What says stockholder theory?

(Friedman)
There is one and only social responsibility of business- to use its resources
and engage in activities designed to increase its profits so long as it stay
within the rules of the game, which is to say, engage in open and free
competition without deception or fraud.
What says stakeholder theory? (Freeman)
o The basic idea is that businesses, and the executives who manage
them, actually do and should create as value for customers, suppliers,
employees and financiers (or shareholders)
o Value not profit
o No business, no matter how successful, exists in a vacuum
o Ongoing success depends on relationships with stakeholders, and in
any relationship, you cannot mistreat your partner and expect things
to work out long term.
What are side constraints?
o It is the social responsibility people and companies are ought to do in
order to meet the societys safety and needs. Milton Friedman
disagrees with this argument.
o Side constraints are not concerned with the end goal of their
implementation, but rather those actions themselves. For example, a
side constraint may be do not murder. This would be a side
constraint moral rule if you implement that not looking at what would
be the consequences of not murdering people. Murder would be
considered bad, whatever the consequences may follow, even if
murder increased the happiness and prosperity of a nation or group of
people.
Why do we need ethics?
Humans are communal animalswe live and work togetherand in
order to exist together and work successfully with one another, we
must have certain constraints on our (otherwise generally selfinterested) behavior
Be
o
o
o
o
o
o
o
o

able to fully define and apply each of the following:

Subjective relativism
Cultural relativism
Divine command theory
Ethical egoism
Kantianism
Act utilitarianism
Rule utilitarianism
Social contract theory

o Virtue ethics
o Ethics of care
What are the three dimensions of justice? How are they defined?
Procedural: The fairness of the processes used to decide those outcomes
Distributive: The fairness of ones outcomes from a decision making
system. E.g when rewards are allocated according to the contribution
made
Interactional: The fairness of the interpersonal exchanges that occur
during work e.g whether or not someone is treated respectfully.
What is a justice climate?
A groups shared perception of how fairly they are treated
Be able to list and describe the seven attributes used to measure
harm/benefit (e.g., intensity, fecundity)
Intensity The magnitude of the experience.
Duration How long the experience lasts.
Certainty The probability of it actually happening.
Propinquity How close the experience is in space and time.
Fecundity The ability of the experience to produce more of the same
kind.
Purity - How diluted the pleasure is by pain (or the pain by pleasure).
Extent The number of people affected.
What is a right?
o Positive right: A right that obligates others to do something on your
behalf. The right to a free education is a positive right. In order for you
to have that right, the rest of society must allocate resources so that
you may attend school.
o Negative right: A right that another can guarantee by leaving you
alone to exercise your right. For example, the right of free expression
is a negative right. In order for you to have that right, all others have
to do is not interfere with you when you express yourself.
o Absolute right: A right that is guaranteed without exception.
Negative rights, such as the right to life, are usually considered
absolute rights.
o Limited right: A right that may be restricted based on the
circumstances. Typically, positive rights are considered to be limited
rights.

What is a vice? What are some examples?

o A character trait that prevents a human being from flourishing or
being truly happy. They are basically the opposite of virtues. For
example, the virtue of courage can be seen occupying a middle
ground between cowardice (having excess fear) and rashness (having
a deficiency of fear).
Define the following:
o Moral issue: A moral issue is present when a persons actions are
both of his/her own volition (i.e., freely performed; by choice) and
likely to result in harm or benefit to others.
o Moral agent: A person who makes a moral decision, even though
she/he might not realize a moral issue is in play.
o Ethical decision: A decision that is both legal and moral.
o Ethical fading: results from the pervasive tendency to reduce
workplace decisions to just business and thus short-circuit moral
awareness mechanisms.

Describe and apply Rests ethical decision-making model.

o A moral agent must recognize the moral issue (explicit), make a moral
judgement (cognitive moral development), resolve to place moral
concerns ahead of other concerns (establish moral intent), and act on
the moral concerns (engage in moral behavior).

Explain the concept of moral intensity. List and define each

of the six components of moral intensity.

o Moral Intensity: Is an issue- contingent model of ethical decisionmaking based on the supposition that situations vary in terms of the
moral imperative present in that situation. It focuses on the moral
issue, not on the moral agent or the organizational context.
o Six Components:
Magnitude of consequences: The sum of harms/benefits done to
victims/beneficiaries of the potential act.
Social consensus: The degree of social agreement that a proposed
act is evil/good.
Probability of effect: [Likelihood that the act will actually take
place] x [Likelihood that the act actually cause the harm/benefit
predicted].

