BUSINESS ETHICS

Business Ethics
Ethics

is the study of right and wrong

behavior; whether an action is fair,
right or just.
In business, ethical decisions are the
application of moral and ethical
principles to the marketplace and
workplace.
Whats Good for Business is Good for
the Country
This former attitude of business is no longer
adequate to insure ethical conduct
De Vee E. Dykstra, J.D., 2004

Business Stakeholders

Shareholders
Employees
Community
Customers

The interests/needs of these

stakeholders need to be balanced in
ethical decision making to ensure a
firms long-term survival.
De Vee E. Dykstra, J.D., 2004

Ethical Conflicts to be
Balanced
Shareholders - want profits
Employees

- want safe and

secure jobs
Community - wants economic
benefit of the business and the
environment protected
Customers - want quality product
for good/fair price
De Vee E. Dykstra, J.D., 2004

Why is Business Ethics

Important?
Directors

and Officers owe a complex set of

ethical duties to various stakeholders
When these duties conflict, ethical dilemmas are
created

Importance

of Values in Business Success

Profits - Ethics Resource Center Study

Costs of Unethical Behavior
Ethics

as a Strategy
Good Reputation
Personal Reasons
Seen as a leader and regulation may be
prevented
De Vee E. Dykstra, J.D., 2004

EXECUTIVES COMMENT ON REPUTATION

A

reputation, good or bad, is tough to

shake.
Richard Teerlink, CEO, Harley-Davison

If we were making that decision now in light of the

press scrutiny we have been receiving, we probably
would not have taken that risk.
Robert C. Winters, Chairman, Prudential Insurance

bad reputation is like a hangover. It takes a while

to get rid of, and it makes everything else hurt.
James Preston,

CEO, Avon
De Vee E. Dykstra, J.D., 2004

Setting the Right Ethical Tone

Importance of Ethical Leadership and Creating

Ethical Codes of Conduct
Clear Communications to Employees
E.g., Costco and Johnson and Johnsons webbased ethical training

Corporate Compliance Programs

Conflicts and Trade-Offs

Stakeholder interests differ

De Vee E. Dykstra, J.D., 2004

How does a firm promote the

importance of ethical behavior?
Adopt

a code of ethics
Initial and ongoing employee training
Employee hotline for anonymous reporting
of ethical violations
Distribute ethical bulletins
Management (from the top down) provides a
role model
Continued review of company policies to
determine their effect on ethical behavior
De Vee E. Dykstra, J.D., 2004

Beware!!!
Watch

for Dangers of Unethical

Environment
Intense competition and issues of
survival
Managers making poor judgments
Employees with no personal values

De Vee E. Dykstra, J.D., 2004

Introduction to Ethical
Theory I

The Goal of Ethical Theory

Generally:

to provide a
systematic answer to the
question of how we should
behave

Theory 1. Moral
Objectivism
Moral Objectivism: What is morally right or
wrong doesnt depend on what anyone
thinks is right or wrong. 'Moral facts' are like
'physical' facts in that what the facts are
does not depend on what anyone thinks they
are. They simply have to be discovered.
E.g., Divine Command Theory whats right is what
God commands; whats wrong is what God forbids

Theory 2. Moral Relativism

Moral

Relativism: What is morally right or

wrong depends on the prevailing view in the
society or culture we happen to be dealing
with.

Often

presented as a tolerant view: if moral

relativism is true, no one has a right to force
his moral views on others.

Increasingly

popular in recent years

Did this change with Sept. 11?

A Bad Argument for Moral

Relativism
The 'Cultural Differences' Argument

Claim: There are huge differences in moral

beliefs from culture to culture and era to
era.
E.g., Some cultures endorse the killing of elderly
members of the tribe, we condemn such actions.

Conclusion: There is no objective fact as to

which of these beliefs is correct, morality is
relative.

Why is the Cultural Differences

Argument Weak?
I.

Controversy regarding how

much fundamental disagreement
about morality really is there

II.

Differing opinions regarding

an issue dont prove there is no
fact of the matter about that
issue
Imagine relativism about the shape
of the earth (e.g., in the 1400s)

Objectivist Theories
Suppose

for the moments that

objectivism is true. What are the
objective facts of morality?
Main Candidates:
Consequentialism
Deontological Theories
Principilism

Theory 3:
Consequentialism
Consequentialists

maintain
that whether an action is morally
right or wrong depends on the
action's consequences.
In any situation, the morally right
thing to do is whatever will have
the best consequences.
Consequentialist theories are
sometimes called teleological
theories.

