chapter 1 ethics morality business ethics moral...

24
Chapter 1 1. Definitions Ethics is the study of morality. When we are studying morality we are doing ‘ethics’. It is the discipline that deals with good and bad and moral duty and obligation. Can also be regarded as a set of moral principles. Morality refers to the standards that an individual or group has about what is right or wrong, good or evil. 2. Pluralistic Society: Pluralism is a condition in which there is a diffusion of power among the societies many groups and organizations. A pluralistic society is one in which there is a wide decentralization and diversity of power concentration. Virtues of a pluralistic society: *prevents power from being concentrated in the hands of a few *maximizes freedom of expression and action and strikes a balance between monism (social organization into one institution) on the one hand and anarchy on the other. *allegiance of individuals to groups is dispersed

Upload: others

Post on 24-Jun-2020

6 views

Category:

Documents


0 download

TRANSCRIPT

Page 1: Chapter 1 Ethics Morality Business Ethics moral …s3.amazonaws.com/prealliance_oneclass_sample/AE4J6b48DB.pdfChapter 1 1. Definitions Ethics is the study of morality.When we are studying

Chapter 1

1. Definitions Ethics is the study of morality. When we are studying morality we are doing ‘ethics’. It is the

discipline that deals with good and bad and moral duty and obligation. Can also be regarded as a set of moral principles.

Morality refers to the standards that an individual or group has about what is right or wrong, good or evil.

Business Ethics is a specialized study of moral right or wrong. It concentrates on moral standards as they apply to business policies, institutions, and behaviour.

Corporate Social Responsibility refers specifically to a description and moral evaluation of the impact that an organization has on society.

Society: a community, a nation, or a broad grouping of people having common traditions values institutions and collective activities and interests.

Environment: often refers to the macro environment, includes the total environment outside the firm, the total societal context in which the organization resides.

View of the environment by Fahey and Narayanan: 4 segments: social, political, economic and technological.

Values: individual concepts of the relative worth, utility or importance of certain ideas. Values reflect what the individual considers important in the larger scheme of things. One’s values shape one’s ethics.

Sources of a manager values that are external to the organization: religious values, philosophical values, cultural and legal, professional

Sources that are internal: respect for the authority structure, loyalty, conformity, performance, results.

Elements of moral judgement: Powers and Vogel: 6 major elements necessary for making moral judgements:1. moral imagination 2. Moral identification and Ordering 3. Moral evaluation 4. Tolerance of moral disagreement and ambiguity 5. Integration of managerial and moral competence 6. A sense of moral obligations

2. Pluralistic Society: Pluralism is a condition in which there is a diffusion of power among the societies many groups and organizations. A pluralistic society is one in which there is a wide decentralization and diversity of power concentration.

Virtues of a pluralistic society:*prevents power from being concentrated in the hands of a few*maximizes freedom of expression and action and strikes a balance between monism (social organization into one institution) on the one hand and anarchy on the other.*allegiance of individuals to groups is dispersed

Page 2: Chapter 1 Ethics Morality Business Ethics moral …s3.amazonaws.com/prealliance_oneclass_sample/AE4J6b48DB.pdfChapter 1 1. Definitions Ethics is the study of morality.When we are studying

*creates a widely diversified set of loyalties to many organizations and minimizes the danger that a leader of any one organization will be left uncontrolled.*provides a built in set of checks and balances.

Strengths:Maximizes freedom of expression and actionPeople prefer it

Weakness: diverse institutions pursue their own self interests, result is that there is no central direction to unify individual pursuits.Groups tend to overlap which causes confusion as to which intuitions best serves which functions.Forces conflict onto center stage because of its emphasis on autonomous groups each pursuing its own interests.

3. Our special interest society: we have carried the idea of pluralism to an extreme with tens of thousands of special interest groups. They have become increasingly activist, intense, diverse and focused on single issues. These groups often work at cross purposes to each other and with no unified set of goals. This has made life more complex for major institutions that have to deal with them.

4. Factors have arisen in the social environment that have created an atmosphere in which business criticism has taken place and flourished. Influenced also by affluence, awareness, education, rising expectations, entitlement mentality, rights movements, victimization philosophy, which leads to business criticism, which increases concern for the societal environment and a changed social contract. These are the factors:

• Societal beliefs regarding success in business: that the only successful businesses are dishonest ones. That business ethics is an oxymoron.

• Affluence and education: Affluence: refers to the level of wealth, disposable income and standard of living of society. This contributes to higher expectations of societies institutions.

• Awareness through the media: power of tv.straight news and investigative news programs. Drive by journalism. Prime time television shows. Commercials

• Revolution of rising expectations: maybe that each generation ought to have a standard of living better than the one before them.

• A social problem has been described as a gap between societies expectations of social conditions and the present social conditions.

• Entitlement Mentality: the general belief that someone is owed something just because he is a member of society.

• These factors have contributed to the Rights Movement

5. Criticisms of business: use and abuse of power.Business power refers to the ability or capacity to produce an effect to bring an influence to bear on a situation or people.

Levels of power: Epstein identified four such levels:Macro level refers to the corporate or business system, the totality of business organizations. Power here emanates from sheer size and dominance of the corporate system.

Page 3: Chapter 1 Ethics Morality Business Ethics moral …s3.amazonaws.com/prealliance_oneclass_sample/AE4J6b48DB.pdfChapter 1 1. Definitions Ethics is the study of morality.When we are studying

Intermediate Level: refers to several firms or a group of corps acting in concert in an effort to produce a desired effect like raise prices, control prices, dominate purchasers, pass or defeat legislation. Example airlines, power companies, banks.Micro Level: single firm

Individual level; refers to the individual corporate leader exerting power. Annita Rodick the body shop.

Spheres of power: arenas in which this power is manifested: Economic, social/cultural, power over the individual, technological, environmental, political.

You must stipulate which level of power is being referred to and in which sphere power is being employed.

Balance of power and responsibility: when power gets out of balance there is may be increased regulation, new laws, more criticism, news media, special interest group power. (cigarettes)

Business response: concern and changing social contract. The social contract is a that set of two way understandings that characterizes the relationship between major institutions. It is partially articulated through laws and regulations and shared understandings that evolve. These are the mutual expectations regarding each other’s roles, responsibilities and ethics. The unspoken components of the social contract represent what Donaldson and Dunfee refer to as the normative perspective of the relationship (what ought to be done by each party)

Management Approach: clarifies the nature of the social or ethical issues that affect the organizations and 2) suggest alternative management responses to these issues in a rational and ethical fashion. Management must deal with the various stakeholder groups in an ethical fashion and also reconcile the conflicts of interest that occur between the organization and the stakeholder groups. They have to treat fairly the groups with which the business interacts and create an organizational climate in which all employees make decisions with the interests of the public and those in the org in mind.

Slides for Week One:

1. Perspectives on Ethics in Business: Ethics as a business constraint “ethics costs”Ethics as a business advantage “ethics pays”Ethics as underpinning of business: business can’t take place without a minimal degree of ethics (e.g., trust).

2. A Brief History of Business Ethics: Stages of Development: Prior to 1960: Business is amoral 1960-1970: Social issues in business 1970-1985: Rise of business ethics (academia) 1985-1995: Integration of business ethics in firms (codes, training, hotlines) 1995-2000: Internationalization of business ethics 2000+: Corporate scandals and government reaction

3. Setting It Straight: Debunking the Myths

Myth #1: Business ethics is an “oxymoron” (i.e., a contraction in terms) or can business and ethics coexist?

