What caused the US to have a financial crisis?

greedy borrowers and lenders

How can we restore trust in the free market system, and in leaders in general?

1. Those who break the law should be punished accordingly.
2. New laws make accounting records more transparent.
However, the problem with writing new laws is that people may begin to think that any behavior that is within the law is also acceptable.

Ethics

Society's accepted standards of moral behavior; aka behaviors accepted by society as right rather than wrong.

The most common form of cheating in schools today

Plagiarism.

Getting fired for refusing to support your boss's inflated expense report is a negative consequence of acting___________.

ethically

An unethical dilemma presents a situation for the decision maker in which there are two...

equally unsatisfactory alternatives

Laws

make businesspeople more accountable for their actions than knowing what is ethical

Why should a business be managed ethically?

To maintain a good reputation, keep existing customers and attract new ones, avoid lawsuits, reduce employee turnover, avoid government intervention in the form of new laws and regulations controlling business activities, please customers, employees, and society, and simply to do the right thing.

Compliance-based ethics codes

Emphasize preventing unlawful behavior by increasing control, and penalizing wrongdoers.

Integrity-based ethics

Define the organization's guiding values, create an environment that supports ethically sound behavior, and stress shared accountability.

6 steps many believe can improve US business ethics

1. Top management must adopt, and unconditionally support an explicit corporate code of conduct.
2. Employees must understand that expectations for ethical behavior begin at the top, and that senior management expects all employees to act accordingly.
3. Managers, and others must be trained to consider the ethical implications of all business decisions.
4. An ethics office must be set up with which employees can communicate anonymously, and whistleblowers must feel protected by retaliation. The act also requires reinstatement and back pay to people who were punished by their employers for passing information about fraud on to authorities(In addition, corporate whistleblowers who provide information that leads to a successful enforcement action to collect 10-30 percent of the total penalty for violations that exceed $1 million).
5. Outsiders such as suppliers, subcontractors, distributors, and customers must be told about the ethics program. Pressure to put aside ethical considerations often comes from the outside, and it helps employees resist such pressure when everyone knows what the ethical standards are.
6. The ethics code must be enforced with timely action if any rules are broken. That is the most forceful way to communicate to all employees that the code is serious.

Whistleblowers

insiders who report illegal, or unethical behavior

Corporate Social Responsibility(CSR)

The concern businesses have for the welfare of society, not just for their owners. It goes well beyond being ethical- it is based on a commitment to integrity, fairness, and respect.

Those who oppose CSR believe that...

it is using investors' money in ways they didn't intend

Research has shown that companies engaged in corporate social responsibility...

Draw more customers, retain better employees, and enjoy greater employee loyalty.

Corportate Philanthropy

Includes charitable donations to nonprofit groups of all kinds.

Corporate social initiatives

Include enhanced forms of corporate philanthropy.

Corporate responsibility

Includes essentially everything that has to do with acting responsibly within society(Ex. treating employees fairly, and ethically).

Corporate policy

Refers to the position a firm takes on social, and political issues

4 basic rights of consumers

1. Right to safety
2. Right to be informed
3. Right to choose
4. Right to be heard
(These rights will be achieved only if businesses and consumers recognize them and take action in the marketplace.)

Benefits of social media in business

Companies use this to raise awareness.
It also allows companies to reach broad and diverse groups, connect directly with customers in a low-cost, efficient way, and enables them to interact with specific groups more easily than through more traditional efforts.

Insider trading

An unethical activity in which insiders use private company information to further their own fortunes, or those of their family and friends.
After many cases of insider trading, a new rule was passed that requires companies that release any information to share it with everyone, not just a few people.

Social audit

A systematic evaluation of an organization's progress toward implementing socially responsible and responsive programs. However, one of its major problems is establishing procedures for measuring a firm's activities, and their effects on society.

5 groups that serve as "watchdogs" to monitor how well companies enforce their ethical, and social responsibility policies

1. Socially conscious investors- insist that a company extend its own high standards to its suppliers.
2. Socially conscious research organizations- analyze, and report on corporate social responsibility efforts.
3. Environmentalists- apply pressure by naming companies that don't abide by environmentalists' standards.
4. Union officials- track down violations and force companies to comply to avoid negative publicity.
5. Customers- make buying decisions based on their social conscience.

Why do many US businesses demand socially responsible behavior from their international suppliers?

They want to make sure they don;t violate U.S. human rights, and environmental standards.

Foreign Corrupt Practices Act(FCPA)

Prohibits employees from offering, or paying bribes to officials of foreign governments for the purpose of persuading the officials government to do business with those companies.

Many businesses believe that they should have an influential, and important role in...

building communities

How do people learn their organizational ethics?

From observing the standards values, and behaviors of leaders, and other employees.

What exhibits subtle consequences of treating employees poorly?

Blaming mistakes on others, hoarding resources, and making results look better than they are.

Ranking the type of jobs according to their importance in influencing the implementation of ethical standards(From most to least influential).

1. Top management
2. Supervisor
3. Full-time co-workers
4. Part-time co-workers

Studies have shown that what most influences a company's effectiveness and financial performance is...

responsible management of human resources

The Green Movement

Creates jobs in new industries(such as the manufacture of solar panels).

A company that has socially responsible human resources management is...

likely to perform better financially.