Blowing the Whistle | Key Terms

Key Terms - Blowing the Whistle

External Whistle-Blowing:  When an employee discovers corporate misconduct and chooses to bring it to the attention of law-enforcement agencies and/or the media.

Internal Whistle-Blowing:  When an employee discovers corporate misconduct and brings it to the attention of his or her supervisor, who then follows established procedures to address the misconduct within the organization.

Whistle-Blower:  An employee who discovers corporate misconduct and chooses to bring it to the attention of others.



Source: Ghillyer_Business Ethics A Real World Approach 2e

Corporate Governance | Key Terms

Key Terms - Corporate Governance

Audit Committee:  An operating committee staffed by members of the board of directors plus independent or outside directors. The committee is responsible for monitoring the financial policies and procedures of the organization—specifically the accounting policies, internal controls, and the hiring of external auditors.

Board of Directors:  A group of individuals hired to oversee governance of an organization. Elected by vote of shareholders at the annual general meeting (AGM), the true power of the board can vary from institution to institution from a powerful unit that closely monitors the management of the organization, to a body that merely rubber-stamps the decisions of the chief executive officer (CEO) and executive team.

Compensation Committee:  An operating committee staffed by members of the board of directors plus independent or outside directors. The committee is responsible for setting the compensation for the CEO and other senior executives. Typically, this compensation will consist of a base salary, performance bonus, stock options, and other perks.

“Comply or Else”:  A set of guidelines that require companies to abide by a set of operating standards or face stiff financial penalties.

“Comply or Explain”:  A set of guidelines that require companies to abide by a set of operating standards or explain why they choose not to.

Corporate Governance:  The system by which business corporations are directed and controlled.

Source: Ghillyer_Business Ethics A Real World Approach 2e

CSR | Corporate Social Responsibility | Key Terms

Key Terms - Corporate Social Responsibility

Altruistic CSR:  Organizations take a philanthropic approach by underwriting specific initiatives to give back to the company’s local community or to designated national or international programs.

Corporate Citizenship:  An alternative term for corporate social responsibility, implying that the organization is a responsible citizen in meeting all its obligations.

Corporate Conscience:  An alternative term for corporate social responsibility, implying that the organization is a responsible citizen in meeting all its obligations.

Corporate Social Responsibility:  The actions of an organization that are targeted toward achieving a social benefit over and above maximizing profits for its shareholders and meeting all its legal obligations.

Ethical CSR:  Organizations pursue a clearly defined sense of social conscience in managing their financial responsibilities to shareholders, their legal responsibilities to their local community and society as a whole, and their ethical responsibilities to “do the right thing” for all their stakeholders.

Instrumental Approach:  The perspective that the only obligations of a corporation is to maximize profits for its shareholders in providing goods and services that meet the needs of its customers.

Social Contract Approach:  The perspective that a corporation has an obligation to society over and above the expectations of its shareholders.

Strategic CSR:  Philanthropic activities are targeted toward programs that will generate the most positive publicity or goodwill for the organization.


Source: Ghillyer_Business Ethics A Real World Approach 2e

CSR | Corporate Social Responsibility 5 | Would the CSR policies of an organization influence your decision to use their products or services? Why or why not?

Would the CSR policies of an organization influence your decision to use their products or services? Why or why not?

Student responses will vary. Many people are aware and respond to organizations decision to act in a socially responsible manner by patronizing them. The consumers who are conscience of a corporation’s charitable donations, or environmentally friendly practices are very likely to have a positive impression of the company and therefore purchase items from them. On the other hand, some consumers simply care about the lowest possible price.


Source: Ghillyer_Business Ethics A Real World Approach 2e

CSR | Corporate Social Responsibility 4 | Explain the term triple bottom line

Explain the term triple bottom line.

Organizations pursue operational efficiency through detailed monitoring of their bottom line. As a testament to how seriously companies are now taking CSR, many have adapted their annual reports to reflect a triple bottom line approach, where they provide social and environmental updates alongside their primary bottom-line financial performance.


Source: Ghillyer_Business Ethics A Real World Approach 2e

CSR | Corporate Social Responsibility 3 | Explain why organizations are struggling to adopt CSR initiatives

Explain why organizations are struggling to adopt CSR initiatives.

Organizations are struggling to adopt CSR initiatives not because the ethical action itself causes a problem, but how to promote those acts to your stakeholders as proof of your new corporate conscience without appearing to be manipulative or scheming to generate press coverage for policies that could easily be dismissed as feel-good initiatives that are simply chasing customer favor. Also, many CSR initiatives do not generate immediate financial gains to the organization.


Source: Ghillyer_Business Ethics A Real World Approach 2e

CSR | Corporate Social Responsibility – Social contract approach

Social contract approach

Social contract approach is the perspective that a corporation has an obligation to society over and above the expectations of its shareholders.

Prior years, the primary focus of the social contract was an economic one, assuming that continued economic growth would bring an equal advancement in the quality of life.

The modern social contract approach argues that since the corporation depends on society for its existence and continued growth, there is an obligation for the corporation to meet the demands of that society rather than just the demands of a targeted group of customers.


Source: Ghillyer_Business Ethics A Real World Approach 2e