Ethics In Business

UNIT 1

INTRODUCTION

UNDERSTANDING ETHICS

Ethics

• Ethics

– Is a code of moral standards of conduct for what is “good”/“right” as opposed to what is “bad”/“wrong”.

• Ethical Behavior

– is that which is “right” or “good” in the context of governing moral code.

– What is considered ethical can vary across cultures.

– Ethical dilemmas are tests of personal ethics and values.

– People have tendencies to rationalize unethical behaviors.

Values

Ethical behavior is value driven.

Values are broad beliefs about what is appropriate behavior.

• Terminal Values

– Preferences about desired end states.

• Instrumental Values

– Preferences regarding the means to desired ends.

Ethical Dilemma

These are situations with no simple choice between write or

wrong.

The most common paradigms of ethical dilemma are:

 Truth versus loyalty.

 Individual versus community.

 Short-term versus long-term.

 Justice versus mercy.

Rationalizing Unethical Behavior

Main justifications:

• “What I’m doing is not really illegal.”

• “My behavior is in everyone’s best interests.”

• “Nobody will ever find out what I’ve done.”

Individual Characteristics Affecting

Ethical Behaviors

• Values

– Basic convictions about what is right or wrong on a broad range of issues (family influences, religious values, personal standards, and personal needs, etc.)

• Stage of Moral Development

– A measure of an individual’s independence from external influences

The main schools of thought about the extent to which ethical standards apply across the world are:

– Ethical Universalism

– Ethical Relativism

Ethical Universalism

• According to the school of ethical universalism ...

– Same standards of what is right and what is wrong are universal and transcend most cultures, societies, and religions (=Behavior unacceptable in one’s home environment should not be acceptable anywhere else)

– Universal agreement on basic moral standards allows a multinational company to develop a code of ethics that is applied evenly across its worldwide operations

Ethical Relativism

• According to the school of ethical relativism . . .

– What is ethical or unethical must be judged in light of local moral standards and can vary from one country to another (=Ethical behavior is always determined by cultural context)

• Some Companies code of conduct based upon the principle of ethical relativism assume that local morality is an adequate guide for ethical behavior

Ethics and Culture

Stages of Moral Development

ETHICAL THEORIES

Chart of Theories

Ethical Theories

Consequentialist Non Consequentialist

Ethical Egoism

Utilitarianism

Act

Rule

Theology The Golden

Rule Kantianism

Ethical Egoism

• It is based on what is right, or what one ought to do ,

driven to act in accordance with one’s own self-interest.

• Tells us what people should do.

• It advocates the long term self interest of the individual.

Act Utilitarianism

• Founder was Jeremy Bentham (1748 – 1832) thinker and social reformer. Pleasure and pain principle.

• An act is only morally right if and only if it maximises utility.

• Utlity – intrinsic goodness, satisfactions, preferences and desires.

• The ratio of benefit to harm calculated by taking everyone affected by the act into consideration is greater than the ratio of benefit to harm resulting from any alternative act.

Rule Utilitarianism

• An act is right if and only if it is in conformity with a

particular moral rule, and the rule is chosen because, of

all alternative rules, it maximises utility.

• i.e. “We must not hold a person accountable for a crime

he has not committed”

Non Consequentialist Theories

• Deontological (Means Duty)

– Immanuel Kant and the Categorical Imperative • Each person should act in a manner that his or her actions could become universal law

• Duty is more important than result

• Other Theories

– The Golden Rule

– Virtue Ethics

Kantianism

• German Philosopher – Immanuel Kant (1724-1804).

• Developed a theory of duty – intellectual justification for the golden rule.

• He believed in a science of morals is possible because humanity has the use of freedom and reason.

• When using people to accomplish your purposes, you have a duty to respect them as human beings and to promote their ability to realise their desired potential or goals.

Theologism

• Asserts that an act is right if, more than any alternative open to the agent at

the time, it is the most consistent with what God wills, either directly or

indirectly.

• Theologism provide us with a set of rules (e.g., the Ten Commandments) that

express God’s will.

The Golden Rule

• The Golden Rule “Do unto others as you would have them do unto

you” is a most widely accepted moral principle.

• Confucianism “That which you do not want done to yourself, do not do

to others” (Analects)

• Islam “No one is a believer unless he loves for his brother what he

loves for himself (Traditions)

• Buddhism “Hurt not others with what pains yourself”

Virtue Ethics

• Dates back to Aristotle

• It stresses the kind of moral abilities that put us in a position to act

morally, whether after weighty deliberation or quick reaction.

• It views the character of the person performing the action and

rejects applying the correct theory.

Determinants of Issue Intensity

Moral Reasoning Four views of ethical behavior

Utilitarian Approach – Moral behavior produces the greatest good for the

greatest number.

Individualism Approach – Acts are moral when they promote the individual’s

best long-term interest, which ultimately leads to the greater good.

Moral–Rights Approach – Correct decisions are those that best maintain the

rights of those people affected by them.

Justice approach – Moral Decisions must be based on standards of

equity, fairness, impartiality.

A Framework ETHICAL DECISION-MAKING

A Framework

WHAT IS DECISION?

A Framework

Decision is a choice from two or more

alternatives.

A Framework

STEPS OF ETHICAL DECISION-MAKING

Step 1: Recognize the Ethical Issue

 Could this decision or situation be damaging to someone or to some group? Does this decision involve a choice between a good and bad alternative, or perhaps between two "goods" or between two "bads"?

 Is this issue about more than what is legal or what is most efficient? If so, how?

Step 2: Get the Facts

 What are the relevant facts of the case? What facts are not known? Can I learn more about the situation? Do I know enough to make a decision?

 What individuals and groups have an important stake in the outcome? Are some concerns more important? Why?

 What are the options for acting? Have all the relevant persons and groups been consulted?Have I identified creative options?

Step 3: Evaluate Alternative Actions  Evaluate the options by asking the following questions:

 Which option will produce the most good and do the least harm? (The Utilitarian Approach)

 Which option best respects the rights of all who have a stake? (The Rights Approach)

 Which option treats people equally or proportionately? (The Justice Approach)

 Which option best serves the community as a whole, not just some members? (The Common Good Approach)

 Which option leads me to act as the sort of person I want to be? (The Virtue Approach)

Step 4: Make a Decision and Test It

 Considering all these approaches, whichoption best addresses the situation?

 If I told someone I respect-or told a television audience-which option I have chosen, what would they say?

Step 5: Act and Reflect on the Outcome

 How can my decision be implemented with the greatest care and attention to the concerns of all stakeholders?

 How did my decision turn out and what have I learned from this specific situation?

Ethical Problem Framework

1. Gather the facts carefully to determine whether there is an ethical problem.

2. If there is a problem, try to state it as clearly as possible.

3. Determine whether the problem has an ethical dimension.

4. Identify those affected by the problem.

5. In many cases you will need to demonstrate the seriousness of your problem, since there is no need to deliberate at the length of a trivial problem.

6. In many cases we are interested in determining what caused the problem.

7. Develop solution.

Some methods of Group Decision-Making

• Devil’s Advocacy: one member of the group acts as the devil’s advocate and critiques the way the group identified alternatives.

• Dialectical inquiry: two different groups are assigned to the problem and each group evaluates the other group’s alternatives.