Business Ethics

9th Edition
by

William H. Shaw

Lecture Outlines

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 Part I: Moral Philosophy
and Business
Chapter 1: The Nature of Morality
Chapter 2: Normative Theories of Ethics
Chapter 3: Justice and Economic Distribution
 Chapter One:
The Nature of Morality

This multimedia product and its contents are protected under copyright law. The following are prohibited by law:
• any public performance or display, including transmission of any image over a network;
• preparation of any derivative work, including the extraction, in whole or in part, of any images;
• any rental, lease, or lending of the program.
The Collapse of Enron’s Stock Price in Late 2001
 Overview
 Chapter One examines the following topics:
(1) Business and organizational ethics
(2) Moral versus nonmoral standards, etiquette and
professional codes
(3) Religion and business morality
(4) Ethical relativism and the “game” of business
(5) Moral principles, conscience, and self-interest
(6) Personal values, integrity, and responsibility
(7) Moral Reasoning, arguments, and judgments
 Introduction to Business Ethics

 What is ethics? The study of right and wrong, duty and

obligation, moral norms, individual character, and
responsibility.
 What is business ethics? The study of right and wrong,
duty and obligation, moral norms, individual character,
and responsibility – in the context of business.
Moral Versus Nonmoral Standards

 Nonmoral standards: Standards about behavior or

practices with no serious effects upon human well-being
 Moral standards: Standards about behavior or practices
with serious upon human well-being
Some Features of Moral Standards
 Moral standards take priority over nonmoral standards.
 The soundness or validity of moral standards depend on
the quality of the arguments or the reasoning that
support them.
 Morality and Etiquette
 Rules of etiquette are ordinarily nonmoral in character
and are meant to serve as guidelines for socially
acceptable behavior.
 Violations of etiquette can sometimes have moral
implications.
 The strict observance of rules of etiquette can
sometimes conceal serious moral issues.
 (1) Morality and Law
 Statutes: Laws enacted by legislative bodies such as the
U.S. Congress and state legislatures
 Regulations: Laws enacted by special boards or
agencies for various kinds of conduct
 Common law: The body of judge-made laws developed
in English-speaking countries over the course of many
centuries
 Constitutional law: Court rulings on the requirements of
the U.S. Constitution and on the constitutionality of
legislation
 (2) Morality and Law
 The distinction between morality and legality:
 An action can be illegal but morally right
 An action can be legal but morally wrong
 Professional codes: The rules that govern the conduct of
the members of a given profession
 Individuals have the responsibility to critically assess
the rules of their professions
 These rules are not always complete and reliable
guides to adequate moral conduct
“You come upon this scene—the car is smoking, and it
is clear that an accident just took place. In most states,
you are not legally obligated to stop and offer help to
the victims.”
 (1) The Sources of Morality
 The justification of moral norms: Moral philosophers
study mainly the justification, rather than the origin, of
moral norms.
 The claim that morality is based on religion:
 Religion provides incentives to be moral
 Religion provides moral guidance
 Moral norms are in essence divine commands
 (2) The Sources of Morality
 Ethical relativism: The view according to which moral
norms derive their ultimate justification from the customs
of the society in which they occur.
 This means that moral norms are not universal, but are
dependent upon a particular cultural or social context.
 (3) The Sources of Morality
 Implications of relativism:
 There is no independent standard by which to judge
the rightness or wrongness of other societies.
 The idea of ethical progress loses its significance.
 It wouldn't make sense to criticize the moral code of
one’s own society or culture.
 (4) The Sources of Morality
 Relativism and the “game” of business:
 The idea that business is a just game captures the
thesis of Albert Carr.
 He argued that business professionals are expected
to follow a code that has little or nothing to do with
ethics in other contexts.
 This view entails – incorrectly – that the practices of
business professionals cannot (or should not) be
evaluated from an ordinary moral standpoint.
 (1) The Importance of Moral
Principles
 What it means to have principles: Accepting moral
principles is not just a matter of intellectual recognition,
but of profound individual commitment to a set of values.
 Conscience: The internalized set of moral principles
taught to us by various authority figures – parents and
social institutions.
 Conscience and its limits: Conscience is not always a
reliable guide because it can be (1) conflicted and (2)
erroneous.
 (2) The Importance of Moral
Principles
 Moral principles and self-interest: The morality of an
action can run counter to our self-interest
 The moral point of view requires that we restrict our
self-interest to satisfy social co-existence.
 In situations of conflict between moral principles and
self-interest, it is important to appeal to shared
principles of justification.
 Morality and Personal Values
 Morality in the narrow sense: The moral principles or
rules that do, or should, govern the conduct of
individuals in their relations with others
 Morality in the broad sense: The values, ideals, and
aspirations that influence the decisions and lifestyles of
individuals and entire societies
 Business ethics are mainly concerned with morality in
the narrow sense.
 But values, ideals, and aspirations also affect the
behavior and ethical choices of business professionals.
 (1) Individual Integrity and Moral
Responsibility
 Organizational norms: Employees of business
organizations (especially corporations) are:
 Expected to further profit goals
 Often pressured to compromise moral values and
ignore or violate rules of ethical conduct
 Conformity: Studies show that individuals are more
prone to act unethically when they are a part of an
organization or a group.
Asch Conformity Experiment
 (2) Individual Integrity and Moral
Responsibility
 Groupthink: The pressure on group members to conform
to morally questionable policies or strategies, often
resulting in unethical conduct.
 Diffusion of responsibility: The multiplicity, complexity,
and distribution of tasks that can lead individuals to feel
less responsibility or accountability for their actions.
 (1) Moral Reasoning
 Argument: A group of statements in which one
statement (conclusion) is follows from the others
(premises)
 Example:
(1) If Norman is bald, then Norman does not need a
haircut.
(2) It is the case that Norman is bald.
(3) Therefore, Norman does not need a haircut.
 (2) Moral Reasoning
 Requirements for a sound argument: If its statements
(premises and conclusion) are true and its form (or
structure) is valid
 Validity: If the assumption that an argument's
premises are true guarantee that the conclusion is
true, then it's valid
 Invalid arguments: If the assumption that an
argument's premises are true do not guarantee that
the conclusion is true, then it's invalid
 Determining whether an argument is valid or invalid
requires familiarity with the rules of logic.
 (3) Moral Reasoning
 Moral arguments: Those conflicting theories and beliefs
whose conclusions are moral judgments, based on the
premise of moral standards and statements of fact
 Example:
(1) If an action violates the law, it is morally wrong.
(2) Affirmative action on behalf of women and minorities in
personnel matters violates the law.
(3) Therefore, affirmative action on behalf of women and
minorities in personal matters is morally wrong.
 (4) Moral Reasoning
 What makes a moral judgment defensible? If it is
supported by a defensible moral standard and relevant
facts
 Evaluating moral arguments:
(1) Clarifying the terms of the premises
(2) Examining the factual claims
(3) Assessing the moral standard
 (5) Moral Reasoning
 Thus, an argument can be challenged by:
(1) Uncovering ambiguity in the terms
(2) Questioning the factual claims
(3) Challenging the moral standards
 (6) Moral Reasoning
 Criteria for moral judgments:
(1) Should be logical
 Embedded in valid arguments
 Compatible with moral and nonmoral beliefs
(2) Should be based on facts
(3) Should be based on acceptable moral principles
 Argument
An argument is a group of statements, one
of which (called the conclusion) is
claimed to follow from the others (called
the premises).
 Argument 1
If a person is a mother, the person is a
female.

