BOBCOM Ch 9

Business ethics concerns

the application of general ethical principles and standards to the actions and decisions of companies and the behavior of company personnel.

Ethical principles in business

are not materially different from ethical principles in general.

Ethical principles as they apply to business conduct and business decisions

are not materially different from ethical principles in general.

Notions of right and wrong, fair and unfair, moral and immoral, ethical and unethical

are present in all societies, organizations, and individuals; some of the most important concepts (for example, being truthful) of what is right and what is wrong resonate with people of most cultures, and are thus universal.

The contentions that (1) many of the same standards of what’s ethical and what’s unethical resonate with peoples of most societies regardless of local traditions and cultural norms and (2) 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 are defining beliefs of

the school of ethical universalism.

The school of ethical universalism holds that

some concepts of what is right and what is wrong resonate with peoples of most societies regardless of local traditions and cultural norms—hence common ethical standards can be used to judge the conduct of personnel at companies operating in a variety of country markets and cultural circumstances.

According to the school of ethical universalism,

to the extent there is common moral agreement about right and wrong actions and behaviors across multiple cultures and countries, there exists a set of universal ethical standards to which all societies, all companies, and all individuals can be held accountable.

According to the school of ethical universalism,

universal ethical principles or norms put limits on what actions and behaviors fall inside the boundaries of what is right and which ones fall outside—such universal norms include honesty, respecting the rights of others, practicing the Golden Rule, and not acting in a manner that harms others or pillages the environment.

If one concurs with the school of ethical universalism, then one believes that

many basic moral standards travel well across cultures and countries and really do not vary significantly according to local cultural beliefs, social mores, religious convictions, and/or the circumstances of the situation.

The strength of the beliefs underlying ethical universalism is that

it draws upon the collective views of multiple societies and cultures to put some clear boundaries on what constitutes ethical business behavior and what constitutes unethical business behavior no matter what country market or culture a company is operating in.

The contention that since different societies and cultures have divergent values and standards of right and wrong it is appropriate to judge behavior as ethical/unethical in the light of local customs and social mores rather than according to a single set of ethical standards

defines what is meant by ethical relativism.

The school of ethical relativism holds that

when there are cross-country or cross-cultural differences in what is deemed fair or unfair, what constitutes proper regard for human rights, and what is considered ethical or unethical in business situations, it is appropriate for local moral standards to take precedence over what the ethical standards may be elsewhere.

According to the school of ethical relativism,

there are important occasions when local cultural norms and the circumstances of the situation determine whether certain behaviors are right or wrong.

If one accepts the tenets of the school of ethical relativism, then it follows that

A. there are multiple sets of ethical standards rather than a single universal set. B. at least some ethical standards are governed by local norms, religious doctrines, and social customs rather than by absolute standards of right and wrong. C. what constitutes ethical or unethical behavior on the part of businesses must in some cases be judged in the light of local customs and social mores. D. it is inappropriate to hold businesses accountable for observing a universal set of ethical standards. E. All of these.

Which one of the following statements about the ethical relativism school of thinking is false?

The best and fairest way for a multinational company to approach the enforcement of ethical standards companywide is to reject ethical universalism and pursue ethical relativism.

According to the advocates of ethical relativism,

if the use of underage labor and/or the payment of bribes/kickbacks are acceptable in a particular culture/society/country, then a case can be made that it is morally correct and ethical for a company to use these practices in conducting its business activities in that culture/society/country.

A belief in ethical relativism leads to the conclusion that

whether the use of underage labor and the payment of bribes/kickbacks should be deemed ethical or unethical depends on the moral standards, values, and business norms that prevail in particular cultures, societies, countries, or circumstances.

Paying bribes and kickbacks to grease business transactions

is one of the thorniest ethical problems that multinational companies face because paying bribes is normal and customary in some countries and ethically or legally forbidden in others.

Multinational companies that forbid the payment of bribes and kickbacks in their codes of ethical conduct and that are serious about enforcing this prohibition

still have considerable difficulty in preventing the payments of bribes and kickbacks when such payments are entrenched as normal and customary in locations where they do business.

According to the ethical relativism school of thinking,

there can be no one-size-fits-all set of authentic ethical norms against which to gauge the conduct of company personnel.

