Business Ethics Key Terms

Chapter 1 Key Terms

• business ethics: the conduct by which companies and their agents abide by the law and respect the rights of their stakeholders, particularly their customers, clients, employees, and the surrounding community and environment
• compliance: the extent to which a company conducts its business operations in accordance with applicable regulation and statutes
• corporate culture: the shared beliefs, values, and behaviors that create the organizational context within which employees and managers interact
• corporate social responsibility (CSR): the practice in which a business views itself within a broader context, as a member of society with certain implicit social obligations and responsibility for its own effects on environmental and social well-being
• deontology: a normative ethical theory suggesting that an ethical decision requires us to observe only the rights and duties we owe to others, and, in the context of business, act on the basis of a primary motive to do what is right by all stakeholders
• ethical relativism: a view that ethics depends entirely upon context
• ethics: the standards of behavior to which we hold ourselves in our personal and professional lives
• goodwill: the value of a business beyond its tangible assets, usually including its reputation, the value of its brand, the attitude of its workforce, and customer relations
• integrity: the adherence to a code of moral values implying trustworthiness and incorruptibility because there is unity between what we say and what we do
• long-term perspective: a broad view of profit maximization that recognizes the fact that the impact of a business decision may not manifest for a long time
• normative ethical theories: a group of philosophical theories that describe how people ought to behave on the basis of reason
• shareholder: an individual or institution that owns stock or shares in a corporation, by definition a type of stakeholder; also called stockholder
• short-term perspective: a focus on the goal of maximizing periodic (i.e., quarterly and annual) profits
• social contract: an implicit agreement among societal members to cooperate for social benefit; when applied specifically to a business, it suggests a company that responsibly gives back to the society that permits it to incorporate, benefiting the community at the same time that it enriches itself
• stakeholders: individuals and entities affected by a business’s decisions, including customers, suppliers, investors, employees, the community, and the environment, among others
• stockholder: an individual or institution that owns stock or shares in a corporation, by definition a type of stakeholder; also called shareholder
• utilitarianism: a normative theory of ethics suggesting that an ethical act is the one whose consequences create the greatest good for the greatest number of people
• virtue theory: a normative theory that focuses on proper conduct guided by the training we received growing up

Chapter 2 Key Terms

• categorical imperative: Kant’s unconditional precept that we must “act only according to that maxim whereby you can, at the same time, will that it should become a universal law”; to act on the basis of good will rather than purely self-interested motives and never treat others as means toward an end without consideration of them as ends in themselves
• consequentialism: an ethical theory in which actions are judged solely by their consequences without regard to character, motivation, or absolute principles of good and evil and separate from their capacity to produce happiness and pleasure
• eudaimonia: the happiness or human flourishing that results from virtuous activity; it is more than contentment or satisfaction
• golden mean: in Aristotelian virtue ethics, the aim of ethical behavior, a value between excess and deficiency
• harm principle: the idea that the only purpose for which the power of the state can rightly be used is to prevent harm to others
• junzi :a person who is gracious, magnanimous, and cultured; a flourishing human being
• justice as fairness: Rawls’s summary of the essence of his theory of justice
• justice theory: the idea of fairness applied beyond the individual to include the community as well as analysis of social injustice with remedies to correct it
• li: the proper order of the universe and the customs and rituals that support order and harmony on Earth
• managerial ethics: a way of relating to self, employees, and the organization that balances individual and collective responsibility
• original position: in Rawls’s justice theory, a hypothetical situation in which rational people can arrive at a contractual agreement about how resources are to be distributed in accordance with the principles of justice as fairness
• phrónēsis: prudence or practical wisdom; the intellectual virtue Aristotle considered most important
• quan :expediency; a practical consideration of the relative rightness of options when considering a moral dilemma
• social contract theory: a theory that holds the natural state of human beings is freedom, but that human beings will rationally submit to some restrictions on their freedom to secure their mutual safety and benefit
• unanimity of acceptance: in Rawls’s theory, the requirement that all agree to the contract before it goes into effect
• utility function: a measure, in “utils,” of the value of a good, service, or proposed action relative to the utilitarian principle of the greater good, that is, increasing happiness or decreasing pain
• veil of ignorance: in Rawls’s theory, a condition in which people arrive at the original position imagining they have no identity regarding age, sex, ethnicity, education, income, physical attractiveness, or other characteristics; in this way, they reduce their bias and self-interest
• virtue ethics: an ethical system based on the exercise of certain virtues (loyalty, honor, courage) emphasizing the formation of character

