Business Ethics Flashcards

Which statement best describes the 'stakeholder theory' of business ethics?

Answer: Firms should consider the interests of employees, customers, communities, and suppliers, not only shareholders

Stakeholder theory, associated with R. Edward Freeman, holds that firms owe obligations to all groups affected by their actions.

A vendor offers a diversity executive an expensive trip in exchange for selecting its training program. The primary ethical issue is:

Answer: A conflict of interest

Accepting personal benefits that could influence a business decision creates a conflict of interest.

Which practice most strengthens ethical accountability for DEI outcomes at the leadership level?

Answer: Tying a portion of executive compensation to measurable DEI goals

Linking incentives to measurable outcomes creates real accountability for leaders.

An employer asks job applicants about their plans to have children. Why is this ethically and legally problematic in the U.S.?

Answer: It can be used as evidence of sex discrimination under Title VII

Questions about family plans can support claims of sex or pregnancy discrimination, even if asked of everyone.

Virtue ethics evaluates business conduct primarily by asking:

Answer: What would a person of good character do?

Virtue ethics focuses on character traits like honesty, fairness, and integrity rather than rules or consequences.

A data analysis shows an AI hiring tool rejects older applicants at a much higher rate. The most ethical first response is to:

Answer: Suspend or audit the tool for disparate impact and correct the bias

Algorithmic tools can produce disparate impact, so organizations must audit and correct them under laws like the ADEA.

The legal concept of 'disparate impact' refers to:

Answer: A facially neutral policy that disproportionately harms a protected group

Disparate impact occurs when a neutral practice has an unjustified disproportionate effect on a protected group, as established in Griggs v. Duke Power (1971).