DSST Business Ethics cheat sheet

Consequentialist theories judge acts by outcomes: utilitarianism selects the action producing the greatest total welfare (Bentham, Mill), weighing all affected parties equally.

Deontological ethics (Kant) judges acts by duty and maxims; the categorical imperative requires acting only on rules you could will as universal law and treating persons as ends, never merely as means.

Kant's second formulation bans using people as mere instruments, so deception and coercion in negotiation are suspect even when profitable.

Aristotelian virtue ethics locates morality in character traits (courage, honesty, temperance) developed by habit and aimed at human flourishing; it asks what a virtuous person would do.

Ethical egoism holds that an act is right if it maximizes the agent's own long-term self-interest; it differs from psychological egoism, which is a descriptive claim about motivation.

Rawlsian justice uses a veil of ignorance: principles are fair if chosen without knowing your talents, wealth, or social position; result is equal basic liberties plus the difference principle.

Stakeholder theory (Freeman) says firms should balance claims of owners, employees, customers, suppliers, and community; shareholder primacy (Friedman) says the sole social duty is lawful profit maximization.

Moral relativism denies universal standards, while moral objectivism holds some norms bind regardless of culture; business codes usually presuppose objectivism.

A moral dilemma test: identify stakeholders, list options, apply utilitarian, rights/duty, justice, and virtue lenses, then choose and justify the action that survives most lenses.

Carroll's pyramid orders responsibilities: economic (be profitable), legal (obey law), ethical (do what is right beyond law), and philanthropic (contribute to community).

The triple bottom line measures performance on profit, people, and planet; sustainability reporting often adds governance to form ESG.

Friedman's position: managers are agents of shareholders, so spending corporate funds on social causes beyond legal duty is a form of taxation without representation.

Stakeholder vs. shareholder debate: stakeholder model counts all affected groups; shareholder model counts owners only but still requires legal compliance and honesty.

Corporate social responsibility is often framed as voluntary; corporate citizenship adds the idea the firm has rights and duties like a member of society.

Social responsibility categories: reactive (deny), defensive (admit and comply), accommodative (accept and adjust), proactive (anticipate and lead).

Philanthropy differs from strategic CSR: strategic CSR targets activities that also create business value (e.g., training that reduces turnover and helps community).

A social audit measures a firm's actual social and environmental impact against stated commitments, independent of marketing claims.

Regulation rationales: correct market failure from externalities, monopoly power, information asymmetry, and public goods; each justifies a different tool (tax, antitrust, disclosure, provision).

Command-and-control regulation sets standards and penalties; market-based regulation uses taxes, tradable permits, or fees to price the harm.

Cost-benefit analysis of a rule compares compliance costs to expected benefits; agencies may be required by statute or executive order to conduct it.

Antitrust law targets restraints of trade, monopolization, and mergers that substantially lessen competition; consumer welfare is the common standard.

Regulatory capture occurs when an agency serves the industry it regulates; public-choice theory explains it through concentrated benefits and diffuse costs.

Deregulation removes rules; self-regulation substitutes industry codes, which work only with credible monitoring and sanctions.

Administrative agencies combine legislative (rulemaking), executive (enforcement), and judicial (adjudication) functions, subject to notice-and-comment and judicial review.

Strict liability imposes liability without proof of intent or negligence; negligence requires duty, breach, causation, and harm.

Employment at will allows either party to end the relationship at any time for any lawful reason, subject to exceptions: public policy, implied contract, and good faith.

Title VII of the Civil Rights Act of 1964 bars discrimination based on race, color, religion, sex, and national origin; disparate treatment is intentional, disparate impact is neutral rules with unequal effect.

Bona fide occupational qualification is a narrow defense permitting sex, religion, or national origin requirements when essential to the job.

Sexual harassment forms: quid pro quo (condition of employment) and hostile work environment (severe or pervasive conduct).

Whistleblower protections shield employees who report illegal conduct; Sarbanes-Oxley and Dodd-Frank provide specific corporate and financial reporting protections.

Conflict of interest policy requires disclosure and recusal when personal interest could bias judgment; gifts and outside employment are common triggers.

Employee privacy: employers may monitor workplace systems but generally must disclose policies; off-duty conduct and medical information receive stronger protection.

Right to work laws concern union security (whether union membership can be required), not the right to be hired or fired freely.

Occupational safety law imposes a general duty on employers to provide a workplace free of recognized hazards.

