Business Ethics (2) MBA (1)

Business Ethics (2)

Kaushik Chaudhuri

SME

7/20/2015 Kaushik Chaudhuri SME 1

Right’s theory • A right is an individual’s entitlement to something.

• If it derives from a legal system, it is a legal right. Legal rights are limited to the particular jurisdiction within which the legal system is in force.

• Moral rights or human rights are based on moral norms and principles that specify that all human beings are permitted or empowered to do something or are entitled to have something done for them.

• Contractual rights and duties (sometimes called special rights and duties or special obligations) are the limited rights and correlative duties that arise when one person enters an agreement with another person.


Q/S we ask in rights theory • “Are we respecting human rights ?”

• People are familiar with the idea of rights and are quick to use the word to explain a claim they have against others.

• why they are entitled to something from society or others?

• why they should be protected from actions that benefit society or others at our expense?


• Rights are not an empirical fact of human life and are understood differently in different societies and periods of history. Rights are a way of thinking that recognizes human beings as valuable in and of themselves (intrinsic value), regardless of their physical and mental attributes or position in society and regardless of what they are worth to others (extrinsic value). Animals also have rights, though most people would claim it is a more limited set.

• Rights indicate the freedoms or the material conditions required for this value. Without the ability to express his/her political or religious beliefs, for example, or to vote, (liberty rights), or without food, clothing, health care, education, or employment (welfare rights), an individual human cannot live in a way that expresses that intrinsic value.

• None of these rights have any validity, however, if we do not recognize the intrinsic value in human beings. Why recognize that value in others? Because we recognize it in ourselves, and recognize that others are equal to us. If I recognize that I have rights, others must also have rights unless I can explain why they are not entitled to what I am entitled to.

Formula of the End : we "treat others always as ends, never merely as

means," The rights that represent special cases of treating people as ends

and not merely as means include (a) informed consent, (b) privacy, (c) due

process, (d) property, (e) free speech, and (f) conscientious objection


Kant’s Categorical Imperative

• Kant’s first formulation of the categorical imperative is as says an action is morally right for a person in a certain situation if, and only if, the person’s reason for carrying out the action is a reason that he or she would be willing to have every person act on, in any similar situation.

• The second formulation Kant gives of the categorical imperative says never treat people only as means, but always also as ends. “An action is morally right for a person if, and only if, in performing the action, the person does not use others merely as a means for advancing his or her own interests, but also both respects and develops their capacity to choose freely for themselves.

• (good action for duty’ sake, does your action work if you reverse role with those receiving end)


Q/S on rights theory

• 1. Which action protects and furthers the rights of the stakeholders?

• 2. When stakeholder rights are in conflict, how do you decide whose rights take precedence?

• 3. Which action would you want done to you if the roles were reversed?

• 4. Would you want to live in a world where everyone engaged in the action , in question?

• 5. How will you explain your answers.


• “Are we respecting the rights of those affected?

• “Are we making an exception for ourselves? What if everyone did it? What if they did it to us?”

• “Are we letting others make their own choices?”


• Rights test: Are we respecting the rights of those affected?

• Everybody test(extra slack test): “What if everybody did it? Are we cutting ourselves extra slack that we are not willing to give to others? What if they did it to us?” If everyone is equal, why should some be able to do what others can’t do?

• Choices test : Are we letting others make their own choices? Are we giving others the freedom to choose? Are we giving others the information to know what they value in this situation?


Steps • STEP 1: Identify the right being upheld or violated. • Liberty rights, such as the right to property, to free

speech, to religion, and so on, are protections against the encroachment of society or other individuals.

• Welfare rights, such as the right to food, clothing, education, health care, and so on, are indications of what we need in order to live a life worth of human beings. Individuals and society may have obligations to help me obtain these if they are available and I have done my part to obtain them.

• An extensive listing of what many take to be essential human rights is contained in the United Nation’s Universal Declaration of Human Rights.


http://www.un.org/Overview/rights.html

http://www.un.org/Overview/rights.html

• STEP 2: Explain why it deserves the status of a right, because it is:

• Essential a person’s dignity and self worth; and/or

• Essential to a person’s freedom or well-being.

• We can explain why a right is essential by asking what would happen if the individual were denied this right and whether we would want that right respected if we were in that person’s position.


