Management Ethics Chapter 1


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Management Ethics Chapter 1

  1. 1. Ethics-the principles of conduct governing an individual or a group.Ex personal ethics-refers to the rules by which an individual lives his personal lives. Accounting ethics refers to the code that guides the professional conduct of accountants.It also can also mean the discipline that examines one’s moral standard or the moral standards of a society.It asks how these standards apply to our lives and whether these standards are reasonable or unreasonable-that is whether they are supported by good reasons or poor reasons.Standards absorbed from family,friends, schools etc.Morality can be defined as the standards that an individual or group has about what is right or wrong. Ex. a person believes that lying is bad and honesty is good.
  2. 2. Two types of standards :A. Moral standards- include the norms we have about the kinds of actions we believe are morally right and wrong. Ex It is wrong to kill people.B. Non moral standards-the standards by which we judge what is good or bad and right or wrong in a non moral ways.Ex the standard used to judge a good or bad football game, good or bad art, god or bad grammar. These standards are not moral standards.What are the characteristics that distinguish moral standards from standards that are not moral?Ethicists have suggested 5 characteristics that help pin down nature of moral standards:a.moral standards deal with matters that we think can seriously injure or seriously benefit human beings. Our moral standards against rape,theft etcb.Moral standards are not established or changed by decisions of particular authoritative bodies(ex law-legislative body).the validity of moral standards rests on the adequacy of the reasons that are taken to support and justify them.c.Moral standards should be preferred to other values including self interest.It is wrong to choose self interest over morality.Ex. Lie to retain job or be honest about test report to lose job
  3. 3. d. Moral standards are based on impartial/neutral considerations. The fact that you will benefit from a lie and that I will be harmed is irrelevant to whether lying is morally wrong. *e.moral standards are associated with special emotions and a special vocabulary. Ex. if I act contrary to a moral standard, I will normally feel guilty, ashamed and feel bad about myself.Business ethics is a specialised study of moral right and wrong. It concentrates on moral standards as they apply to business institutions,organisations and behavior. How moral standards are applied to the social systems and organisations through wish modern soceities produce and distribute goods and services and to the behaviors of the people who work within these organisations.The 3 types of issues that business ethics investigstes area. Systemic issues-Ethical questions being raised about the economic,political,legal and other social systems or institutions within which the business operates.ex. questions about governments direct negotiation for purchasing products instead of tender(government policies that encourage corruption), capitalism, communism.
  4. 4. b.Corporate issues-ethical questions raised about a particular organisation.These includes questions about the morality of the activities,policies,practices or the organisational structure of an individual company taken as a whole.Ex. questions about morality of a company’s corporate decision to “qualify” things even though there are flaws in production.c.Individual issues-ethical questions raised about a particular individuals within a company and their behaviors and decisions. These include questions about the morality of the decisions, actions, or character of an individual. Ex. whether it was moral for a manager to allow his researchers to develop a product that would probably not generate profits.It is helpful when analysing the ethical issues raised by a particular decision or case to sort out the issues in terms of whether they are systemic,corporate or individual issues. The kinds of solutions that are appropriate for dealing with systemic or corporate issues are not the same as the kinds of solutions that are appropriate for dealing with individual issues.
  5. 5. If a government culture permits bribery(systemic issue)-then it must be dealt with through the coordinated actions of many social groups. If a company has a culture that encourages moral wrong doing(corporate issue), then changing the culture requires the co orperation of many different people that constitute the company.Finally, individual ethical issues need to be solved through individual decisions and perhaps individual reform.Applying Ethics to corporate organisationsThe statement that corporate organisations can be ethical or unethical raises a puzzling issue. Can we really say that the acts of organisations are moral or immoral in the same sense that the actions of human individuals are? “Companies don’t commit crimes, individuals do?”2 thoughts on this:a.One side argues that because the rules that tie organisations together allow us to say that corporations act as individuals and have intended objectives for what they do, we can also say that they are morally responsible for their actions and that their actions are moral or immoral in exactly the same sense that a human being’s are.
