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157 Cards in this Set
- Front
- Back
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business
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the collection of private, commerically oriented (profit-oriented) organizations, ranging in size from 1 person proprietorships to corporate giants
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society
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a community, a nation, or a broad group of people having common traditions, values, institutions, and collective activities and interests
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macroenvironment
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includes the total societal environment outside the firm
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social environment
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focuses on demographics, lifestyles, and social values of the society
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economic environment
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focuses on the nature and direction of the economy in which business operates
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political environment
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focuses on the processes by which laws get passed and officials get elected and all other aspects of the interaction between the firm, political processes, and government
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technological environment
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represents the total set of technology-based advancements taking place in society
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pluralism
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refers to a diffusion of power among society's many groups and organizations... "wide decentralization and diversity of power concentration"
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special-interest society
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the idea of pluralism is pursued to an extreme, a society is created that is characterized by ten of thousands of special-interest groups, each pursuing its own focused agenda
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affluence
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refers to the level of wealth, disposable income, and standard of living of the society
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education
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has increased alongside an increased standard of living
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revolution of rising expectations
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a belief or an attitude that each succeeding generation ought to have a standard of living higher than that of its predecessor
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social problem
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described as a gap between society's expectations of social conditions and the current social realities; the gap grows between society's expectations of the firm's social performance and its acutal social performance
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entitlement mentality
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the general belief that someone is owed something just because she or he is a member of society
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rights movement
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the revolution of rising expectations, the entitlement mentality, and the others discussed have contibuted to this
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victimization philosophy
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growing numbers of individuals see themselves as having been victimized by society
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business power
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refers to the ability or capacity to produce an effect or to bring influence to bear on a situation or people
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iron law of responsibility
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addresses, "in the long run, those who do not use power in a manner which society considers responsible will tend to lose it." Whenever a power and responsibility become substantially out of balance, forces will be generated to bring them into closer balance.
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social contract
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a two-way understanding that characterize the relationship between major institutions- in our case, business and society
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business ethics and stakeholder management
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two parts of the managerial approach
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ethics
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basically refers to issues of right, wrong, fairness, and justice
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business ethics
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focuses on ethical issues that arise in the commerical realm
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stakeholders
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individuals or groups with which business interacts who have a "stake" or vested interest in the firm
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Business for Social Responsibility (BSR)
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it was formed to fill an urgent need for a national business alliance that fosters socially responsible corporate policies
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Corporate Social Responsibility
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is seriously considering the impact of the company's actions on society
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philanthropy
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contributions to charity and other worthy causes- even during periods characterized by the tradtitional economic view
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community obligations
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to voluntarily improve, beautify, and uplift
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paternalism
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most visible example= company town, company played this role
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economic responsibilities
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American system calls for business to be an economic institution, whose objective is to produce goods and services that society wants and to sell them at fair prices- prices that society thinks represent the true value of the goods and services delivered and that provide business with profits adequate to ensure its survival and growth and to reward its investors
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legal responsibilities
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reflect societies view of codified ethics in the sense that they embody basic notions of fair practices as established by our lawmakers
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ethical responsibilities
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need to embrace those activities and practices that are expected or prohitited by society even though they are not codified into law
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philanthropic responsiblities
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voluntary or discretionary "responsibilities," desire to engage in social activites that are not mandated, not required by law, and not generally expected of business in an ethical sense
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Pyramid of Corporate Social Responsibility (CSR)
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Responsibilites top to bottom:
Philanthropic Ethical Legal Economic |
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corporate social responsiveness
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the action-oriented variant of CSR
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corporate social performance (CSP)
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intended to suggest that what really matters is what companies are able to accomplish- the results or outcomes of their acceptance of social responsibility and adoption of a responsiveness philosophy
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corporate social performance model
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1. Social responsibility categories- economic, legal, ethical, and discretionary (philanthropic)
2. Philosophy (or mode) of social responsiveness- e.g., reaction, defense accommodation, and proaction 3. Social (or stakeholder) issues involved- consumers, environment, employees, etc. |
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corporate citizenship
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"serving a variety of stakeholders well"
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"triple bottom line"
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seeks to encapsulate for business the three key spheres of sustainability
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sustainability
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three key factors: economic, social, and environmental
