Ethics - 1

Key Definitions

Moral:“relating to principles of right

and wrong” Ethics: “the discipline of dealing with

what is good and bad and with moral duty and obligation”

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Study of Ethics

Process of determining what is and is not a reasonable standard of moral conduct.

Process of problem-solving to resolve situations in which there is actual or potential harm to an individual or group.

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BUSINESS ETHICS

The study of morality as applied to business

Aims at developing reasonable moral standards for business conduct

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STAGES OF MORAL DEVELOPMENT

Lawrence Kohlberg

Preconventional – Self1. Obey or Pay2. Self-Satisfaction

Conventional – Group3. Group Approval 4. Law and Order

Postconventional – Universe 5. Standards of Society 6. Logical Moral Principles

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BUSINESS ETHICSLevels of Analysis

Individual– Role of individual– Impact on individual

Organizational– Impact of organization– Decisions, policies, structures

Systemic– Social systems– Economic and political institutions

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Stakeholder Analysis

Any individual, group or item that can affect or is affected by an organization’s decisions.

FirmInvestors

Competitors

Employees

Media

Labor Unions

Government

Suppliers

Environmentalists

CreditorsFinancial

Community

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APPROACHES TO MORAL REASONING

Utilitarianism– Examines net welfare produced for all

stakeholders

Rights– Emphasizes rights and duties of stakeholders

Justice– Focuses on fair processes and equitable

distribution of the benefits and burdens imposed by an action or policy on stakeholders

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UTILIARIANISM CRITERIA

“Greatest Good for the Greatest Number”

1. Identify alternatives

2. Determine costs and benefits of each alternative for each primary stakeholder

3. Select alternative that produces greatest net good for greatest number of stakeholders

Which one do I choose???

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RIGHTS APPROACH

“Action is correct if it respects the rights of stakeholders affected by the action”

Moral entitlements by virtue of being human

Rights independent of being members of social institutions

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RIGHTS APPROACHMoral Duties

Duty Not to Interfere

Duty to Protect Rights

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JUSTICE APPROACH

Equal Treatment– Stakeholders treated the same except when

they differ in relevant ways

Consistent Administration of Rules– Policies and procedures, job descriptions, salary

negotiations should be administered fairly and evenhandedly

Restitution– People should be accountable for injustices they

commit except for those which are uncontrollable

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LOGICAL APPROACHMoral Decision Making

What are the facts? What are the ethical issues? Who are the primary stakeholders? What are the alternatives? What are the practical constraints? What actions should be taken?

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MISCONCEPTIONS ABOUT BUSINESS ETHICS

Business ethics = an oxymoron

Proper ethical analysis = clear cut solutions

Ethics = Legal compliance

Ethical analysis = an “ivory tower” approach

Good ethics = good “business”