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Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
Chapter 8
Making
Ethical
Decisions in
Business
8-2
David Geffen
o David Geffen the son of poor Russian immigrants
o Geffen was coming of age as an entrepreneur, he still had to face school
o Geffen graduated from high school wanting to get rich in show business
o From the mailroom a 21-year-old Geffen launched the career that made him “the richest man in Hollywood”
8-3
David Geffen
o Irrespective of moral admonitions Geffen was now on his way o His extraordinary qualities in a business that rewards
such traits
o Geffen’s achievements and atonements can be weighed against his early indiscretions
8-4
Principles of Ethical Conduct
o The following 14 principles are fundamental guides or rules for behavior
o These principles distill basic wisdom that spans 2,000 years of ethical thought
8-5
The Categorical Imperative
o Origination: Immanuel Kant
o Basic premise: Act only according to that maxim by which you can at the same time will that it should become a universal law
o Criticism: Theory is dogmatic and inflexible
8-6
The Conventionalist Ethic
o Origination: Albert Z. Carr
o Basic premise: Business is like a game with permissive ethics and any action that does not violate the law is permitted
o Criticism: Commerce defines the life changes of millions and is not a game to be taken lightly
8-7
The Disclosure Rule
o Basic premise: Test an ethical decision by asking how you would feel explaining it to a wider audience such as newspaper readers, television viewers, or your family
8-8
The Disclosure Rule
o Criticism: o Does not always give clear guidance for ethical
dilemmas in which strong arguments exist for several alternatives
o An action that sounds acceptable if disclosed may not, upon reflection, be the most ethical
8-9
The Doctrine of the Mean
o Origination: Aristotle
o Basic premise: Virtue is achieved through moderation o Avoid behavior that is excessive or deficient of a virtue
o Criticism: The doctrine itself is inexact
8-10
The Ends-Mean Ethic
o Origination: Ancient Roman proverb, but often associated with Niccolò Machiavelli
o Basic premise: The end justifies the means
o Criticism: o In solving ethical problems, means may be as
important, or more so, that ends
o The process of ethical character development can never be furthered by the use of expedient means
8-11
The Golden Rule
o Origination: Found in the great religions and in works of philosophy
o Basic premise: Do unto others what you would have them do unto you
o Criticism: o People’s ethical values differ, and they may mistakenly
assume that their preferences are universal
o It is primarily a perfectionist rule for interpersonal relations
8-12
The Intuition Ethic
o Origination: Defined by G.E. Moore in Principia Ethica
o Basic premise: What is good or right is understood by an inner moral sense based on character development and felt as intuition
8-13
The Intuition Ethic
o Criticism: o Ethical intuition is reliable, but not infallible
o Self-interest may be confused with ethical insight
o No standard of validation exists outside the individual
o Intuition may fail to give a clear answer when ethical norms are in conflict
8-14
The Might-Equals-Right Ethic
o Origination: Thracymachus
o Basic premise: Justice is the interest of the stronger
o Criticism: o Confusion of ethics with force
o Invites retaliation and censure, and is not conducive to long-term advantage
8-15
The Organization Ethic
o Origination: Not credited
o Basic premise: Be loyal to the organization
o Criticism: Many employees have such deep loyalty to an organization that it transcends self-interest
8-16
The Principle of Equal Freedom
o Origination: Herbert Spencer
o Basic premise: A person has the right to freedom of action unless such action deprives another person of a proper freedom
o Criticism: Lacks a tie breaker for situations in which two rights conflict
8-17
The Proportionality Ethic
o Origination: Medieval Catholic theology
o Basic premise: A set of rules for making decisions having both good and evil consequences
o Criticism: These are intricate principles, requiring consideration of many factors
8-18
The Rights Ethic
o Origination: Western Europe during the Enlightenment
o Basic premise: Each person has protections and entitlements that others have a duty to respect
o Criticism: o Rights are sometimes stretched into selfish demands or
entitlements
o Rights are not absolute and their limits may be hard to define
8-19
The Theory of Justice
o Originator: Contemporary, John Rawls
o Basic premise: Each person should act fairly toward others in order to maintain the bonds of community
o Criticism: Rawl’s principles are resplendent in theory and may even inspire some business decisions, but they are best applied to an analysis of broad societal issues
8-20
Figure 8.1 - Three Spheres of Justice
8-21
The Utilitarian Ethic
o Origination: Line of English philosophers, including Jeremy Bentham and John Stuart Mill
o Basic premise: The greatest good for the greatest number
8-22
The Utilitarian Ethic
o Criticism: o In practice it has led to self-interested reasoning
o Because decisions are to be made for the greatest good of all, utilitarian thinking has led to decisions that permit the abridgement of individual or minority group rights
8-23
Reasoning with Principles
o The use of ethical principles, as opposed to the intuitive use of ethical common sense, may improve reasoning, especially in complex situations
o Based on the application of utility, rights, and justice, the manager’s decision in the text example to remain silent is acceptable
8-24
Reasoning with Principles
o Some judgment is required in balancing rights, but the combined weight of reasoning with all three principles supports the manger’s decision
8-25
Character Development
o Character development is a source of ethical behavior separate from the use of principles reasoning
o Virtue ethic: Ethical behavior stems from character virtues built up by habit
o Aristotle believed that by their nature ethical decisions require choice, and we build virtue, or ethical character, by habitually making the right choices
8-26
The Neural Basis of Ethical Decisions
o A fast, unconscious, and automatic process in neural circuits causes ethical judgments to appear in our awareness without any feeling of having gone through a reasoning process
o There is no specific part of the brain that makes ethical decisions
8-27
The Neural Basis of Ethical Decisions
o Functional magnetic resonance imaging: A method used to map activity in neural networks during ethical decision making
o Emotions have a central role in ethical thought because of their importance to adaptive behavior
o Moral intuition creates awareness of a moral judgment without any memory of having gone through a step-by-step reasoning process
8-28
The Neural Basis of Ethical Decisions
o Moral intuition is a form of social intuition that is adaptive to the social environment and predominates in individual ethical decisions
o There is considerable individual variation in perceptions of right and wrong
o Neuroscience, as it removes physiological mysteries, reinforces the ethical teachings of centuries
8-29
Practical Suggestions for Making Ethical Decisions
o Pay attention to your ethical intuition
o Consider tactics that illuminate alternatives
o Critical questions approach: A method of ethical reasoning in which insight comes from answering a list of questions
o Sort out ethical priorities early
8-30
Practical Suggestions for Making Ethical Decisions
o Set an example
o Thoughts must be translated into action, and ethical deeds often require courage
o Cultivate sympathy and charity toward others
o Ethical perfection is illusory
8-31
Concluding Observations
o There are many paths to ethical behavior
o Not all managers appreciate the repertoire of principles and ideas that exist to resolve the ethical problems of business life
