Introduction Inventory of Ethical Issues in Business• Employee-Employer Relations• Employer-Employee Relations• Company-Customer Relations• Company-Shareholder Relations• Company-Community/Public Interest
Public’s Opinion of Business Ethics• Gallup Poll finds that only 17 percent to 20 percent of the public thought the business ethics of executives to be very high or high• To understand public sentiment towards business ethics, ask three questions – Has business ethics really deteriorated? – Are the media reporting ethical problems more frequently and vigorously? – Are practices that once were socially acceptable no longer socially acceptable?
Public’s Opinion of Business Ethics• Gallup opinion polls about ethical behavior (see text book Figure 3.1) – Pharmacists ranked highest – Car salespeople ranked lowest – Business executives ranked near the middle – People in the United States do not have a positive view of ethics and behavior in organizations
Business Ethics: What Does It Really Mean? Definitions• Ethics involves a discipline that examines good or bad practices within the context of a moral duty• Moral conduct is behavior that is right or wrong• Business ethics include practices and behaviors that are good or bad
Business Ethics: What Does It Really Mean? Two Key Branches of Ethics• Descriptive ethics involves describing, characterizing and studying morality – “What is”• Normative ethics involves supplying and justifying moral systems – “What should be”
Conventional Approach to Business Ethics• Conventional approach to business ethics involves a comparison of a decision or practice to prevailing societal norms – Pitfall: ethical relativismDecision or Practice Prevailing Norms
Sources of Ethical Norms Regions of Fellow Workers Fellow Workers Country Family Profession The Individual Conscience Friends Employer The Law Religious Society at Large Beliefs
Ethics and the Law• Law often represents an ethical minimum• Ethics often represents a standard that exceeds the legal minimum Frequent Overlap Ethics Law
Making Ethical Judgments Behavior or act compared with Prevailing norms that has been of acceptability committed Value judgments and perceptions of the observer
Four Important Ethical Questions• What is?• What ought to be?• How to we get from what is to what ought to be?• What is our motivation for acting ethically?
3 Models of Management Ethics Three Types Of Management Ethics
Three Models of ManagementMorality and Emphasis on CSR
Making Moral ManagementActionable Important Factors • Senior management • Ethics training • Self-analysis
Developing Moral Judgment External Sources of a Manager’s Values• Religious values• Philosophical values• Cultural values• Legal values• Professional values
Developing Moral Judgment Internal Sources of a Manager’s Values• Respect for the authority structure• Loyalty• Conformity• Performance• Results
Can Business Ethics Be Taught And Trained? • Ethic courses should not: – Advocate a set of rules from a single perspective – Not offer only one best solution to specific ethical problems – Not promise superior or absolute ways of thinking and behaving in situations
Can Business Ethics Be Taught And Trained? • Scholars argue that ethical training can add value to the moral environment of a firm and to relationships in the workplace by: – Finding a match between employer’s and employee’s values – Handling an unethical directive – Coping with a performance system that encourages unethical means
Ethics-Moral Disengagement• Social Learning Theory – Moral reasoning translates to moral action through self regulatory processes • You do things that bring you self-worth • You avoid things that avoid self censure• You have to disengage from your normal internal self sanctions to commit unethical or deviant acts
Moral Disengagement• Scoring the questionnaire – Moral justification-A – Euphemistic language-B – Displacement of responsibility-C – Advantageous comparison-D – Diffusion of responsibility-E – Distorting consequences-F – Attribution of blame-G – Dehumanization-H
Ethical and Unethical Behavior• Ethical behavior is good, right, just, honorable, and praiseworthy• Unethical behavior is wrong, reprehensible, or fails to meet an obligation• Judgment of behavior is based on a specific moral philosophy or ethical theory
Ethical andUnethical Behavior (Cont.)• Nagging issues – Finding a standard of judgment with which all reasonable people can agree – Defining the meaning of “good,” “bad,” “right”, and “wrong” – Add the nasty issue of cross-cultural ethical behavior
Ethical andUnethical Behavior (Cont.) Ethical dilemmasFind 1 cent Find $1Find wallet with $1,000 Find wallet with $1,000and no identification. and identification.
Legal Versus Ethical Behavior: The Issue of Lying Legal Ethical behavior behavior Lying to a customerTestifying under “How does my about the safety ofoath in court. hair look?” a product. Lying: deliberate misrepresentation of the truth.