• STEP 3: Ask whether that right conflicts with other rights or with the rights of others.

• When rights conflict, decide which has precedence by explaining why each right is important and showing the consequences for dignity and self worth (or freedom and well being) if the right is not protected. Ethical people can disagree about which right is more important since no ranking principle is universally accepted.


Strength and weakness • Human rights have become a very powerful tool across the

world for showing respect for people. Others pay attention when you advance a claim that someone’s rights are being violated.

• Rights are considered by some to be absolute. Rights sometimes conflict with other rights and with the overall good of all those affected. Solving these conflicts means that rights might have to be subordinated.

• Many people do not understand there is not a universally recognized list of rights so a person must defend his/her claim that something is a human right.

• Because of its power, the rights test is sometimes applied to situations that are not serious enough to qualify as a threat to a person’s rights. This test is not helpful in ordinary circumstances.


Justice and Fairness

• Distributive justice is concerned with the fair distribution of society’s benefits and burdens.

• Egalitarian justice holds that there are no relevant differences among people that can justify unequal treatment. Every person should be given exactly equal shares of a society’s or a group’s benefits and burdens.

• Capitalist justice is based on effort. Benefits should be distributed according to the value of the contribution the individual makes to a society, a task, a group, or an exchange (based on work effort).

• Socialist justice is based on ability and need. First proposed by Louis Blanc (1870-1924), “From each according to his ability, to each according to his needs.”

• Justice as fairness (Rawls) says that the distribution of benefits and burdens in a society is just if and only if: a) Each person has an equal right to the most extensive basic liberties compatible with similar liberties for all, and b) Social and economic inequalities are arranged so that they are both:

• 1.)To the greatest benefit of the least advantaged persons

• 2.)Attached to offices and positions open to all under conditions of fair equality of opportunity

• Retributive Justice: refers to the just imposition of punishments and penalties on those who do wrong. Major conditions under which a person could not be held responsible include ignorance and inability. Punishments must be consistent and proportioned to the wrong.

• Compensatory Justice : Compensatory justice concerns the best way of compensating people for what they lost when they were wronged by others. Traditional moralists have argued that a person has a moral obligation to compensate an injured party only if three conditions are present:

• 1) The action that inflicted the injury was wrong or negligent.

• 2) The person’s action was the real cause of the injury.

• 3) The person inflicted the injury voluntarily.


Q/S we ask • “Is this a fair distribution of benefits and burdens?”

• Why is the Justice Test a valid way to decide right and wrong?

• - So a fair distribution is in each situation depends on their equality or inequality:

• -Treat equals equally and unequals unequally.

The reasons for inequality:

• Effort – some may have worked harder

• Accomplishment – some may have achieved more or performed better

• Contribution – some may have contributed more to the group or society

• Need – some may have a greater need to be served first or receive a larger share

• Seniority – some may have arrived in line first, be older or younger, or have more years of service

• Contract – a prior agreement about how the distribution should be made.

• Relationship or In-Group Status -- some may have a claim because they are members of my family or a group to which I owe loyalty.


• 1. Which action produces a fair distribution of benefits and costs for all stakeholders?

• 2. How do you determine what is fair? Who decides?

• 3. What action provides stakeholders with equal liberty and equal opportunity?

• 4. How you explain your choices?


• STEP 1: What is the distribution? Who is getting the benefits and burdens in the situation: Do those who get benefits also share burdens? Do those with benefits share some of the burdens? These are factual questions. Once you know the distribution you can decide if it is fair or not.

• STEP 2: Is the distribution fair? Which criterion for distribution would be most fair in this situation and why would it be most fair in this situation? You have to defend the distribution and the criterion or reason for the distribution.

• STEP 3: If disagreement persists over which outcome is fair or over which criterion for inequality is best in the situation, then select a fair process to decide what is fair: an election, dispassionate judge, chance decided by a coin or paper-rock-scissors.

• STEP 4: Draw a conclusion : Will this action produce a fair distribution, and why?


• STRENGTHS : Research shows fairness to be one of the most fundamental ethical instincts in humans. It is present in many animals, including primates and dogs. Subjects will give up rewards that would make them better off than they are, if others are getting greater rewards that are not justified.

