impartial. It overlaps with the concepts of justice, equity, and equality.
Can be broadly defined as a lack or absence of integrity, incomplete disclosure, and an unwillingness to tell the truth.
Lying, cheating, and stealing is typically associated with this conduct.
Elements that motivate people to be fair
1. Equality
2. Reciprocity
3. Optimization
One of the elements that motivate people to be fair. It is about the distribution of benefits and resources.
One of the elements that motivate people to be fair. It is an interchange of giving and receiving in social relationships. It occurs when an action that has an effect upon another is reciprocated with an action that has an approximately equal effect.
The return of favors approximately equal in value.
Eg. Workers be compensated with wages approximately equal to their effort
One of the elements that motivate people to be fair. The trade off between equity (equality) and efficiency (maximum productivity)
Abusive or intimidating behavior
A common ethical problem for employees.
These terms refer to many things–physical threats, false accusations, being annoying, profanity, insults, yelling, harshness, ignoring someone, and unreasonableness–and their meaning differs from person to person.
Healthy workplace bill
A bill in the U.S. that has been introduced by 27 states in the U.S. It has been created to consider ways to combat workplace bullying.
There are three types of this:
1. Joking, without malice
2. Lying by commission
3. Lying by ommission
Commission lying
A type of lying. Creating a perception or belief by words that intentionally deceive the receiver of the message
Eg. Lying about being at work, expense reports, or carrying out work assignments.
Also entails intentionally creating “noise” within the communication that knowingly confuses or deceives the receiver.
Eg. Using legal terms relating to unfamiliar processes and systems to explain what was done in a work situation
Technical explanations the communicator knows the receiver does not understand.
Used in commission lying.
Omission lying
A type of lying. It is intentionally not informing others of any differences, problems, safety warnings, or negative issues relating to the product or company that significantly affect awareness, intention, or behavior.
Eg. Tobacco manufacturers’ decade-long refusal to allow negative research about the effects of tobacco appear on cigarettes and cigars.
Conflict of interest
This exists when an individual must choose whether to advance his or her own interests, those of the organization, or those of some other group.
In order to avoid this, employees must be able to separate their private interests from their business dealings.
The practice of offering something (often money) in order to gain an illicit advantage from someone in authority.
active bribery (active corruption)
The person who promises or gives the bribe commits the offense
Passive bribery
An offense committed by the official who receives the bribe.
It is not an offense if the advantage was permitted or required by the written law or regulation of the foreign public official’s country (including case law)
facilitation payments
Small _________ made to obtain or retain business or other improper advantages do not constitute bribery payments for U.S. companies in some situations.
corporate intelligence (CI)
The collection and analysis of information on markets, technologies, customers, and competitors, as well as on socioeconomic and external political trends.
_______ on the basis of race, color, religion, sex, martial status, sexual orientation, public assistance status, disability, age, national origin, or veteran status is illegal in the U.S.
Breaking into a computer network to steal information
Types of hacking
1. System hacking
2. Remote hacking
3. Physical hacking
System hacking
A type of hacking. Assumes attacker already has access to a low-level, privileged-user account
Remote hacking
A type of hacking. Involves attempting to remotely penetrate a system across the Internet.
Physical hacking
A type of hacking. Requires the hacker to enter a facility physically and find a vacant unsecured workstation with an employee’s login and password.
Social engineering
Tricking individuals into revealing their passwords or other valuable corporate information.
Types of social engineering
1. Shoulder surfing
2. Password guessing
Shoulder surfing
A type of social engineering. Someone simply looks over an employee’s shoulder while he or she types a password.
Password guessing
A type of social engineering. When an employee is able to guess a person’s password after finding out personal information about him or her.
Dumpster diving
Digging through trash to find trade secrets.
Eg. An employee obtains several organizational charts from a rival business by digging through that organization’s trash.
Using wireless hacking to break into a network.
Eg. An intruder uses a radio to tap into a wireless network to access unencrypted data.
Phone eavesdropping
Using a digital recording device to monitor and record a fax line.
Eg. A person records a message from a fax line and recreates an exact copy of the message by playing back the recording.
Equal Employment Oppotunity Commission (EEOC)
The equal right of all citizens to the opportunity to obtain employment regardless of their gender, age, race, country of origin, religion, or disabilities.
