Chapter 1 - Business Ethics

nguyp035's version from 2017-05-07 01:03

Section 1

Question Answer
What is business ethics?The study of business activity, decisions and activities, where issues of right and wrong are addressed
What is morality?Concerned with the norms, values and beliefs embedded in social processes, defining right and wrong for an individual e.g. to be accountable, act integrally
What is ethics?Concerned with the study of morality and application of reason to explain specific rules and principles (ethical theories) that determines right and wrong
Why do corporations have social responsibility?Business reasons (outcome-related) - enlightened self interest, to satisfy customers, benefits in long term
Moral reasons (principle-related) - doing the right thing, realizing that they cause problems (accountability), having a social impact
Corporate Social Responsibility includes..the legal, economic, ethical and philanthropic expectations placed on organisations by society at a given point in time
According to Carroll's CSR Pyramid, why should we meet responsibilities?Model lists what is required, expected and desired of an organisation in relation to legal and economic responsibilities, ethical responsibilities (beyond the law) and philanthropic responsibilities (i.e. to give back to society)
What are the 3 outcomes of CSR?Social policy (mission statement, values), social programme (suicide prevention, financial inclusion), social impact (change achieved e.g. increased literacy rates) (PPI)

Section 2

Question Answer
What is a corporation?Legally independent from people who work in them, manage or invests. Are separate identities in their own rights. Can survive death of internal stakeholders. Own their own assets e.g. Samsung assets are property of samsung, not shareholders
Corporations are artificial persons in the eyes of law. Notionally owned by shareholders but exist independently without.
Can corporations have responsibilities?Milton Friedman (1970) - Social responsibility of a business is to make profits . Only human beings have moral responsibility for their actions. Managers are responsible for acting in interest of shareholders, otherwise considered betrayal. Social issues are for governments to deal with
Can corporations be morally responsible for their actions?Yes. Corporations have legal identity,enter into contracts, can sue other entities. Corporations has a set of beliefs, values that sets out what is right and wrong i.e. organisation culture, which influences decision-making

Section 3

What are strategies of CSR?
Question Answer
Traditional CSRPart of strategy to generate profits without wider consideration for wider societal expectations. 'Bolt on' without integration into core business
Contemporary CSRResponsible behavior as an opportunity to generate profits, whilst living up to societal expectations. Work with stakeholders to understand expectations. 'Built in' to core business e.g. Using active green technology. Pro-active approach


Section 4

Stakeholder theory of the firm
Question Answer
Stakeholder approach set out by Edward Freeman (1984) states...Corporations are not managed in the interest of shareholders alone. There is a range of stakeholders that have a legitimate interest in the corporation
Corporate rightscorporation has obligation not to violate rights
Corporate effectscompanies responsible for effects of their action
Why do stakeholders matter? Using the legal and economic perspective
Question Answer
Legal perspectiveshareholders are not the only group with a legitimate stake. Interest of other groups are protected in some way e.g. laws, regulations
Economic perspectivesome shareholders buy shares for speculative reasons as opposed to 'owning' a company - Thus, should they be most important?
Normative Stakeholder theory looks at..why corporations SHOULD take stakeholder interest into consideration
Descriptive Stakeholder theory looks at...why corporations DO take stakeholder interests into consideration

Section 5

Question Answer
Why are firms becoming political actors?Friedman argued social issues should be solved by governments but government are treating from catering social needs (privatizing public goods)
Government are unwilling to address social needs (lack of resources)

Section 6

Question Answer
What is sustainability?Long term maintenance of systems according to environmental, social and economic considerations
What is sustainable development?development that meets the needs of the present without compromising ability of future generations to meet their own needs
Triple bottom line by John Elkington suggests..Sustainability as a goal. Based on three perspectives (Economic, Environmental, Social).
Examples include..Environment (conserve resource for future), Social (Business activity on less developed countries), Economic (Emerged from economic growth due to unsustainable economy during financial crash)