Business Ethics Fundamentals

1
(No Transcript)
2
Ethics and Behaviorin Organizations
Chapter 3
3
Introduction

• Inventory of Ethical Issues in Business
• Employee-Employer Relations
• Employer-Employee Relations
• Company-Customer Relations
• Company-Shareholder Relations
• Company-Community/Public Interest

4
Publics 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?

5
Publics 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

6
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

7
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

8
Conventional Approach to Business Ethics

• Conventional approach to business ethics involves
  a comparison of a decision or practice to
  prevailing societal norms
• Pitfall ethical relativism
• Decision or Practice Prevailing Norms

9
Sources of Ethical Norms

10
Ethics and the Law

• Law often represents an ethical minimum
• Ethics often represents a standard that exceeds
  the legal minimum

Frequent Overlap
Ethics
Law
11
Making Ethical Judgments

Behavior or act that has been committed
Prevailing norms of acceptability
compared with
Value judgments and perceptions of the observer
12
Ethics, Economics, and Law
13
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?

14
3 Models of Management Ethics

• Immoral ManagementA style devoid of ethical
  principles and active opposition to what is
  ethical.
• Moral ManagementConforms to high standards of
  ethical behavior.
• Amoral Management
• Intentional - does not consider ethical factors
• Unintentional - casual or careless about ethical
  considerations in business

15
3 Models of Management Ethics
Three Types Of Management Ethics
Moral
Amoral
Immoral
16
Three Approaches to Management Ethics
17
Three Models of Management Morality and Emphasis
on CSR
18
Making Moral Management Actionable

• Important Factors
• Senior management
• Ethics training
• Self-analysis

19
Developing Moral Judgment

• External Sources of a Managers Values
• Religious values
• Philosophical values
• Cultural values
• Legal values
• Professional values

20
Developing Moral Judgment

• Internal Sources of a Managers Values
• Respect for the authority structure
• Loyalty
• Conformity
• Performance
• Results

21
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

22
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 employers and employees
  values
• Handling an unethical directive
• Coping with a performance system that encourages
  unethical means

23
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

24
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

25
(No Transcript)
26
Chapter 3Ethics and Behaviorin Organizations
27
Ethical andUnethical 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

28
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

29
Ethical and Unethical Behavior (Cont.)
Ethical dilemmas
Find 1 cent
Find 1
Find wallet with 1,000 and no identification.
Find wallet with 1,000 and identification.
30
Legal Versus Ethical BehaviorThe Issue of Lying
Ethical behavior
Legal behavior
Lying to a customerabout the safety ofa product.
Testifying underoath in court.
How does myhair look?
Lying deliberate misrepresentation of the truth.
31
Theories of Ethics

• Four major theories of ethics in the Western
  world
• Utilitarianism net benefits
• Rights entitlement
• Justice fairness
• Egoism self-interest

32
Theories of Ethics (Cont.)

• Utilitarianism
• examine an actions 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

33
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

34
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

35
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

36
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

37
Theories of Ethics (Cont.)

• Rights
• Right a persons just claim or entitlement
• Focuses on the persons 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

38
Theories of Ethics (Cont.)

• Rights (cont.)
• Features
• Respect the rights of others
• Lets people act as equals
• Moral justification of a persons action
• Examples
• Legal right right to a fair trial in the United
  States
• Moral right right to due process within an
  organization

39
Theories of Ethics (Cont.)

• Rights (cont.)
• Rejects view of assessing the results of actions
• Expresses moral rights from individual's view,
  not society's. Does not look to the number of
  people who benefit from limiting another person's
  rights
• Example right to free speech in the United
  States stands even if a person expresses a
  dissenting view

40
Theories of Ethics (Cont.)

• Rights (cont.)
• Types of rights
• Negative rights do not interfere with another
  persons 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
blowthe whistle on unethical actions
41
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

42
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 ones
  interests
• Usually rejected by moral philosophers as a
  defensible basis of ethics

43
Theories of Ethics (Cont.)

• Egoism (cont.)
• Universal ethical egoism
• Can include the interests of others when
  assessing ones 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

44
Theories of Ethics (Cont.)

• Egoism (cont.)
• Objections raised by moral philosophers
• Does not resolve conflicts in peoples interests
• One party would always have the pursuit of his or
  her interests blocked

45
Theories of Ethics (Cont.)

• Questions from the ethical theories
• Utilitarianism does the action yield the
  greatest net benefits?
• Rights does the action negatively affect
  someones 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?

46
International Aspectsof 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

47
International Aspectsof Ethics (Cont.)
Two ethical views
Culturalrelativism
Ethicalrealism
Multinationalorganization
48
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 society's predominant ethical values
• Cultural relativists base their argument on three
  points

49
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

50
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
  relativism's argument that codes of ethics cannot
  cross national boundaries
• Agree, however, that countries vary in what they
  define as right and wrong

51
International Aspectsof 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

52
International Aspectsof 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