Business Ethics & Financial Management homework

BBA 4751, Business Ethics 1

UNIT II STUDY GUIDE

Philosophical Ethics and Business

Course Learning Outcomes for Unit II Upon completion of this unit, students should be able to:

1. Explain the ethical framework of utilitarianism and describe how utilitarian thinking underlies much economic and business decision making.

2. Explain how the free market is thought to serve the utilitarian goal of maximizing the overall good.

3. Explain some challenges to utilitarian decision making. 4. Explain principle-based, or rights-based, frameworks of ethics. 5. Explain the concept of human rights and how they are relevant to

business. 6. Distinguish moral rights from legal rights. 7. Explain several challenges to principle-based ethics. 8. Describe and explain virtue-based framework for thinking about ethical

character.

Unit Lesson In the first unit of our course, we examined the origins of ethics etymologically and as a branch of philosophy. In this unit, we will examine several traditional ethical theories including relativism, psychological egoism, utilitarianism, deontology, virtue ethics, pragmatism, and a more contemporary theory known as the original position theory. Before examining each of these theories, it is relevant to understand that an ethical theory or ethical framework is an attempt to provide a systematic answer to the fundamental ethical question of how human beings should live their lives. Ethical frameworks also provide reasons to support the answers to this question. In terms of the theories noted above, ethical relativism is the general concept that right or wrong is relative to something else, and therefore, it has many variations. For example, cultural relativism is the theory that right and wrong are relative to one’s cultural values and beliefs, whereas religious relativism is the theory that right and wrong are determined by one’s religious beliefs. In a more general sense, religious ethics explains human well-being in religious terms whereas philosophical ethics provides justifications that must be applicable to all people, regardless of their religious starting points. Egoism is a psychological theory that maintains that humans act only from self-interest. Ethical egoism is the idea that one’s concept of such ideas as right and wrong or good and evil are determined by one’s own sense of value. More precisely, an act is good or right to the extent that it advances one’s self interests. One could accurately conclude that this is the theory of selfishness, but in this context, it is not morally wrong, it is just what we as humans should do in the manner of looking out for our own best interests.

Reading Assignment Chapter 3: Philosophical Ethics and Business, pp. 102-130

Suggested Reading See information below.

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The ethical theory known as utilitarianism claims that the way we should measure the ethical rightness of our actions (or contemplated actions) is based on their consequences. More specifically, a utilitarian judges ethical acts based on their ability to deliver the greatest good (or the greatest happiness) to the greatest number; that which maximizes the overall good. John Stuart Mill and Jeremy Bentham are two of the best-known utilitarian philosophers. Deontological ethics is in some sense the opposite of utilitarian ethics. Whereas the latter focuses on the outcomes or consequences of an action to determine its rightness, and deontological ethics focuses on the intention of the person performing the act or making the decision. If that person’s intentions are good, then to the deontologist, the consequences are irrelevant. Immanuel Kant advises that we should

1. act according to those rules that could be universally agreed to by all people, and

2. treat each person as an end in themselves and never only as means to our own ends.

To some, this may sound very similar to the Golden Rule: Do unto others as you would have them do unto you. Virtue ethics is a tradition within philosophical ethics that focuses on the character traits and personal attributes that would constitute a good and full human life. This concept shifts the focus of ethical consideration from questions about what a person should do to a focus on who that person is. Such a shift emphasizes that our identity as a person, and therefore our actions (remember that ethics is concerned with how we should act), are constituted by our beliefs, values, and attitudes. Pragmatic ethics is in some sense a version of relativism. The pragmatic portion of the term refers to the idea that what “works” should be kept and what does not should be discarded. Combining the pragmatic with ethics results in a theory whereby there are no absolutes; although there is allowance for universal truths. Ethics can be objective while acknowledging relativist aspects and where the practice of values or “the practical” (vs. theory) is emphasized. It should be noted here, and as you read Chapter 3 in our textbook, that each of these theories has its short comings; there has yet to be developed a “perfect” ethical theory or system. Nevertheless, knowledge of these theories provides us with a practical ethical framework and the justified rationale for that framework. As we contemplate ethics in the wider context of society (social ethics), the American philosopher John Rawls has developed a thought experiment that is intended to reveal how we could create an ethical, just, and equitable society. The thought experiment instructs us to imagine that we are making the fundamental decisions about how our society will work and that we engage in that process from behind a veil of ignorance. This theory has come to be known as the original position theory. In the original position, we do not know anything about ourselves. We do not know if we are male or female, what religion we subscribe to, what sexual orientation we are, what race we are, or anything else about ourselves.

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Then, without knowing these answers, we make decisions about how our society will be constructed. Here is the takeaway for the thought experiment. If, for example, one does not know his or her own gender when creating the rules for the society, it is likely that he or she will treat the genders equally. He or she would not want to risk discrimination. Therefore, we would be more inclined, if only due to our own self-interest, to make rules and laws that are fair and equitable to everyone, regardless of their individual attributes.

Reference

Hartman, L. P., DesJardins, J., & MacDonald, C. (2014). Business ethics: Decision making for personal integrity & social responsibility (3rd ed.). New York, NY: McGraw-Hill.

Suggested Reading Click here access the PDF of the Chapter 3 Presentation. Cavaliere, F. J., Mulvaney, T. P., & Swerdlow, M. R. (2010, Fall). Teaching

business ethics after the financial meltdown: Is it time for ethics with a sermon? Education, 131(1), 3-7.

Verschoor, C. C. (2010, January). Are we experiencing an ethics bubble?

Results of the sixth National Business Ethics Survey suggest that fewer instances of ethical misconduct are being observed, a higher percentage is being reported, and more employees perceive that the ethical culture within their company is strong. Strategic Finance, 91(7), 10-13.

Young, G., & Hasler, D. S. (2010, November). Managing reputational risks:

Using risk management for business ethics and reputational capital. Strategic Finance, 92(5), 37-46.