BUSINESS ETHICS

Business EthicsEthics is the study of right and wrong behavior; whether an action is fair, right or just. In business, ethical decisions are the application of moral and ethical principles to the marketplace and workplace.Whats Good for Business is Good for the Country This former attitude of business is no longer adequate to insure ethical conduct De Vee E. Dykstra, J.D., 2004*

De Vee E. Dykstra, J.D., 2004

Business StakeholdersShareholdersEmployeesCommunityCustomers

The interests/needs of these stakeholders need to be balanced in ethical decision making to ensure a firms long-term survival. De Vee E. Dykstra, J.D., 2004*

Ethical Conflicts to be BalancedShareholders - want profitsEmployees - want safe and secure jobsCommunity - wants economic benefit of the business and the environment protectedCustomers - want quality product for good/fair price De Vee E. Dykstra, J.D., 2004*

De Vee E. Dykstra, J.D., 2004

Why is Business Ethics Important?Directors and Officers owe a complex set of ethical duties to various stakeholdersWhen these duties conflict, ethical dilemmas are createdImportance of Values in Business SuccessProfits - Ethics Resource Center StudyCosts of Unethical BehaviorEthics as a StrategyGood ReputationPersonal ReasonsSeen as a leader and regulation may be prevented De Vee E. Dykstra, J.D., 2004*

De Vee E. Dykstra, J.D., 2004

EXECUTIVES COMMENT ON REPUTATIONA reputation, good or bad, is tough to shake.Richard Teerlink, CEO, Harley-Davison

If we were making that decision now in light of the press scrutiny we have been receiving, we probably would not have taken that risk.Robert C. Winters, Chairman, Prudential Insurance

A bad reputation is like a hangover. It takes a while to get rid of, and it makes everything else hurt.James Preston, CEO, Avon De Vee E. Dykstra, J.D., 2004*

De Vee E. Dykstra, J.D., 2004

De Vee E. Dykstra, J.D., 2004*Setting the Right Ethical ToneImportance of Ethical Leadership and Creating Ethical Codes of ConductClear Communications to EmployeesE.g., Costco and Johnson and Johnsons web-based ethical trainingCorporate Compliance ProgramsConflicts and Trade-OffsStakeholder interests differ

How does a firm promote the importance of ethical behavior?Adopt a code of ethicsInitial and ongoing employee trainingEmployee hotline for anonymous reporting of ethical violationsDistribute ethical bulletinsManagement (from the top down) provides a role modelContinued review of company policies to determine their effect on ethical behavior De Vee E. Dykstra, J.D., 2004*

De Vee E. Dykstra, J.D., 2004

Beware!!!Watch for Dangers of Unethical EnvironmentIntense competition and issues of survivalManagers making poor judgmentsEmployees with no personal values

De Vee E. Dykstra, J.D., 2004*

De Vee E. Dykstra, J.D., 2004

Introduction to Ethical Theory I

The Goal of Ethical TheoryGenerally: to provide a systematic answer to the question of how we should behave

Theory 1. Moral ObjectivismMoral Objectivism: What is morally right or wrong doesnt depend on what anyone thinks is right or wrong. 'Moral facts' are like 'physical' facts in that what the facts are does not depend on what anyone thinks they are. They simply have to be discovered.

E.g., Divine Command Theory whats right is what God commands; whats wrong is what God forbids

Theory 2. Moral Relativism

Moral Relativism: What is morally right or wrong depends on the prevailing view in the society or culture we happen to be dealing with.

Often presented as a tolerant view: if moral relativism is true, no one has a right to force his moral views on others.

Increasingly popular in recent yearsDid this change with Sept. 11?

A Bad Argument for Moral RelativismThe 'Cultural Differences' Argument Claim: There are huge differences in moral beliefs from culture to culture and era to era.

E.g., Some cultures endorse the killing of elderly members of the tribe, we condemn such actions.

Conclusion: There is no objective fact as to which of these beliefs is correct, morality is relative.

Why is the Cultural Differences Argument Weak?I. Controversy regarding how much fundamental disagreement about morality really is there

II. Differing opinions regarding an issue dont prove there is no fact of the matter about that issueImagine relativism about the shape of the earth (e.g., in the 1400s)

Objectivist TheoriesSuppose for the moments that objectivism is true. What are the objective facts of morality?Main Candidates: ConsequentialismDeontological TheoriesPrincipilism

Theory 3: ConsequentialismConsequentialists maintain that whether an action is morally right or wrong depends on the action's consequences. In any situation, the morally right thing to do is whatever will have the best consequences.Consequentialist theories are sometimes called teleological theories.

What Kind of Consequences?Consequentialism isn't very informative unless it's combined with a theory about what the best consequences are.

