Business ethics essay

Business Ethics

Session 2: Business Ethics Theories I

Business Ethics Theories

1. Summary of Session I

2. Introduction to Business Ethics Theories

3. Business Ethics Theories (Part I)

4. Discussion: Wiki Leaks

5. Exercise: A Tale of Two Stories

6. The Paradise Papers

Introduction to Business Ethics Theories

Ethical Decision-Making

What to decide in ambitious/complicated situations?

What to decide in a dilemma situation?

Ethical theory can help to find a solution.

Introduction to Business Ethics Theories

• Ethical Theories provides part of the solution when decisions need to be made in situations where ethics (right and wrong) play a role.

• Ethical theories provide guidelines.

• Each theory emphasizes different points:

– A different decision-making style, or

– A decision rule – eg to predict the outcome of the decision and to follow duties to others in order to reach what the said individual considers to be ethically correct.

Introduction to Business Ethics Theories

In order to understand ethical decision-making,

it is important to acknowledge that not everyone makes decisions in the same way by using exactly the same information.

To further understand ethical theory, there must be a common understanding of a common set of goals based on ethical principles:

• Beneficence

• Least Harm

• Respect for autonomy

• Justice

Introduction to Business Ethics Theories

Common set of goals based on ethical principles:

• Beneficence

– Guides the decision-maker to do what is good and right.

– « to do good » makes the possible solution to an ethical dilemma acceptable

– The principle is related to utilty theory (we should attempt to to generate the largest ration of good over evil possible in the world.

Introduction to Business Ethics Theories

Common set of goals based on ethical principles:

• Least Harm

– As in the case of beneficence, least harm deals with situations in which no choice seems beneficial.

– In these cases, decision-makers base their decisions on doing the least harm to the greater number of people.

Introduction to Business Ethics Theories

Common set of goals based on ethical principles:

• Respect for autonomy

– This principle states that decision-making should focus on allowing people to be autonomous – to be able to make decisions that apply to their lives.

• Justice

– Decision-makers should focus on actions that are fair to those involved.

Ethical Theories

I. Egoism/ Liberalism

II. Utilitarianism

III. Ethics of Duties/ Deontology/ Kantianism

IV. Natural Rights Theory

Business Ethics Theories I. Egoism/ Liberalism

Implies that the individual follows his/her long-term interest.

Egoism is not selfishness.

Enlightened self-interest implies that, for example, CSR activities are sometimes implemented, because they have a positive long-term impact on the financial performance of a company.

Authors: Plato (470-399 BC), Adam Smith (1723-1790)

The logic of market:

• Everybody pursues their own interest.

• The market participants engage in exchange in order to gain something they need or desire.

• Everybody profits from the exchange.

Consequentialst: the outcomes are more important than the actions

Business Ethics Theories II. Utilitarianism

An action is morally right if it results in the greatest amount of good for the greatest amount of people affected by the action.

Authors: Jeremy Bentham (1749-1832), John Stuart Mill (1806-1873)

Method: A cost-benefit analysis

Approaches:

Each act is evaluated according to its outcomes - consequentialist

Each rule has to contribute to the greatest good for the greatest number. Some individual acts that respect the rule may not do so.

Business Ethics Theories

II. Utilitarianism involves 4 theses:

• Consequentialism

The rightness of actions is only determined by their consequences

• Hedonism

Utility is identified with pleasure and the absence of pain

• Maximalism

A right action is one that has not merely some good consequences, but also the greatest amount of good consequences possible when the bad consequences are also taken into consideration.

• Universalism

The consequences to be considered are those for everyone

Business Ethics Theories II. Utilitarianism

Values:

• pleasure vs. pain

• happiness vs. unhappiness

• intrinsically valuable human goods (such as friendship, love, trust)

Problems:

• Protection of minorities.

• What is the greatest good? Subjective choice; difficult to quantify.

Business Ethics Theories III. Ethics of Duties/ Deontology/ Kantianism

Relates to a set of a priori moral laws that apply to all ethical problems.

Assumes that humans are rational and, thus, independent moral actors – there are things we ought to do and there are things we ought not to do.

Author: Immanuel Kant (1724-1804)

Non-consequentialist

Problems:

• Undervaluing outcomes of one’s actions.

• Complexity. Difficult to apply.

• Optimism. How rational are we?

Business Ethics Theories Categorical imperative

Maxim 1:

Act only according to that maxim by which you can at the same time will that it should become a universal law.

 consistency

Maxim 2:

Act so that you treat humanity, whether in your own person or in that of another, always as an end and never as a means only.

 human dignity

Maxim 3:

Act only so that the will through its maxims could regard itself at the same time as universally lawgiving.

 universality

Business Ethics Theories IV. Natural Rights Theory

Natural rights (today: human rights) are certain basic, important, unalienable entitlements that should be respected and protected in every single action.