Age discrimination in employment act
An act that specifically outlaws hiring practices that discriminate against people 40 years of age or older, as well as those that require employees to retire before the age of 70.
Affirmative action programs
To help build work forces that reflect their customer base, many companies have initiated these. They involve efforts to recruit, hire, train, and promote qualified individuals from groups that have traditionally been discriminated against on the basis of race, gender, or other characteristics.
Standards for implementation of affirmative action programs
1. There must be a strong reason for developing an affirmative action program
2. Affirmative action programs must apply only to qualified candidates
3. Affirmative action programs must be limited and temporary and therefore cannot include “rigid and inflexible quotas”
sexual harrassment
A form of sex discrimination that violates the Title VII of Civil RIghts Act of 1964.
It is defined as any repeated, unwanted behavior of a sexual nature perpetrated upon one individual by another.
May be verbal, visual, written, or physical.
hostile work environment
Three criteria must be met
1. The conduct was unwelcome
2. The conduct was severe, pervasive, and regarded by the claimant as so hostile or offensive as to alter his or her conditions of employment
3. The conduct was such that a reasonable person would find it hostile or offensive
dual relationship
A personal, loving, and/or sexual relationship with someone with whom you share professional responsibilities.
When individuals engage in intentional deceptive practices to advance their own interests over those of the organization or some other group.
It is any purposeful communication that deceives, manipulates, or conceals facts in order to harm others.
Accounting fraud
Usually involves a corporation’s financial reports, in which companies provide important information on which investors and others base decisions involving millions of dollars.
Fraud triangle
Three factors that seem to predict why people commit fraud
1. Pressure
2. Opportunity
3. Rationalization
Public company accounting oversight board (PCAOB)
One of the results of SOX. It is a nonprofit organization that oversees the audits of public companies. The intent is to protect investors and ensure that the public is receiving accurate audit reports.
marketing fraud
The process of dishonestly creating, distributing, promoting, and pricing products.
Categories of false/misleading advertisements
1. Puffery
2. Implied falsity
3. Literal falsity
A type of false/misleading advertisement. It is defined as exaggerated advertising, blustering, and boasting upon which no reasonable buyer would rely upon and is not actionable under the Lanham Act.
Implied falsity
A type of false/misleading advertisement. Means that the message has a tendency to mislead, confuse, or deceive the public.
Eg. Advertising claims that use this are those that are literally true but imply another message that is false.
Literally false
A type of false/misleading advertisement. It can be divided into two subcategories:
1. Tests prove (establishment claims)
2. Bald assertions (nonestablishment claims)
Tests prove (establishment claims)
A type of literally false advertising. Occurs when the advertisement cites a study or test that establishes the claim.
Bald assertions (nonestablishment claims)
A type of literally false advertising. Occurs when the advertisement makes a claim that cannot be substantiated, as when a commercial states a certain product is superior to any other on the market.
consumer fraud
Occurs when consumers attempt to deceive businesses for their own gain.
Eg. Shoplifting, price tag switching, lying to obtain age-related and other discounts, and taking advantage of generous return policies by returning used items.
Types of consumer fraud
1. Friendly fraud
2. Price arbitrage
3. Return fraud
4. Wardrobing
5. Returning stolen goods
Friendly fraud
A type of consumer fraud. It is making a big purchase with a credit card and then filing a fraud claim with the credit card company.
Price arbitrage
A type of consumer fraud. Substituting differently priced but similar items for a higher return.
Eg. Daniel placed a 1 terabyte hard drive into the box for a 20 ter
Return fraud
A type of consumer fraud. It is replacing an item with something different and returning it for a full refund.
Eg. Joe filled a PlayStation box with rocks, resealed it, and received a full refund when the store clerk failed to check the merchandise.
A type of consumer fraud. It is wearing an expensive item once for an event and then returning it for a full refund.
Returning stolen goods
A type of consumer fraud. Receiving a full refund on goods that had been stolen.
Types of insider trading
1. Illegal insider trading
2. Legal insider trading
Illegal insider trading
A type of insider trading. The buying or selling of stocks by insiders who possess information that is not yet public.
Legal insider trading
A type of insider trading. Involves legally buying and selling stock in an insider’s own company.
Intellectual property rights
Involves the legal protection of intellectual property such as music, books, and movies.
privacy issues
Threats to privacy. Some ___________ that must be addressed by businesses include the monitoring of employees’ use of available technology and consumer privacy.

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