  6. 6. B,another side argues that it makes no sense to hold organisations “morally responsible” or to say that they have moral duties. Here, business organisations are the same as machines whose members must blindly and undeviatingly conform to formal rules that has nothing to do with morality.*org consists of human beings.Globalisation, Multinationals and business ethics.-Many of the most pressing issues in business ethics today are related to the phenomenon of globalisation. Globalisation is the worldwide process by which the economic and social systems of nations have become connected together so that goods services, capital, knowledge and cultural artifacts are traded and moved across national borders at an increasing rate. Same product available everywhere. Lowering of trade barriers, open market, global communication-Multinational corporation is a company that maintains manufacturing, marketing, service or administrative operations in many different host countries. They draw capital, raw materials and human labor from wherever in the world where they are cheap and available.
  7. 7. Globalisation has enabled nations to specialise in producing and exporting those goods and services that they can produce most efficiently and to trade for goods that they are not so skilled at producing.But usually, developed countries have high tech products to sell. Non developed have lower end products or cheap primary commodities.But globalisation all good?Host country benefit?Are MNCs really transferring technologies?MNCs staying in one place forever or free to shift from one country to another.?Apart from that, because the multinationals operates in nations that have different cultures and standards, critics claim that MNC also covertly engage in practices that violate the norms and standards that we should respect. Companies using the not so strict laws of the countries to operate. Cheap wages in India.companies giving bribes to governments to operate.It is not easy for companies operating in a globalised world to deal with different moral standards in other parts of the world.
  8. 8. Business ethics and cultural DifferencesWhen faced with the fact that different cultures have different moral standards, the managers of some multinationals have adopted the theory of ethical relativism.A theory that states that there are no ethical standards that are absolutely true and that apply or should be applied to the companies and people of all societies. The only way to determine whether action is morally right or wrong is by asking the people of the society.It is immoral to bribe in US but ok for US company to bribe in Arab.Issues like polygamy,slavery,homosexuality. Have different perspective in different countries.Critics of this theory argued that there are certain moral standards that
  9. 9. -Despite numerous practices that are judged immoral by some societies thatother society deemed morally acceptable, critics of ethical relativism pointed outthat it does not follow/agree that there are no moral standards that are bindingthe people everywhere. They argued that there are certain moral standards thatthe members of any society must accept if that society is to survive and if itsmembers are to interact with each other effectively. Ex. All soceities have normsagainst taking goods of other and killing people.-Apart from that, many apparent differences among society turn out, on closerexamination, to mask deeper underlying similarities. Ex. Innuit-Ok to letfamilies abandon elders outdoors to ensure enough food for survival of family.Other say not ok but they also ensure survival by protecting the elders who carrywithin them the knowledge and experience the community needed.-other critics of the theory of ER point out that, because different people havedifferent moral beliefs about some issue, it does not follow logically that there isno objective truth about that issue nor that all beliefs about the issue are equallyacceptable. Ex scientific matters- disease cause by bacteria vs evil spirits.
  10. 10. -If ER is true, opponents claim, then it would meke little sense to critise the practices of other societies so long as their practices conformed to their own standards. Is this true for us?-Is moral standards of the society the only criteria to judge what is right or wrong?-Popular vs right? Any difference.Technology and Business Ethics-Technology consists of all those methods , processes and tools that human invent to manipulate their environment.-the way we do business is being continuously influenced by new technologies and this will raise new ethical issues for business.-Field of IT-The use of extremely powerful and compact computers,the internet and so forth have made it easier to capture manipulate, monitor and move information in new ways. Ex.-privacy, copyright-Field of genetic engineering-mixing the genes to create new organisms. Are we playing god? Gene padi and anggur
  11. 11. MORAL DEVELOPMENT AND MORAL REASONINGA person’s values are not formed during childhood only. According to Kohlberg, there is a sequence of six identifiable stages in the development of a person’s ability to deal with moral issues.There are:1.Level One:Preconventional Stages:Here right or wrong are interpreted in terms of the pleasant or painful consequences of actions or in terms of the physical power of those who set the rules. “Stealing is bad because my mommy will acne me”a.Stage one:Punishment and Obedience Orientation:The child’s reasons for doing the right thing are to avoid punishment or defer of superior physical power of authorities. (based on consequences)There is little awareness that others have needs and desires similar to one’s own.b.Stage two:Instrumental and Relative orientation. Here,right actions are actions that can serve as instruments for satisfying the childs own needs or the needs of those for whom the child cares. The child is now aware that others have needs and desires similar to his own and begins to defer to them to get them to do what he wants.