• WEAKNESSES OF THE JUSTICE TEST : There is no single criterion for a fair distribution so the test is always open to disagreement among ethical persons.


Care ethics

• An ethic of care emphasizes two moral demands:

• We each exist in a web of relationships and should preserve and nurture those concrete and valuable relationships we have with specific persons.

• We each should exercise special care for those with whom we are concretely related by attending to their particular needs, values, desires, and concrete well-being as seen from their own personal perspective, and by responding positively to these needs, values, desires, and concrete well-being, particularly of those who are vulnerable and dependant on our care.


Care

• A communitarian ethic is an ethic that sees concrete communities and communal relationships as having a fundamental value that should be preserved and maintained.

• But it is important to recognize that the demands of caring are sometimes in conflict with the demands of justice. It has been claimed that an ethic of care can degenerate into unjust favoritism. Its demands can lead to burnout due to the sacrifice of their own needs and desires to care for the well-being of others.


• 1. What action cares for those individuals with whom you have a special relationship?

• 2. Which action helps those who are vulnerable and dependent on you?

• 3. How you explain your choices.


Virtue theory

• Virtue theory argues that the aim of the moral life is to develop those general dispositions we call the moral virtues, and to exercise and exhibit them in the many situations that human life sets before us.


Virtue Test

• Ask: “Does this action represent the kind of person I am or want to be?”

• Ask: “Does it represent my organization’s reputation or vision of the kind of enterprise it wants to be?”


• What action(s) displays virtuous character traits (e.g., integrity, honesty, fairness, loyalty, etc.)? What virtues are displayed?

• 2. What action(s) displays vices (e.g., dishonesty, deceit, selfishness, etc.)? What vices are displayed?

• 3. How will you explain your answers.


WHY IS THE CHARACTER OR VIRTUE TEST A VALID WAY TO DECIDE RIGHT

AND WRONG? • The kind of person I am, or the kind of organization this is, are as

important to living a good life as what specific actions we do. • My character and the organization’s culture are represented and

influenced both by how we act and by what we aspire to be. • To focus only, as the other ethics test do, on how to judge

individual actions to be right or wrong would be to miss an important aspect of ethics. Part of our aspiration is to have virtues or habits of acting in certain ways that fit our character. If we know who we are and aspire to be, we can decide how to act by considering whether an action is something that would be done by the kind of person or organization we want to be.


• STEP 1: Ask if the action will help to make you the kind of person you want to be.

• Consider whether the action fits your self-image or the story you would like to tell about your life. The most excellent or virtuous people are usually thought of as those who consistently act with honesty, courage, compassion, generosity, fidelity, integrity, fairness, self-control, prudence and so on.

• One way to see if the action fits with who you would like to be, is to ask whether the action is something that the person you most respect in your company would do.

• Business people often call this question the Mirror Test, “If you do this action, will you be able to look at yourself in the mirror every morning?”


• STEP 2: Ask whether the action will fit the company’s

reputation or vision of what it would like to be. • An individual’s actions represent and affect not only him/her but also the firm or organization

he/she works in. The image of what the company wants to be will be found in the mission and

vision statements, the core values, and the ethics code, as well as in the stories that are told

about the heroes and the villains in the firm’s history.

• STEP 3: Ask whether the action maintains the right

balance between excellence and success for the firm? • Excellence refers to how well the activities of the organization are being done. Each activity,

such as producing a product or service, marketing it to customers, financing the organization,

accounting and maintaining controls, and so on can be done in the best possible

way. Striving for too much perfection in any one of these areas, however, can have an affect

on the ability of the firm to do the other activities and generate profits necessary to keep it in

operation over the long term. If the product or service is too perfect for the customer to afford

it, then the firm will fail.

• Overemphasizing success, measured as profitability, can affect the excellence of the firm’s

activities, and thereby cause the firm to fail.

• Actions that maintain the right balance between excellence and success are therefore the

right ones.

. 7/20/2015 Kaushik Chaudhuri SME 26

• STEP 4: Draw a conclusion

• Actions that fit your idea of what kind of person you want to be, and with the firm’s idea of what it wants to be are good actions


WEAKNESSES OF THE VIRTUE OR

CHARACTER TEST

• Psychological research suggests that most of us do not act in a consistent way across different situations, motivated by our character traits such as honesty or generosity.