What Kind of
Consequences?
Consequentialism

isn't very
informative unless it's combined
with a theory about what the best
consequences are.

Utilitarianism

is such a theory.

Utilitarianism is the most influential

variety of consequentialism

Utilitarianism
The

Basis of Utilitarianism: ask what has

intrinsic value and assess the
consequences of an action in terms of
intrinsically valuable things.
Instrumental Value - a thing has only
instrumental value if it is only valuable for what it
may get you
e.g., money

Intrinsic Value - a thing has intrinsic value if you

value it for itself
i.e., youd value it even if it brought you nothing else

What,

if anything, has intrinsic value?

Only Happiness has Intrinsic Value

What

Utilitarians Think Is Intrinsically

Valuable: happiness (or pleasure or
satisfaction)
"actions are right in proportion as they tend
to promote happiness, wrong as they tend to
produce the reverse of happiness." (John
Stuart Mill's Greatest Happiness
Principle)
In other words, judge an action by the total
amount of happiness and unhappiness it
creates

Jeremy Bentham

Distributive

justice: based on
concept of fairness. Leads to
equitable distribution of goods
and services.

Five types of distributive

norm are defined by Forsyth
Equity

Equality
Power
Need
Responsibility

Theory 4: Deontology
'Duty

Based' Ethics
Deontologists deny that what
ultimately matters is an action's
consequences.
They claim that what matters is the kind
of action it is. What matters is doing our
duty.
There are many kinds of deontological
theory
e.g., The 'Golden Rule' - "Do unto others
as you'd have them do unto you."

Kantian Deontology
Immanuel

Kant (1724-1804) is the most

influential deontologist.

Rejecting

Consequentialism: "A good will

is good not because of what it effects or
accomplishes." Even if by bad luck a good
person never accomplishes anything much,
the good will would "like a jewel, still shine
by its own light as something which has its
full value in itself."

The Categorical
Imperative
Kant claims that all our actions should be

judged according to a rule he calls the

Categorical Imperative.
First Version: "Act only according to that
maxim [i.e., rule] whereby you can at the
same time will that it become a universal
law."
Second Version: "Act in such a way that
you treat humanity, whether in your own
person or in the person of another, always at
the same time as an end and never simply
as a means."
Important to treat people as autonomous agents

Problems
Deontology:

What if doing your

duty has repugnant consequences?
Kant on telling lies lying in any
circumstances is the obliteration of
ones dignity as a human being

Consequentialism: What if you

have to do something that seems
wrong in order to produce the best
consequences?

Convicting the innocent

Theory 5: Principilism
Principilism

attempts to have it

both ways
Popularized by Beauchamp and
Childress
Principles of Biomedical Ethics
The Georgetown Mantra

Four Principles
1.

Autonomy
2. Beneficence
3. Non-maleficence
4. Justice
1 & 4 are deontological
2 & 3 are consequentialist
It

is really possible to have it both

ways?

Alternative Approaches
Virtue

Ethics (Aristotle)

What sort of person should I be?

Any

moral theory that takes the

first question as primary is a
virtue-ethical theory
Ethics of Care

Virtue Ethics
Virtues have three features:

They are a relatively fixed trait of character or

mind.
They typically involve a disposition to think, act,
or feel in certain ways in certain circumstances.
They are the primary basis for judging the
overall moral goodness or worth of a person.

The virtues are character traits that are cultivated

they are not something that one is born with.
We learn what is good or bad, right or wrong in
virtue of (no pun intended) observing virtuous
individuals act, feel, and behave.

Virtue Ethics

Aristotle argued that all human activities have some

purpose or end. But what is the purpose of human life?

He argued that the purpose of human life must several

characteristics:

It is an end for which all other ends are pursued,

It is pursued for itself,
It is never pursued as a means for any other end.

Aristotle argued that eudaimonia or human flourishing

(happiness) is the end of human life.

Virtue Ethics - Problems

An action is right just in case it is what a

virtuous agent would, characteristically,
do in the circumstances.

How does one know what to do in

a particular circumstance?
What makes a virtue good?
Is there an essential human nature
or stable characters?

Ethics of care
The basic beliefs of the theory are:
All individuals are interdependent for achieving
their interests
Those particularly vulnerable to our choices and
their outcomes deserve extra consideration to be
measured according to
the level of their vulnerability to one's choices
the level of their affectedness by one's choices
and no one else's
It is necessary to attend to the contextual details
of the situation in order to safeguard and
promote the actual specific interests of those
involved