C r a i g Va t t i a t
Ore go n C i t y Hi g h S ch o o l
Ad a p te d f ro m We s t ’s Bu s i ne s s L a w a nd L a w f o r B us i n e s s a n d Pe r s o n a l Us e , 19 e
Ethics – a collection of standards of conduct
and moral judgment forming the basis for a
reasoned, impartial decision as to what is right or wrong.
OR
How moral principles are applied to daily life.
It pursues the question of what people ought to
do when faced with choices.
What is fair?
What is just?
What is the right thing to do in this situation?
Ethics are refl ected in laws. They refl ect
society’s customs and values.
Ex: murder is unethical and against the law
Ethics involves impartiality – the
standards must apply to everyone.
Ex: racial profiling is not impartial
Ethics involves making decisions based on
reason, not emotion.
Ex: You don’t want to report a friend that
committed a crime, but it is ethical to do so.
There can be ethical gray area, where it is
not always clear what is the right thing to
do (confl icting interests).
Ex: New product that benefits many but
might have undesirable side effects for a
small percentage of users
Business ethics – focuses on right and wrong
behavior in business and applying moral principles in
workplace decisions.
Business law encourages ethical business decisions.
Honor contractual commitments
Don’t engage in fraud, deceit
Sometimes business decisions are legal but
unethical.
Ex: Selling a dangerous toy, banned in the US, to other
countries where there are weaker consumer protections.
The law cannot make ethical decisions for us
Decision making in business is complicated
by the goal of profi t maximization.
Tension between pursuit of profi ts and
welfare of those aff ected by this pursuit.
Business decisions often have wider eff ects
than personal decisions.
Example: Paying low wages to employees to
help the “bottom line.” (criticism of
Wal-Mart)
Those aff ected by a company’s actions are
called stakeholders.
As a business person or employee in any
environment, you must be prepared to justify
your decisions to others (law enforcement,
employers, the public, fellow employees, etc.)
Amongst alternatives, why was your decision
the right one?
Not enough to say, “It seemed like the right
decision to make” or “I tried my best.”
Employees- safety, compensation, equal treatment, privacy, freedom
from harassment, whistleblowing.
Ex: Enron executives encouraging employees to buy stock in Enron, all the while knowing they were in a financial crisis
Customers - marketing techniques, product safety, consumer protection
Ex: Joe Camel used as a mascot to market to youth, GM failing to correct a problem with the ignition in its cars
Owners – managers’ duties to shareholders.
Ex: Tyco executive throwing company funded party for his wife
Competitors - fair competition and collusion
Ex: price fi xing
Society - pollution, natural resources
Ex: BP and Deep Horizon oil well explosion in the gulf coast due to poor safety
Globally - exploitation of developing countries and workers, bribery of
foreign offi cials, confl icting values\cultural diff erences.
Ex: Nestle pushing baby formula in Africa and discouraging mothers from using breast milk
multiple perspective s on how to make
Means: (deontology, from Greek deon meaning
duty)
Seeks to put the decision-maker of the shoes of those to be
affected by their decisions and to ask if you would be satisfied by the action.
Embodied by the Golden Rule.
Actions must be judged by their motives and means as well
as their results.
German philosopher Immanuel Kant stated that individuals
should evaluate their actions in light of the consequences that would follow if everyone in society acted in the same way (cheating on a test).
It is rule-based; there are can’t be exceptions, it needs to
be universal.
Ends: The Greatest Good (utilitarianism)
Moral actions are those that produce the greatest net
pleasure compared with net pain.
Theory developed by Jeremy Bentham, advanced by Stuart Mill
It is outcome oriented. Here, the ends justify the means. A decision is right when among the people it aff ects, it
produces the greatest amount of good for the greatest number.
1) who will be aff ected
2) an assessment of the negative and positive eff ects of the various alternatives
3) a choice that produces the maximum utility (greatest good).
Q: What “good” is being sought? Monetary? Justice?
ETHICAL
RESPONSIBILITIES OF
Is maximizing profi t the only responsibility of business? Our
economic system is based on the pursuit of self-interest.
Competition helps to keep companies in check but it needs
help. We still need "regulation" whether by the business itself or by the government. Ideally in business, the
shareholders keep the management accountable for their
actions. But the reality is that shareholders are far removed from decision-making. Many big companies are controlled by few people.
This has changed as a result of new rules from the US SEC
and the Sarbanes-Oxley Act of 2002. Both require more outside directors and additional safeguards to keep
companies in check.
Social responsibility
is
an ethical framework
which suggests that an
entity, be it an
organization or
individual, has an
obligation to act for the
benefi t of society at
large.
Social Contract - Because society allows for the
creation of corporations and gives them special
rights, corporations owe a responsibility to our
society.
Less gov't regulation - If companies managed
themselves responsibly, government would have less
reason to get involved.
Long-Run Profi ts - Corporate involvement in social
causes creates goodwill, which simply makes good
business sense.
Profi tability - Companies exist to make a profi t and any other
concern distracts them from achieving this goal.
Unfairness- Money spent on social issues is money taken
away from the employees and owners who rightfully have a priority.
Expertise - Companies are experts in producing and selling
their product but not necessarily managing socially useful activities.
Accountability- Consumers can vote with their dollars
regarding concerns of theirs. Companies may wield too much power in supporting social causes it sees important. Could also provide money for groups "with strings attached."