Page 4: Chapter 1 Ethics Morality Business Ethics moral …s3.amazonaws.com/prealliance_oneclass_sample/AE4J6b48DB.pdfChapter 1 1. Definitions Ethics is the study of morality.When we are studying

Myth #2: Business ethics is just a “fad” or the longest running fad in business history?Myth #3: Business ethics is just “personal ethics” or can “good apples” do bad things due to their organization’s reward systems?

4. Costs of Business Ethics Scandals: Fines, Lawsuits, Imprisonment, Investor and Depositor Losses Bankruptcies, Unemployment, Increased Regulation

5. Why a Manager Should be Concerned with Ethics... It is the right thing to do. It improves the bottom line.

6. Did Ethics Affect Your Decision? Self-interest? (free-rider) Trust? (uncertainty, risk) Honesty? (vs. bluffing) Promise-keeping? (vs. need for legal contract) Integrity? (consistency) Loyalty? (co-workers, company, friends, family) Caring? (avoiding harm or doing good)

7. How Does Ethics Relate to Markets? Choices(1) Strict Rationality: Best for Individual (Place $100,000 in Private Account) (2) Enlightened Self-Interest: Best for Society (Place $100,000 in Public Account)

Lessons (1) Are we strictly rational? (2) It is sometimes in your best self-interest not to act in your own apparent self-interest.

8. 5) How does McCoy’s ‘parable’ embody the characteristics of a typical business ethics dilemma? Ethics versus the law (e.g., ‘Good Samaritan Laws’) Lack of clarity over moral responsibility and leadership Moral reasoning skills Causes of unethical decision making (individual and organizational) Ethical problems are dumped at our feet (little time to react)

9. Ethical dilemmas are ambiguous (e.g., right vs. right or wrong vs. wrong) Easier to say what’s morally right, harder to do (e.g., classroom) Danger of pursuing super-ordinate goal (e.g., profits) How to create a moral context (e.g., codes, training, etc.) Importance/relevance of business ethics

Chapter 6Business Ethics FundamentalsSlides:

1. Outline of this section: Moral Development Moral Responsibility Moral ReasoningWho Is a Stakeholder? Moral Standards Simple Ethical Tests Case: IBM and the Final Solution

2. Descriptive versus Normative: A descriptive statement makes a claim about what is the case (i.e., the facts). It is concerned with describing characterizing and studying the morality of a people, culture or a society. It also compares and contrasts different moral codes, systems, beliefs and values. A normative statement makes a claim about what ought to be the case. Normative ethics is concerned with supplying and justifying a coherent moral system of thinking and judging.

Page 5: Chapter 1 Ethics Morality Business Ethics moral …s3.amazonaws.com/prealliance_oneclass_sample/AE4J6b48DB.pdfChapter 1 1. Definitions Ethics is the study of morality.When we are studying

Slippery Slope’ -“IS” (descriptive) versus “OUGHT” (normative). Be careful throughout the course not to slip from “is” to “ought”.

Immoral management is defined as a posture that is devoid of ethical principles. Nothing matters except making money.Moral management conforms to the highest standards of ethical behavior. Management strives to be ethical in terms of its focus on high ethical norms and professional standards of conduct, motives, goals, orientation toward the law and general operating strategy. Ethical values shape managements search for opportunities, the design of organizational systems, and the decision making process.

Amoral management: 2 types, intentional amoral management, think different rules apply in business than in real life. Unintentional, do not think of business activity in ethical terms. Both see the law as setting the parameters the business must operate in.

2b. Law and ethics: law embodies notions of ethics. Law can be seen as a reflection of what society thinks are the minimum standards of conduct and behavior. They are codified ethics.

3. Levels of Ethical Analysis:Societal: Is capitalism morally justified?Industry: Should the industry target market children?Organizational: Should the company recall the product?Individual: Should I pad my expense account?

How to determine the level of the ethical issue: Who is making the decision or facing the dilemma? From which perspective does the issue relate?

4. What is an Ethical Dilemma? A situation in which an individual, organization, or industry must reflect upon competing moral standards and/or stakeholder claims in determining what is the morally appropriate decision, policy, or action. True ethical dilemmas involve a right vs. right, or a wrong vs. wrong, as opposed to a right vs. wrong.

5. Moral Responsibility: An individual is morally responsible for:those wrongful acts which he/she performed (or wrongly omitted) and for those injurious effects he/she brought about (or wrongly failed to prevent) when this was done knowingly and freelyMoral responsibility is excused by: (i) ignorance and (ii) inabilityMoral responsibility is mitigated by: (i) uncertainty; (ii) difficulty; (iii) degree of involvement; (iv) non-seriousness of the wrongWho was morally responsible for the sadhu? Milgram Experiments

6. Can a Corporation Be Responsible? Can we hold companies morally accountable for their actions? Or can only individuals be held morally accountable? What about for past actions? (e.g., European companies using slave labor during World War II; American companies using slave labor hundreds of years ago).

Is the Corporation a Moral Agent? Yes:

laws make corporations artificial persons corporations can act and form intended objectives people hold corporations morally accountable

No: corporations are made up of people: they do not feel or act alone

Page 6: Chapter 1 Ethics Morality Business Ethics moral …s3.amazonaws.com/prealliance_oneclass_sample/AE4J6b48DB.pdfChapter 1 1. Definitions Ethics is the study of morality.When we are studying

only human beings can be morally blamed corporations are really like machines

8. What are Moral Standards? Values (something we think is important) Honesty Caring Life Principles (guide behaviour): Tell the truth Avoid unnecessary harm Don’t murder

9. Stakeholder Identification: “A stakeholder is any group of individuals who can affect or is affected by the achievement of an organization’s purpose” (Freeman, 1984)“Stakeholders have stakes in the business, either as an interest [affect or affected by business], a right [legal or moral], or ownership” (Carroll, 1993)Primary: company (shareholders/owners), managers, employees, customers, suppliers, local communitiesSecondary: government, competitors, media, special interest groups, natural environ, future generations.

10. Moral Development: Kohlberg’s Six Stages: Level One: Preconventional (Self)

Stage 1- Fear of punishment and authorityStage 2 - Serving one’s own needs (getting rewarded)

Level Two: Conventional (Group) (Learns to conform to the group or the conventional norms of society)

Stage 3 - Look for approval from family, friends (good girl/boy mentality, there are feelings of warmth, trust, loyalty for conforming to expectations)

Stage 4 - Adherence to law and order (being a good citizen)

Level Three: Postconventional (Autonomy) Concerned for humankind as a wholeStage 5 – Recognize social contractStage 6 - Concern for universal ethical principles

10.

1) Core (Universal) Ethical Values Trustworthiness: (honesty, integrity, transparency, promise-keeping, loyalty) Responsibility: (accountable for actions, accept fault, apologize, don’t blame others) Caring :(avoid unnecessary harm, do good when little cost to oneself, sensitive to others’ feelings) Citizenship:(obey laws, assist community, protect environment)

From the text (calls this virtue ethics: focuses on the individual becoming imbued with virtues such as the ones mentioned above, is centered in the heart of the person. Traditional ethicsl principles such as utilitarianism, rights and justice focus on what should I do, this focuses on what sort of person should I become.