Assumption of human dignity.

Authors: John Locke (1632-1714), John Rawls (1921-2002)

Two main features:

• Universality – possessed by all persons regardless of race, sex, nationality etc.

• Unconditionality – there is nothing we can do to relinquish our natural rights or to deprive ourselves or others of them.

Business Ethics Theories IV. Natural Rights Theory

Examples of natural rights:

• Right to life,

• Freedom,

• Property, etc.

Related: Philosophical approaches of the Enlightenment; Catholic social thought.

Non-consequentialist

Classical ethical theories

Egoism Utilitarianism Ethics of duties Rights Theory

Contributors Adam Smith. Jeremy Bentham, John Stuart Mill.

Immanuel Kant. John Locke, John

Rawls

Focus Individual desires or interests.

Collective welfare. Duties. Rights.

Rules Maximization of desire/self interest.

Act/rule utilitarianism. Categorical

imperative.

Respect for

human beings.

Concepts of human

beings

Man as an actor with

limited knowledge and

objectives

Man is controlled by

avoidance of pain and

gain of pleasure

(hedonist).

Man is a rational

moral actor.

Man is a being

that is

distinguished by

dignity.

Type Consequentialist. Consequentialist. Non- consequentialist. Non- consequentialist.

Source: Crane & Matten, 2007: 91.

Discussion WikiLeaks – The Ethics of Transparency

WikiLeaks (founded 2006) and OpenLeaks (founded 2011) are whistle- blowing websites that allow the anonymous submission of documents that are kept secret, but are of interest to the general public.

WikiLeaks has published documents on

• operating procedures of the Guantanamo Bay prison,

• collected secret bibles of Scientology,

• friendly fire in Afghanistan and Iraq,

• confidential diplomatic cables from US embassies.

In 2009, WikiLeaks received a New Media award from Amnesty International for “Kenya: The Cry of Blood - Extra Judicial Killings and Disappearances” (source: www.guardian.co.uk).

WikiLeaks is financed through donations.

WikiLeaks – The Ethics of Transparency

Question: Is WikiLeaks an ethical organisation?

Blanton (director of the National Security Archive at George Washington University) said that while journalists consider openness an informed struggle over time, Assange took the anarchists’ approach of posting everything to let it collapse the system.

“Contrary to the Anarchist Manifesto, there are some secrets that should be maintained” because they can kill people—such as Afghans who are working with the U.S. to identify members of the Taliban.

WikiLeaks – The Ethics of Transparency

Question: How do you evaluate WikiLeaks when you apply ethical theories?

To evaluate ethics of WikiLeaks, we will apply the Utilitarian Approach

WikiLeaks – The Ethics of Transparency

. The Utilitarian Approach

The Utilitarian Approach is focusing on the

consequences that the publications of

WikiLeaks have on the well-being of all parties

that are involved directly or indirectly.

WikiLeaks – The Ethics of Transparency

.

The Utilitarian Approach

In The Utilitarian Approach, there are two opposite sides to

consider.

1.On the one hand, the uncovering of misconduct and

the increased transparency of the governments are of

such importance that the publication benefits society as

a whole.

It alleviates opinion making and leads to a greater

understanding of governmental work.

WikiLeaks – The Ethics of Transparency

. The Utilitarian Approach

2. On the other hand the publications may cause harm.

They may threaten the national security and so harm

society.

They can lead to a society with decreased institutional

integrity which may eventually result in self-censorship,

decreased communication, more technical restrictions

and so in less freedom.

Exercise: A Tale of Two Stories

Phase 1: Individual Reflection

Read the instructions and take some time to find your own answers. Take some notes.

Time: 20 minutes

Phase 2: Group Reflection

Form groups of 4-5 participants. Discuss your responses and try to find out whether there are common factors that helped you to speak up or that hindered you to do so.

Time: 30 minutes

Phase 3: Plenum

We share our insights of what factors help us to speak up and what hinder us to do so.

Exercise: A Tale of Two Stories

Recall an experience in a summer job, an

internship, a student club, a student team

project, etc. where your values conflicted

with what you were expected to do in a

particular, nontrivial decision, and you

spoke up and acted to resolve the

conflict.

Exercise: A Tale of Two Stories Consider the following 4 questions and write down

your thoughts and brief responses:

1. What did you do, and what was the impact?

2. What motivated you to speak up and act?

3. How satisfied are you? How would you like to have

responded? (This question is not about rejecting or

defending past actions but rather about imagining

your Ideal Scenario.)

4. What would have made it easier for you to speak/act?

– Things within your own control

– Things within the control of others