Temporal immediacy: The length of time between the present and

the onset of consequences from the moral act (sooner = greater
immediacy).
Proximity: Extent to which victims/beneficiaries of the act are
perceived as socially, culturally, psychologically, and/or physically
near the moral actor.
Concentration of effect: The inverse function of the number of
people affected by an act of a given magnitude. (e.g., 10 people
losing 10,000,000 USD would be a more concentrated effect than
10,000,000 people losing 10 USD, even though the magnitude of
either event is 100,000,000 USD)

o Joness Propositions about Moral Intensity:

RE: Moral AwarenessIssues of high moral intensity will be
recognized as moral issues more frequently than will issues of low
moral intensity
RE: Moral JudgmentIssues of high moral intensity will elicit more
sophisticated moral reasoning than will issues of low moral intensity
RE: Moral IntentMoral intent will be established more frequently
for issues of high moral intensity than with issues of low moral
intensity
RE: Moral BehaviorMoral behavior will be observed more
frequently for issues of high moral intensity than with issues of low
moral intensity
List and describe the five factors that contribute to business
ethics breakdowns (see slides)
o Ill-conceived goals: People tend to do what they are measured on
and/or rewarded for; we set goals and incentives to promote a desired
behavior, but they encourage an unethical one.
o Motivated blindness: We tend to overlook the unethical behavior of
others when it is in our own interest to remain ignorant of whats
going on.
o Indirect blindness: We tend hold others less accountable for
unethical behavior when it is carried out through third parties.
o The slippery slope: We are less able to see others unethicality when
it develops gradually.
o Overvaluing Outcomes: We tend to judge unethical behavior less
harshly if the outcome is good.
What is the instrumental rationale for businesses acting
responsibly? What are the two non-instrumental rationales?
o Instrumental (Strategic Ethics): Businesses should behave
ethically because not to do so hampers profits. Good ethics is good

business. (E.g., if firms dont take account of society's values, they

end up isolated from the values of the customers they seek to attract)
o Non-instrumental (Principled Moral Reasoning): A wellfunctioning society requires that all its members act according to
moral principles;
a firm, as a member of society, is obligated by its voluntary
participation in society to comply (i.e., behave ethically)
and (or, if you dont want to buy into a firm being a person and thus
having moral obligations) a firm is not a magic box that somehow
erases a persons (i.e., a managers) moral obligations as a member
of broader society.
What says the agent morality view?
o Managers have moral obligations that come BEFORE (i.e., are superior
to) profit maximization, but lets not get carried away There are
FOUR that should be primary:
1. Honor agreements
2. Dont lie
Dont impinge on liberty:
3. Dont harm others
4. Respect the autonomy of others
o These four are necessary conditions for markets to function and
contracts to be binding. Without them, the principle-agent contract is
null; to disregard them is erode the basis upon which the contract is
made.
o The basic idea is that businesses, and the executives who manage
them, actually do and should create value for customers, suppliers,
employees, and financiers (or shareholders) (Value, not profit)
o No business, no matter how successful, exists in a vacuum. Ongoing
success depends on relationships with stakeholders, and in any
relationship, you cannot mistreat your partner and expect things to
work out long term.
What is the point of the triple bottom line? Know ALL
o Ellingtons triple bottom line is intended to advance the goal of
sustainability in business practices. The three measures include: profit
(the economic value created by the company, or the economic benefit
to the surrounding community and society), people (the fair and
favorable business practices regarding labor and the community in
which the company conducts its business) and planet (the use of
sustainable environmental practices and the reduction of environment
impact).
o Also, be able to properly label the seven regions in the triple bottom
line diagram (e.g., People, Bearable, Planet, etc.).


