Chapter #2: Introduction to Ethics 1 MBA 685 Chapter #2 Introduction to Ethics.

Chapter #2: Introduction to Ethics 1

MBA 685Chapter #2Chapter #2

Introduction to EthicsIntroduction to Ethics


Chapter #2 Overview

• Introduction to business ethics• Overview of ethical theories • Thinking ethically for business decision making

– The PLUS model– Combining ethical theories– Code of Ethics


Nature and Significance of Ethics in Business Decision-Making

• Ethics: Rational examination of moral beliefs and behavior; the study of morality.– Morality: Standards, conduct, and systems that provide

guidance on how to act.

• Law: Society’s standards and values that are enforceable in court


Is business ethics an oxymoron?

Former Supreme Court Justice Potter Stewart, “Ethics is knowing the difference between what you have a right to do and what is the right thing to do.”


Overview of Ethical TheoriesOverview of Ethical Theories

1.1. Subjective relativismSubjective relativism

2.2. Cultural relativismCultural relativism

3.3. Divine command theoryDivine command theory

4.4. KantianismKantianism

5.5. Act utilitarianismAct utilitarianism

6.6. Rule utilitarianismRule utilitarianism

7.7. Social contract theorySocial contract theory


Relativism versus Objectivism:Relativism versus Objectivism:Where Where “The Good”“The Good” Exists Exists

1.1. Subjective relativismSubjective relativism

2.2. Cultural relativismCultural relativism

3.3. Divine command theoryDivine command theory

4.4. KantianismKantianism

5.5. Act utilitarianismAct utilitarianism

6.6. Rule utilitarianismRule utilitarianism

7.7. Social contract theorySocial contract theory

Relativism

Objectivism

“The Good” is inside

“The Good” is outside


The Workable Ethical Theories:Rational Theories

1. Subjective relativism2. Cultural relativism3. Divine command theory4. Kantianism5. Act utilitarianism6. Rule utilitarianism7. Social contract theory

Workable Theories

Not a Workable TheoryAccording to the Author


1. Subjective relativism• Relativism

– No universal norms of right and wrong

– One person can say “X is right,” another can say “X is wrong,” and both can be right

• Subjective relativism– Each person decides right and

wrong for himself or herself– “What’s right for you may not

be right for me”

Case forCase for Well-Well-meaning and meaning and intelligent intelligent people people disagree on disagree on moral issuesmoral issues Ethical Ethical debates are debates are disagreeable disagreeable and pointlessand pointless

Case againstCase against Blurs distinction Blurs distinction between doing what between doing what you think is right and you think is right and doing what you want doing what you want to doto do Makes no moral Makes no moral distinction between distinction between the actions of the actions of different peopledifferent people SR and tolerance SR and tolerance are two different are two different thingsthings Decisions may not Decisions may not be based on reasonbe based on reason Not a workable Not a workable ethical theory ethical theory (according to author)(according to author)


2. Cultural relativism

• What is “right” and “wrong” depends upon a society’s actual moral guidelines

• These guidelines vary from place to place and from time to time

• A particular action may be right in one society at one time and wrong in other society or at another time

Case forCase for Different social Different social contexts demand contexts demand different moral different moral guidelinesguidelines It is arrogant It is arrogant for one society to for one society to judge anotherjudge another Morality is Morality is reflected in reflected in actual behavioractual behavior

Case againstCase against Because two societies Because two societies dodo have different moral views have different moral views doesn’t mean they doesn’t mean they ought ought toto have different views have different views Doesn’t explain how Doesn’t explain how moral guidelines are moral guidelines are determineddetermined Doesn’t explain how Doesn’t explain how guidelines evolveguidelines evolve Provides no way out for Provides no way out for cultures in conflictcultures in conflict Because many practices Because many practices are acceptable does not are acceptable does not mean any cultural practice mean any cultural practice is acceptable (many/any is acceptable (many/any fallacy)fallacy) Societies do, in fact, Societies do, in fact, share certain core valuesshare certain core values Only indirectly based on Only indirectly based on reasonreason Not a workable ethical Not a workable ethical theorytheory


3. Divine command theory(the virtue approach)

• Good actions: those aligned with God’s will

• Bad actions: those contrary to God’s will

• Holy books reveal God’s will.

• We should use holy books as moral decision-making guides.