  12. 12. 2.Level two: Conventional Stages: Mainatining the expectations of one’s own family,peer group or nation is now seen as valuable in its own right, regardless of the consequences. The person at this level of development does not merely conform to expectations but exhibits loyalty to the group and its norms.”it is right my friends/america think so” ‘ it is what our law says”a.Stage Three:Interpersonal Concordance orientation:Right action is conformityto what is generally expected in one’s role as a good son,daughter, brother etc.Doing what is right is motivated by the need to be seen as a good performer in one’s own eyes and in the eyes of others.b.Stage four:Law and order orientation:What is right or wrong here, is now determined by loyalty to one’s own larger nation or surrounding society. Laws are to be upheld except where they conflict with other fixed social duties.
  13. 13. 3.Level Three: Postconventional, Autonomous or principled stages:Here, a person no longer simply accepts values and norms of the groups to which he or she belongs to. Instead, the person now tries to see situations from a point of view that impartially takes everyone’s interests into account. The person questions the laws and values that a society has adopted and redefines them in terms of self chosen principles that can be justified in rational terms. If an adult at this stage is asked why something is wrong, the person will respond in terms of what has been decided through processes that are fair to everyone or in terms of justice.a.Stage Five:Social Contract Orientation:Here, the person becomes aware that people hold a variety of conflicting personal views and opinions and emphasizes fair ways of reaching consensus by agreement, contract and due process.b.Stage Six:Universal Ethical Orientation: At this final stage, the right action comes to be defined in terms of moral principles chosen because of their logical comprehensiveness,universality and consistency. These ethical principles are not concrete,but abstract general principles dealing with justice,socirty’s welfare,equality of human rights,respect for the dignity of individual human beings.the person’s reasons for doing what is right are based on a commitment to these moral principles.
  14. 14. Kohlberg’s theory is useful because it helps us understand how our moral capacities develop and reveals how we can become increasingly sophisticated and critical in the use and understanding of the moral standards that we hold . Not everyone go through all the stages. Some get stuck.-Critics of this theory criticise K for claiming that the higher stages are morally preferable to lower stages. Broader perspective does not mean better.--Gilligan-psychologist-because most of K’s subjects are male, his theory failed to take into account the patterns of moral thinking of woman.Moral Reasoning/Pertaakulan-It refers to the reasoning process by which human behaviors,institutions or policies are judged to be in accordance with or in violations or moral standards.-It has two essential components:a.An understanding of what reasonable moral standards require,prohibit,value or condemnb.Evidence or information that shows that a particular person,policy ,institution or behavior has the kinds of features that these moral standards require,prohibit,value or condemn.