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corporate sustainability
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the goal of the triple-bottom line approach
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socially responsible or ethical investing
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a comprehensive investing approach, complete with social and environmental screens, shareholder activism , and community investment
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stake
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an interset in or a share in an undertaking
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stakeholder
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an individual or a group that has one or more of the various kinds of stakes in the organization, such as actions, decisions, policies, or practices of the business firm; they may affect the organization's actions, decisions, policies, or practices
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production view of the firm
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owners thought of stakeholders as only those individuals or groups that supplied resources or bought products or services
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managerial view of the firm
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business see their responsibilities toward other major constituent groups if they were to be managed successfully
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stakeholder view of the firm
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as major internal and external changes occurred in business and its environment, managers were required to undergo a revolutionary conceptual shift in how they perceived the firm and its multilateral relationships with constituent or stakeholder groups
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primary social stakeholders
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have a direct stake in the organization and its success, and therefore, are most influential
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secondary social stakeholders
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their stake in the organization is more indirect, but still extremely influential
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core stakeholders
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a specific subset of stakeholders that are essential for the survival of the organization
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strategic stakeholders
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stakeholder groups that are vital to the organization's sucess and the particular set of threats and opportunities it faces at a particular point in time
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environmental stakeholders
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are all others in the organizations environment that are not core or strategic stakeholders
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legitimacy
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refers to the perceived validity or appropriateness of a stakeholder's claim to a stake
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power
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refers to the ability or capacity to produce an effect- to get something done that otherwise may not be done, means that the stakeholder could affect the business
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proximity
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the spacial distance between the organization and its stakeholders is a relevant consideration when evaluating stakeholders' importance and priority
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three attributes of stakeholders
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legitimacy, power, proximity
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Key Stakeholder Questions
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1. Who are our stakeholders?
2. What are our stakeholders' stakes? 3. What opportunities and challenges do our stakeholders present to the firm? 4. What responsibilites (economic, legal, ethical, and philanthropic) does the firm have to its stakeholders? 5. What strategies or actions should the firm take to best address stakeholder challenges and opportunites? |
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stakeholder thinking
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the process of always reasoning in stakeholder terms throughtout the management process, and especially when an organization's decisions and actions have important implications for others
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stakeholder culture
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embraces the beliefs, values, and practices that organizations have developed for addressing stakeholder issues and relationships
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stakeholder management capability (SMC)
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the extent to which an organization has developed... rational, process, transactional levels
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rational level
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descriptive and somewhat analytical, because the legitimacy of stakes, the stakeholders' power, and urgency are identified
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process level
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organizations go a step further than level 1, and actually develop and implement approaches, procedures, policies, and practices by which the firm may scan the environment and receive relevant information about stakeholders, which is then used for decision-making purposes.
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transactional level
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the highest and most developed of the three levels, the extent to which managers actually engage in transactions (relationships) with stakeholders
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stakeholder engagement
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one approach by which companies implement the transactional level of strategic management capability
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stakeholder corporation
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"increasing shareholder value will be best served if your company cultivates the support of all who may influence its importance
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stakeholder inclusiveness
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stakeholders will become one of the most important determinants of commercial viability and business sucess
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stakeholder symbiosis
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an idea that recognizes that all stakeholders depend on each other for their success and financial well-being
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"principles of stakeholder management"
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"the Clarkson principles"
suggests action words that would relfect the kind of cooperative spirit that should be used in building stakeholder relationships: acknowledge, monitor, listen, communicate, adopt, recognize, work, avoid, acknowledge conflicts |
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legitimacy
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helps explain the importance of the relative roles of a corporation's charter, shareholders, board of directors, management, and employees- all of which are components of the modern corporate governance system
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legitimation
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a dynamic process by which business seeks to perpetuate its acceptance
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corporate governance
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refers to the method by which a firm is being governed, directed, administered, or controlled and to the goals for which it is being governed
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charter
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issued by the state, giving the corporation the right to exist and stipulating the basic terms of its existance
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shareholders
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the owners of the corporation
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seperation of ownership from control
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the major condition embedded in the sturcture of modern corporations that has contributed to the corporate governance problem
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proxy process
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the method by which the shareholders elected boards of directors
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agency problems
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developed when the interests of the shareholders were not aligned with the interest of the manager, and the manager began to pursue self-interest instead of the owners' best interest
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inside directors
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directors within the firm
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outside directors
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directors independent of the firm and its top managers