Companies that adopt the principle of ethical relativism in providing ethical guidance to company personnel

quickly find themselves on a slippery slope with no higher order moral compass if they operate in countries where ethical standards vary considerably from country to country.

The contention that ethical standards should be 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 are the basic principles of

integrated social contracts theory.

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—but universal ethical norms always take precedence over local norms.

According to integrated social contracts theory,

A. universal ethical principles apply in those situations where most all societies—endowed with rationality and moral knowledge—have common moral agreement on what is wrong and thereby put limits on what actions and behaviors fall inside the boundaries of what is right and which ones fall outside. B. commonly held views about what is morally right and wrong form a contract with society that is binding on all individuals, groups, organizations, and businesses in terms of establishing right and wrong and in drawing the line between ethical and unethical behaviors C. universal ethical principles or norms leave some "moral free space" for the people in a particular country (or local culture or even a company) to make specific interpretations of what other actions may or may not be permissible within the bounds defined by universal ethical principles. D. universal ethical norms always take precedence over local ethical norms. E. All of these.

Which one of the following is not a key element of integrated social contracts theory?

A. Universal ethical principles apply in those situations where most all societies—endowed with rationality and moral knowledge—have common moral agreement on what is wrong and thereby put limits on what actions and behaviors fall inside the boundaries of what is right and which ones fall outside. B. Commonly held views about what is morally right and wrong form a "social contract" (contract with society) that is binding on all individuals, groups, organizations, and businesses in terms of establishing right and wrong and in drawing the line between ethical and unethical behaviors C. Universal ethical principles or norms leave some "moral free space" for the people in a particular country (or local culture or even a company) to make specific interpretations of what other actions may or may not be permissible within the bounds defined by universal ethical principles. D. Universal ethical norms always take precedence over local ethical norms. E. Integrated social contracts theory rejects the slippery slope of ethical relativism and embraces ethical universalism.

Integrated social contracts theory maintains that

adherence to universal ethical norms always take precedence over local ethical norms.

The strength of integrated social contracts theory is that it

accommodates the best parts of ethical universalism and ethical relativism.

The litmus test of a company’s code of ethics is

the extent to which it is embraced in crafting strategy and in the day-to-day operations of the business.

Which of the following is not a key question that senior executives must ask whenever a new strategic initiative is under review?

Would the potential outcome of the proposed action pose a risk of embarrassment?

The major drivers of unethical managerial behavior include

ethically corrupt corporate cultures, heavy pressures on company managers to meet or beat performance targets, and overzealous pursuit of personal gain, wealth, and other self interests.

Unethical managerial behavior tends to be driven by such factors as

A. the pervasiveness of immoral and amoral businesspeople. B. overzealous pursuit of personal gain, wealth, and other selfish interests. C. a company culture that puts the profitability and good business performance ahead of ethical behavior. D. heavy pressures on company managers to meet or beat earnings targets. E. All of these.

Which one of the following is not one of the major drivers of unethical managerial behavior?

Intense competitive pressures

Which of the following occurs when managers take advantage of their position to further their own private interests rather than those of the firm?

Self-dealing

Short-termism is defined as

the tendency for managers to focus excessive attention on short-term performance objectives

When high ethical principles are deeply ingrained in the corporate culture of a company, culture can

A. function as a powerful mechanism for communicating ethical behavioral norms. B. function as a powerful mechanism for gaining employee buy-in to the company’s moral standards. C. function as a powerful mechanism for gaining employee buy-in to the company’s business principles. D. function as a powerful mechanism for gaining employee buy-in to the company’s corporate values. E. All of these.

The strength of the beliefs underlying the moral case for an ethical strategy

A. begins with managers who themselves have strong character (for example, who are honest, have integrity, and truly care about how they conduct a company’s business). B. starts with managers who walk the talk in displaying the company’s stated values. C. involves managers with high ethical principles and standards who are advocates of a corporate code of ethics and strong ethics compliance and are genuinely committed to certain corporate values and business practices. D. starts with managers who understand there is big difference between adopting values statements and codes of ethics that serve merely as window dressing and those that truly paint the white lines for a company’s actual strategy and business conduct. E. All of these.

A company’s strategy needs to be ethical because

(1) a strategy that is unethical in whole or in part is morally wrong and reflects badly on the character of the company personnel involved and (2) an ethical strategy is good business and in the best interest of shareholders.