Chapter 3 Key Terms

• amenities: resources made available to employees in addition to wages, salary, and other standard benefits
• descriptive approach: a theory that views the company as composed of various stakeholders, each with its own interests
• diffused stakeholder: a stakeholder with an interest in a company’s decisions and whose impacts on a firm can be large even if the relationship is generally weaker than other types
• enabling stakeholder: a stakeholder who permits an organization to function within the economic and legal system
• ethical maximum: the strongest action a company can choose to behave ethically in a given situation ethical minimum the least a company might do to claim it holds an ethically positive position exigency the level of urgency of a stakeholder claim
• functional stakeholder: a stakeholder whose relationships influence or govern an organization’s inputs and outputs
• greenwashing: carrying out superficial CSR efforts that merely cover up systemic ethics problems for the sake of public relations
• instrumental approach: a theory proposing that good management of stakeholders is important because it can help the bottom line
• normative approach: a theory that considers stakeholders as ends unto themselves rather than means to achieve a better bottom line
• normative stakeholder: a stakeholder in the organization’s industry who influences its norms or informal rules
• social responsibility of business: the view that stakeholders are not the means to the end (profit) but are ends in and of themselves as human beings
• stakeholder claim: a particular stakeholder’s interest in a business decision
• stakeholder management: the process of accurately assessing stakeholder claims so an organization can manage them effectively
• stakeholder prioritization: the process of deciding which stakeholders to focus on and in what sequence
• triple bottom line (TBL): a measure that accounts for an organization’s results in terms of its effects on people, planet, and profits

Chapter 4 Key Terms

• business judgment rule: the principle that officers, directors, and managers of a corporation are not liable for losses incurred when the evidence demonstrates that decisions were reasonable and made in good faith
• cap and trade: a system that limits greenhouse gas emissions by companies while allowing them to buy and sell pollution allowances
• carbon footprint: the amount of carbon dioxide and other carbon compounds released by the consumption of fossil fuels
• carbon tax: a pay-to-pollute system in which those who discharge carbon into the air pay a fee or tax
• Citizens United: a 2010 Supreme Court ruling in favor of unlimited spending by individuals and corporations on political campaigns
• Commerce Clause: an enumerated power listed in the Constitution giving the federal government the right to regulate commerce between states
• corporate personhood: the legal doctrine holding that a corporation, separate and apart from the people who are its owners and managers, has some of the same legal rights and responsibilities enjoyed by natural persons
• fiduciary duty: a very high level of legal responsibility owed by those who manage someone else’s money, which includes the duties of care and loyalty
• limited liability: a business owner’s protection against loss of personal assets, granted with corporate status
• moral minimum: the minimal actions or practices a business must undertake to satisfy the base threshold for acting ethically
• quid pro quo: the tradeoff someone makes in return for getting something of value; from the Latin meaning this for that
• Sarbanes-Oxley: legislation passed in 2002 that mandates reporting transparency by businesses in areas ranging from finance to accounting to supply chain activities
• shareholder primacy: a company’s duty to maximize profits for stockholders
• states’ rights: a view that states should have more governing authority than the federal government, based on the Tenth Amendment, which reserves to the states any right not specifically delegated to the federal government
• sustainability: a long-term approach to the interaction between business activity and societal impact on the environment and other stakeholders
• tragedy of the commons: an economy theory highlighting the human tendency to use as much of a free natural resource as wanted without regard for others’ needs or for long-term environmental effects or issues

Chapter 5 Key Terms

• acculturation: the cultural transmission and socialization process that stems from cultural exchange
• consumerism: a lifestyle characterized by the acquisition of goods and services
• enculturation: the process by which humans learn the rules, customs, skills, and values to participate in a society
• humanistic business model: a business model for balancing profitability and responsibility fairly, especially with regard to stakeholders
• localization: the process of adapting a product for non-native environments and languages, especially in other nations and cultures
• mercantilism: the economic theory that global wealth is static and prosperity comes from the accumulation of wealth through extraction of resources or trade
• moral agency: the self-awareness, freedom, and ability to make choices based on one’s perception of right and wrong
• universal values: ethical principles that apply everywhere despite differences in time, geography, and culture

Chapter 6 Key Terms

• business purpose exception: an exception to the Electronic Communications Privacy Act of 1986 that permits employers to monitor all oral and electronic communications, assuming they can show a legitimate business purpose for doing so
• closed shop: a union environment that requires new hires to be automatically enrolled in the labor union and union dues to be automatically deducted from their pay
• codetermination: a concept popular in Europe that gives workers the right to participate on the board of directors of their company
• collective bargaining: union negotiations with an employer on behalf of employees
• comparable worth: the idea that pay should be based upon a job holder’s worth to the organization rather than on salary history
• consent exception: an exception to the Electronic Communications Privacy Act of 1986 that allows employers to monitor employee communications provided employees have given their consent
• EEOC: the Equal Employment Opportunity Commission, created by the U.S. Civil Rights Act of 1964 and which attempts to eliminate discrimination in the workplace based on race, gender, or creed
• employment at will: a legal philosophy that holds that either the employee or the employer may dissolve the employment arrangement at will (i.e., without cause and at any time unless an employment contract is in effect that stipulates differently)
• OSHA: the Occupational Safety and Health Act, which governs workplace safety, and the Occupational Safety and Health Administration, which administers the act at the federal level
• pay ratio: the number of times greater the average executive’s salary is than the average worker’s
• right-to-work law: a state law that says a worker cannot be forced to join a union
• sexual harassment: unwelcome touching, requests for sexual favors, and other verbal or physical harassment of a sexual nature from a supervisor, coworker, client, or customer