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stock options
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efforts to strengthen CEO pay/firm performance relationship have centered on the use of this
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backdating
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occurs when the recipient is given the option of buying stock at yesterday's price, resulting in an immediate and guaranteed wealth increase
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spring-loading
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the granting of a stock option at today's price, but with the inside knowledge that something good is about to happen that will improve the stock's value
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bullet-dodging
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the delaying of a stock option grant until right after bad news
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clawback provisions
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compensation recovery mechanisms that enable a company to recoup compensation funds, typically in the event of a financial restatement or executive's misbehavior
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tax gross-up
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"reimbursed for the taxes that he would have to pay on his medical benefits"
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poison pill
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intended to discourage or prevent a hostile takeover; an acquirer tries to swallow a company, the poison pill makes it very difficult to ingest
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golden parachute
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a contract in which a corporation agrees to make payments to key officers in the event of a change in the control of the corporation
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insider trading
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the practice of obtaining critical information from inside a company and then using that information for one's own personal financial gain
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Accounting Reform and Investor Protection Act of 2002, Sarbanes-Oxley Act (SOX)
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amends the securities laws to provide better protection for investors in public companies by improving the financial reporting of companies
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audit committee
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responsible for assessing the adequacy of internal control systems and the integrity of financial statements
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nominating committee
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should be composed of outside directors, has the responsibility of ensuring that competent, objective board members are selected
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compensation committee
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has the responsibility of evaluating executive performance and recommening terms and conditions of employment
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public issues committee or public policy committtees
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committe sensitive to public or social issues, provide policy leadership, and monitor management's performance on these issues
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business judgement rule
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holds that cours should not challenge board members who act in food faith, making informed decisions that reflect the company's best interests instead of their own self-interest
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personal liability
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"board members had failed in their responsibility to monitor employees... can be held personally responsible
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majority vote
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the requirement that board members be elected by a majority of votes cast
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classified boards
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boards that elect their members in staggered terms
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shareholder ballot access
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provides shareholders with the opportunity to propose nominees for the board of directors
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role of the SEC
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responsible for protecting investor interests
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ordinary buiness decisions
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hiring falls under this and was thus entirely the province of corporate directors and officers
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shareholder activism
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not a new phenomenon; shareholders have discovered the benefits of organizing and wielding power
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corporate gadflies
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activist shareholders, no longer dismissed as nuisances; they are viewed a credible, powerful, and a force with which to be reckoned
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shareholder resolutions
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one of the major vehicles by which shareholder activists communicate their concerns to management groups is through filing these
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shareholder lawsuit
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"shareholders sued the BOD for approving a buyout offer that the shareholders argued should have had a higher price tag"
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Public Securites Litigation Reform Act of 1995
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intended to rein in excessive levels of private securities litigation
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full disclosure or transparency
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one of public corporations' responsibilities to shareholders and potential shareholders
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ethics
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the discipline that deals with what is good and bad and with moral duty and obligation
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morality
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a doctrine or system of moral conduct
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business ethics
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concerned with good and bad or right and wrong behavior and practices that take place within a business context
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descriptive ethics
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concerned with describing, characterizing, and studying the morality of a people, an organization, a culture, or a society
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normative ethics
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concerned with supplying and justifying a coherent moral system of thinking and judging
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conventional approach to business
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essentially an approach whereby we compare a decision, practice, or policy with prevailing norms of acceptablility
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Four Important Ethics Questions
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1. What is it? (descriptive ethics)
2. What ought to be? (normative ethics) 3. How do we get from what is to what ought to be? 4. What is our motivation in all this? |
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immoral management
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an approach that not only is devoid of ethical principles or precepts but also implies a positive and active opposition to what is ethical
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moral management
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conforms to the highest standards of ethical behavior or professional standards of conduct
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integrity strategy
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characterized by a conception of ethics as the driving force of an organization
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two types of amoral management
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intentional, unintentional
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intentional amoral management
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do not factor ethical considerations into their decision, actions, and behaviors, because they believe business activity resides outside the sphere to which moral judgements apply
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unintentional amoral management
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do not think about business activity in ethical terms; they are simply casual about, careless about, or inattentive to the fact that their decisions and actions may have negative or deleterious effects on others
