Chapter 5

Ethics

an individual's personal beliefs about whether a decision, behavior, or action is right or wrong

ethical behavior

behavior that conforms to generally accepted social norms

unethical behavior

behavior that does not conform to generally accepted social norms

Generalizations of Ethic and Social responsibility

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In Mexico, ________.

one in five children work

Ethics in Cross-Cultural and International Contexts

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How an Organization Treats its Employees

hiring and firing practices, wages and working conditions, and employee privacy and respect

How Employees Treat the Organization

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A ________________ occurs when a decision potentially benefits the individual to the possible detriment of the organization.

conflict of interest

In Japan, ________ gifts represent a token of gratitude for favors and loyalty shown throughout the year

oseibo

Japan has a high-context culture. Gift exchanges in a business situation are ________.

common and appropriate

Gift exchanges are likely to be considered a conflict of interest in a(n) ________ culture.

low-context

Employees, the Organization & Other Economic Agents

customers, competitors, stockholders, suppliers, dealers, and labor unions

Behavior of economic agents and the organization include:

advertising and promotions, financial disclosures, ordering and purchasing, shipping and solicitations, bargaining and negotiation

written guidelines

that detail how employees are to treat suppliers, customers, competitors, and other stakeholders

formal codes of ethics

written statements of the values and ethical standards that guide the firms' actions

Code of ethics must be backed up by

organizational practices and the company's corporate culture

In a survey on the acceptability of bribing officials when doing business in foreign countries that _____________ firms found bribery to be relatively acceptable

Russian, Chinese, Taiwanese and South Korea

In a survey on the acceptability of bribing officials when doing business in foreign countries that _____________ found bribery to be unacceptable

Australia, Sweden, Switzerland, Austria, and Canada

Corporate social responsibility (CSR)

is the set of obligations a corporation undertakes to protect and enhance the society in which it functions

the triple bottom line

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shareholder model

a firm's goal is to maximize the after-tax present discounted value of the profits flowing over time to shareholders

the stakeholder model

corporation has gained prominence, which has made the task of delivering value to shareholders even more complex

Primary Stakeholders

those individuals and organizations directly affected by the practices of the organization and that have an economic stake in its performance

primary stakeholders include

employees, customers, and investors

secondary stakeholders

are individuals or groups that may be affected by corporate decisions but are not directly engaged in economic transactions with the firm

secondary stakeholders include

news media, nongovernmental organizations (NGOs), or the community in which the firm operates

Most nations have laws striving to

protect and improve the quality of their waters, lands, and air

Companies need to develop economically feasible ways to

reduce acid rain and global warming; to avoid depleting the ozone layer; and to create alternative methods of handling sewage, hazardous wastes, and ordinary garbag

Examples of promoting general welfare of society

making contributions to charities, philanthropic organizations, and not-for-profit foundations and associations; supporting museums, symphonies, and public radio and television; and taking a role in improving public health and education

obstructionist stance

approach to social responsibility that involves doing as little as possible to address social or environmental problems
- least responsible approach to social responsibility

defensive stance

approach to social responsibility by which an organization will do everything that is required of it legally but nothing more

accommodative stance

approach to social responsibility by which a firm meets its legal and ethical requirements but may also go beyond these requirements in selected cases

proactive stance

approach to social responsibility by which a firm takes to heart the arguments in favor of social responsibility and views themselves as citizens in a society and proactively seek opportunities to contribute
- highest degree of social responsibility

Formal dimensions of social responsibility

Legal compliance
Ethical compliance
Philanthropic giving

Legal compliance

the extent to which the organization conforms to local, state, federal, and international laws

ethical compliance

the extent to which the members of the organization follow basic ethical (and legal) standards of behavior

philanthropic giving

the awarding of funds or gifts to charities or other social programs

Informal Dimensions of Social Responsibility

Leadership practices, organization culture, whistle blowing

Whistle-blowing

The disclosure of information by a company insider that exposes illegal or unethical behavior by others within the organization

An organization serious about social responsibility must

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corporate social audit

a formal and thorough analysis of the effectiveness of a firm's social performance

three main actors in the policy formulation process

the state
the market
the civil society

the state

passes and enforces laws

the market

utilizes inputs and allocates outputs to members of the society

civil society

includes churches, charitable organizations, labor unions, NGOs (nongovernmental organizations)

Anglo-Saxon Approach

view the state, the market, and civil society as separate, competitive, and antagonistic.

Asian Approach

Japan, Korea, China, and Indonesia come to mind�rely on close cooperation between the private sector and the government

Continental European Approach

in continental European countries such as Austria, Germany, France, and the Netherlands�the three actors have much more cooperative ways of working with one another

Foreign Corrupt Practices Act (FCPA)

prohibits U.S. firms (or their employees and agents) from bribing any foreign government official to influence his or her actions to gain or retain business
- passed by US Congress in 1977

Bribery Act

A 2010 British law that applies to transactions involving government officials and transactions between two businesses, and it outlaws facilitation payments

Alien Tort Claims Act

A 1789 law that U.S. multinationals may be responsible for human rights abuses by foreign governments, if the companies benefited from those abuses

Anti-Bribery Convention of the Organization for Economic Cooperation and Development

mandates jail time for those convicted of paying bribes

The International Labor Organization (ILO)

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