2) Relativism: Morality depends upon whether the majority of reference point (e.g., firm, industry, customers, society) believes activity should be considered morally acceptable

Problems: moral judgment can easily change based on time, circumstance, culture, etc. consequences or individual moral rights can be ignored

Page 7: Chapter 1 Ethics Morality Business Ethics moral …s3.amazonaws.com/prealliance_oneclass_sample/AE4J6b48DB.pdfChapter 1 1. Definitions Ethics is the study of morality.When we are studying

You operate a business, there is a law which prevents opening on a public holiday (subject to fines) All of your competitors will be opening Even with fines, you will make a profit Do you open up?

3) Egoism: Psychological Egoism: People act according to their own perceived self-interest Ethical Egoism: People should only act according to their own perceived self-interest

Problems: altruism or self-sacrifice is unacceptable You and a friend have both graduated from York and are now looking for a job in a very tough job

market You hear from a relative about a position, although you think you are qualified you believe your friend is better qualified. Do you let your friend know about the position?

4) Utilitarianism“Greatest NET good for the greatest number” (i.e., consequences) Process:

1) Identify alternatives2) Determine costs and benefits for each stakeholder under each alternative3) Select alternative that produces the greatest net good (i.e., utility)

A runaway train is about to crash and kill 100 people on another train. Do you pull the switch and kill only 50? What might you want to know about the people on the trains?

Criticisms: Difficulties with measurement how do you measure the value of life, health how do you predict the future

Unable to deal with rights (individuals could be sacrificed) and justice (minorities suffer burdens with few benefits). Should you take out a kidney from a criminal on death row (without consent) to save the life of another?

Common Mistakes:1) If the sum total of the benefits are greater than the sum total of the costs for a given action, is it moral?

NO, only when net benefits are greater than all other possible alternatives 2) If net benefits are greatest for the person performing the action versus all other possible alternatives, is it moral? NO, only if the net benefits are greatest for all people affected by the action

From text: the principle of utilitarianism is a consequential principle. Forces us to think about the general welfare. It provides a standard outside of self-interest by which to judge the value of a course of action. Does not recognize actions as inherently good, or inherently bad. Weaknesses: ignores actions that may be inherently bad. Also the ends justifies the means. The action or decision is only objectionable if it leads to a lesser ratio of good to evil. It also may come in conflict with the idea of justice. It ignores the distribution of good. What distinguishes utilitarianism from egoism has to do with the scope of the relevant consequences. On the utilitarian view one ought to maximize the overall good — that is, consider the good of others as well as one's own good. Utilitarianism is also distinguished by impartiality and agent-neutrality. Everyone's happiness counts the same. When one maximizes the good, it is the good impartially considered. My good counts for no more than anyone else's good. Perhaps the strongest objection to Utilitarianism comes from the natural rights theory: AU is false, because it tells us to violate people’s rights when that’s necessary to maximize utility. A surgeon has I healthy and 5 sick and dying patients. Each of the sick and dying patients needs a new organ— one a new kidney, another a new liver, the third a new heart, etc.—and would fullyrecover if he received it. It so happens that the 1 healthy patient would be a suitable organ donor for all of them. If the surgeon kills the 1 and redistributes his organs, he saves 5. If he does nothing, then 1 is alive and 5 are dead. Utilitarianism does not handle the issue of rights very well. It implies that certain acts are

Page 8: Chapter 1 Ethics Morality Business Ethics moral …s3.amazonaws.com/prealliance_oneclass_sample/AE4J6b48DB.pdfChapter 1 1. Definitions Ethics is the study of morality.When we are studying

morally right (they represent the greaters good for the greatest number) when in fact they may violate another person’t rights.

5) Kantianism: Motive: Must act based on moral duty and not merely due to concern over consequences The categorical imperative determines moral duty:

Universalizability: If everyone did it, would it become self-defeating? (e.g., drive on shoulder? cheat on test?)

Reversibility: Put yourself in the other person’s shoes (i.e., the person most directly affected) Respect: Don’t treat people merely as a ‘means’ to an end (i.e., do not exploit them)

Problems: Consequences potentially ignored

Is it ever okay to cheat? Everyone has a copy of the exam, should you take a look? Is it ever okay to lie? Telling your spouse/partner/friend you like their hair cut, their new outfit, dinner was great Is it ever okay to steal?E.g., Aladdin and Robin Hood

Eg. on deserted island you promise to your dying friend to give your friend’s wealth to elder son back in Toronto elder son is lazy playboy who tends to squander his money in Las Vegas, friend’s younger daughter on verge of discovering cure to AIDS, has used up all of her funding, should you break your word to your friend?

From web: Kantian ethics is based on what Immanuel Kant claimed is the supreme principle ofmorality, the Categorical Imperative. Kant claimed that there were a few different butequivalent ways of stating the Categorical Imperative. The first, the Universal LawFormula, says that we should act only on principles that we can will to be a universal lawthat applies to everyone. The idea here seems to be that when people act immorally, theywant everyone else to obey “the rules” but want to make an exception for themselves.Another way of stating the Categorical Imperative, the one we’ll focus on, is the Principleof Humanity. It says that whenever we act we must be sure always to treat all “persons”(both ourselves and others) as “ends” and never as “mere means.”“Persons” in Kantian ethics refers to any being with the capacity to make moraljudgments and conform to them (where that often requires that one resist various urges,inclinations, and temptations to act against them). Persons have free will and reason.

6) Moral Rights: are important, justifiable claims or entitlements. The idea under the principle of rights is that rights cannot simply be overridden by utility. A right can only be overridden by another, more basic or important right. The rights principle expresses morality from the point of view of the individual or the group of individuals, whereas the utilitarian principle expresses morality in terms of the group or society as a whole. The rights view forces us in our decision making to ask what is due each individual and to promote individual welfare. It also limits the validity of appeals to numbers and to societies aggregate benefit.

Actions morally right or wrong if it respects the rights of individuals affected by the action Legal rights (as opposed to moral rights) are determined by social institutions Moral human rights not granted by society but exist by mere fact you are a human being Right: an individual’s entitlement to something Negative Rights (creates duty on others not to interfere):

life, health, safety, privacy, property

Page 9: Chapter 1 Ethics Morality Business Ethics moral …s3.amazonaws.com/prealliance_oneclass_sample/AE4J6b48DB.pdfChapter 1 1. Definitions Ethics is the study of morality.When we are studying

consumer’s right to life, health, and safety creates duty on company to disclose known dangers regarding products

shareholder’s right to property creates duty on managers and employees not to ‘steal’ their property (e.g., through fraud, theft, conflicts of interest, or possibly charitable giving)

Positive Rights (creates duty on others to provide): employment, housing, food, education, job security

Process:1) determine moral rights each stakeholder has (including shareholders) and duties owed to other stakeholders;2) determine relative significance of rights and duties; and3) choose alternative that best respects rights and duties of individual stakeholders

Criticism: Difficult to resolve conflicting rights e.g., right to use property versus rights of others not to be polluted

You are the sheriff of a small racist town, a woman has been raped, riots are about to break out, many innocent people will be killed, No leads, arrest of innocent individual will prevent additional killing, What do you do? From text: it is also hard to answer what is a legitimate right that should be honoured and what rights take precedence over others. See pdf for list of legal rights and claimed moral rights.

