Business ethics concerns
the application of ethical principles and standards to business activities, behavior, and decisions.
Ethical principles in business
are not materially different from ethical principles in general and have to be judged in the context of society’s standards of right and wrong, not by a special set of rules that business people decide to apply to their own conduct.
Unethical managerial behavior tends to be driven by such factors as
overzealous or obsessive pursuit of personal gain, wealth, and other self interests; a company culture that puts the profitability and good business performance ahead of ethical behavior; and heavy pressures on company managers to meet or beat performance targets.
A company’s strategy needs to be ethical because
E) a strategy that is unethical not only damages the company’s reputation but it can also have costly consequences.
Which of the following are consequences of pursuing a strategy that has unethical or shady components?
A) Government fines and penalties
B) Legal and investigative costs incurred by the company
C) Customer defections
D) Adverse effects on employee productivity
Notions of right and wrong, fair and unfair, moral and immoral, ethical and unethical
are present in all societies, organizations, and individuals.
According to the school of ethical universalism,
many of the same standards of what’s ethical and what’s
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unethical resonate with peoples of most societies regardless of local traditions and cultural norms—hence, to the extent there is common moral agreement about right and wrong actions, common ethical standards can be used to judge the conduct of personnel at companies operating in a variety of country markets and cultural circumstances.
The thesis that since different societies and cultures have divergent values and standards of what is “ethically right” and “ethically wrong” it is appropriate to judge behavior as ethical/unethical in the light of local customs and social mores
is a view that characterizes the school of ethical relativism.
If one adopts the thinking of the school of ethical relativism, then
there are multiple sets of ethical standards because what is ethical or unethical depends on local customs and social mores and can vary from one culture or nation to another.
Companies that adopt the principle of ethical relativism in providing ethical guidance to company personnel
quickly find themselves on a slippery slope with no ethical standards or principles of its own.
According to integrated social contracts theory,
the ethical standards a company should try to uphold are governed both by (1) a limited number of universal ethical principles that are widely recognized as putting legitimate ethical boundaries on actions and behavior in all situations and (2) the circumstances of local cultures, traditions, and shared values that further prescribe what constitutes ethically permissible behavior and what does not—however, universal ethical norms take precedence over local ethical norms.
Integrated social contracts theory maintains that
“first order” universal ethical norms always take precedence over “second order” local ethical norms.
According to the information presented in Table 9.1, the perceived degree of corruption as seen by business people, academics, and risk analysts is
is lowest in Denmark, New Zealand, Sweden, Singapore, and Finland.
The theory of corporate social responsibility concerns
the balance between a company’s (1) economic responsibility to reward shareholders with profits, (2) its legal responsibility to comply with the laws of countries where it operates, (3) the ethical responsibility to abide by society’s norms of what is moral and just and (4) a discretionary philanthropic responsibility to contribute to the non-economic needs of society.
Which of the following is not generally on a company’s menu of actions to consider in crafting a strategy of social responsibility?
Actions to provide suppliers, distributors, and other value chain partners with handsome profit margins
Corporate citizenship goes beyond meeting society’s expectations for ethical strategies and business behavior by
addressing unmet non-economic needs of society.
Corporate sustainability involves
strategic efforts to meet the needs of today’s customers, suppliers, shareholders, employees, and other stakeholders in a manner that protects the environment and provides for the longevity of resources needed by future generations.
Companies committed to corporate sustainability
undertake initiatives directed at improving the company’s triple bottle line—TBL—its performance on economic, environment, and social metrics.
Which one of the following is not a part of the business case for why companies should act in a socially responsible manner?
The aggressive pursuit of market share, revenues, and profits always puts the company in jeopardy of violating society’s social responsibility expectations.
The business case for why companies should act in a socially responsible manner includes such reasons as
A) helping avoid or preempt legal and regulatory actions that could prove costly.
B) avoiding criticism from consumer, environmental, and human rights activist groups.
C) contributing to lower employee turnover and better worker productivity.
D) the potential for increased buyer patronage.