Corporate Social Responsibility Flashcards

Terms Definitions
individuals and groups that cause and respond to external issues, opportunities and threats
environmental forces and stakeholders
1) economic environment2) technological environment3) govt and legal environment4) legal5) demographic and social environment
5 myths about business ethics
1) individual ethics are based on religious beliefs2) business and ethics do not mix3) ethics in business is relative4) good business means good ethics5) information and computing are amoral
stakeholder theory
argues that corporations should treat all their constituencies fairly and that doing so can enable the companies to perform better in the marketplace
stakeholder management approach
ethical imperative that mandates that businesses in their fiduciary relationships to their stockholders:1) act in the best interests of and for the benefit of their customers, employees, suppliers and stockholders2) respect and fulfill these stakeholder rights
any interest, share or claim that a group or individual has in the outcome of a corporation's policies, procedures or actions toward others
four different types of stakeholders
1) supportive2) nonsupportive3) mixed blessing4) marginal
8 types of power stakeholders can use
1) voting power2) political power3) economic power4) technological power5) legal power6) environmental power7) cultural power8) power over individuals and groups
6 step issue management
1) scan and identify issues2) issues analysis3) issues ranking and prioritizing4) issues resolution strategizing5) issues response and implementation6) issues evaluation and monitoring
a turning point for better or worse, a decisive moment or crucial time or a situation that has reached a critical phase
4 stages of a crisis
1) prodromal (precrisis) 2) acute3) chronic4) resolved
prodromal stage
warning stage, observe clues carefully
acute stage
damages have been done. control as much damage as possible
chronic crisis
clean up phase
crisis resolution
crisis management goal
ethical issues can occur at what levels
1) individual level2) organizational level3) industry level4) societal and global level
- greatest good for greatest number of people - estimate costs and benefits of actions
- everyone should act the same way in the same circumstances
rights (moral approach)
- rights can be used to manipulate- protection of rights can exaggerate certain entitlements in society at the expense of others
justice (procedures, compensation, retribution)
1) compensatory justice2) retributive justice3) distributive justice4) procedural justice
compensatory justice
compensation for past harm or injustice
retributive justice
serving punishment for harming
distributive justice
fair distribution of benefits and burdens
procedural justice
designates fair decision practices, procedures, etc among parties
virtue ethics
focuses on the type of person we ought to be, not specific actions that should be taken
the common good constraints
1) not viable in a pluralistic society 2) individualistic society rewards on independent basis3) free riders abuse4) unequal sharing of burdens and sacrifices
ethical relativism (self interest approach)
- no universal standards or rules can be used to guide or evaluate the morality of an act1) laziness explains lack of moral standards2) contradicts everyday experience3) can become absolutists--their act is always right or wrong regardless of how other view it
four social responsibility roles
A) stockholder model1) productivists2) philanthropistsB) stakeholder model1) progressivists2) ethical idealists
1) free market ethic2) profit maximization
1) moral duty to help less-advantaged members of society through tax deductible charity
1) motive of self interest2) take a broader view of social change
ethical idealists
1) transform businesses where workers can realize their full potential
individual ethical decision making styles
1) individualists 2) altruists3) pragmatists4) idealists
individualists decision making style
1) driven by natural reason2) self is the source and justification
altruists decision making style
1) concerned with other people
pragmatist decision making style
concerned with the situation at hand- deals with needs at the moment
idealist decision making style
- driven by principles and rules- duties are absolute
illegal downloading music facts
1) RIAA sued over 20,000 people2) some hide behind the university--RIAA issued subpoenas3) RIAA uses "John Doe" suing method4) Brennan was showed but did not show up in court. RIAA used default judgment. courts found it wrong (songs only on computer)5) RIAA wants IP addresses, but only used in criminal cases
primary stakeholders
- owners, management, suppliers, and customers
secondary stakeholders
media, society, any special interest group, media, and the community
why does business ethics matter
1) increases recruitment and retention2) increase engagement (synced values)3) employees attracted to ethical companies (flextime, benefits, flexibility, etc)
preconventional stage
1) punishment avoidance2) reward seeking
conventional stage
1) acceptance from others2) law and order
postconventional (principled) stage
1) social contract (relative values)2) universal ethics principles
stakeholder management analysis steps
1) map the stakeholder relationships2) map the stakeholder coalitions3) assess the nature of each stakeholders interest4) asses the nature of each stakeholders power5) identify stakeholder ethics and moral responsibilities 6) develop specific strategies and tactics7) monitor shifting coalitions
6 steps of the issue management approach
1) environmental scanning and issues identification2) issues analysis3) issues ranking and prioritizing4) issues resolution strategizing5) issues response and implementation6) issues evaluation and monitoring
how do executives respond to a crisis
1) reaction2) defense3) insight range4) accommodation5) agency
3 criteria for ethical reasoning
1) moral reasoning must be logical2) factual evidence to support judgment3) ethical standards used in reasoning should be consistent
moral creativity
relates to the need for and skill of recognizing the complexity of some ethical dilemmas that involve interlocking conflicting interests and relationships from the point of view of the person, group and/or organization facing a decision to be made
free-market theory: assumptions, optimal conditions, problems