7) Justice or Fairness – Typesa) Retributive: Punishmentb) Compensatory: Restitutionc) Procedural: Processd) Societal: Basic Principlese) Distributive: Outcome

a) Retributive Justice - just imposition of punishments and penalties upon those who do wrong (e.g., fine corporation; put CEOs in jail)

person was not ignorant or unable certain person actually did wrong punishments consistent and proportioned to the wrong

b) Compensatory Justice - just ways of compensating people for what they have lost when wronged by others (e.g., restitution)

action causing injury was wrong or negligent person’s action was cause of injury person voluntarily caused injury (not accident)

c) Procedural Justice - fairness in the process (e.g., bidding for contract) impartial, unbiased, objective

transparent reasons givenEvery Friday night the manager of a movie theatre discovers that about $50 is missing from food and beverage tills. The employees (all eight of them) are warned that if money is missing after the next Friday night, one employee would be fired. More than $50 missing, an employee is picked from a hat and fired.Fair process? What would be fairer?

d) Societal Justice - Rawlsianism (John Rawls)

Page 10: Chapter 1 Ethics Morality Business Ethics moral …s3.amazonaws.com/prealliance_oneclass_sample/AE4J6b48DB.pdfChapter 1 1. Definitions Ethics is the study of morality.When we are studying

The “Veil of Ignorance”: Close your eyes, you are about to be born, you have no idea if you will be born physically handicapped, if you will be mentally challenged, if you will be a man or a woman, intelligent, artistic, what color your skin will be. What principles would like to establish for your society?

Rawls provides a comprehensive principle of justice. His theory is based on the idea that what we need first is a fair method by which we may choose the principles through which conflicts will be resolved. The two principles of justice that underlie his theory are as follows:

1. Each person has an equal right to the most extensive basic liberties compatible with similar liberties for all others.2. Social and economic inequalities are arranged so that they are both reasonalbly expected to be to everyone’s advantage and attached to positions and offices open to all. This is criticized because the inequalities that may result may be so great as to be clearly unjust, the rich get richer and the poor only get less poor. But some argue that as long as we have equal opportunity there is no injustice when people benefit from their own work, skill, ingenuity or assumed risks. Therefore such people deserve more and should not be required to produce benefits for the least advantaged.

e) Distributive Justice - equitable or fair distribution of the benefits (e.g., wages) and burdens (e.g., firing) imposed by an action or policy.

Similar individuals should be given similar benefits and suffer similar burdens OR treat people the same except when they differ in relevant ways

So how does one decide if individuals deserve similar or different treatment? Is it fair that some CEOs companies are paid hundreds of millions of dollars for their services, even

when their companies are losing millions? Is it fair that someone with seniority gets to keep his/her job over someone who is more productive? Is it fair for pharmaceutical companies to make a profit when selling HIV/AIDS drugs in developing

nations? Is it fair that women (e.g., even with short hair) have to pay more for having their hair cut and styled

than men?

Supporters of the principle of justice claim that it preserves the basic values, freedom, equality of opportunity, and a concern for the disadvantaged that have become embedded in our moral beliefs.

Other Moral StandardsReligion (e.g., Torah, Bible, Koran, etc.) Moral Virtue (i.e., character) Intuition (i.e., gut feeling) Example – Applying Moral StandardsIs accepting an expensive gift from a supplier unethical? How would each of the moral standards apply?

Utilitarianism does not deal well with justice either. Justice involves the fair treatment of each person.

Example – Applying Moral Standards

1) Core Values - am I acting in a trustworthy manner?2) Relativism - is everyone else doing it and believe it’s acceptable?3) Egoism - will it serve my own interests?4) Utilitarianism - will society ultimately benefit?5) Kantianism - if everyone accepts gifts, will purchasing decisions break down?6) Moral Rights - what about obligations to shareholders?7) Justice - is this fair to competitors?

Page 11: Chapter 1 Ethics Morality Business Ethics moral …s3.amazonaws.com/prealliance_oneclass_sample/AE4J6b48DB.pdfChapter 1 1. Definitions Ethics is the study of morality.When we are studying

Taped to here:Simple Ethical Tests…Would you want your decision to appear in the newspaper? (Newspaper Test)

Common Rationalizations for Unethical BehaviorIf it’s necessary, it’s ethical If it’s legal, it’s ethicalWe’ve always done it this way Everyone else is doing itIt’s a dumb rule It’s ethical as long as it doesn’t hurt anyoneIt’s ethical if I don’t gain personally I’ve got it coming, they owe meI’m doing it for my family It’s for a good causeThis is a business decision, ethics has nothing to do with it I can’t do anyone any good if I lose my jobEthics is a luxury I can’t afford right now It’s not my problemSometimes you have to take shortcuts to survive

From the text: The Golden Rule: do unto others as you would have them do unto you. The key is impartiality, we are not to make an exception of ourselves. Personifies business relations and brings the ideal of fairness into business deliberations.

From the text: Ruggiero, there are three common concerns that must be addressed when there are conflicts between and among principles. First we enter in obligations as a part of daily organizational lives. Like a written contract or a verbal one. Principles of rights, justice and virtue would hold that we should honour our obligations. Second as managers we might hold certain ideals. These may be some morally important goal, principle, virtue or notion of excellence worth striving for. A quest for justice, protection of rights, and balancing of individual versus group goals may be examples. Third we are interested in the effects or consequences on stakeholders of decisions or actions. What do we do when our obligations, goals and effects conflict or produce mixed results?Shaw and Barry propose 3 guidelines:1. When two or more moral obligations conflict, choose the stronger one.2. When two or more ideals conflict or when ideals conflict with obligations, honour the most important one.3. When effects are mixed, choose the action that produces the greatest good or less harm.

Ethical Case Analysis1) Relevant facts2) Ethical issues 3) Alternatives4) Stakeholders (who is affected or can affect the firm)5) Ethical analysis (apply moral standards to alternatives and come to a moral judgment) 6) Recommended action (steps/preparation, who must be persuaded, contingency plan)7) Justice or Fairness

Rawl’s Two Principles: equal right to basic liberties (right to vote, freedom of speech and conscience; freedom to hold

personal property, freedom from arbitrary arrest) inequalities are arranged so that they are to the greatest benefit of the least advantaged and

remain under conditions of fair equality of opportunity

7) Justice or FairnessCriteria of similarity OR difference:1) contribution/productivity (i.e., how much output) 2) effort (i.e., how hard one tries);3) merit/seniority (i.e., how long have you been there);

Page 12: Chapter 1 Ethics Morality Business Ethics moral …s3.amazonaws.com/prealliance_oneclass_sample/AE4J6b48DB.pdfChapter 1 1. Definitions Ethics is the study of morality.When we are studying

4) needs and abilities (i.e., how much is able to be produced or required);5) equality (i.e., everyone treated the same regardless of differences)

Simple Ethical Tests…What would you tell your child to do? (Child TestWill your decision allow you to sleep peacefully? (Pillow Test)Test of common sense Test of one’s best selfTest of making something public (if it was on the evening news)Test of ventilation: expose your proposed action to others and get their thoughts on it.