Case forCase for We owe We owe obedience to our obedience to our Creator.Creator. God is all-good God is all-good and all-knowing.and all-knowing. God is the God is the ultimate ultimate authority.authority.

Case Case againstagainst Different holy Different holy books disagreebooks disagree Society is Society is multicultural, multicultural, secularsecular Some moral Some moral problems not problems not addressed in addressed in scripturescripture “ “The good” The good” ≠ ≠ “God” “God” (equivalence (equivalence fallacy)fallacy) Based on Based on obedience, not obedience, not reasonreason


4. Kantianism (the rights approach)

• Good will: the desire to do the right thing

• Immanuel Kant: Only thing in the world good without qualification is good will.

• Reason should cultivate desire to do right thing.

Case forCase for RationalRational Produces Produces universal moral universal moral guidelinesguidelines Treats all Treats all persons as moral persons as moral equalsequals Workable Workable ethical theoryethical theory

Case Case againstagainst Sometimes no Sometimes no rule adequately rule adequately characterizes an characterizes an action.action. There is no way There is no way to resolve a to resolve a conflict between conflict between rules.rules. Kantianism Kantianism allows no allows no exceptions to exceptions to moral laws.moral laws.


Consumer Bill of Rights


Negative Versus Positive Rights

• Negative right (liberty right): A right that another can guarantee by leaving you alone

• Positive right (claim right): A right obligating others to do something on your behalf


Discussion QuestionsDiscussion Questions

1.1. In the following (true) scenarios on In the following (true) scenarios on the next two slides, tell whether the the next two slides, tell whether the people are interpreting the right people are interpreting the right being claimed as a being claimed as a negative right negative right or as a or as a positive right.positive right. Explain your Explain your choice.choice.

2.2. In each scenario, which kind of right In each scenario, which kind of right should it be and why?should it be and why?


Scenario A:Scenario A:

A man sued his health insurance A man sued his health insurance company because it would not pay company because it would not pay for Viagra. He argued that the for Viagra. He argued that the insurer’s refusal to pay denied his insurer’s refusal to pay denied his right to a happy sex life.right to a happy sex life.


Scenario B:Scenario B:

Two legislators who lost reelection Two legislators who lost reelection votes sued an organization that ran votes sued an organization that ran ads criticizing their right to hold ads criticizing their right to hold office.office.


5. Act Utilitarianism• Jeremy Bentham and John Stuart Mill, 19th century• The best ethical course of action is the one that brings the

greatest good for the greatest number– An action is good if it benefits someone– An action is bad if it harms someone

• Utility: tendency of an object to produce happiness or prevent unhappiness for an individual or a community– Happiness = advantage = benefit = good = pleasure– Unhappiness = disadvantage = cost = evil = pain

• Principle of Utility (The Greatest Happiness Principle)– An action is right (or wrong) to the extent that it increases (or

decreases) the total happiness of the affected parties.


Act utilitarianism - Continued

• Act utilitarianism applies Principle of Utility to individual actions

• Act utilitarianism– Add up change in

happiness of all affected beings

– Sum > 0, action is good– Sum < 0, action is bad

Case forCase for Focuses on Focuses on happinesshappiness Down-to-earth Down-to-earth (practical)(practical) ComprehensiveComprehensive Workable Workable ethical theoryethical theory

Case Case againstagainst Unclear whom Unclear whom to include in to include in calculationscalculations Too much workToo much work Ignores our Ignores our innate sense of innate sense of dutyduty Susceptible to Susceptible to the problem of the problem of moral luckmoral luck


6. Rule utilitarianism

• We ought to adopt moral rules which, if followed by everyone, will lead to the greatest increase in total happiness

• Rule utilitarianism applies Principle of Utility to moral rules

Case forCase for Compared to Compared to act utilitarianism, act utilitarianism, it is easier to it is easier to perform the perform the utilitarian utilitarian calculus.calculus. Not every Not every moral decision moral decision requires requires performing performing utilitarian utilitarian calculus.calculus. Moral rules Moral rules survive survive exceptional exceptional situationssituations Avoids the Avoids the problem of moral problem of moral luckluck Workable Workable ethical theoryethical theory

Case Case againstagainst All All consequences consequences must be must be measured on a measured on a single scale.single scale. Utilitarianism Utilitarianism ignores the ignores the problem of an problem of an unjust unjust distribution of distribution of good good consequences.consequences. Utilitarianism does Utilitarianism does notnot always mean “the always mean “the greatest good of the greatest good of the greatest number”greatest number” That requires a That requires a principle of justiceprinciple of justice What happens when What happens when a conflict arises a conflict arises between the Principle between the Principle of Utility and a principle of Utility and a principle of justice?of justice?


