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- Arts and Humanities
- Philosophy
- Ethics
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Terms in this set (57)
ethical dilemma
The quandary people find themselves in when they have to decide if they should act in a way that might help another person or group even though doing so might go against their own self-interest.
ethics
the inner guiding moral principles, values, and beliefs that people use to analyze or interpret a situation and then decide what is the right or appropriate way to behave
Dealing with Ethical issues:
There are no ___ or ___ rules or principles that can be
-->There are no absolute or indisputable rules or principles that can be developed to decide if an action is ethical or unethical
-->Neither laws nor ethics are fixed principles
-->Managers must confront the need to decide what is appropriate and inappropriate as they use a company's resources to produce goods and services
-->Ethical beliefs lead to the development of laws and regulations to prevent certain behaviors or encourage others
Stakeholders
-->The people and groups that supply a company with its productive resources and so have a claim on and stake in the company.
-->When the law does not specify how companies should behave, managers must decide what is the right or ethical way to behave toward the people and groups affected by their actions
Types of Company Stakeholders
stockholders; managers; employees; suppliers and distributors; customers; and community, society, and nation-state
Stockholders
-->Want to ensure that managers are behaving ethically and not risking investors' capital by engaging in actions that could hurt the company's reputation
-->Want to maximize their return on investment
Managers
Responsible for using a company's financial capital and human resources to increase its performance
Have the right to expect a good return or reward by investing their human capital to improve a company's performance
Frequently juggle multiple interests
--> agency problem
Ethics and Nonprofit Organizations
Over 200 nonprofits pay their top executives more than $1 million a year in salary
Laws governing disclosure are far weaker for non-profits
Many states and the federal government are considering new laws that would subject nonprofits to strict Sarbanes-Oxley-type regulations that force the disclosure of issues related to managerial compensation and financial integrity
Employees
Expect to receive rewards consistent with their performance
Companies can act ethically toward employees by creating an occupational structure that fairly and equitably rewards employees for their contributions
Suppliers
expect to be paid fairly and promptly for their inputs
Distributors
expect to receive quality products at agreed-upon prices
Customers
Most critical stakeholder
Company must work to increase efficiency and effectiveness in order to create loyal customers and attract new ones
Community
Physical locations like towns or cities in which companies are located
Provides a company with the physical and social infrastructure that allows it to operate
A company contributes to the economy of the town or region through salaries, wages, and taxes
4 ethical rules
Utilitarian, Justice, Practical, Moral Rights Rules
Utilitarian Rule
An ethical decision should produce the greatest good for the greatest number of people
Justice Rule
An ethical decision should distribute benefits and harm among people in a fair, equitable, and impartial manner
Practical Rule
An ethical decision should be one that a manager has no hesitation about communicating to people outside the company because the typical person in a society would think the decision is acceptable
Moral Rights Rule
An ethical decision should maintain and protect the fundamental rights and privileges of people
Practical Decision Model
1. Does my decision fall within the acceptable standards that apply in business today?
2. Am I willing to see the decision communicated to all people and groups affected by it?
3. Would the people with whom I have a significant personal relationship approve of the decision?
Why should managers behave ethically?
The relentless pursuit of self-interest can lead to a collective disaster when one or more people start to profit from being unethical because this encourages other people to act in the same way
Some Effects of Ethical/Unethical Behavior
Unethical behavior ruins business commerce and society has a lower standard of living because fewer goods and services are produced, as
Figure 4.3 illustrates.
Trust
The willingness of one person or group to have faith or confidence in the goodwill of another person, even though this puts them at risk.
