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LGST 210 Midterm
| Question | Answer |
|---|---|
| What does CSV stand for? How do Porter and Kramer define it? | Creating Shared Value; Shared values are policies and operating practices that enhance the competitiveness of a company while simultaneously advancing the economic and social conditions in the communities in which it operates |
| What three way companies can create shared value, according to Porter and Kramer? | re-conceiving products and markets redefining productivity in the value chain enabling local cluster development |
| In what ways are Porter and Freeman similar? | Porter = creating shared value Freeman = stakeholder theory both try and avoid trade-offs |
| Name two of Porter's well-known strategic theories. | Five Forces Shared Values |
| What are some critiques of Porter's Shared Values model? | When both social and company values cannot be achieved simultaneously, how should one weigh and balance the two? Companies should follow certain socially responsible behavior, even if it does not enhance competitive posture. |
| Explain the "resource curse" and how it pertains to the Exxon Mobil Chad/Cameroon Pipeline case study. | when countries with an abundance of non-renewable resources experience stagnant economic growth because prices for natural commodities vary greatly, inefficient and corrupt governments World Bank should not have funded the oil pipeline project |
| Name one dilemma that Blair-Stout's Team Production Model faces, and provide a solution to this problem. | Free-rider problem: when individuals fail to make optimum efforts Solution: an independent third party to serve as board of directors |
| Does the Team Product Model support Friedman's Shareholder primacy norm or Freeman's Stakeholder theory? | It could be argued either way, but Blair-Stout believe their meditating hierarchy approach suggests that directors should not be under direct control of either shareholders or other stakeholders |
| What are the three major neo-classical theories on corporate ethics? | Stakeholder (Freeman) Social Contract (Donaldson, Dunfee, Keeley) Team Production (Blair-Stout) |
| What were the main findings from the Chad-Cameroon Oil Pipeline project failure? | The main project was technically well implemented and a financial success, but the objectives of capacity building to manage the petroleum sector and helping Chad reduce poverty and improve governance were not met. Reason: lack of government ownership |
| What is the main problem with corporate ethics that the social contract theory addresses? | The "artifactual" problem: businesses and corporations are human inventions and they vary greatly across time, cultures, communities, etc. |
| What gap does the Integrative Social Contracts theory try to bridge? | is-ought gap normative - empirical gap by comparing hypothetical contracts with actual contracts used in real world cases |
| According to the "Big" or "Marco" Social Contract (Version #1), what should society provide corporations with? | customers, legal status, unlimited longevity, limited liability, access to natural resources, labor pool |
| According to the "Big" or "Marco" Social Contract (Version #1), what should be allowed to be demanded from corporation? | behavior in accordance with "general canons of justice," limit pollution and harm to community, function efficiently, honor responsibilities to investors, provide accurate information |
| True or False: Chiquita did not make payments to the AUC after the Department of Justice demanded they stop. | False |
| How did Banadex, the subsidiary of Chiquita in Colombia, make illegal payments to the AUC? | Third Party Checks Employee Income |
| Describe the aftermath of the Chiquita case. | Chiquita does make the final payment to the AUC. In 2004, the FBI seizes Chiquita headquarters, U.S. Attorney subpeonas board of directors, payments stop. Chiquita sells Colombian subsidiary and pleads guilty to felony. Colombian families of killed sue |
| What are Sandbu's critiques of Friedman's shareholder primacy view? | the deontological arguments do not hold; mafia boss example; merck example: moral arguments exist on both sides; one is "never forced to be a shareholder" -- why should this relationship be prioritized? |
| What are Sandbu's critiques of Freeman's stakeholder primacy view? | Who are the stakeholders? How are the tradeoffs made between stakeholder interests? |
| Did Merck invest in the cure for river blindness? Was it a good or bad decision? | Did invest; most would agree they made the right decision - a lot of employees said they may have quit if Merck had not invested; employees like to work for a company with good values (relate to Frank reading on solving commitment problems) |
| Who does Freeman also consider to be stakeholders? | financiers, employees, customers, suppliers, communities |
| Is shareholder or stakeholder theory more popular? | Stakeholder PWC 17th annual Global CEO survey in 2014: 68% Agree or Strongly Agree McKinsey Global Survey 2006: "Which best describes corporation's role?" less than 40% across many nations think corporation should be for "profit only" |
| What are Freeman's consequential arguments for stakeholder theory? the deontic ones? | Consequential: better results than shareholder theory because Adam Smith's invisible hand only works under unrealistic conditions i.e. perfectly free market economy Deontological: stakeholder rights, valuing well-being of all, freedom, equality, decency |
| What are some of the lessons learned from the Motorola "What Price? Safety" case? | Cultural relativism - ethical principles are context specific Balancing universal precedence versus local cultural norms |