7. Social contract theory(The Common Good Approach)

• Thomas Hobbes– “State of nature”– We implicitly accept a social

contract• Establishment of moral rules

to govern relations among citizens

• Government capable of enforcing these rules

• Jean-Jacques Rousseau– In ideal society, no one above

rules– That prevents society from

enacting bad rules

Case forCase for Framed in Framed in language of language of rightsrights Explains why Explains why people act in self-people act in self-interest without interest without common common agreementagreement Provides clear Provides clear analysis of analysis of certain certain citizen/governmecitizen/government problemsnt problems Workable Workable ethical theoryethical theory

Case Case againstagainst No one signed No one signed contractcontract Some actions Some actions have multiple have multiple characterizationscharacterizations Conflicting Conflicting rights problemrights problem May unjustly May unjustly treat people who treat people who cannot uphold cannot uphold contractcontract


Thinking Ethically for Business Decision Making

• How exactly should we think through an ethical issue?

• What questions should we ask?• What factors should we consider?

The first step is obvious but not always easy:

GET THE FACTS!

Primary/Direct Stakeholders Secondary/Indirect Stakeholders


Basic Business Decision Making Model

Step 1: Define the problemStep 2: Identify alternatives Step 3: Evaluate the alternativesStep 4: Make the decision Step 5: Implement the decision Step 6: Evaluate the decision


Example of an Ethical Filter: The PLUS Model

• P = PoliciesP = Policies Is it consistent with my organization's policies, procedures and guidelines?

• L= LegalL= Legal Is it acceptable under the applicable laws and regulations?

• U = UniversalU = Universal Does it conform to the universal principles/values my organization has adopted?

• S= SelfS= Self Does it satisfy my personal definition of right, good and fair?


Six Steps to Ethical Decision Six Steps to Ethical Decision MakingMaking Using the Using the PLUS ModelPLUS Model

Step 1: Define the problem Step 1: Define the problem PLUSPLUS

Step 2: Identify alternatives Step 2: Identify alternatives

Step 3: Evaluate the alternatives Step 3: Evaluate the alternatives PLUSPLUS

Step 4: Make the decision Step 4: Make the decision

Step 5: Implement the decision Step 5: Implement the decision

Step 6: Evaluate the decision Step 6: Evaluate the decision PLUS PLUS

EthicalFilters


Using Multiple Theories for Ethical Problem Solving

1. What moral rights do the affected parties have, and which course of action best respects those rights?

2. What benefits and what harms will each course of action produce, and which alternative will lead to the best overall consequence?

3. Which course of action treats everyone the same, except where there is a morally justifiable reason not to, and does not show favoritism or discrimination?

4. Which course of action advances the common good? 5. Which course of action develops moral virtues? 6. Other Approaches

– The Legality Test– The Golden Rule Test– The Light of Day Test


Codes of Ethics(Ethics Codes, Ethics Policies, Core Values, Integrity Policies,

etc.) • Formal statement of ethical principles and rules of conduct

– United Technologies –http://www.utc.com/responsibility/ethics/index.htm

– JMU CoB Faculty Integrity Policy - http://www.jmu.edu/cob/CoB2/FacPolicies.shtml#FIP

– JMU Finance Code of Ethics - http://www.jmu.edu/financeoffice/code_of_ethics.shtml

– Advice from the Ethics Office of Texas Instruments - http://www.onlineethics.org/CMS/workplace/workcases/ti-ethics.aspx

Copyright Copyright 2008 by Theresa B. Flaherty, Ph.D. 2008 by Theresa B. Flaherty, Ph.D.

No part of these materials may be reproduced or No part of these materials may be reproduced or transmitted in any form or by any means, electronic or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any mechanical, including photocopying, recording, or by any information storage and retrieval system, without the information storage and retrieval system, without the express written consent of Dr. Theresa B. Flaherty.express written consent of Dr. Theresa B. Flaherty.

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Chapter #2: Introduction to Ethics 1 MBA 685 Chapter #2 Introduction to Ethics.

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