[Business Law] Business Ethics

Business Ethics
‘‘What are the main types of issue-related factors in ethical
decision-making? What is the signiﬁcance of these factors for
managers seeking to prevent ethical violation in their organizations?
Critically discuss.’’
Business Law / Mr. Aurélien Portuese
Garance COUVRY
Woojin KIM
Class 14 / 2013-14

1. Introduction: Business Ethics
2. Ethical Decision-making Process
3. Issue-related Factors in Ethical Decision-making
4. Conclusion: For The Better Business World
5. Q&A
Table of Contents

‘Introduction:
Business Ethics

Who is this man?
Introduction: Business Ethics

Case Study 1: Enron Scandal

‣ You make money in the new economy in the same ways you make money
in the old economy- by providing goods and services that have real value.
‣ Financial cleverness is no substitute for a good corporate strategy.
‣ The arrogance of corporate executives who claim they are the best and
the brightest, ‘‘the most innovative’’ and who present themselves as
superstars should be a ‘‘red ﬂag’’ for investors, directors and the public.
‣ Executives who are paid too much can think they are above the rules and
can be tempted to cut ethical corners to retain their wealth and
perquisites.
‣ Government regulations and rules need to be updated for the new
economy, not relaxed and eliminated.
Lessons from the Enron Scandal

What is Business Ethics?
The will of
long-term growth
and sustainability
The issue of
globalization
The study of business
situation, activities, and
decision where issue of
right and wrong are
addressed.

What is Business Ethics?
The limited
resources
and the growing
population
The reduction of
costs and risks
The study of business
situation, activities, and
decision where issue of
right and wrong are
addressed.

2 Types of Business Ethics Theories
Descriptive Business Theory
The scientiﬁc study of
moral beliefs and practices,
to describe how people
behave and think when
dealing with moral issues and
arguments.
The study of principles,
rules, or theories that guide
our actions and judgements, To
determine what actually is
morally right or wrong.
Normative Business Thoery

Case Study 2: The Price of Your Life
‘‘Should Business
Ethics Theory be
normative or descriptive?’’
?

‘Part 1:
Ethical Decision-making
Process

Models of Ethical Decision-making
Issue-related Factor
‘‘Can I cheat during an exam?’’
Context-related
Factor
‘‘So I cheat during
an exam.’’
Context-related Factor
‘‘But I have to get a good
mark, it’s more important’’
Establish moral
intent
Recognize
moral issue
Engage in moral
behavior
Make moral
judgement
Issue-related Factor
‘‘Cheating is wrong.’’
Part 1: Ethical Decision-making Process
Thomas Jones’s Decision-making Process (1991)

Models of Ethical Decision-making
Establish moral
intent
Recognize
moral issue
Engage in moral
behavior
Make moral
judgement
Ford and Richardson (1994)
Individual
Factors
Situational
Factors

Individual Factors
Factors Acquired
by Experience and Socialization
Birth Factors
!
!
• Education
• Personality
• Psychological factors
• Moral imagination
!
!
• Age
• Gender
• Nationality
• Culture

Cognitive Moral Development
When the individual is
mature enough to make
his decision based on
principles of right and
wrong, instead of
external impact.
When the individual’s
decision-making
process depends on the
self interest and rewards.
When the individuals
reasoning is based on
conforming himself on
what people expect from
him.
Pre-conventional
level
Conventional
level
Principled
level
Cognitive Moral Development by Lawrence Kohlberg (1969)

Situational Factors
Decision-
making
Process
Context-related
Factors
Issue-related
Factors
Moral intensity
Moral framing
Rewards
Organizational culture
Authority
Bureaucracy
Work roles
National context

‘Part 2:
Issue-related Factors in
Ethical Decision-making

Situational Factors
Decision-
making
Process
Context-related
Factors
Issue-related
Factors
Moral intensity
Moral framing
Rewards
Organizational culture
Authority
Bureaucracy
Work roles
National context
Part 2: Issue-related Factors in Ethical Decision-making

Moral Intensity
Concentration
of effect
Social
consensus
Magnitude of
consequences
Probability of
effect
Temporal
immediacy
6
Variables Proximity
‣ Moral intensity means how important the issue is to the decision-maker.
‣ There was strong support for the inﬂuence of moral intensity on ethical
decision-making, especially with respect to magnitude of consequences
and social consensus.
The expected sum of the harms
(or beneﬁts) for those impacts
by the problem or action.
The degree to which people are
in agreement over the ethics of
the problem or action.