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compliance strategy
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more focused on obedience to the law as its driving force
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Kohlberg's levels of moral development
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Level 1-Preconventional Level
Stage 1: Reaction to punishment Stage 2: Seeking of rewards Level 2- Conventional Level Stage 3: Good boy/ nice girl morality Stage 4: Law and other morality Level 3- Postconventional, Autonomous, or Principled Level Stage 5: Social-contract orientation Stage 6: Universal ethical priniciple orientation |
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moral development
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there is a general sequence of three levels (each with two stages) through which individuals evolve in learning to think of develop morally
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moral imagination
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refers to the ability to perceive that a web of competing economic relatinoships is, at the same time, a web of moral or ethical relationships
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moral identification and ordering
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the ability to discern the relevance or nonrelevance of moral factors that are introduced into a decision-making situation
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tolerance of moral disagreement and ambiguity
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an extention of managerial talent or facility that is present in practically all decision-making situations managers face
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integration of managerial and moral competence
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moral issues in management do not arise in isolation from traditional business decision making but right smack in the middle of it
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sense of moral obligation
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the key to the process but is the most difficult to acquire, requires the intuitive or learned understanding that moral fibers- a concern for fairness, justice, and due process to people, groups, and communities- are woven into the fabric of managerial decision making and are the integral components that hold systems together
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teleological theories
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focus on consequences or results of the actions they produce
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deontological theories
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focus on duties
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aretaic theories
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the individual as essentially a member of a social unit and a moral virtue as a habit of behavior, a trait of character that is both socially and morally valued
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principle of utilitarianism
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a consequential principle, a teleological principle, "we should always act so as to produce the greatest ratio of good to evil for everyone
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categorical imperative (Kant)
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a duty based principle of ethics (deontological), it is an action that is morally obigatory; refers to obligatory nature of certain actions and to a way of reasoning about what is right and wrong
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rights
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utilitarianism implies that certain actions are morally right, when in fact they may violate another person's rights
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moral rights
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important, justifiable claims or entitlements, not dependent on a legal system to be valid
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legal rights
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rights by law
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principle of rights
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rights cannot simply be overridden by utility, a right can be overridden only by another, more basic or important right
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negative right
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the right to be left alone, the right to think and act free from the coersion of others
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positive right
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a right to something, such as a right to food, to health care, to clean air, to a certain standard of living, or to education
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principle of justice
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it involves the fair treatment of each person
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distributive justice
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distribution of benefits and burdens
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compensatory justice
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involves compensating someone for a past injustice
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procedural justice
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refers to fair decision making procedures, practices, or agreements
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ethical due process
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being sure that fairness characterizes the decision-making process
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process fairness
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three factors:
1. Have employees been given input into the decision making process? 2. Do employees believe the decisions were made and implemented in an appropriate manner? 3. Employees are watching to see how managers behave. |
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ethic of care
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principle of caring, based on responsiblity to others and on the continuity of interdependent relationships
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virtue ethics
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focuses on the individual becoming imbued with virtues
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servant leadership
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an approach to ethical leadership and decision making based on the moral principle of serving others first
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Golden Rule
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Do unto others as you would have them do unto you.
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ethical tests
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Test of Common Sense
Test of One's Best Self Test of Making Something Public Test of Ventilation- expose to others Test of the Purified Idea- authority says its appropriate Watch out for greed, speed, laziness, and haziness Gag test |
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Two Pillars of Leadership
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moral person, moral manager
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ethics programs
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embrace both compliance and ethics
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ethics officer
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one in charge of implementing the array of ethics initatives of the organization
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Ethics Check questions
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1. Is it legal?
2. Is it balanced? 3. How will it make me feel about myself? |
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codes of ethics or codes of conduct
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95% of corporations have them now, effectiveness revolves around the managerial policies and attitudes with their use
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ethics audits
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intended to carefully review such ethics initiatives as ethics programs, codes of conduct, hotlines, and ethics training programs
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corporate transparency
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refers to a quality, characteristic, or state in which activities, processes, practices, and decisions that take place in companies become open or visible to the outside world
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opacity
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an opaque condition in which activities and practices remain obscure or hidden from outside scrutiny and review
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ways of perceiving codes
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rule book, signpost, mirror, magnifying glass, shield, smoke detector, fire alarm, club
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Ethics Quick Test
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1. Is the action legal?
2. Does it comply with our values? 3. If you do it, will you feel bad? 4. How will it look in the newspaper? 5. If you know it's wrong, don't do it. 6. If you're not sure, ask. 7. Keep asking until you get an answer. |
