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    Corporate Ethics Posting: evaluate response

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    Write a intellectual response, in APA format if outside sources are used, to the following post...... Justify your answers based on

    A.) "How" you arrived at your answer(s)
    B.) "What" facts and sources you reviewed and considered
    C.) "Why" your response is the best one from all the alternatives


    Corporate ethics has been expanding since 1991 when the U.S. Sentencing Commission declared that firms with "effective ethics programs would enjoy lighter sentences." (Darcy, 2005) In 2002 the Sarbanes-Oxley Act passed, the New York Stock Exchange and NASDAQ have placed greater emphasis on ethics and the U.S. Sentencing Commission again in 2004 redefined what an effective ethics program is. (Darcy, 2005) The Business Ethics Award for the 100 Best Corporate Citizens is a list of companies that have stepped up to the plate and over the past year have been playing the game of business with sound ethical practices.

    In 2004 the list of variables used to determine what firms made the list included a group of seven stakeholders: Shareholders, community, minorities & women, employees, environment, non-U.S. stakeholders (human rights) and customers. (Graves, et al.) For 2005 governance was added as another stakeholder group, bringing the list of variables up to eight. (Asmus, 2005) Firms are scored in each category and then compiled to get an unweighted average (single) score.

    Seeing how companies like Enron, WorldCom, Tyco among others have affected the corporate climate in the U.S., I think having a measurement that showcases firms that perform at a higher standard is very beneficial. The firms that make the list are doing a lot of things right, and are performing well with all eight stakeholders that are being evaluated. To make the list and stay there might be difficult, Fannie Mae ranked No. 1 in 2004 did not even make the list in 2005 due to accounting misrepresentations.(Kelly, 2005)

    Like most competitions, there is room for error. The judging (calculating) is being done by humans, and even though there is probably a lot of thought involved to make sure there is no bias, it probably still happens. I think the eight stakeholders that are included in the group are sufficient, I can't really think of too many things that would not fit into one of those categories. I guess I am bummed that the company I work for did not make the list, we are on the Russell 1000 Index though.


    Asmus, P. (2005, spring). 100 best corporate citizens 2005. Business Ethics, vol. 19 no. 1, pp. 20-27.

    Darcy, K. (2005, spring). Ethics Officers Double in Four Years. Business Ethics, vol. 19 no. 1, p. 9.

    Graves, S., Waddock, S., & Kelly, M. How the List is Put Together. Business Ethics. Retrieved 22 August 2005, from http://www.business-ethics.com/100best.htm

    Kelly, M. (2005, spring). Fannie Mae, No. 1 Corporate Citizen? How this firn went from No. 1 to 0 among 100 Best Corporate Citizens. Business Ethics, vol. 19 no. 1, p. 7.

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    A.) "How" you arrived at your answer(s)
    I arrived at my answers using the actual methodology used by the study.
    The methodology behind the corporate citizenship rankings
    By Samuel P. Graves, Sandra Waddock, and Marjorie Kelly

    The aim of this listing is to identify firms that excel at serving a variety of stakeholders well. For 2004, the 100 Best Corporate Citizens list marks its fifth anniversary. Over those five years, KLD Research & Analytics in Boston has been the consistent source of our social data, while our methodology has evolved slightly. Initially, the list was drawn from 650 firms used in the socially screened Domini Index: the S&P 500, plus 150 other firms selected for industry balance and social performance. In 2003 we expanded to cover the Russell 1000, the 1,000 largest public traded firms (for consistency we included the 150 Domini firms). We also switched in 2003 from using three-year average scores to one-year scores. The stakeholder list has also expanded from four stakeholder groups to seven.

    The seven stakeholder groups are shareholders, community, minorities and women, employees, environment, non-U.S. stakeholders, and customers. In each category, KLD notes where companies have "strengths" and "concerns." For example, in the employee category, a firm might get three strengths for profit sharing, retirement benefits, and employee involvement, while it gets two concerns for union relations and workforce reductions. To arrive at a net score in this category, we take three strengths and subtract two concerns. The same is done in each category. Environmental strengths, for example, might include beneficial products, pollution prevention, and recycling, while concerns would include emissions, climate change, and regulatory problems.

    Since all seven variables have different scales, we standardize them to determine a standard deviation from the mean -- which indicates performance relative to peers. The scores shown in the chart represent the number of standard deviations a firm fell above or below the mean. For the shareholder performance measure, we use one-year total return to shareholders (stock appreciation plus dividends), standardized in the same way.

    Next we take a neighed average of all seven stakeholder measures, to arrive at a single score per company. The fact that the scale is unweighted means that all stakeholders are accorded equal status.

    In a final step, a selection committee does additional research on social scandals, or other issues possibly missed, and recommends firms to be pulled. Firms were removed for accounting fraud, for example, or if they lost money two or more years in a row.


    B.) "What" facts and sources you reviewed and considered.

    Â? What is a responsible business enterprise?
    Â? What constitutes a business ethics program?
    Â? How is a business ethics program structured?
    Â? How is a business ethics program put into practice?
    Â? How can responsible business conduct be achieved?


    A social contract approach frames the question of individual entitlement in terms of those agreed upon expectations of social, political, and economic institutions which give birth to and sustain them. The method is to examine the legitimacy of claims individuals can make regarding employment, and, consequently, of employers, in the light of the motivation for an initial movement out of a world of individual production to a world populated by productive organizations (as Donaldson does) or, in the context of a procedural attempt to adjust such initial expectations to the known realities of current historical contexts in order to generate specific, applicable standards by which to judge the justness of historical practices (Rawls' "reflective equilibrium"). Whether such expectations constitute "natural rights" or some derivative thereof misses the point that expectations like those that individuals currently have of employment and employers have emerged as part of the evolution of employment in our society, and have come to occupy a prominent place in the "American Dream." In fact, such expectations have been historically fostered by productive organizations when it was to their advantage to do so (e.g. IBM, until very recently, and the automotive industry during the fifties and sixties).


    For employees, corporate citizenship is likely to give meaning to organizational activities beyond the mere pursuit of greater profitability. Employees also know that their personal and professional needs are more likely to be taken into account in an organization that is dedicated to meeting its social responsibilities. In exchange, organizational ...

    Solution Summary

    In a 2987 word response, the solution carefully lays out a case for evaluating and explaining various position in corporate ethics.