  15. 15. • Ex. Factual Moral judgment Moral information on the rightness standar concerning the or wrongness of ds policy, institution the policy, or behavior under institution or consideration behavior Ex. A society Ex. In american society,41% EX.america is unjust Of negros fall below n society is if it does the un just. not treat minoriti poverty line as es as compared with equal to 12% Of whites whites
  16. 16. There are various criteria that ethicists use to evaluate the adequacy of moral reasoning:a. Moral reasoning must be logical: It means the logic of the arguments used to establish a moral judgment must be rigorously examined, all the unspoken moral and factual assumptions be made explicit, and both assumptions and premises be displayed and subjected to criticism.b.The factual evidence cited in support of a person’s judgment must be accurate,relevant and complete(not just lopsided evidence).c.The moral standards involved in a person’s moral reasoning must be consistent.Ex. Moral standards-employee disobeying is bad and it is wrong to help someone who is endangering innocent people’s life. One day your boss calls you to do something that can endanger the lives of others.So , need to do modification, we need to look at the reasons behind the two moral standards to see which is important. here, maybe modify the first standard that employees have to obey except when they threaten human lives. Consistency also refers to the requirement that one must be willing to accept the consequences of applying one’s moral standards consistently to all persons in similar circumstances. You lie-OK. Others lie-not OK
  17. 17. ARGUMENTS FOR AND AGAINST BUSINESS ETHICSThree objections of bringing ethics into business:a.In perfectly competitive free markets, the pursuit of profit will by itself ensure that the members of society are served in the most socially beneficial way. To be profitable, managers will need to produce what society wants. So no need for managers to impose their on values on business. Managers need to concentrated on making profitsBut are all economies perfectly competitive free(some monopoly business.) Sometimes , steps to increase profits can socially harmful. ex.corruption, pollution from that, the market consists of rich and poor people.Companies will only produce things that are good for rich people.b.A second kind of argument sometimes advanced to show that business managers should single-mindedly pursue the interests of their firms and should ignore ethical considerations is embodied in Michales “loyal agent’s argument” – “An employer would want to be served in whatever ways will advance his or her self interests. Therefore, as a loyal agent of the employer, the manager has a duty to serve the employer in whatever ways will advance the employer’s self interests.”
  18. 18. However-the phrase is an example of unproved moral standards.It is really good.Furthermore, a manager’s duty has legal limitations.Code of conduct for lawyers , real estate agents etc.c.It is ethical enough to just obey the law. But is ethics the same as law.The Case for Ethics in Businessa.Ethics should govern all voluntary human activities and because business is a voluntary human activity, ethics should govern business.b.Like any other human activities, a business cannot exist unless the the people involved in the business and its surrounding community adhere to some minimal standards of ethics .managers who lie, customers who still.c. Good ethics is good profit.?d. Customers and employees care about ethics. Boycot unethical companies.
  19. 19. MORAL RESPONSIBILITY AND BLAMEMoral reasoning is sometimes directed at a different kind of judgment: determining whether a person is morally responsible for an injury or for a wrong.The kind of moral responsibility we are discussing here is the kind of moral responsibility a person has when we say a person is to be blamed for something.-Traditional view-A person is morally responsible for an injury when the person caused the injury and did so knowingly and freely. But it ignores the fact that people are sometimes responsible for injuries which they did not cause but which they could and should have prevented.So, a person is morally responsible for an injury or wrong if:a.The person caused or help caused it, or failed to prevent it when he could and should have; andb.The person did so knowing what he was doing; andc.The person did so of his own free will.Company keep posion-no proper labelling-worker open can and overcome by gas and dies.
  20. 20. Corporate responsibility-Who should be responsible for corporate act/ action/activities?Within the modern day corporations, responsibility for a corporate act is often distributed among a number of cooperating parties. Corporate acts normally are brought about by several actions or omissions of many different people all cooperating together so that their linked actions and omisions jointly produce the corporate team designs cars ,another make it, another sells it. One group knowingly defrauds buyers and another group knowingly but silently enjoying the profit. So who is morally responsible for such jointly produced acts?-traditional view is that those who knowingly and freely did what was necessary to produce the corporate act are each morally responsible.The person is fully responsible for the wrong or injury even if this responsibility is shared with others. You use others help to commit fraud.-Critics say that when an organised group such as corporation acts together, their corporate act may be described as the act of a group and corporate the group and not individuals of the group that must be held responsible.ex. Defective car, we blame proton. Not its enginners.
  21. 21. The law typically attributes the acts of a corporation’s managers to corporation (act within their authority)and not to managers as individuals.However, in large organisations, consisting of different departments. Members of one department might not know what is going on in the next department. Engineering might submit design to production department. After that that’s it. Sometimes , employees can also be pressured into such activities. Is he morally responsible?Subordinates Responsibility-Corporations usually have a hierarchical structure of authority in which orders and directives pass from those higher in the structure to a variety of agents at lower levels. Who is morally responsible when a superior orders a subordinate to carry out an act that both of them know is wrong?-following orders good enough to escape?