What is whistleblowing? How is it different from leaking?
o Whistleblowing: The disclosure by a person, usually an employee in
an government agency or private enterprise, to the public or to those
in authority of gross mismanagement, corruption, illegality, or some
other form of serious wrongdoing.
o Leaking: An action that is not protected by law, since it involves
illegally revealing confidential company or government secrets or
information to some outside person or agency.
What is intellectual property and why is it important?
o Intellectual Property: Products of the intellect (i.e. output of the
mind) that can be owned in some sense.
o Intellectual property protection is critical to fostering innovation.
Without protection of ideas, businesses and individuals would not reap
the full benefits of their inventions and would focus less on research
and development. Similarly, artists would not be fully compensated for
their creations and cultural vitality would suffer as a result.
For what reasons might one be said to have a right to privacy?
What is privacy? Why do we value privacy?

the state or conditon of being free from being observed or

disturbed by other people

someone's right to keep their personal matters and relationships

secret

o Necessary for special relationships of intimacy and trust, or on its

being necessary for democracy. If we want such relationships, we must
create domains of privacy. If individuals are constantly being
observed, they will not be able to exercise the kind of independent
thinking that is essential for democracy to work. Remember that
freedom is one of the most fundamental aspects of democracy.
o Necessary for control over information about oneself (Parent, 1983).

o Required for human dignity (Bloustein, 1964).

o Crucial for intimacy (Gerstein, 1978; Inness, 1992).
o The value that accords us the ability to control the access others have
to us (Gavison, 1980; Allen, 1988; Moore, 2003).
o Acts as a set of norms necessary not only to control access but also to
enhance personal expression and choice (Schoeman, 1992).
What is transactional advertising?
What are ways in which
transactional advertising might be deceptive and examples of
each?
o Transactional Advertising: Advertising that provides information
relevant to transactions (of money for products) e.g., purpose, price,
or specifications of the product. (E.g., Come on down to Sleep Train
where you can get the Super Sleeper Mattress for only $699)
o Deceptive Practices:
Deceptive Pricing: Falsely advertising factory, wholesale,
clearance or other seemingly large reductions from a phony high
original retail (list) price. (E.g., Tire shop selling new and used
wholesale tires for reduced prices)
Deceptive Promotion: Overstating a products features or
performance, creating false sense of urgency coupled with perceived
savings. (E.g., Bait-and-Switch advertising, Puffery) (E.g., Dettol:
Kills 99.9% of bacteria)
Deceptive Packaging: Exaggerating package contents through slick
design, misleading quantity or quality imagery and misleading
labeling. (E.g., Marlboro and Marlboro lights packs)
What is branding? How might branding efforts be unethical?
o Branding: Advertising that does not give real information about the
products price, availability or qualities.
o aims to make you feel a certain way about the product/brand. (E.g.,
Nike and Coke)
o Creates false wants and needs. Promotes poor quality products. Makes
people materialistic (to the point that they define themselves in terms
of products).
o The fundamental purpose of advertising is to persuade. Is advertising
morally problematic in all circumstances? In some? Why? Answer from
these perspectives:
Kantian Utilitarian Virtue Ethics
What is involved in establishing a diversity strategywhat are key
components? (see Good Practice Note)

o Top management commitment: Support for diversity initiatives at

all levels of the organization is important, but senior-level support is
critical.
Auditing and assessment of needs: Determine the needs of your
organization in the area of diversity. Merely taking an off the shelf
program will only lead to the development of a plan and targets that
are inappropriate to the business and as a result are less likely to be
achieved.
o Clarity of objectives: A strategy to promote diversity should be
based on clear, quantifiable objectives within defined time scales.
Look to develop indicators for the various aspects of the plan and
regularly check progress.
o Promotion of accountability: Transparent and fully understood
processes on diversity will lead to a more successful outcome, and will
also help to avoid any misunderstandings or feeling that there is more
favorable treatment of one group.
o Establishment of a diversity team: There should be more than one
or two staff members, but too many members can be
counterproductive. It is important to remember that inclusion is better
than exclusion. Find a way for willing individuals to participate.
Encourage a broad base of participation.
o Communication: Information regarding the progress and purpose of
a diversity strategy should be spread throughout the organization.
Further, seeking feedback from employees is an important way of
developing the strategy and heading off any discontent. Diversity
training and education are critical for the success of initiatives.
o Individual understanding: While it is important to create plans for
the overall organization, individuals need to understand their specific
role in the success of the strategy. As part of this process, try to set
appropriate goals for managers.
o Diversity champions: One measure of success is the number of
individuals who have seamlessly integrated the goals of the diversity
strategy into the work plan for their own departments/divisions. As
these champions emerge, the success of the diversity strategy
stabilizes and grows.
o Evaluation: Any workplace change initiative should be evaluated with
reference to the vision, objectives and indicators established at the
start of the process. The same goes for a diversity strategy.
Why is gay and transgender discrimination especially costly to
businesses?
o Employment discrimination cripples employers ability to
recruit talent:
Recruitment: In the business community the new reality is one that
puts a premium on talented labor. Consequently, American

