Holier-Than-Thou Effect - People tend to be overly optimistic about their own abilities and fortunes. E.g. I cheated in school, but once I’m in the workplace I won’t.

Motivated Blindness - Overlook information that works against our best interest.

Triple Bottom Line - Representing People, Planet, and Profit (3Ps) - measures an organization’s social, environmental, and financial performance.

Social Audit - A systematic assessment of a company’s performance in implementing socially responsible programs, often based on predefined goals. Can be used to measure the 3Ps (People, Planet, Profit).

San Bruno explosion caused by PG&E because they incentivized reporting less gas leaks rather than trying to find as many gas leaks as possible.

Stakeholders - The people whose interests are affected by an organization’s activities.

Internal Stakeholders: Employees, Owners (Stockholders), Board of Directors

External Stakeholders: The Task Environment, The General Environment

The Task Environment: Customers, Competitors, Suppliers, Distributors, Allies, Unions, Lenders, Governments, Interest Groups, Media

The General Environment: Economic Forces, Technological Forces, Sociocultural Force, Demographic Forces, Political-Legal Force, International Forces

ESOP - Employee Stock Ownership Plan

Inside Directors - Board of directors from inside of the company.

Outside Directors - Board of directors from outside of the company.

External Stakeholders - People or groups in the organization’s external environment that are affected by it.

Task Environment - Consists of 11 groups that present you with daily tasks to handle: customers, competitors, suppliers, distributors, strategic allies, employee organizations, local communities, financial institutions, government regulators, special-interest groups, and mass media.

Customers - Those who pay to use an organization’s goods or services.

Competitors - People or organizations that compete for customers or resources.

Supplier - A person or organization that provides supplies - that is, raw materials, services, equipment, labor, or energy - to other organizations.

Distributor - A person or an organization that helps another organization sell its good and services to customers.

Strategic Allies - Describes the relationship of two organizations who join forces to achieve advantages neither can perform as well alone.

As a general rule of thumb, labor unions tend to represent hourly workers. Professional associations tend to represent salaried workers.

Clawbacks - Rescinding the tax breaks given to firms when they fail to deliver promised jobs.

Crowdfunding (Crowdsourcing) - Raising money for a project or venture by obtaining many small amounts of money from many people, a.k.a “the crowd.”

Government Regulators - Regulatory agencies that establish ground rules under which organizations may operate.

Special Interest Groups - Groups whose members try to influence specific issues.

General Environment (Macroenvironment) - Includes six forces: economic, technological, sociocultural, demographic, political-legal, and international.

Economic Forces - Consist of the general economic conditions and trends - unemployment, inflation, interest rates, economic growth - that may affect an organization’s performance.

Technological Forces - New developments in methods for transforming resources into goods or services.

Sociocultural Forces - Influences and trends originating in a country’s, a society’s, or a culture’s human relationships and values that may affect an organization.

Demographic Forces - Influences on an organization arising from changes in the characteristics of a population, such as age, gender, or ethnic origin.

Political-Legal Forces - Changes in the way politics shape laws and laws shape the opportunities for and threats to an organization.

International Forces - Changes in the economic, political, legal, and technological global system that may affect an organization.

In business, choosing between economic performance and social performance is what most ethical conflicts are about.

Ethical Dilemma - A situation in which you have to decide whether to pursue a course of action that may benefit you or your organization but that is unethical or even illegal.

Ethics - The standards of right and wrong that influence behavior.

Ethical Behavior - Behavior that is accepted as “right” as opposed to “wrong” according to those standards.

Value System - The pattern of values within an organization.

Values - The relatively permanent and deeply help underlying beliefs and attitudes that help determine a person’s behavior.

Four Approaches to Deciding Ethical Dilemmas:
The Utilitarian Approach: For the Greatest Good
The Individual Approach: For Your Greatest Self-Interest Long Term, Which Will Help Others
The Moral-Rights Approach: Respecting Fundamental Rights Shared by Everyone
The Justice Approach: Respecting Impartial Standards of Fairness

Utilitarian Approach - Guided by what will result in the greatest good for the greatest number of people.

Individual Approach - Guided by what will result in the individual’s best long-term interests, which ultimately are in everyone’s self-interest.

Moral-Rights Approach - Guided by the respect for the fundamental rights of human beings.

Justice Approach - Guided by respect for impartial standards of fairness and equity.

Insider Trading - The illegal trading of a company’s stock by people using confidential company information.

Ponzi Scheme - Using cash from newer investors to pay off older ones.

Sarbanes-Oxley Act of 2002 (SarbOx/SOX) - Established requirements for proper financing for public companies and penalties of as much as 25 years in prison for noncompliance.
Laurence Kohlberg - Established three levels of personal moral development: preconventional, conventional, and postconventional.

(Lvl 1) Preconventional (Follow Rules) - People who have achieved this level tend to follow rules and to obey authority to avoid unpleasant consequences.

(Lvl 2) Conventional (Follows Expectations of Others) - People whose moral development has reached this level are conformist but not slavish, generally adhering to the expectations of others in their lives.

(Lvl 3) Postconventional (Guided by Internal Values) - The farthest along in moral development, level 3 managers are independent souls who follow their own values and standards, focusing on the needs of their employees and trying to lead by empowering those working for them. Only 1/5th of managers are said to reach this level.

How Organizations Can Promote Ethics:
Creating a Strong Ethical Climate
Screening Prospective Employees
Instituting Ethics Codes & Training Programs
Rewarding Ethical Behavior: Protecting Whistle-Blowers

Ethical Climate - Represents employees’ perceptions about the extent to which work environments support ethical behavior.

Code of Ethics - Consists of a formal written set of ethical standards guiding an organization’s actions.

Whistle-Blower - An employee, or even an outside consultant, who reports organizational misconduct to the public.

Social Responsibility - A manager’s duty to take actions that will benefit the interests of society as well as of the organization. This applies on a personal level, whereas CSR applies to the organization as a whole.

Corporate Social Responsibility - The notion that corporations are expected to go above and beyond following the law and making a profit.







Archie B. Caroll - author of the global CSR pyramid.




Climate Change - Refers to major changes in temperature, precipitation, wind patterns, and similar matters occurring over several decades.

Global Warming - One aspect of climate change, refers to the rise in global average temperature near the Earth’s surface, caused mostly by increasing concentrations in the atmosphere of greenhouse gases, such as carbon emissions from fossil fuels.

Sustainability - Economic development that meets the needs of the present without compromising the ability of future generations to meet their own needs.

Natural Capital - The value of natural resources, such as topsoil, air, water, and genetic diversity, which humans depend on.

Philanthropy - Making charitable donations to benefit humankind.

According to one survey, 88% of the respondents said they were more apt to buy from companies that are socially responsible than from companies that are not.

Another survey of 2,037 adults found that 72% would prefer to purchase products and services from a company with ethical business practices and higher prices compared with 18% who would prefer to purchase from a company with questionable business practices and lower prices.

Corporate Governance - The system of governing a company so that the interests of corporate owners and other stakeholders are protected.