Slide- CH 5

• Business ethics


  Rules, standards, codes, or principles that provide guidelines for morally right behaviour and truthfulness in specific situations
• Business ethics means different things to different managers
• Value judgments


  Subjective evaluations of what is considered important
• Moral standards


  The means by which individuals judge their actions and the actions of others
• Influences on ethical behaviour

  • Influences of Individuals
  • Corporate or Organizational Influences
  • Economic Efficiency Influences
  • Government and Legal System Influences
  • Social Influences
• Ethical relativism


  Belief that ethical answers depend on the situation and no universal standard or rules exist to guide or evaluate morality
• Value judgments


  Subjective evaluations of what managers think is important; based upon a manager's own values
• Moral standards


  Represent the expectations of society and the means by which managers judge their actions
• Ethical principles


  The fundamental rules by which moral standards and value judgments can be examined
• Ethical principles


  • Self-interest
  • Personal virtues
  • Caring
  • Utilitarian benefits
  • Universal rules
  • Individual rights
  • Justice
• Self-interest ethic (Ethical egoism)


  Individuals or corporations set their own standards for judging the ethical implications of their actions
• Problems with self-interest ethic: considered easy way out, viewed as selfish behaviour, leads to absolutism
• Enlightened egoist


  Attentive to needs of others, and self-interest provides an incentive to restrain one's self-interest
• Maximization of profits is acceptable as long as interests of relevant stakeholders are considered
• Personal virtues ethic


  An individual's or corporation's behaviour is based upon being a good person or corporate citizen
• Ethics of caring


  Gives attention to specific individuals or stakeholders harmed or disadvantaged and their particular circumstances
• Golden rule


  Do unto others as you would have them do unto you
• Advantages of ethics of caring: responsive to immediate suffering or harm, allows for flexibility, not concerned with precedents
• Problems with ethics of caring: lose sight of the bigger picture, caring actions rely on subjective criteria
• Utilitarian ethic


  Focuses on the distribution of benefits and harms to all stakeholders with the view to maximizing benefits
• Problems with utilitarian ethic: does not account for what is just, cannot accurately measure some costs and benefits, no method for distributing costs or benefits
• Universal rules ethic


  Ensures that managers or corporations have the same moral obligations in morally similar situations
• Problems with universal rules ethic: difficult to determine if someone is being used merely as a means to an end, not possible to always work to universal rules, no scale between actions that are considered morally right or wrong
• Individual rights ethic


  Relies on a list of agreed-upon rights for everyone that will be upheld by everyone and that becomes the basis for deciding what is right, just, or fair
• Problems with individual rights ethic: determining and agreeing upon the list of rights, rights and/or holders of those rights can be in conflict, rights are not absolute and overemphasis on one might result in injustice
• Ethic of justice


  Considers that moral decisions are based on the primacy of a single value: justice which will result in fair outcome
• Types of justice

  • Procedural justice
  • Corrective justice
  • Retributive justice
  • Distributive justice
• Advantages of ethic of justice: looks at dilemmas logically and impartially, all are perceived to have an equal right to equitable treatment
• Problems with ethic of justice: difficult to decide who has the moral authority to reward or punish, ensuring benefits distributed fairly is challenging, interests of particular stakeholders may be overlooked, perceived as being impersonal, inflexible, cold and uncaring
• Ethical dilemma


  Situation or problem where a person has to make a difficult choice between two alternatives, neither of which resolves an issue or problem in an ethically acceptable fashion
• Approach to handling ethical dilemmas


  1. Identify the ethical principles involved

  2. Review or analyze the problem using one of the ethical principles outlined above

  3. Examine the problem from an ethical perspective different from the one(s) used initially
• Steps to moral reasoning

  1. Define moral issue or decision

  2. Gather all relevant information

  3. Identify the stakeholders involved

  4. Develop possible alternative solutions

  5. Consider applicable value judgments, moral standards, principles

  6. Identify harms/benefits to stakeholders

  7. Determine practical constraints

  8. Decide on action
• Kohlberg's stages of moral development

  • Level I: Pre-Conventional (Self)
  • Level II: Conventional (Others)
  • Level III: Post-Conventional (Humankind)
• Too simplistic approaches to ethics in business: indicating "just do the right thing" is not satisfactory
• Myths about ethics in business


  • It's easy to be ethical
  • Unethical behaviour in business is simply result of "bad apples"
  • People are less ethical than they used to be
• Lack of awareness: most people believe that they behave ethically towards others, but self-perception often falls short
• Four biases that lead to lack of awareness

  • Prejudice
  • Favouritism
  • Overclaiming credit
  • Conflict of interest