Lewis: how a decision maker should behave when faced with a moral choice:His step by step sequence:1. look at the problem from the position of the other person affected by a decision2. try to determine what virtuous response is expected3. ask a) how it would feel if the decision to be disclosed to a wide audience and b) whether the decision is consistent with organizational goals4. act in a way that is a) right and just for any other person in a similar situation and b) good for the organization.

Online: Descriptive theory explains how things are (e.g., this paper is white; most Americans eat meat; etc.), whereas normative or prescriptive theory tells us how things ought to be (people ought to be honest, etc.). Ethics is about what ought to be, not what is. We simply would not need to consider what we ought to do if we always did it as a matter of course. Since we are focusing on morality and ethics, we are concerned with what morally ought to be the case. All ethical theories use various normative ethical principles in assessing or justifying actions and behavior. To be practical and beneficial, ethical discourse must use understandings, procedures, and judgment criteria that all rational people who are concerned with morality and ethics must affirm. We need to understand that ethical principles must be the ground rules for our moral decision-making—they should not simply be factors we take into consideration.

Perhaps the strongest objection to AU comes from the natural rights theory: AU is false, because it tells us to violate people’s rights when that’s necessary to maximize utility.

Ethical Principle: they are part of a normative theory that justifies or defends moral rules and/or moral judgments. Ethical principles are not contingent upon cultural features such as tradition, religion, or law. For example, a Normative Ethical Principle such as the principle of utility (Utilitarian ethics) or the categorical imperative (Kantian ethics) is not subject to one's subjective viewpoints. Ethics justify or ground morality.

Normative Ethics: attempt to answer specific moral questions concerning what people should do or believe. The word "normative" refers to guidelines or norms and is often used interchangeably with the word "prescriptive." Normative ethical theories are Kantian ethics, Virtue ethics, Utilitarian ethics, and so on.

Examples of Virtues or Values:

Autonomy: the duty to maximize the individual's right to make his or her own decisions.Beneficence: the duty to do good both individually and for all.Confidentiality: the duty to respect privacy of information and action.Equality: the duty to view all people as moral equals.Finality: the duty to take action that may override the demands of law, religion, and social customs.

Page 13: Chapter 1 Ethics Morality Business Ethics moral …s3.amazonaws.com/prealliance_oneclass_sample/AE4J6b48DB.pdfChapter 1 1. Definitions Ethics is the study of morality.When we are studying

Justice: the duty to treat all fairly, distributing the risks and benefits equally.Nonmaleficence: the duty to cause no harm, both individually and for all.

Understanding/Tolerance: the duty to understand and to accept other viewpoints if reason dictates doing so is warranted.

Publicity: the duty to take actions based on ethical standards that must be known and recognized by all who are involved.Respect for persons: the duty to honor others, their rights, and their responsibilities. Showing respect others implies that we do not treat them as a mere means to our end.Universality: the duty to take actions that hold for everyone, regardless of time, place, or people involved. This concept is similar to the Categorical Imperative.Veracity: the duty to tell the truth.

B. Overview of Normative Ethical Principles For Selected Theories.KANTIAN ETHICS. These are principles that form the basis for Kant's non- consequentialist theory. These are listed as only a guideline.

Categorical Imperative: Act only on that maxim whereby you can at the same time will that it would become a universal law of nature.Principle of Ends: Act so that you treat people never as a mere means to an end, but always as an end in themselves. Principle of Autonomy: Every rational being is able to regard herself or himself as a maker of universal law, and everyone who is ideally rational will legislate exactly the same universal principles.

UTILITARIAN ETHICS. These are principles that form the basis for most utilitarian theories. DO NOT simply attempt to apply each principle without a good understanding of Utilitarian ethics. The principles must be used within the context of the theory and be grounded in the readings from the course. These are listed as only a guideline.

Principle of Utility: that principle which approves or disapproves of every action according to whether it increases or diminishes the amount of happiness of the party whose interest is in question.a. Act Utilitarianism: An act is right if and only if it results in as much good as any available alternative. b)Rule Utilitarianism: An act is right if and only if it is required by a rule that is itself a member of a set of rules, the acceptance of which would lead to greater good for society than any available alternative.

Harm Principle: Society is justified in coercing the behavior of an individual in order to prevent her or him from injuring others; it is not justified in coercing her or him simply because the behavior is deemed immoral or harmful to herself or himself.

Principles of Consequences: In assessing consequences, the only thing that matters is the amount of happiness/good or unhappiness/bad that is caused or not caused. The right or good actions are those that produce the greatest amount of good over bad in the long-term.

CONTRACT ETHICS. Morality consists in a set of rules (implicit or explicit), governing how people are to treat one another, which rational people will agree to accept, for their mutual benefit, on the condition that others follow those rules as well. Contract principles form the basis for many social contract theories. Some of these principles will work with either a consequentialist or nonconsequentialist theory. If they are appropriate, you may use them as additional support in your paper. If you do use them, be sure they are consistent with other normative or prescriptive principles you use. Modern contract theories are based on the work of John Rawls, so if you use this approach, be sure you are familiar with his thought. The principles

Page 14: Chapter 1 Ethics Morality Business Ethics moral …s3.amazonaws.com/prealliance_oneclass_sample/AE4J6b48DB.pdfChapter 1 1. Definitions Ethics is the study of morality.When we are studying

must be used within the context of the theory and be grounded in the readings from the course. These are listed as only a guideline.

Principle of Liberty: Each person has an equal right to the most extensive scheme of equal basic liberties compatible with a similar scheme of liberties for all.

Principle of Opportunity: There must be meaningful equality of opportunity in the competition among individuals for those positions in society that bring greater economic and social rewards.

Principle of Distributive Justice: Basic goods should be distributed so that the least advantaged members of society are benefited.

Principle of Justice: Each person possesses an inviolability founded on justice that even the welfare of society as a whole cannot override. The rights secured by justice are not subject to political bargaining or to the calculus of social interests.

Principle of Need: Each person is guaranteed the primary social goods that are necessary to meet the normal costs of satisfying one's basic needs in the society in which one lives, assuming there are sufficient social and economic resources in his society to maintain the guaranteed minimum.

From text:Factors affecting the Morality of Managers and Employers:In order from outside to inside:Society’s moral climateBusiness moral climateIndustry’s moral climateOrganization’s Moral climate (comes from individual, peers, policies and superiors)

Behaviors of superiors and peers that creat a questionable atmosphere are:Behavior of superiorsThe ethical practices of one’s industry or professionBehaviours of own’s peers in the org.Formal organizational policy or lack there ofPersonal financial needPressures exerted on subordinates by superiorsAmoral decision making by superiors or peersUnethical acts, behaviours or practices of superiorsAccepance of legality as a standard of behaviourBottom line mentality and expectations of loyalty and conformityAbsence of ethical leadershipObjectives and evaluation systems that overemphasize profits

Best practices for improving an organizations ethical climate or culture:Ethics programs and officers Realistic objectivesEthical decision making processes Codes of conductEffective communication Discipline of violatorsEthics audits Ethics trainingWhistleblowing mechanisms

Benefits of having a code of conduct: Legal protection for the org

Page 15: Chapter 1 Ethics Morality Business Ethics moral …s3.amazonaws.com/prealliance_oneclass_sample/AE4J6b48DB.pdfChapter 1 1. Definitions Ethics is the study of morality.When we are studying

Increased company prideIncreased consumer goodwill and loyaltyImproved loss preventionReduced bribery and kickbacksImproved product qualityIncreased productivity.

