Review Ethics Exam V Part 1

Summary

In this review, Mary Schecter Butler discusses the importance of business ethics and the Sarbanes-Oxley Act. She explains the distinction between law and ethics, emphasizing that legality is the minimum standard while ethics guide moral behavior in business. The Exxon Valdez case illustrates the consequences of unethical decisions. Butler introduces deontological and utilitarian ethical philosophies, highlighting their impact on business decisions. She stresses the significance of corporate social responsibility and the role of stakeholders in ethical decision-making, concluding with the necessity for corporate leaders to uphold ethical standards.

Takeaways

• 📚 Business ethics help make better decisions by understanding previous decisions and applying moral principles in a business setting.
• ⚖️ Law is considered the moral minimum in business decisions, and ethics come into play after determining legality.
• 💼 Ethical decisions in business involve evaluating legal implications, public relations, safety risks, and financial impacts.
• 🛢️ The Exxon Valdez case illustrates how ethical lapses can lead to severe environmental and financial consequences, with Exxon punished for ignoring known risks.
• 🔨 Punitive damages in legal cases serve as a punishment and deterrent, as seen with Exxon's reduced $2.5 billion penalty for reckless actions.
• 🤝 Two main ethical frameworks in business are Kantian (duty-based) and utilitarian (outcome-based), which focus on fulfilling duty and maximizing happiness, respectively.
• 🌍 Stakeholders in ethical business decisions include not only the company, employees, and customers but also communities, countries, and the global environment.
• 🏢 Corporate social responsibility means businesses must act ethically and be accountable to all stakeholders, beyond just pursuing profit.
• 👔 Ethical leadership starts at the top of organizations, with directors, officers, and managers expected to make responsible decisions.
• 📝 The Sarbanes-Oxley Act of 2002 was enacted to ensure ethical behavior in publicly traded companies, adding accountability for corporate leadership.

Q & A

What is the primary reason for studying business ethics?

The primary reason for studying business ethics is to make better decisions and to understand the decisions people have made previously within a business context.

How does law relate to business ethics?

Law represents the moral minimum, and it is the first step in deciding whether or not to undertake an action. If an action is legal, the next question is whether it is ethical.

Why is it important to make ethical decisions in business?

It is important to make ethical decisions in business to evaluate the legal implications, public relations impact, safety risks for consumers and employees, and financial implications.

What are the consequences of ethical lapses in the judiciary?

Ethical lapses in the judiciary can lead to findings of bad faith and the award of punitive damages.

Can you provide an example of punitive damages from the script?

The Exxon Valdez case is an example where punitive damages were awarded. Originally, it was $5 billion against Exxon, which was later reduced to $2.5 billion.

What are the two basic kinds of ethics discussed in the script?

The two basic kinds of ethics discussed are deontological ethics (Kantian ethics) and utilitarian ethics.

What is deontological ethics and how does it relate to business?

Deontological ethics is based on duty, regardless of the consequences. It generally arises from religious beliefs or philosophical reasoning. In business, if a corporation fulfills its duty to its customers, it is considered ethical according to deontological ethics.

How does utilitarian ethics differ from deontological ethics?

Utilitarian ethics focuses on the consequences of actions, without regard to the underlying concept of duty. It is outcome-based and considers the greatest good for the greatest number.

What is the concept of utility in utilitarian ethics?

In utilitarian ethics, utility is equated to happiness. Every unit of happiness and unhappiness is considered, and decisions are justified when they create the most utility for the most people.

What is corporate social responsibility as discussed in the script?

Corporate social responsibility means that corporations and businesses are citizens of the communities they are in and should act ethically and be accountable to stakeholders for their actions.

What are stakeholders in the context of business ethics?

Stakeholders include the corporation itself (stockholders or owners), the people who work in the business, directors, officers, customers, suppliers, and communities.

Why did Congress enact the Sarbanes-Oxley Act of 2002?

Congress enacted the Sarbanes-Oxley Act of 2002 to ensure that officers and directors of publicly traded companies are ethical and to prevent corporate and accounting fraud.