• We are motivated more by factors in the situation, even those with no ethical significance, as when we act generously because of the good smells of a bakery or less generously because of a higher ambient noise level. Yet we continue to attribute our own and others’ actions to good or bad character traits rather than to factors in the situation.

• we don’t have dispositions to act a certain way but that steady virtue may be very hard to develop because situational factors do affect us so much.


Common Good theory • This approach to ethics assumes a society comprising individuals whose own

good is inextricably linked to the good of the community. Community members are bound by the pursuit of common values and goals.

• The common good is a notion that originated more than 2,000 years ago in the writings of Plato, Aristotle, and Cicero. More recently, contemporary ethicist John Rawls defined the common good as "certain general conditions that are...equally to everyone's advantage."

• In this approach, we focus on ensuring that the social policies, social systems, institutions, and environments on which we depend are beneficial to all. Examples of goods common to all include affordable health care, effective public safety, peace among nations, a just legal system, and an unpolluted environment.

• Appeals to the common good urge us to view ourselves as members of the same community, reflecting on broad questions concerning the kind of society we want to become and how we are to achieve that society. While respecting and valuing the freedom of individuals to pursue their own goals, the common-good approach challenges us also to recognize and further those goals we share in common.


Q/S we ask to test • Ask: “Are we doing our part to look out for the

common good in this situation?” • Why important ? - Being able to live together in a community requires that we pay attention not just to our individual goods but also to the common conditions that are important to the welfare of us all. This common good includes the social systems, institutions, natural and technological environments, and ways of understanding that we all depend on to pursue our individual goods. For a community to be sustainable, these must work in a manner that benefits all people. Since we all have access to the common good and benefit from it, we all have obligations to establish and maintain it.


• STEP 1: Specify what parts of the common good are involved. • Which social systems, institutions, environments and ideologies

that we depend on for a functioning and healthy society could be advanced or damaged by our actions in this situation? What actions will strengthen them? What actions will weaken them?

• Whereas the utility test focuses on the total benefits and harms produced, the common good test focuses on whether the action or situation contributes to or harms a particular aspect of the common good.

• The common good includes among other things the family, social, educational, and health care systems required for human growth, development, and happiness; the police, courts, military and political system required for public safety, a functioning government, and peace; the businesses, financial, and legal systems necessary for the production of goods and services and economic development; and the ecosystem and technology which make all these activities possible. The common good also includes the sets of ideas we use to understand the different aspects of the common good.


• STEP 2: Explain why we have obligation to promote or protect the common good.

• What obligation does my company or I have to maintain these aspects of the common good because we benefit from them?

• If my company benefits from having stable families and educated workers, for example, do we have an obligation to promote these aspects of the common good or at least not to harm them?


• STEP 3: Does the proposed action conflict with this obligation? • Do our employment policies and actions in the community weaken

family stability or education or put these aspects of the common good at risk?

• This question might help an investment banker recognize that even though he is due a multimillion dollar bonus, the common good of restoring trust in the financial system may require that he give it up; that the common good of maximizing the good effects of distributing federal stimulus money in a severe recession means that lobbying for a particular interest group needs to be restrained more than in ordinary times; or that the common good of maintaining the courts as an efficient problem resolution mechanism requires that even though a company’s deep pockets enable them to stall a lawsuit indefinitely by filing an endless motions, they should not do so.

• D. DRAW A CONCLUSION: • If the action conflicts with my or my organization’s obligation to

contribute to the common good, it is the wrong action.


• STRENGTHS OF THE TEST: • It provides an important reality check for individuals and

organizations. No matter how much a person or group has contributed to their own success, the test reminds them that society and the natural and technological environments also contribute to that success and that existing institutions and ideologies enable them to carry on their activities.

• It is a good check on the free rider problem where the efforts of others may allow one not to contribute.

• WEAKNESSES OF THE TEST: • There is a great deal of disagreement over what constitutes the

common good and over what relative value the parts have should they conflict.

• The test runs contrary to a long-standing tradition of individualism and the pursuit of self-interest in some western societies, so it may stir up immediate resistance that could distract from the ethical issue to be resolved. 7/20/2015 Kaushik Chaudhuri SME 34

Business Ethics (2) MBA (1)

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