Most common topics covered in corporate codes of conduct are:Conflicts of interestReceiving giftsProtecting proprietary informationGiving gifts gratuityDiscrimination, sexual harassment, kickbacksGeneral conduct, employee theft, proper use of company assets

Should be forcefully and embedded in the org culture.

How codes of conduct influence behaviour within organizations:

1. As a rule bookAs a signpost to lead and help guide actionsAs a mirror to confirm whether their behaviour is acceptable to the companyAs a magnifying glass to be more carefulAs a shield that allows employees to better resist unethical requestsAs a smoke detector to convince and warn others of their ethical behaviourAs a fire alarm to contact and report violationsAs a club to make employees comply

Ethical training objectives:To increase the managers sensitivity to ethical problemsTo encourage critical evaluations of value prioritiesTo increase awareness of organizational realitiesTo increase awareness of societal realitiesTo improve understanding of the importance of public image and public society relations.To examine the ethical facets of business decision makingTo bring about a greater degree of fairness and honesty in the workplaceTo respond more completely to the organizations social responsibilities.

Ethics audits are approaches by which a company may assess its ethical climate or programs.

Improving the organizations ethical climate:Written codes, policies, or guidelineDistribution of policies to all employees, not just managementReinforcement through communications, including videotapes, articles public talksAdditional training geared toward application of policies to everyday work situationsSources of information and advice, such as ombudsperson and hotlinesMonitoring and enforcement through a corporate ethics office and a BOD ethics committee

Textbook:Ethics check: Is it legal? Is it balanced (promote win-win)? How will it make me feel about myself?Ethics quick test: Is it legal? Does it comply with our values? If you do it will you feel bad? How will it look in the newspaper?

Page 16: Chapter 1 Ethics Morality Business Ethics moral …s3.amazonaws.com/prealliance_oneclass_sample/AE4J6b48DB.pdfChapter 1 1. Definitions Ethics is the study of morality.When we are studying

Chapter 2 and 3

1.Corporate Social Responsibility: What is corporate social responsibility (CSR)? Is CSR good business?Social Investment: What is the field of social investing? What are social investment criteria?Social/Ethical Auditing

Learning Objectives: understand CSR theory and debate, evaluate CSR criteria, formulate your own position on CSR.

The Central Focus of CSR Theory: What obligations does a firm have toward society?

CSR Definitions: “The idea of social responsibility supposes that the corporation has not only economic and legal obligations, but also certain responsibilities which extend beyond these obligations”

And “Social responsibility is the obligation of decision makers to take actions which protect and improve the welfare of society as a whole along with their own interests”

Related CSR Business Concepts: cause related marketing (percent of product price goes to charitable cause) corporate strategic philanthropy (sponsorship/voluntarism) cradle to cradle (design products to create new products) environmental footprint (human demand versus planet’s ability to regenerate) fair trade (provide sustainable livelihood to suppliers). fortune at the bottom of the pyramid (e.g., microfinance) social enterprise (business where profits used to further social aims) social entrepreneur (visionary leader of non-profit used to solve social issues) triple-bottom line (economic prosperity, environmental quality, social equity)

These are not mutually exclusive. They are also in constant tension with each other. The most critical tensions are between economic and the other three. A CSR perspective would recognize that these tensions are organizational realities but would focus on the total pyramid as a unified whole and on how the firm might engage in decisions, actions, policies and practices that simultaneously fulfill all of its component parts. These are not sequential either. CSR = all of them added together.

Milton Friedman (Maximize Profits) vs. The Body Shop (Beyond Profits)Milton Friedman: A corporation’s only social responsibility is “to make as much money as possible while conforming to the basic rules of the society”: (i) obeying the law; (ii) conforming to “ethical custom” (i.e., business norms where you do business); and (iii) acting “without deception or fraud”.

The Body Shop: Business should do more than make money, we believe that companies have additional ethical obligations (i.e., beyond Friedman’s criteria) and/or philanthropic obligations (e.g., helping to solve social problems).

Outline of the CSR Debate: Narrow Obligations:

Page 17: Chapter 1 Ethics Morality Business Ethics moral …s3.amazonaws.com/prealliance_oneclass_sample/AE4J6b48DB.pdfChapter 1 1. Definitions Ethics is the study of morality.When we are studying

stockholder model company is a legal fiction pursuit of profit maximizes social utility ‘Chainsaw’ Al Dunlap formerly of Sunbeam

Broad Obligations: stakeholder model company is a moral agent upholding stakeholder obligations maximizes social utility Anita Roddick of The Body Shop

Milton Friedman vs. The Body Shop:Friedman:

managers are agents of shareholders spending shareholders’ money, imposes taxes companies pursuing profits leads to social utility maximization policy decisions better left to government shareholders or managers can still give charity firms can engage in ‘socially responsible’ activity but only if it maximizes the bottom line

From text: management has one job to maximize profits its owners. Also business is not equipped to handle social activities. If they do it dilutes the businesses primary purpose. Business already has enough power and CSR would give them additional power. It would make business less competitive internationally.

The Body Shop: corporations are citizens of society, must consider all stakeholders shareholders’ desires often go beyond the bottom line shareholders have moral obligation towards society managers often make decisions under uncertainty corporations have power and ability to make a difference, government not always sufficient or willing

Text: Petit’s view: industrial society made problems, managers should work to solve them. It is in businesses long range self interest. It wards off government regulation. Business has the resources so let it try. Only they can solve some problems like fair workplaces, providing safe products. Proacting is better than reacting.

Conceptual Reasons for Broader CSR:Stakeholder Theory: moral obligations to all stakeholders, not merely shareholdersSocial Contract: corporation is a citizen of society (i.e., reciprocity)Social Power: social responsibility arises from power held by corporation, able to do more good

Is Ethics and Broader CSR Really Good Business? Although not conclusive, the bulk of empirical and anecdotal evidence conducted to date suggests that acting in an ethical or socially responsible manner improves the bottom line, at least in the long-term.

CAUTIONARY NOTE! Even if good ethics is demonstrated to be good business, a strong argument is that this should not be the only or primary motivation for being ethical. Otherwise, when bad ethics is good business, bad ethics will inevitably be practiced. Being ethical can entail a cost

Does Crime Ever Pay? Acting illegally or unethically can and has paid, at least in the short term: white collar crime costs U.S. business approximately $100 billion each year (Driscoll et al.,

1996)

Page 18: Chapter 1 Ethics Morality Business Ethics moral …s3.amazonaws.com/prealliance_oneclass_sample/AE4J6b48DB.pdfChapter 1 1. Definitions Ethics is the study of morality.When we are studying

Unethical organizations can be profitable (e.g., mafia)Proceeds of unethical activity or crime are often never recovered (Leeds, 1999)

Although unethical business can pay, at least in the short-term… unethical business usually does not pay in the long-term.

Evidence: Ethical → Profits Consumers: Base purchase decisions in part on view of ethical practices of company Employees: If view the organization’s decision-making processes as just, will exhibit lower

absenteeism, lower turnover, higher commitment, and demand lower wages. Regulators: Mitigate sentencing Creditors: Beginning to use social/ethical screens

Shareholders: Part of investment decision

Share Value Maximization: Free Market Assumption: Shareholders only care about their return on investment Is this true?

