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ChapterFive

Ethics of Business:The Theoretical Basis

Canadian Business and Society: Canadian Business and Society: Ethics & ResponsibilitiesEthics & Responsibilities

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Chapter Outline

Business Ethics: Key Terms Ethical Implications in Business Influences on Ethical Behaviour Theoretical Basis for Ethical Conduct Moral Reasoning Process Kohlberg’s Stages of Moral

Development

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Business Ethics Ethics of business: rules, standards, codes, or

principles that provide guidelines for morally right behaviour and truthfulness in specific situations.

Value judgments: subjective evaluations of what is considered important.

Moral standards: the means by which individuals judge their actions and the actions of others.

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Types of Ethical Assessment

Amoral Awareness of Implications Individual and Societal Influences

Value judgments Moral standards

Systematic Analysis

Influences on Ethical Behaviour Individual morals National and ethnic cultures Government legislation and regulation The legal system Religion Colleagues or peers Education Media Corporate mission, vision and values statements Union Contracts Competitive behavour Activist or advocacy groups Business or industry organizations Professional associations

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Self-Interest (Ethical Egoism) Individuals or corporations set their own

standards for judging the ethical implications of their actions; only the individual’s values and standards are the basis for actions.

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Egoism (Self-interest)

Self-interest not necessarily the same as: selfishness, greed, disregard for the rights and interests of others, hedonism, or materialism.

Not “eat, drink and be merry” That’s not in your best interest

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Egoism (Self-interest)

Look out for # 1 No moral obligation to help others Moral obligation is to do the best you can

do for yourself Can involve helping others as long as it

furthers your own interests

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Egoism (Self-interest)

Self-interest to some degree is always present

Short-term vs. Long-term Negative light Enlightened egoist Scale

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Personal Virtues Ethic

An individual’s or corporation’s behaviour is based upon being a good person or corporate citizen with traits such as courage, honesty, wisdom, temperance, and generosity.

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Personal Virtues Ethic

Honor, pride, and self-worth Not about kindness or compassion Not about rights or benefits All about the character of actions Ask, how would I feel if my actions

were explained on television?

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Ethics of Caring

Gives attention to specific individuals or stakeholders harmed or disadvantaged and their particular circumstances.

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Ethics of Caring

Responsibility to reduce harm or suffering of others

Golden rule: Do unto others as you would want done to you.

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Ethics of Caring

Upside for business: Flexible Quick response

Downside for business: Miss the big picture Subjective criteria

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Government Requirements Ethic

The acceptance of a code of laws as the governing rules of society or as a contract with society that determines what is considered right or appropriate behaviour.

The law represents the minimal moral standard.

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Government Requirements Ethic

Legal system and a code of laws Government enforces obedience to

provide fair competition and peace “It’s legal so it’s okay” Do laws cover everything?

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Utilitarian Ethic

Focuses on the distribution of benefits and harms to all stakeholders with the view to maximizing benefits.

“The greatest good for the greatest number.”

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Utilitarian Ethic

Cost-Benefit analysis Good means happiness or pleasure Anything has the potential of being

morally right Take the long-term into account Can we predict the future?

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Universal Rules Ethic

Ensures that managers or corporations have the same moral obligations in morally similar situations.

Treat people as means in themselves (i.e., with respect) and never as a means to one’s own ends.

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Universal Rules Ethic

Goal: eliminate self-interest Create rules and morals that are fair to

everyone Only act if you are willing for it to become

a universal law Drawback: no exceptions

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Individual Rights Ethic

Relies on a list of agreed upon rights for everyone that will be upheld by everyone and that becomes the basis for deciding what is right, just, or fair.

Examples: Rights to safety, information, privacy, property.

“Universal Declaration of Human Rights”

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Economic Efficiency Ethic

Judges the moral implications of a decision by its economic consequences and provides the moral justification for a market system.

Adam Smith: By focusing on efficient operations, profits are maximized, and society ultimately benefits.

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Economic Efficiency Ethic

Market and legal constraints No wasted resources Environmental sustainability Economic efficiency Competitive effectiveness

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Ethics of Justice

Considers that moral decisions are based on the primacy of a single value: justice.

Social contract

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Ethics of Justice

Different types of justice: Procedural justice Corrective justice Retributive justice Distributive justice

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Ethics of Justice Benefits:

Logical and impartial process Equal rights

Drawbacks: Who has moral authority? Stakeholder may be overlooked Impersonal, inflexible, cold and uncaring Markets are unjust