Chapter 7 Key Terms

• brand: a type of product or service marketed by a particular company under a particular name
• branding: the process of creating, differentiating, and maintaining a particular image and/or reputation for a company, product, or service
• bribe: a payment in some form (cash or noncash) for an act that runs counter to the legal and ethical culture of the work environment
• duty of confidentiality: a common-law rule giving an employee responsibility to protect the secrecy of the employer’s proprietary information, such as trade secrets, material covered by patents and copyrights, employee records and salary information, and customer data
• duty of loyalty: a common-law rule that requires an employee to refrain from acting in a manner contrary to the employer’s interest
• Foreign Corrupt Practices Act: an amendment to the Securities and Exchange Act of 1934; its main purpose is to make it illegal for companies and their managers to influence or bribe foreign officials with monetary payments or rewards of any kind in an attempt to get or keep business opportunities outside the United States
• insider trading: the buying or selling of stocks, bonds, or other investments based on nonpublic information that is likely to favorably affect the price of the security being traded
• intellectual property: the manifestation of original ideas, protected by legal means such as patent, copyright, or trademark
• internal marketing: the process of getting employees to believe in the company’s product and even to buy it
• non-compete agreement: a contract clause ensuring that employees will not compete with the company during or after employment there
• nondisclosure agreement: an agreement to prevent the theft of trade secrets, most of which are protected only by a duty of secrecy and not by federal intellectual property law
• nonsolicitation clause: an agreement that protects a business from an employee who leaves for another job and then attempts to lure customers or former colleagues away
• pay secrecy: a policy of some companies to prevent employees from discussing their salary with other workers
• qui tam provision: the section of the False Claims Act of 1863 that allows private persons to file lawsuits for violations of the act on behalf of the government as well as for themselves and so receive part of any penalty imposed
• trade secret: a company’s technical or design information, advertising and marketing plans, and research and development data that would be useful to competitors
• whistleblowing: the act of reporting an employer to a governmental entity for violating the law work style the way and order in which we are most comfortable accomplishing our tasks at work workplace personality the manner in which we think and act on the job

Chapter 8 Key Terms

• animal rights: the entitlement of nonhuman animals to ethical treatment
• diversity dividend: the financial benefit of improved performance resulting from a diverse workforce
• inclusion: the engagement of all employees in the corporate culture
• income inequality: the unequal distribution of income among the participants of an economy
• reasonable accommodation: a change or adjustment to a job or other aspect of the work environment that permits an employee with a disability or other need to perform that job
• undue hardship: a difficulty or expense to the firm significant enough that reasonable accommodation may not be required

Chapter 9 Key Terms

• advertising: commercial messages urging the purchase of new or improved products or services that reach us in every medium: print, online, digital, television, radio, and outdoor
• Affordable Care Act (ACA) : the Patient Protection and Affordable Care Act of 2010, often known as the Affordable Care Act or simply “Obamacare,” a comprehensive federal health care management system
• claim: a request to an insurance carrier for monetary compensation for a loss sustained by a customer
• copayment: a partial charge for covered care negotiated by the provider and the employer and paid by the employee
• deductible: the annual portion of health care costs the patient must assume before full insurance coverage applies
• entrepreneur: a business leader willing to take on the risk of starting a new company and offering a product or service in the hope of a profit
• entrepreneurial culture: the combination of personality and management style with which entrepreneurs shape the initial business practices and ethical environment of their firm
• multipayer health care system: a means of providing health care in which the patient and others such as an employer and a private health insurance company all pay for the patient’s care
• premiums: the fees customers pay for different forms of coverage
• psychological appeal: advertising intended to bolster consumers’ self-esteem if certain products or services are purchased
• redlining: a discriminatory (and usually illegal) insurance practice of denying certain coverages in specific neighborhoods or selling them there at a higher price
• single-payer health care system: a means of providing health care in which state or national tax revenues would pay for citizens’ medical care, with the government being the sole payer
• subliminal advertising: appeals including words and images that reach us at a level below our consciousness
• universal health care system: a means of providing health care to all, funded through taxes and overseen by the central or federal government
• wellness programs: employer initiatives that stress healthy eating, exercise, weight management, smoking cessation, and other efforts, to sustain employees’ health and reduce health care costs

Chapter 10 Key Terms

• access economy: a nontraditional business model in which consumers participate on both sides of a transaction, sometimes facilitated by a third party
• artificial intelligence (AI) : the branch of science that uses computer algorithms to replicate human intelligent behavior by machines with minimal human intervention
• flextime: a work schedule in which employees can select their own start and finish time
• gig economy: an environment in which individuals and businesses contract with independent workers for the completion of short-term assignments, engagements, or projects, offering few or no benefits beyond compensation
• job sharing: the use of two or more employees to perform the work of one full-time position
• robotics: a field of research that includes computer science, mechanical and electronics engineering, and science process with the objective to produce robots, or related forms of automation, to replicate human tasks
• telecommuting: working from a remote location (home or other space) by means of electronic connections