Social/Ethical Investing: “A social investment...is an investment made with an intent to take into account the impact of the investment on the society in which the investment is made. Economic return may or may not be the principal goal of the investment…” Use negative screens to eliminate companies from investment pool or positive screens to select companies.

Examples of Investment Criteria: Calvert Funds (US): Governance and Ethics Workplace issues Environmental standards Product safety and impact (e.g., alcohol; tobacco; gambling; weapons, animal testing) International operations and human rights Indigenous peoples’ rights Community Relations

Social and Ethical Reporting/Auditing: Development of CSR Reporting and Auditing Standards Global Reporting Initiative (GRI) AccountAbility (AA 1000) ISO CSR Standards 72 percent of world’s largest companies issue non-financial reports (Social Funds, 2004).

From text chapter 2 and 3Corporate social responsibility-emphasizes obligation, accountabilityCorporate social responsiveness-emphasizes action, activityCorporate social performance emphasizes outcomes, results.

Historical perspective on csr: smith’s invisible hand, the classical view that held that a society could best determine its needs and wants through the marketplace, transforms self-interest into societal interest. It did not cause business to act ethically and fairly. Then came the legal model: see the business criticism/social response model.

Modification of the economic model: modification of the classical model was seen in practice in at least 3 areas: philanthropy , community obligations (CP rail and YMCA) and paternalism (company town).

Page 19: Chapter 1 Ethics Morality Business Ethics moral …s3.amazonaws.com/prealliance_oneclass_sample/AE4J6b48DB.pdfChapter 1 1. Definitions Ethics is the study of morality.When we are studying

Advantage of how business used the idea of the generous corporation: gain support from local and national governments, helped to achieve in north America a social stability that was unknown in Europe at the time, to keep government at arm’s length.

CSR: evolving viewpoints: Two aspects of social responsibility: protecting and improving.

Carrol’s four point definition of CSR:Focuses on the types of social responsibilities that businesses might have:Encompasses the economic, legal, ethical and discretionary (philanthropic) expectations that society has of organizations at a given point in time. This attempts to place economic and legal expectations of business in context by relating them to more socially oriented concerns. These include ethical responsibilities, philanthropic.

See understanding the 4 components on page 19 b

Legal responsibilities: the law is inadequate for 3 reasons: can’t possible address all topics, new ones always emerge. 2nd law lags behind more recent concepts of what is appropriate behavior. 3rd. laws are made by lawmakers and may be political and personal. Ethics often become the driving force of laws.

Corporate Social responsiveness:Ackerman and Bauer’s Action View: business can’t just decide, they have to do! They have to accept and internalize the obligation.

Sethi’s 3 stage schema for classifying corporate behavior in responding to social needs: social obligation, social responsibility and social responsiveness.

Frederick’s CSR1, CSR2, CSR31 is corporate social responsibility2 is corporate social responsiveness3 is CS rectitude

Epstein’s process view; corporate social policy process: emphasizes the process aspect.

Carroll’s social performance model: see page 20aThe models major use to academics is to help systemize the important concepts and to clarify. The model can help managers think systematically through the major stakeholder issues. Can be used as a planning tool. River blindness drug.

Wartick and Cochran’s CSP extensions: extended the social performance mode. Talked about social issues management. Useful because they help us to appreciate the complementary aspects that were neglected in the original model,

Benefits of being Good corporate citizens:Improve employee relations, recruitment, retention, loyalty, motivationImproved customer relations, loyalty, tiebreaker for purchasing, brand imageImproved business performance: bottom line, competitive advantageImproved marketing efforts, positive image, reputation, prestige pricing, government affairs activities are enhanced. See chart: Relationships among corporate social performance, page 20 c.

3 perspectives on social performance and financial performance:

Page 20: Chapter 1 Ethics Morality Business Ethics moral …s3.amazonaws.com/prealliance_oneclass_sample/AE4J6b48DB.pdfChapter 1 1. Definitions Ethics is the study of morality.When we are studying

1. socially responsible firms are more financially profitable2. financial performance is a driver of its social performanceAn interactive relationship among social performance, financial performance and corporate reputation.

Chapter 3 Stakeholder approach

A stake is an interest or a share in an undertaking. See types of stakes page 20 dA stakeholder is someone that has one or more of the types of stakes in a business.

Who are business’s stakeholders: Production> managerial> Stakeholder views see page 20 eStakeholder view page 20fIn the stakeholder view of the firm, management must perceive its stakeholders as not only those groups that management think have a stake but also the ones that themselves think have one.

Primary social stakeholders: shareholders and investors, ees and managers, customers, local communities, suppliers and other business partnersSecondary social stakeholders: gov and regulators, civic institutions, social pressure groups, media and academic commentators, trade bodies, competitors. Primary nonsocial stakeholders: the natural environment, future generations, nonhuman speciesSecondary nonsocial stakeholders: environmental pressure groups, animal welfare groups.

Core stakeholders: specific subset of strategic stakeholders essential to the survival of the firm.Strategic stakeholders; vitalEnvironmental: not core or strategic.

Legitimacy, power, urgency: stakeholder attributes. See page 21 a.Legitimacy refers to the perceived validity of a stakeholders claim to a stake (can be from a formal, explicit and direct relationship).Power refers to the ability or capacity to produce an effect to get something done that might otherwise not be done. (Peta).Urgency: refers to the degree to which the stakeholder claim on the business calls for the business’s immediate attention.

Strategic, multifiduciary and synthesis views: is it about managing stakeholders or treating stakeholders better? Goodpaster says the strategic approach views stakeholders primarily as factors to be taken into consideration and managed while pursuing profits. Multifiduciary approach says it has a shared responsibility to stakeholders on roughly equal footing as shareholders. Goodpaster says neither of these. Instead he recommends that businesses take a stakeholder synthesis approach that holds that firms have a moral responsibility to stakeholders but they should not be seen as part of fiduciary obligations. The ethical responsibility to these are not to harm, cheat, steal, lie or coerce.

Three values of the stakeholder model (Donaldson and Preston): descriptive (provides language for), instrumental (establishes connections between the practices of CSR and meeting corporate goals) and normative aspects stakeholders seen as possessing value irrespective of their instrumental use to management). Often thought of as the moral or ethical view because it emphasizes how stakeholders should be regarded. The theory is also managerial in that it recommends attitudes, structures and practices that constitute stakeholder management.

Key questions in stakeholder management:1. who are our stakeholders2. what are their stakes3. what opportunities and challenges do they present to our firm

Page 21: Chapter 1 Ethics Morality Business Ethics moral …s3.amazonaws.com/prealliance_oneclass_sample/AE4J6b48DB.pdfChapter 1 1. Definitions Ethics is the study of morality.When we are studying

4. what responsibilities: economic , legal, ethical, and philanthropic does the firm have to them.5. what strategies or actions should the firm take to best handle stakeholder challenges and opportunities.

Who are they: see page 21b. see also page 21c for factors affecting potential for stakeholder threats.See page 21 d for matrix and 21 e for diagnostic.