1) primary aim of business is to make profit2)assumes: balance of power; knowledge; and sofistication of choice3) conditions to bloom: minimal moral restraints, full competiveness, relevant info to all, and accurate reflection of all production costs4) problems: businesses are not on equal footing, thin line between advertising and exaggeration, imperfect markets
social contract theory
1) based on implicit and explicit agreements 2) act in an ethical manner to promote public trust3) often involves a quid pro quo
conventional ethic theory
focuses on the importance of relationships. (social, and economic)
corporate philanthropy
1) people expect that corporations give back2) giving back to the community (at all levels)
stick approach
1) legal compliance2) rules and legal based3) courts, regulations, congressional oversight
carrot approach
1) voluntary self-regulation2) ethical and values based3) vision/mission/values, ethical programs, risk management, philanthropy
arguments for Sarbanes-Oxley
1) costs are minimal compared to the costs of not having them2) better internal control--more accurate info3) many view the act as positive4) if used for a reason to not go public then you should not go public
arguments against Sarbanes-Oxley
1) too costly2) negative impact on global competiveness 3) government costs increase4) smaller companies pay higher fees
major accounting scandals
Enron, WorldCom, Adelphia, Tyco, Martha Stewart, Qwest Communication, Credit Suisse First Boston
what are laws designed to do
1) regulate competition2) protect consumers3) promote equity and safety4) protect the natural environment5) ethics and compliance programs to deter enforcement
- financial accounting standards board- SEC delegated GAAP standard setting to them
- american institute of certified public accountants- lost is power due to SOX- once regulated accounting profession and established GAAS
- public company accounting oversight board- now establishes GAAS- inspects registered accounting firms and registers them- 5 members - no more than 2 members may be CPAs
is the SEC reactive or proactive
- reactive- "management by walking around"
what are the SEC's main goals
1) protect investors and ensure the integrity of business2) creates agencies to help compliance
why are independent auditors important
provide investor assurance
why is corporate governance needed
asymmetry of power and knowledge between absentee owners and management
the Securities Act of 1933
- covers initial public offerings (IPOs)- disclosure requirements for newly registered companies- does not provide a judgment - investor loss recovery for misleading financial statements
accountants role in the securities act of 1933
- must audit prospectus- must issue a comfort letter to underwriters
comfort letter
provides negative assurance- there is no false info in here
securities act of 1934
1) deals with trading on the secondary markets2) created to SEC3) registration requirements to brokers, analysts, companies and exchanges4) forbids market making5) forbids insider trading
purpose of the Sarbanes-Oxley Act
1) to restore public confidence2) prevent future frauds
Sarbanes Oxley Act acts
1) created the PCAOB2) delegates what auditors cannot do3) audit partner rotation4) executives must sign off on financial statements5) CEO is not the chairman of the board6) audit committee is a subset of the board of directors
Foreign Corrupt Practices Act (1977)
- prohibit the bribery of foreign officials for the purpose of retaining or obtaining business- excludes "greasing payments" expedites already occurring business transactions
critique of the stockholder theory
1) corporations should only serve the stockholders2) negates and weakens fiduciary duties managers owe to stockholders3) weakens the influence and power of stakeholder groups4) weakens the firm5) changes the long-term character of the capitalistic system
not only should companies act in socially responsible ways because "it is the right thing to do" but also because
it ensures their legitimacy
stakeholder analysis
analytical concepts and methods for identifying, mapping, and evaluating corporate strategy with stakeholders
synonyms for each step of a crisis
1) warning; symptoms2) point of no return3) self doubt; self-analysis4) return to normalcy
questions to ask yourself when doing moral creativity
- 3 questions under each question1) who am i?2) who are we?3) who is the company?
rule based utilitarianism
general principles are used as criteria for deciding the greatest benefit to be achieved from acting a certain way
act based utilitarianism
analyze a particular action or behavior to determine whether the greatest utility or good can be achieved
what ethical decision making principle do businesses use
rights (ethical principle) in business decisions
useful when conflicting legal and moral rights of individuals occur or when rights may be violated if a certain course of action is pursued
what to ask using the social contract approach
1) what is the nature of the contract?2) are all parties satisfied with it?3) then break down primary and secondary stakeholders and ask questions accordingly
what matter more: compliance programs or ethics programs
ethics programs
the iron law of responsibly
"if a business has the power, then a just relationship demands that business also bear the responsibility for its actions in these areas"
five broad guidelines or obligations businesses have
1) "trustee for society's resources" this satisfy interests of all stakeholders2) open receipt of inputs from society and open disclosure3) all costs must be calculated (social and benefits, etc)4) social costs will be priced into the good5) social involvement in areas of their competence where social need exists
WorldCom fraud
accounting fraud of 11 billion
Enron fraud
- conspiracy, insider trading, fraud, etc
Tyco fraud
CFO stole 600 million
Adelphia fraud
conspiracy and bank and securities ffraud
HealthSouth fraud
CEO inflated earnings to meet wall street expectations
what do laws promote
social and economic growth
sherman antitrust act
prohibits monopolies
clyaton act
prohibits price discrimination, exclusivity, and restricting competition
federal trade commission
enforces antitrust laws
where has the SEC failed
- Bernie Madoff- regulation in the early 2000's
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