Reputation
esteem or high repute that individuals or organizations gain when they behave ethically
4 sources of ethics --> 4 main determinants of differences in ethics between people, employees, companies, and countries
- Societal Ethics
- Occupational Ethics
- Organizational Ethics
- Individual Ethics
Societal Ethics
Standards that govern how members of a society should deal with one another in matters involving issues such as fairness, justice, poverty, and the rights of the individual
People behave ethically because they have internalized certain values, beliefs, and norms
Occupational Ethics
Standards that govern how members of a profession, trade, or craft should conduct themselves when performing work-related activities
medical and legal ethics
Individual Ethics
personal standards and values that determine how people view their responsibilities to others and how they should act in situations when their own self-interests are at stake
How they should act in situations when their own self-interests are at stake
Organizational ethics
the guiding practices and beliefs through which a particular company and its managers view their responsibility toward their stakeholders
Top managers are especially important in shaping the organization's code of ethics
Social Responsibility
The way a company's managers and employees view their duty or obligation to make decisions that protect, enhance, and promote the welfare and well-being of stakeholders and society as a whole
4 approaches to social responsibility
Obstructionist Approach (lowest social responsibility)
Defensive
Approach
Accommodative Approach
Proactive Approach (highest social responsibility)
Obstructionist approach
Companies choose not to behave in a social responsible way and behave unethically and illegality
Defensive approach
companies and managers stay within the law and abide strictly with legal requirements but make no attempt to exercise social responsibility
Accommodative approach
Companies behave legally and ethically and try to balance the interests of different stakeholders against one another so that the claims of stockholders are seen in relation to the claims of other stakeholders
Proactive approach
Managers actively embrace the need to behave in socially responsible ways and go out of their way to learn about the needs of different stakeholder groups and are willing to use organizational resources to promote the interests not only of stockholders but also of the other stakeholders such as their employees and communities.
Why Be Socially Responsible?
Demonstrating its social responsibility helps a company build a good reputation
If all companies in a society act socially, the quality of life as a whole increases
Role of Organizational Culture
Ethical values and norms help members
-Resist self-interested action
-Realize they are part of something bigger than themselves
Ethics Ombudsman
-Responsible for communicating ethical standards to all employees
-Designing systems to monitor employees conformity to those standards
-Teaching managers and employees at all levels of the organization how to appropriately respond to ethical dilemmas
Dianna has noticed that there has been an error in her weekly pay stub and the company has unknowingly paid her too much. This example illustrates a(n) ________.
ethical dilemma
A company's stance on social responsibility is the way its managers and employees view their obligation to make decisions that promote the well-being of stakeholders and society as a whole.
True
The way a company's managers view their duty to make decisions that enhance the well-being of stakeholders is called organizational ethics.
True
The standards that govern how members of a profession should conduct themselves are called organizational ethics.
False
When one person starts to profit by behaving unethically, it encourages other people to act in the same way.
True
A company that expects its managers to behave ethically to the degree that they stay within the law is acting with a(n) ________ approach.
defensive
Business ethics are only important because the failure of a company can solely have catastrophic effects on the goals of the company.
False
When making business decisions, managers must consider the claims of stockholders exclusively.
False
The moral principles and beliefs about what is the right or appropriate way to behave are known as ________.
ethics
Steve has noticed that there has been an error in his weekly pay stub and the company has unknowingly paid him too much. Steve is pondering whether to report this issue or not. This is an example of an ethical dilemma.
True
Which approach to social responsibility is being implemented by a company that actively embraces the need to behave in socially responsible ways?
Proactive
Trust refers to the esteem or high repute that people or organizations gain when they behave ethically.
False
According to the moral rights rule, managers should choose the course of action that best protects and upholds their personal rights.
False
The utilitarian rule states that an ethical decision is a decision that:
produces the greatest good for the greatest number of people.
Moral principles or beliefs about what is the right or appropriate way to behave are known as ethics.
True
Stakeholders benefit in the long run from companies making the right choices.
True
Ethical beliefs lead to the development of laws and regulations.
True
Employees are much more likely to act ethically when a credo does not exist or is avoided.
False
Laws and regulations lead to the development of ethical beliefs.
False
Under the moral rights rule, an ethical decision is one that distributes benefits and harms among people and groups in an equitable way.
False
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