Privacy principles: notice, choice/consent, access, security, and accountability; collection should be limited to what is necessary for the stated purpose.

Informed consent requires disclosure of what data is collected, how it is used, who receives it, and the consequences of refusal.

Data minimization and purpose limitation reduce risk; secondary use of data for purposes unrelated to collection violates fair information practice principles.

Intellectual property: copyright protects expression, patents protect inventions, trademarks protect source identifiers, trade secrets protect confidential information.

Fair use considers purpose, nature of the work, amount used, and market effect; it is a defense, not an automatic right.

Insider trading uses material nonpublic information in breach of a duty; materiality and duty are the key legal elements.

Digital divide and algorithmic bias are ethical issues: models trained on biased data can produce discriminatory outcomes even without intent.

Security ethics requires reasonable safeguards, breach notification, and proportionality between monitoring and legitimate business need.

Cultural relativism says follow local norms; ethical absolutism says apply home standards everywhere; a common middle path uses a moral minimum of universal rights.

The Foreign Corrupt Practices Act prohibits bribery of foreign officials by U.S. firms and requires internal accounting controls; small facilitation payments have narrow treatment.

The OECD Anti-Bribery Convention and UN Convention against Corruption push cross-border enforcement and cooperation.

Sweatshop and labor standards debates turn on wages, hours, child labor, and freedom of association; codes of conduct need independent auditing to be credible.

Transfer pricing and tax planning raise fairness questions when profits are shifted to low-tax jurisdictions without corresponding activity.

Sanctions and export controls restrict trade with certain countries or parties; compliance requires screening customers and end uses.

Environmental standards vary by country; the pollution haven hypothesis predicts firms relocate to lax jurisdictions, countered by the race-to-the-bottom critique.

Human rights due diligence frameworks ask firms to identify, prevent, mitigate, and account for adverse impacts in supply chains.

Stakeholders are groups or individuals who affect or are affected by the firm's actions: owners, employees, customers, suppliers, creditors, community, government.

Stakeholder salience depends on power, legitimacy, and urgency; high scores on all three define definitive stakeholders.

Corporate governance separates ownership from control; agency problems arise when managers pursue their own interests rather than owners'.

Board duties: duty of care (informed decision-making) and duty of loyalty (no self-dealing); the business judgment rule protects good-faith decisions.

Shareholder rights include voting, receiving dividends, inspecting records, and suing for harm to the corporation (derivative suits).

Stakeholder mapping distinguishes primary (essential to operations) from secondary (influence but not essential) stakeholders.

Fiduciary duty requires acting in the beneficiary's interest; it constrains managers but does not forbid considering long-term stakeholder effects.

Transparency tools: audited financial statements, proxy statements, and disclosure of executive compensation and related-party transactions.

Externalities are costs or benefits borne by third parties; pollution is a negative externality, so unregulated markets overproduce it.

Tragedy of the commons: shared resources are depleted when individual users capture full benefit but share the cost of depletion.

Sustainable development meets present needs without compromising future generations' ability to meet theirs (Brundtland definition).

Pollution control tools: effluent taxes, cap-and-trade permits, performance standards, and technology standards; each differs in efficiency and certainty.

The polluter-pays principle assigns cleanup and prevention costs to the party causing the pollution.

Life-cycle assessment evaluates environmental impact from raw material through disposal; cradle-to-grave thinking supports design for recyclability.

Carbon disclosure and emissions reporting let investors and regulators compare firms; greenwashing is unsubstantiated environmental claims.

Precautionary principle: when evidence of serious harm exists, lack of full certainty is not a reason to postpone cost-effective protective measures.

Government roles in the economy: regulator, purchaser, subsidizer, tax collector, and owner of public enterprise.

Lobbying seeks to influence legislation and rules; disclosure requirements and registration aim to make influence transparent.

Political action committees pool contributions; direct corporate contributions to candidates are generally prohibited at the federal level in the U.S., while independent expenditures are permitted under Citizens United.

Revolving door between agencies and regulated industries raises conflict-of-interest and capture concerns.

Public-private partnerships share risk and financing between government and firms; accountability depends on clear contracts and performance measures.

Subsidies and tariffs can protect domestic industries but distort competition and invite retaliation.

Privatization transfers state assets to private owners; nationalization is the reverse, and both raise compensation and efficiency questions.

Government procurement ethics require competitive bidding, conflict-of-interest disclosure, and rules against bribery of public officials.