Fran is a mother.

Therefore, Fran is a female.

 Valid vs. Invalid Argument
Valid argument
Premises logically entail its conclusion.
Example: Argument 1

Invalid argument
Premises do not entail its conclusion.
Example: Argument 2
 Argument 2
If a person is a mother, the person is a
female.

Fran is a female.

Therefore, Fran is a mother.

 Counterexample
An example that is consistent with the
premises but is inconsistent with the
conclusion.

Argument 2 Counterexample
“Fran is a two-year-old” is consistent with
premises but inconsistent with conclusion
since could not be a mother.
 Argument 3
If a person is a female, she must be a
mother.

Fran is a female.

Therefore, Fran must be a mother.

 Sound vs. Unsound Argument
Sound argument
Have true premises and valid reasoning
Example: Argument 1

Unsound argument
Have at least one false premise, as in
Argument 3, or invalid reasoning, as in
Argument 2, or both.
 Moral Arguments
Arguments whose conclusions are moral
judgments.

Moral Reasoning or argument typically

moves from a moral standard, through one
or more factual judgments about some
person, action, or policy related to that
standard, to a moral judgment about that
person, action, or policy.
 Argument 4
If an action violates the law, it is morally
wrong.
Affirmative action on behalf of women and
minorities in personnel matters violates the
law.
Therefore, affirmative action on behalf of
women and minorities in personnel
matters is morally wrong.
 Defensible Moral Judgments
If a moral judgment or conclusion is
defensible, then it is must be supportable
by a defensible moral standard, together
with relevant facts.
Patterns of Defense and Challenge
1. Evaluating factual claims.
2. Challenging the moral standard.
3. Defending the moral standard.
4. Revising and modifying the argument.
Requirements for Moral Judgments
• Should be logical
• Should be based on facts
• Should be based on acceptable moral
principles
- Example: consistency with our
considered moral beliefs