Theories of Ethics• Four major theories of ethics in the Western world – Utilitarianism: net benefits – Rights: entitlement – Justice: fairness – Egoism: self-interest
Theories of Ethics (Cont.)• Utilitarianism – examine an action’s effects to decide whether it is morally correct – Action is morally right if the total net benefit of the action exceeds the total net benefit of any other action – Assumes a person can assess all costs and benefits of an action
Theories of Ethics (Cont.)• Utilitarianism (cont.) – Assessment of net benefits includes any important indirect effects – Example: assessing the effects of pollutant discharge from a factory on the immediate surrounding environment and those down stream or down wind from the factory – Two forms: act and rule
Theories of Ethics (Cont.)• Utilitarianism (cont.) – Act utilitarianism asks a person to assess the effects of all actions – Rejects the view that actions can be classified as right or wrong in themselves – Example: lying is ethical if it produces more good than bad
Theories of Ethics (Cont.)• Utilitarianism (cont.) – Rule utilitarianism asks a person to assess actions according to a set of rules designed to yield the greatest net benefit to all affected – Compares act to rules – Does not accept an action as right if it maximizes net benefits only once – Example: lying is always wrong or “thou shalt not lie”
Theories of Ethics (Cont.)• Utilitarianism (cont.) – Two main limitations • Hard to use in difficult to quantify situations • Does not include rights and justice – Other ethical theories meet these objections
Theories of Ethics (Cont.)• Rights – Right: a person’s just claim or entitlement – Focuses on the person’s actions or the actions of others toward the person • Legal rights: defined by a system of laws • Moral rights: based on ethical standards – Purpose: let a person freely pursue certain actions without interference from others
Theories of Ethics (Cont.)• Rights (cont.) – Features • Respect the rights of others • Lets people act as equals • Moral justification of a person’s action – Examples • Legal right: right to a fair trial in the United States • Moral right: right to due process within an organization
Theories of Ethics (Cont.)• Rights (cont.) – Rejects view of assessing the results of actions – Expresses moral rights from individuals view, not societys. Does not look to the number of people who benefit from limiting another persons rights – Example: right to free speech in the United States stands even if a person expresses a dissenting view
Theories of Ethics (Cont.)• Rights (cont.) – Types of rights • Negative rights: do not interfere with another person’s rights • Positive rights: A person has a duty to help others pursue their rights Negative: do not stop a person from whistleblowing Positive: coworker helps another person blow the whistle on unethical actions
Theories of Ethics (Cont.)• Justice – Looks at the balance of benefits and burdens distributed among members of a group – Can result from the application of rules, policies, or laws that apply to a society or a group – Just results of actions override utilitarian results – Rejects view that an injustice is acceptable if others benefit the action
Theories of Ethics (Cont.)• Egoism – Self-centered form of ethics – Two forms of ethical egoism: individual and universal – Individual ethical egoism • Judges actions only by their effects on one’s interests • Usually rejected by moral philosophers as a defensible basis of ethics
Theories of Ethics (Cont.)• Egoism (cont.) – Universal ethical egoism • Can include the interests of others when assessing one’s actions • Still self-centered: pursuing pleasure and avoiding pain • “Enlightened self-interest.” Considers the interests of others because the person wants others to do the same toward him or her
Theories of Ethics (Cont.)• Egoism (cont.) – Objections raised by moral philosophers • Does not resolve conflicts in people’s interests • One party would always have the pursuit of his or her interests blocked
Theories of Ethics (Cont.)• Questions from the ethical theories – Utilitarianism: does the action yield the greatest net benefits? – Rights: does the action negatively affect someone’s moral rights? – Justice: does the action give a fair distribution of costs and benefits among those affected? – Egoism: will the action lead to other people behaving toward me in a way I would like?
International Aspects of Ethics• Sharp contrasts exist between U.S. attitudes toward business ethics and those of other countries• Of the major capitalist nations, the United States has the highest frequency of reporting ethical violations, the toughest laws, and the greatest prevalence of organization codes of ethics
International Aspectsof Ethics (Cont.) Two ethical views Cultural Multinational Ethical relativism organization realism
International Aspectsof Ethics (Cont.)• Ethical views (cont.) - Cultural relativism • Cultural relativism refers to differences in ethical values among different cultures • Premise: right and wrong should be decided by each societys predominant ethical values • Cultural relativists base their argument on three points
International Aspectsof Ethics (Cont.)• Ethical views (cont.) - Cultural relativism(cont.) • Three points – Moral judgments are statements of feelings and opinions; neither wrong nor right – Moral judgments are based on local ethical systems; cannot judge right or wrong across cultures – Prudent approach: do not claim an action is either right or wrong
International Aspectsof Ethics (Cont.)• Ethical views (cont.) - Cultural relativism(cont.) • Managers should behave according to local ethical systems, even if their behavior violates the ethical systems of their home country • Many philosophers have rejected cultural relativisms argument that codes of ethics cannot cross national boundaries • Agree, however, that countries vary in what they define as right and wrong
International Aspects of Ethics (Cont.)• Ethical views (cont.) – Ethical realism • Morality does not apply to international transactions • Because no power rules over international events, people will not behave morally • Because others will not behave morally, one is not morally required to behave ethically – See text for a revision to this view of ethical realism
International Aspects of Ethics (Cont.)• International ethical dilemmas – Goods made in a country with no child labor laws – Goods made in a country with child labor laws that are not enforced – Changing the behavior of local people – Making small payments that are allowed under the FCPA
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