businesses must make hiring decisions based solely on a candidates

skills and abilities that directly relate to performance on the job if
they are to outperform the competition. When employers hire
individuals based on job-irrelevant characteristics such as sexual
orientation and gender identity, businesses are left with a
substandard workforce that diminishes their ability to generate
healthy profits.
Employee discrimination decreases retention rates and
introduces turnover-related costs:
Retention: Retaining employees are equally important to a
companys financial strength. Discrimination, however, forces
otherwise qualified gay and transgender employees out of a job and
into the ranks of the unemployed. This introduces numerous
turnover-related costs since employers must then find, hire, and
retrain employees to replace those who have left due to workplace
discrimination. This takes significant amounts of time, money, and
resources that could have instead been spent on primary business
operations. According to a recent study, to replace a departing
employee costs somewhere between $5,000 and $10,000 for an
hourly worker, and between $75,000 and $211,000 for an executive
making $100,000 a year.4
Employee
discrimination
stifles
job
performance
and
productivity:
Job performance and productivity: Sexual orientation and gender
identity discrimination in the workplace needlessly compromise
maximum labor productivity and workforce output. Discrimination
and hostility in the workplace prevent employees from performing
their core functions on the job. Moreover, it introduces unnecessary
costs by increasing absenteeism, lowering productivity, and fostering
a less motivated, less entrepreneurial, and less committed workforce.
Workplace discrimination limits access to consumer markets:
Marketing to consumers: Discrimination can be costly not only in
terms of labor supply but also in terms of consumer demand. When
companies discriminate and allow unfairness to go unchecked in the
workplace, consumers increasingly react by actively choosing to do
business elsewhere. This is certainly true of gay and transgender
consumers who are especially responsive to corporate social
responsibility. Companies simply cannot afford to lose a share of this
market that wields a cumulative spending power of nearly $1 trillion.

o Costly legal ramifications of workplace discrimination:

Litigation: Workplace discrimination exposes businesses to
potentially costly lawsuits. Allowing discrimination against gay and
transgender employees can be especially harmful in states that have
outlawed gay and transgender workplace discrimination. Businesses,

however, are also increasingly liable for discrimination suits even in

states that have not outlawed gay and transgender discrimination,
making discrimination economically unwise for companies in all 50
states. In 2010 the top 10 private plaintiff employment discrimination
lawsuits cost firms more than $346 million.
What is gender intelligence and what are its implications for
promoting gender equality at work?
o The equal access to opportunities for both genders within a business
community. A way to tackle the gender intelligence issue is to address
it as an unconscious bias.
There are two general climate change strategies: Innovation and
Compensation. List these and explain what each entails.
Innovation: Greater emphasis on improvements in business activities to
improve a companys assets (whether via process improvements, product
development or market development)
Compensation: Transfer of emissions-generating activities through the
development of new climate-friendly technologies.
Combining both: Carbon neutrality is achieved when emissions from a
product or activity or whole organization are netted, either through the
purchase of an equivalent number of offsets or through a combination of
emission reduction and offsetting.
What are the three stages of environmental strategy? What does
each encompass? (Slides 9&10 page 12)
Stage One: Pollution prevention (minimize or eliminate waste before it is
created)
Stage Two: Product Stewardship (minimizing pollution from manufacturing
and environmental impacts from full product life cycle)
Stage Three: Clean Technology (Plan for an invest in tomorrows
environmentally sustainable technologies)
List and define these ecological sustainability tools:
Environmental Management Systems, C2C analysis and design,
ISO standards
Environmental Management Systems: Structures, systematic
comprehensive, planned and documented management of an
organizations environmental impact
C2C Analysis: A term used to describe a material or product that is
recycled into a new product at the end of its life, so that ultimately
there is no waste and zero litter.
ISO Standards: Document that provides requirements,
specifications and guidelines that can be used consistently to ensure
that materials, products, processes and services fit for their purpose.

What is green marketing? Greenwashing?