| How did Motorola handle the morning glory incident? | bought out the two employees |
| What is the Prisoner's Dilemma game? | game theory example that shows two rational individuals might not cooperate, even if it is in both of their best interests in the long run |
| How do you increase trust in the prisoner's dilemma? | enhance transparency discussion align incentives tit-for-tat |
| What are Robert Frank's five way a socially responsible firm can prosper? | by solving commitment problems with employees solving commitment problems with customers solving business to business commitment problems reflecting consumers' morals reflecting employees' morals |
| Did Fuller end up pulling out their adhesive product from Honduras? | Yes, a former employee who was fired for unrelated reasons went to the media and did a vicious story exposing to the US public of their questionable activities in Honduras |
| What is the consequentialist rationale for Friedman's Shareholder Primacy view? | most effective strategy for maximizing aggregate economic welfare it makes the most money for-profit companies often mess up politics/society by not focusing on what they are good at |
| What is the deontological rationale for Friedman's Shareholder Primacy view? | Shareholders own property rights Keeping a promise - obeying a contract - fiduciary duty not just for managers to enforce policies they were not elected to oversee |
| Plasma International: is there such thing as a just price? What factors must be considered when answering this question? | perfect market vs monopoly some goods should not be on the market at all price discrepancy between US and Nicaragua |
| Can an "individual moral relativist" defend moral tolerance? | individual relativism = individual morals are not comparable moral tolerance = another person's moral views, even when different from my own, should be respected and not censored therefore individual moral relativist must also accept intolerance |
| What was the moral dilemma in the Guidant case? What was their justification behind their decision? | Whether or not to publicize the flaw in their defibrillator the surgeries to remove the defibrillator would be more dangerous than the chance of the defibrillator malfunctioning deontological counterargument: honesty, freedom of choice |
| What are the two versions of rationality? | From the "ultimatum game" = optimization From the defintiion of "value" = having a goal or "reason" for acting |
| According to Sen, does business ethics make economic sense? | yes depending on how "economic sense" is defined if definition includes good society, then distributional achievements also included in definition only includes profit, then ethics is just a means to an end |
| "Alchemist's Dream Come True": name some of the consequential and deontological arguments for not selling TEL to third world countries. | Consequential: no guarantee of actually phasing product out because become too hooked on profits/greedy, bad PR Deontological: hypocrisy, environmental rights |
| What actually happened in the outcome of the TEL case? | completed acquisition of Du Pont, and continued to sell TEL with no plan of getting out - solely focused on making as much profits as possible |
| What is the main argument of Adam Smith's Wealth of Nations? | Invisible Hands - a free market economy works best when everyone is action out their own self interest Division of labor and the pin factory example - increasing the size of the pie |
| What are the three organizational conditions Sen covers in his article? | exchange - trust production - the public good, externalities distribution - how to divide the cake, the incentive problem |
| What is the incentive problem? | how a cake is to be divided can influence the size of the cake - how hard people work to make the cake |
| Name the five points on the spectrum from relativism to absolutism. | Individual Relativism, Cultural Relativism, Modified Universalism, Universalism, Absolutism |
| Define values. | Thing seen as worth acting for purest values have intrinsic worth |
| Define ethics | a subset of values concerned with the ends or principles of action |
| What is a falsifiability criterion? What is the paradox of the falsifiability criterion? | "The only propositions which can said to be true are those subject to falsification through observation or experiment" This is a non-falsifiable proposition |
| Is "fairness" a falsifiable concept? | No because you cannot prove something to be fair through observation or experiment. (Does voting count as an experiment? If majoring people agree something to be "fair" does that make it fair??) |
| What are the two methodologies to studying business ethics? | Normative - values-ethics, law, prescriptive or "action-guiding" Empirical - facts, description |
| What are the two sets of normative standards? | Ehtical frameworks Legal principles and practices |
| How awesome is Sean? | So awesome that he is out of your league |
| What was the key business challenge in the Italian Tax case study? | Cultural Relativism file American style or Italian styel deontological or Kantian thinking would support filing American style - do not lie consequential could support Italian style - maximize profit, keep job |
| Compare and contrast macro social contracts and hypernorms. | both are broad overarching norms that guide micro social contracts macro social contracts apply to interactions between corporations and society hypernorms limit how to apply micro social contracts |
Created by:
sjaewonlee