Case Study 3: The Explosion of Ford Pinto
‘‘Which variables of
Moral Intensity
Inﬂuenced Ford’s decision?’’
?
‣ It costs $11 per car to implement the new design
‣ It resulted in 180 deaths
- Magnitude of consequences
- Social consensus

Case Study 4: Nike Sweatshops
‘‘Which variables of
Moral Intensity
Influenced Nike Sweatshops?’’
?
‣ Nike has been accused of using sweatshops
since early 1970s.
‣ When workers demanded additional rights and
benefits, the Nike factories closed and moved
to different location to continue operating at a
low cost.
- Proximity
- Concentration of effect

Moral Framing
‣ The same problem or dilemma can be perceived very differently according
to the way that the issue is framed.
‣ However, many people in business are reluctant to ascribe moral terms.
Harmony Efficiency
Image of
power and
effectiveness
3 Threats
Managers tend to believe that moral
talk would disturb organizational
harmony by provoking
confrontation, recrimination, and
finger-pointing.
Managers often felt that moral talk
could cloud issues, making
decision-making more difficult, time
consuming, and inflexible.
Managers also felt that their own
image might suffer since being
associated with ethics could be
seen as idealistic and lacking
sufficient robustness for effective
management.

Rationalizing Unethical Behaviour
Strategy Description
Denial of
responsibility
The actors engaged in corrupt behaviors perceive that they have no other
choice than to participate in such activities.
Denial of injury
The actors are convinced that no one is harmed by their actions; hence
the actions are not really corrupt.
Denial of victim
The actors counter any blame for their actions by arguing that the violated
party deserved whatever happend.
Social weighting
The actors assume two practices that moderate the salience of corrupt
behavior: 1. Condemn the condemner, 2. Selective social comparison.
Appeal to higher
loyalties
The actors argue that their violation of norms is due to their attempt to
realize a higher-order value.
Metaphors of the
ledger
The actors argue that they are entitled to indulge in deviant behaviors
because of their accrued credits (time and effort) in their jobs.
<Mental strategies that allow employees to view their croup acts as justiﬁed> by Anand, Ashforth, and Joshi (2004)

Rationalizing Unethical Behaviour
‘‘They deserve it.’’
‘‘I would not report it
because of my loyalty to my boss.’’
‘‘What can I do?
My arm is being twisted.’’
‘‘No one is really harmed’’
‘‘It’s all right for me to use the internet
for personal reasons at work.
After all, I do work overtime.’’
‘‘Others are worse than we are.’’
What can I do? My arm is being twisted.
No one was really harmed.
They deserve it.
Others are worse than we are.
I would not report it because of my loyalty to my boss.
It’s all right for me to use the internet for personal reasons at work.
After all, I do work overtime.

Case Study 5: Downloading vs. Stealing
‘‘With which strategies,
illegal downloaders
rationalize themselves?’’
?
- Denial of injury
- Social weighting
- Denial of victim

Decision-making Process
Decision-making
Process
Heading 2!
Recognize
moral issues
Heading 4Heading 3! ! !
Make moral
judgement
Establish
moral intent
Engage in
moral behavior
Individual
factors
Situational

factors
Situational

factors

‘Conclusion:
For the Better
Business World

Beneﬁts of an Ethical Business
Conclusion: For the Better Business World
Improve
organizational
morale, also bring
the ability to attract
new customers
Reduce the risk
of negative
reputation and
public
repercussion
Provide a positive
impact on the
community

Responsibility of New Generation
Conclusion: For the Better Business World
1 2
Corporate Social
Responsibility (CSR)
Business Ethics
The Better Business Environment

Q&A

you
Thank

[Business Law] Business Ethics

More Related Content

What's hot

Viewers also liked

Similar to [Business Law] Business Ethics

More from Andy Woojin Kim

Recently uploaded

[Business Law] Business Ethics