Which of the following represents a justifiable reason for why a company’s strategy should be ethical?

A. An unethical strategy reflects badly on the character of the company personnel involved. B. A strategy that is unethical in whole or in part is morally wrong. C. Pursuing an unethical strategy damages a company’s reputation and can have costly consequences. D. An ethical strategy is good business and is in the best interest of shareholders. E. All of these.

Which of the following is not a particularly sound or valid reason why a company’s strategy should be ethical?

Most all shareholders believe it is honorable for their company to pursue an ethical strategy (even though it usually entails making less profit) and are turned off by company efforts to make greater profits via unethical means.

The business case for an ethical strategy

emphasizes that pursuing unethical strategies not only damages a company’s reputation but can also have costly consequences that are wide ranging.

Visible costs which are incurred by companies and imposed for ethical wrongdoing can include

A. Government fines and penalties. B. Civil penalties arising from class-action lawsuits or other litigation. C. Lower dividends for shareholders. D. Lower stock prices. E. All of these.

The notion of social responsibility as it applies to businesses concerns

a company’s duty to operate in an honorable manner, provide good working conditions for employees, be a good steward of the environment, and actively work to better the quality of life in the local communities where it operates and in society at large.

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 look out exclusively for the best interests of shareholders

Which of the following is not something a company should usually consider in crafting a strategy of social responsibility?

Actions to benefit shareholders (such as raising the dividend or boost the stock price)

Which of the following should be on a company’s menu of actions to consider in crafting a strategy of social responsibility?

A. Actions to ensure that the company’s strategy is ethical and that ethical principles will be observed in operating the business B. How much and what kinds of resources it will allocate to charitable contributions, community service endeavors, various worthy causes, and helping the disadvantaged C. Actions (over and above what is required) to protect or enhance the environment, including both those environmental problems stemming from the company’s own business activities and those problems outside the company’s immediate sphere of operations D. Actions to create a work environment that enhances employee well-being and makes the company a great place to work E. All of these.

A company’s social responsibility strategy is typically comprised of all but which one of the following elements?

Actions to keep prices low enough that the company’s profits will not be viewed by the general public as obscenely high or exorbitant

Striving to be socially responsible entails touching such bases as

A. what actions to take to enhance workforce diversity and make the company a great place to work. B. whether to make charitable contributions and donate money and the time of company personnel to community service endeavors. C. what, if any, actions to take to protect or enhance the environment (beyond what is legally required). D. exerting conscious efforts to ensure that all elements of the company’s strategy are ethical and actions to make the company a great place to work. E. All of these.

Good corporate citizens

pursue discretionary activities that contribute to the betterment of society, especially in areas where government has chosen not to focus its efforts or has fallen short.

The "triple bottom line" refers to what three performance metrics?

economic, social, environmental.

An environmental sustainability strategy consists of a company’s deliberate actions to

meet the current needs of customers, suppliers, shareholders, employees and other stakeholders in a manner that protects the environment, provides for the longevity of natural resources, maintains ecological support systems for future generations, and guards against ultimate endangerment of the planet.

Which of the following is not something a company should consider in crafting an environmental sustainability strategy?

Making contributions to the Global Environmental Council which are distributed based on a competitive basis

Which of the following statements regarding a company’s social responsibility and sustainability strategy is false?

A company is not demonstrating an adequate degree of social responsibility or endeavoring to be a model corporate citizen unless it spends 5% (or more) of pretax profits on social responsibility initiatives.

The moral case for why a company should actively promote the betterment of society and act in a manner benefitting all its stakeholders

boils down to "it’s the right thing to do."

Which one of the following is not part of the moral case for why a company should actively promote the betterment of society?

Acting in a socially responsible manner is in the overall best interest of shareholders.

The business case for why companies should act in a socially responsible manner includes such reasons as

A. it generates internal benefits (as concerns employee recruiting, workforce retention, employee morale, and training costs). B. it reduces the risk of reputation-damaging incidents. C. it is in the best interest of shareholders. D. it can lead to increased buyer patronage. E. All of these.

Which one of the following is not a part of the business case for why companies should act in a socially responsible manner?

Every business has a moral duty to be a good corporate citizen

Which one of the following is false as concerns the merits of why acting in a socially responsible manner is "good business"?

Acting in a socially responsible manner nearly always results in higher profits and a higher stock price for shareholders.