Business Ethics

107 flashcards by MentisLibrary

The frameworks from Kant to Rawls, applied to conflicts of interest, whistleblowing, and corporate governance. Grounded throughout in what actually happened at Enron, Volkswagen, Wells Fargo, Theranos, and Challenger.

What is business ethics?
The study of what constitutes right and wrong conduct in a commercial context, and how organizations should make decisions affecting stakeholders
What is the difference between what is legal and what is ethical?
Law sets an enforceable minimum standard; ethics asks what ought to be done, which is often more demanding and sometimes conflicts with law
What is consequentialism?
The view that the morality of an action is determined by its outcomes
What is utilitarianism?
The consequentialist principle that the right action is the one producing the greatest good for the greatest number
What is the main criticism of utilitarianism in business?
It can justify serious harm to a minority if the aggregate calculation favors it, and it requires quantifying incommensurable goods
What is deontology?
The view that certain acts are right or wrong in themselves, regardless of consequences, because of duties and rules
What is Kant's categorical imperative?
A test for moral rules: act only on a principle you could will to become a universal law, and treat people always as ends in themselves, never merely as means
What does treating people as ends and not merely as means require in business?
Respecting the autonomy and dignity of employees, customers, and suppliers rather than using them purely instrumentally
What is virtue ethics?
An approach focusing on the character of the actor rather than rules or outcomes, asking what a person of good character would do
What is the doctrine of the mean in virtue ethics?
Virtue lies between deficiency and excess of a trait
What is the ethics of care?
An approach emphasizing relationships, context, and responsiveness to the needs of particular people rather than abstract universal rules
What is justice as fairness?
A theory holding that principles of justice are those that free and equal people would choose from behind a veil of ignorance about their own position
What is the veil of ignorance?
A thought experiment where you choose rules without knowing what position you will occupy under them, forcing impartiality
What is distributive justice?
Fairness in how benefits and burdens are allocated among people
What is procedural justice?
Fairness in the process used to reach a decision, independent of the outcome
What is the disclosure or newspaper test?
A practical heuristic asking whether you would be comfortable if the decision were reported accurately on a front page
What is the mirror test in ethics?
A heuristic asking whether you could look at yourself in the mirror after the decision, testing consistency with your own values
What is moral relativism, and what is the business objection to it?
The view that moral standards are only valid relative to a culture; the business objection is that it can be used to justify exploiting weaker local standards
What is ethical absolutism?
The view that certain moral standards apply universally regardless of culture or context
What is a stakeholder in ethics?
Any group affected by or able to affect a company's actions: employees, customers, suppliers, communities, creditors, and shareholders
What is stakeholder theory?
The view that a firm should create value for all its stakeholders, not just shareholders, and that these interests are usually interdependent rather than opposed
What is shareholder primacy?
The view that a company's primary responsibility is to maximize returns for shareholders within the rules of the game
What did Milton Friedman actually argue about corporate social responsibility?
That managers are agents of shareholders and should maximize profits while conforming to the basic rules of society, both law and ethical custom
What is the Business Roundtable's 2019 statement on the purpose of a corporation?
A statement signed by nearly 200 US chief executives committing to deliver value to customers, employees, suppliers, communities, and shareholders
What is corporate social responsibility, or CSR?
A company's voluntary commitment to operate in ways that account for social and environmental impact beyond legal requirements
What is Carroll's pyramid of corporate social responsibility?
A four level model: economic responsibilities as the base, then legal, ethical, and philanthropic responsibilities
What is the triple bottom line?
An accounting framework measuring performance across people, planet, and profit rather than financial results alone
What is greenwashing?
Making misleading claims about environmental benefits to appear more sustainable than the company actually is
What is ESG?
Environmental, social, and governance: a set of non financial criteria used to assess a company's practices and risks
What is a conflict of interest?
A situation where a person's private interest could improperly influence their professional judgment or duty