Stakeholder management capability: extent to which the organization does effective stakeholder managementLevel 1 Rational level: low level of SMC. Identifies sh and what their stakes are. Stakeholder maps, nature, power and urgency are identified.Level 2 process level: develop and implement org processes (approaches, procedures, policies, practices). By which the firm may scan the environment, make approaches for crisis management.Level 3: Transactional Level: takes initiative in meeting stakeholders at the communication level, communication proactiveness, interactiveness, genuineness, satisfaction and resource adequacy.

Four gates of engagement to assess commitment level:Awareness, knowledge, admiration, action.

Principles of stakeholder management: see page 22 a

Page 479-493: Workplace issues:Freedom of expression and whistle blowing

Employee Obligations Chapter 16 and 171. Employee Obligations:

Conflicts of Interest: Greed Bribes/Gifts Insider Trading Fraud Whistleblowing

2. Clarification of Concepts: What’s the difference, if any, between: acting out of greed acting out of selfishness acting out of self-interest acting out of enlightened self-interest

Does a company have to maximize profit? Or is a ‘reasonable’ profit acceptable?

3. When is a Gift a Bribe? Value of the gift (will it influence one’s decisions) Purpose of the gift (intended to influence) Circumstances of the gift (done openly, to celebrate event) Position of the recipient Accepted business practice Company’s policy Law

4. Insider Trading: Definition: Buying or selling shares on the basis of price sensitive information which has not been disclosed to the public. Insider trading is illegal, but is it unethical? How do you feel about the actions of Martha Stewart?

Insider TradingEthical:

everyone does it (relativism) price reflects true underlying value of the stock (utility)

Page 22: Chapter 1 Ethics Morality Business Ethics moral …s3.amazonaws.com/prealliance_oneclass_sample/AE4J6b48DB.pdfChapter 1 1. Definitions Ethics is the study of morality.When we are studying

no unfair advantage over anyone (justice) doesn’t harm anyone (utility)

Unethical: against the law (citizenship) information used does not belong to insider trader but to shareholders (rights) information is unfair or unjust (justice) it is harmful to market (utility)

Theft: padding expense accounts, theft of supplies (e.g., pens, paper, staplers, scotch tape, memory keys) use of company resources for personal use (e.g., long distance phone, fax, photocopier), Question: Does your firm owe you anything in addition to your salary?

Fraud/Red Flags: living beyond means depressed unrealistic goals uncharacteristic request for raises second job personal financial loss/debts addiction problems personal relationship problems agitated

Fraud Proofing: Reactive: control/audit mechanisms (random checks, hotlines)Proactive: diagnostics (surveys, interviews), hiring practices (reference checks, integrity testing)value systems (codes, training).

Whistle-blowing: Definition: An individual who reports to some outside party [e.g., media, government agency] some wrongdoing [illegal or unethical act] that he or she knows or suspects his or her employer of committing. The Average Whistle-blower: Who is the average whistleblower? A 47-year old family man who has been a conscientious employee for seven years and who has a strong belief in universal moral principles.

Whistle blowing Options:Upon witnessing misconduct one can:

a) Accept;b) Quit;c) Sabotage; ord) Blow the whistle:

internal (manager, legal, human resources, audit, security, ombudsperson, ethics office);

external (government regulator, police, media, special interest group)

Legal Context: U.S.: Federal and state general whistle-blowing statutes: False Claims Act (whistleblowers involving misconduct by government contractors can receive

25-30% of judgment, 1986)Sarbanes-Oxley Act (public companies must set up hotlines, ensure protections against retaliation for whistle-blowing, 2002.

Legal Context: Canada: In Canada, other than New Brunswick, little regulatory protection existed for whistleblowers other than for environmental protection legislation or occupational and health and safety legislation

Some additional protections for unionized employees (under their collective agreements); employees under the Canada Labour Code, and other employees under the common law (e.g., wrongful dismissal)

Page 23: Chapter 1 Ethics Morality Business Ethics moral …s3.amazonaws.com/prealliance_oneclass_sample/AE4J6b48DB.pdfChapter 1 1. Definitions Ethics is the study of morality.When we are studying

However, new corporate employee whistle-blowing channels and protections now exist (Amendments to Canada’s Criminal Code in 2005)

Ethical Issues: Moral Standards: core values (honesty, integrity, loyalty); relativism; egoism; utilitarianism (cost/benefit);

Kantianism (motive), rights and duties; justice (fairness) Resulting Conflicts:

legal contractual obligations vs. moral obligations loyalty vs. snitching employee’s right to free speech vs. rights of others (employer, other employees, shareholders) reprisals vs. doing the right thing

External Whistle-blowing: Morally Permissible? Wrong is serious enough (e.g., physical or financial harm) to justify injuries caused to oneself and

one’s family Reasonable attempts to prevent the wrong have failed (e.g., internal whistle-blowing starting with

supervisor up to board of directors) Proper intent (not out of revenge) Clear evidence organization is engaged in wrongful activity

External Whistle-blowing: Morally Obligatory? Based on employee’s professional responsibilities No one else can prevent the wrong

How to Blow the Whistle: exhaust all internal channels; confirm family support; contact a lawyer; find another job first; anonymous if possible; document everything; and find others to come forward with you.

How to reduce the need to whistleblow for employers:1. Assure ees that the org will not interfere with their basic political freedoms.2. streamline grievance procedures.3. review org idea of social responsibility and make it more than charitable giving.4. recognize and communicate respect for individual consciences.5. realize dealing harshly with whistleblowers affects public image.6. Ombudsman7. allow whistleblowers to report anonomysly8. listen to point of view9. delve into the issue to see legitimacy10. look for solutions that are good for the company and the objector11. attempt to establish an equitable means of judging future actions.12. have a whistleblowing policy and shout it from the rooftops.

Mid-Term Class Review: (I) Theoretical Frameworks

Page 24: Chapter 1 Ethics Morality Business Ethics moral …s3.amazonaws.com/prealliance_oneclass_sample/AE4J6b48DB.pdfChapter 1 1. Definitions Ethics is the study of morality.When we are studying

What is Ethics? (Law/Religion/Etiquette vs. Ethics) Who Is a Stakeholder? Moral Standards

(1) Core Values; (2) Relativism; (3) Egoism; (4) Utilitarianism; (5) Kantianism; (6) Rights; (7) Justice

Corporate Social Responsibility Friedman versus the Body Shop

Cases: IBM, Merck and River blindness, Union Carbide, Malden Mills, The Body Shop, Martha Stewart, The Whistleblower at Canadian Marconi

(II) Practical Application: Employees’ Obligations

Multiple choice (best answer): Which aspect of the Kantian moral standard most clearly supports never cheating?

(a) Reversibility; (b) Respect; (c) Universalizability; (d) Motive; (e) None of the above.

Fill in the blanks: Identify four stakeholders from the RU486 case. Short Answer: What is the difference between psychological egoism and ethical egoism?Short Essay: Would Milton Friedman approve of IBM working for the Nazis?

From text: Privacy in the workplace:

Canada has privacy act and pipeda personal information protection and electronic documents act.Pipeda: need consent, use info only for purposes you have consent for, even with consent you have to limit what is collected, used for appropriate, reasonable purposes. Individuals have the right to see what is collected about them and correct inaccuracies. You have to tell the ee:That the company is seeking the info, reason for its collection, who will see it, nature of controls protecting it.

See page 22b for principles.Big thing is only collect what is necessary and only use it for what was intended.