Utilitarianism is such a theory. Utilitarianism is the most influential variety of consequentialism

UtilitarianismThe Basis of Utilitarianism: ask what has intrinsic value and assess the consequences of an action in terms of intrinsically valuable things. Instrumental Value - a thing has only instrumental value if it is only valuable for what it may get youe.g., money Intrinsic Value - a thing has intrinsic value if you value it for itselfi.e., youd value it even if it brought you nothing elseWhat, if anything, has intrinsic value?

Only Happiness has Intrinsic ValueWhat Utilitarians Think Is Intrinsically Valuable: happiness (or pleasure or satisfaction)"actions are right in proportion as they tend to promote happiness, wrong as they tend to produce the reverse of happiness." (John Stuart Mill's Greatest Happiness Principle) In other words, judge an action by the total amount of happiness and unhappiness it creates

Jeremy Bentham

Distributive justice: based on concept of fairness. Leads to equitable distribution of goods and services.

Five types of distributive norm are defined by ForsythEquityEqualityPowerNeed Responsibility

Theory 4: Deontology'Duty Based' Ethics Deontologists deny that what ultimately matters is an action's consequences. They claim that what matters is the kind of action it is. What matters is doing our duty. There are many kinds of deontological theory e.g., The 'Golden Rule' - "Do unto others as you'd have them do unto you."

Kantian DeontologyImmanuel Kant (1724-1804) is the most influential deontologist.

Rejecting Consequentialism: "A good will is good not because of what it effects or accomplishes." Even if by bad luck a good person never accomplishes anything much, the good will would "like a jewel, still shine by its own light as something which has its full value in itself."

The Categorical ImperativeKant claims that all our actions should be judged according to a rule he calls the Categorical Imperative. First Version: "Act only according to that maxim [i.e., rule] whereby you can at the same time will that it become a universal law." Second Version: "Act in such a way that you treat humanity, whether in your own person or in the person of another, always at the same time as an end and never simply as a means." Important to treat people as autonomous agents

ProblemsDeontology: What if doing your duty has repugnant consequences?Kant on telling lies lying in any circumstances is the obliteration of ones dignity as a human being Consequentialism: What if you have to do something that seems wrong in order to produce the best consequences?Convicting the innocent

Theory 5: PrincipilismPrincipilism attempts to have it both waysPopularized by Beauchamp and ChildressPrinciples of Biomedical EthicsThe Georgetown Mantra

Four Principles1. Autonomy2. Beneficence3. Non-maleficence4. Justice1 & 4 are deontological 2 & 3 are consequentialistIt is really possible to have it both ways?

Alternative ApproachesVirtue Ethics (Aristotle)What sort of person should I be?

Any moral theory that takes the first question as primary is a virtue-ethical theoryEthics of Care

Virtue EthicsVirtues have three features:

They are a relatively fixed trait of character or mind.They typically involve a disposition to think, act, or feel in certain ways in certain circumstances.They are the primary basis for judging the overall moral goodness or worth of a person.

The virtues are character traits that are cultivated they are not something that one is born with. We learn what is good or bad, right or wrong in virtue of (no pun intended) observing virtuous individuals act, feel, and behave.

Virtue EthicsAristotle argued that all human activities have some purpose or end. But what is the purpose of human life?

He argued that the purpose of human life must several characteristics:

It is an end for which all other ends are pursued,It is pursued for itself,It is never pursued as a means for any other end.

Aristotle argued that eudaimonia or human flourishing (happiness) is the end of human life.

Virtue Ethics - ProblemsAn action is right just in case it is what a virtuous agent would, characteristically, do in the circumstances.

How does one know what to do in a particular circumstance?What makes a virtue good? Is there an essential human nature or stable characters?

Ethics of careThe basic beliefs of the theory are:All individuals are interdependent for achieving their interestsThose particularly vulnerable to our choices and their outcomes deserve extra consideration to be measured according to the level of their vulnerability to one's choicesthe level of their affectedness by one's choices and no one else'sIt is necessary to attend to the contextual details of the situation in order to safeguard and promote the actual specific interests of those involved

**E/H/HL Session 5 - Latus*Equity: Members outcomes should be based upon their inputs. Therefore, an individual who has invested a large amount of input (e.g. time, money, energy) should receive more from the group than someone who has contributed very little. Members of large groups prefer to base allocations of rewards and costs on equity.Equality: Regardless of their inputs, all group members should be given an equal share of the rewards/costs. Equality supports that someone who contributes 20% of the groups resources should receive as much as someone who contributes 60%.Power: Those with more authority, status, or control over the group should receive more than those in lower level positions.Need: Those in greatest needs should be provided with resources needed to meet those needs. These individuals should be given more resources than those who already possess them, regardless of their input.Responsibility: Group members who have the most should share their resources with those who have less.

E/H/HL Session 5 - Latus*