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Chapter 5 Legal Environment

by: Alberto Maza

Chapter 5 Legal Environment 2900

Marketplace > University of Missouri - St. Louis > Business > 2900 > Chapter 5 Legal Environment
Alberto Maza
GPA 3.5

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Summarize of chapter 5
Legal Environment Of Business
Elizabeth Grimm-Howell
Class Notes
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This 3 page Class Notes was uploaded by Alberto Maza on Wednesday February 3, 2016. The Class Notes belongs to 2900 at University of Missouri - St. Louis taught by Elizabeth Grimm-Howell in Winter 2016. Since its upload, it has received 18 views. For similar materials see Legal Environment Of Business in Business at University of Missouri - St. Louis.


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Date Created: 02/03/16
CHAPTER 5: BUSINESS,SOCIETAL AND ETHICAL CONTEXT OF LAW Ethics is the branch of philosophy that focuses on morality and what constitutes "right" or " wrong" behaviour. Business ethics focuses on how businesses and individual business people make ethical choices. We consider business ethics separately, since ethical decision-making occurs under pressure from, and sometimes in conflict with, the legal and ethical duty to be profitable. Every business must have a code of ethics which is under Sarbanes- Oxley Act. Code of ethics only work when people at the top of a company set an example. They should be understood by employees who should have training sessions to make sure they understand it. Business crime such as fraud and embezzlement cost U.S business of dollars. Business often do not prosecute offenders unless the crime has to be with big amounts of money. A survey conducted in 2013 estimated that 41% of U.S workers observed misconduct in their workplace. However, only 63% of these workers reported what they saw. The ones who did not report it either said that no action would be taken or they suffer retaliation from co- workers, boss etc. 21% of the workers that reported some misconduct said they had experienced "retaliation". Ethics culture is defined as the work environment, including factors such as whether managers are trustworthy, talk about ethics and model appropriate behaviour, and the extent to which employees value and support ethical conduct. According to employees, at least 42% businesses have a weak ethical culture. Ethical theories can be divided in: -Duty-based (deontology): universal beliefs about what is ethical r unethical. They derive from religion, right theories or philosophy. -Outcome-based: concerned with the consequences of behaviour in order to determine if an act is ethical. An example of a duty-based theory is formalism. It is based on the rightness of rationally-derived rules. They are always right; no exception. It is classified as categorical imperative which means that means we only act on these principles that for us are "universal laws". Kantian ethics is a good example. An example of outcome-based is utilitarianism. It approaches weighs the good against the evil consequences of alternative choices. It is also called cost-benefit analysis. "Greatest goods to the greatest number" Moral maturity is when people are able to apply ethical principles autonomously. Psychologists and education theorists show 6 stages of development to achieve it. Shareholder model defends traditional model of corporate responsibility in the U.S. It means "maximize profits for shareholders". Stakeholders model is the modern view of corporate responsibility. It is also reflected in laws. It means "consider all stakeholders". There is a conflict between these two models because of stakeholders interests. Foreign Corrupt Practices Act bans bribes to foreign governments officials in order to obtain any improper business advantage. The Organization for Economic Cooperation and Development passed its Anti-Bribery Convention, which puts the same restrictions that FCPA. OECD has currently 30 members. Federal Civil False Claims Acts protects only people reporting fraud in government contracts or procurement. Sarbanes-Oxley forbids retaliation against employees reporting corporate fraud , and makes it a crime retaliate someone who reports a misconduct.


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