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Business Ethics Final Exam Review.docx

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University of Waterloo
PHIL 215
Kurt Holukoff

Business Ethics Ingrid Liu responsibilities 2. Recognize arguments; differentiate between explanations and arguments of 3. Distinguish between different sorts of arguments 4. Explain the significance of corporate accountability, corporate citizenship, the stakeholder theory of the firm, the various traditional and contemporary ethical theories, ethical culture, business ethics management, the various stakeholders and the environment for understanding business and professional responsibilities 5. Demonstrate basic critical thinking skills in clear and precise written work. U n i v e r s i t y o f W a t e r l o o CHAPTER 1: INTRODUCING BUSINESS ETHICS Business ethics is the study of business situations, activities, and decisions where issues of right and wrong are addressed. Equivocal: simply may not be a definitive „right‟ answer to many business ethics problems Morality is concerned with norms, values, and beliefs embedded in social processes which define right and wrong for an individual or a community. Ethics is concerned with study of morality and application of reason to elucidate specific rules and principles that determine right and wrong for a given situation. These rules and principles are called ethical theories. Ethics Ethics Ethical theory Potential rationalises produces applied to any solutions to morality ethical theory situation ethical problems Figure 1.1 The Relationship Between Morality, Ethics, and Ethical Theory Why Business Ethics is Important 1. Power and influence of business in society greater than ever before 2. Business has potential to provide major contribution to societies 3. Business malpractices have potential to inflict harm on individuals, communities and environment 4. Demands being placed on business to be ethical by its stakeholders are becoming more complex/challenging 5. Few businesspeople have received formal business ethics education/training 6. Ethical violations continue to occur in business across countries & sectors 7. Business ethics can provide ability to assess benefits & problems associated with managing ethics in organizations 8. Provides knowledge that transcends traditional framework of business studies and confronts most important questions faced by society Globalization: process which diminishes the necessity of common and shared territorial basis for social, economic, and political activities, processes, and relations - Cultural issues - Legal issues - Accountability issues Sustainability is the long-term maintenance of systems according to environmental, economic, and social considerations. CHAPTER 2: FRAMING BUSINESS ETHICS Corporate Responsibility, Stakeholders, and Citizenship Features of a Corporation  Typically regarded as “artificial persons” in eyes of law  „Owned‟ by shareholders, but exist independently of them  Managers & directors have „fiduciary‟ responsibility to protect investment of shareholders Philantropic Responsibilities- Desiredby Society EthicalResponsibilities- Expected by Society Legal Responsibilities- Requiredby Society EconomicResponsibilities- Requiredby Society Figure 2.1 Carroll‟s four-part model of corporate social responsibility. Corporate social responsibility (CSR) includes economic, legal, ethical, and philanthropic expectations placed on organizations by society at given point in time. Economic Responsibility - Required Shareholders demand return on investment Employees want safe and paid jobs Customers demand good quality products at fair price Legal Responsibility – Required Demands businesses abide by law Law is codification of society‟s moral views Ethical Responsibility – Expected Oblige corporations to do what is right, even when they are not compelled to by law Philanthropic Responsibility – Desired Love of the fellow human Corporation‟s discretion to improve quality of life of employees, communities, society Corporate social responsiveness refers to capacity of a corporation to respond to social pressure. Four Strategies of Social Responsiveness: 1. Reaction – corporation denies any responsibility for social issues 2. Defense – corporation admits responsibility, but fights it 3. Accommodation – accepts responsibility and does what is demanded 4. Pro-Action – seeks to go beyond industry norms and anticipates future expectations Outcomes of CSR: Corporate Social Performance  Social Policies – policies stating company‟s values, beliefs, and goals with regard to social environment  Social Programs – programs of activities, measures, and instruments implemented to achieve social policies  Social Impacts – traced by looking at concrete changes the corporation has achieved through programs implemented in any period A stakeholder of a corporation is an individual or a group which either: is harmed by, or benefits from, the corporation OR whose rights can be violated, or have to be respected, by the corporation. Three forms of stakeholder theory:  Normative Stakeholder Theory – provide reason why corporations should take into account stakeholder interests  Descriptive Stakeholder Theory – ascertain whether corporations actually do take into account stakeholder interests  Instrumental Stakeholder Theory – answer the question whether it is beneficial for the corporation to take into account stakeholder interests Corporate Accountability – whether a corporation is answerable in some way for the consequences of its actions Two reasons for privatization:  Governmental failure  Increasing power and influence of corporations Transparency is the degree to which corporate decisions, policies, activities, and impacts are acknowledged and made visible to relevant stakeholders. Corporate Citizenship:  Limited view of CC – equates CC with corporate philanthropy  Equivalent view of CC – equates CC with CSR  Extended view of CC – acknowledges extended political role of corporation in society Corporate citizenship describes corporate function for governing citizenship rights for individuals CHAPTER 3: EVALUATING BUSINESS ETHICS Ethical theories are rules and principles that determine right and wrong for given situation. Two extreme positions:  Ethical absolutism  Ethical relativism Pluralism – occupies something of middle ground between absolutism and relativism Consequentialist Theories Egoism – an action is morally right if decision-maker freely decides in order to pursue either their (short-term) desires or their (long-term) interests Utilitarianism – an action is morally right if it results in greatest amount of good for greatest amount of people affected by the action Main problems: Subjectivity Problems of quantification Distribution of utility Act utilitarianism Looks to single actions and bases moral judgement on amount of pleasure/pain caused Rule utilitarianism If underlying principles of action produce more pleasure than pain for society in long run Non-Consequentialist Theories Ethics of Duties Ethics of Rights and Justice Natural rights are certain basic, important, unalienable entitlements that should be respected and protected in every single action Justice can be defined as simultaneously fair treatment of individuals in given situation with result that everybody gets what they deserve. Limits of Western Modernist Theories  Too abstract 
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