Business Ethics Final

Practical Imperative

"One must be able to will that a maxim of our action should become a universal law" Act so that you use humanity as much in your own person as in the person of every other, always at the same time as end and never merely as means Every being has to judge their actions not on the effects of their point of view, but every other point of view

10. Can a man be called "happy" during his lifetime?

-Aristotle does not agree that we need to wait until the end of a person's life to decide if he's been happy or not. -Large reverses in fortune can bash a person's overall happiness, but "Atruly good and prudent person" will do the best he can regardless of his fortune. (take a long time to recover after a catastrophic event) -If a person lives a complete live in accordance with virtue and comes to his death in a reasonable way, he's considered happy or blessed.

1.The good as the aim of action

-Every human action aims at some good -Difference in the end at which they aim -the activity -some product beyond the activity (the product is naturally superior to the activity)

4. Happiness is the good, but many views are held about it.

-Everyone agrees that the highest Good is happiness, but people disagree over what constitutes happiness, whether it is pleasure, honor, health, wealth, or something else. (a greater good from which all the other goods flow.) -The idea of first principles We have to begin with the things known to us, and that it's best if we've been brought up from an early age to understand things that are just and noble. This way, we grasp these principles without needing to question them further, since they are part of our "habits." But if we haven't been brought up in this manner, we only need to listen to "one who speaks well".

2.Politics as the master science of the good

-Highest good: the good which is chosen for its own sake rather than as means to an end."Highest good belongs to the most sovereign and most comprehensive master science and politics..." -"The end of politics is the good for man" The study of the Good is part of political science, because politics concerns itself with securing the highest ends for human life The highest good is the good which is chosen for its own sake rather than as means to an end.It would be whatever that governs all knowledge and provides a way of thinking about all things. Politics is one of these science. It is the overriding category of knowledge that rules everything: it determines what citizens must and must not do, and it decides what people have to learn and do. It encompasses all the other noble arts, including things like generalship and household management. Since the ends of the political art include the ends of these other communal roles, it must be the highest human good.

8. Relations between Mean and Extreme States

-In some cases the deficiency, in others the excess, is more opposed to the intermediate condition -Sometimes one extreme is closer and more similar to the intermediate condition. -We have some natural tendency to one extreme more than to the other Eg.bravery, rashness, cowardice Eg.we have more tendency to pleasure, so intemperance is more contrary to temperance, since it is the excess of pleasure

5. Various views on the highest good

-Three types of lives: a life of pleasure, political and contemplative Common people: aim pleasurePolitical: aim honor But... honor is too dependent on others' opinions to be the true goodEven virtue itself cannot be the true good, since a virtuous person could still be "asleep or inactive throughout his life," or suffer misfortune.

Physical Welfare

A living wage is sufficient for physical welfare in a capitalist society ́Justification for Characteristic 4: meaningful work provides a wage sufficient for physical welfare

2. Habituation

A.Actions should accord with the correct reason. B.Both excessive and deficient exercise ruin bodily strength. a.Mean Our purpose is not to know what virtue is, but to become good. Eg.too much or too little eating ruins health.

5. Virtue of Character: Its Genus

A.Is virtue one of these - feelings, capacities, and states? B.The virtues are neither feelings nor capacities, the remaining possibility is that they are states. We are neither praised nor blamed insofar as we have feelings. Eg.angry We are neither called good nor called bad insofar as we are simply capable of feelings.

4. Virtuous Actions versus Virtuous Character

A.We do just or temperate actions, we are thereby just or temperate. B.Actions are not enough. a.He must know [that he is doing virtuous actions] b.He must decide on them, and decide on them for themselves - B. the agent must also be in the right state when he does them. c.He must also do them from a firm and unchanging state C.A person comes to be just from doing just actions and temperate from doing temperate actions; for no one has the least prospect of becoming good from failing to do them.

categorical imperatives **

Act only in such a way that you can also will that your maxim become a universal law Maxim - how you strip out the consequences and look at the actions itself False promising is good because Say you'll pay someone back in a week and don't- why is it impossible for that action to pass this test → if everyone lies about everything then it will lose its meaning Stealing - in stealing something you want that to be yours but at the same time if you let people steal whenever they want they can take whatever they want from you at any time Act in such a way that you treat human beings as ends in themselves, not merely as means Example a waiter, any service type job like electrician - see them purely as a mean you can be mean to them → use waiter for food People see women as objects and are objectified Brings out concepts of respect and dignity *not as important* Treat the will of every rational being as a will giving universal law Autonomy - every person should be able to decide for themselves how to live if they act in a way to where they are forced to do so it is not a moral decision

Concept of duty

Acting from duty - means doing something because you think its the right thing to do - not that you are getting something out of it. Actings in accordance with duty - doing the right thing but also because it helps (shopkeeper ex) He;s not saying go ahead and do whatever you want as long as you do well/ have good intentions. He's thinking the moral action - he wants everyone to do

The agency model's flaws:

Agency thoery is at odds with corporate law:legally, shareholders do not have the rights of "owners" of the corporation, and managers are not shareholder's agents From a legal perspective, shareholders are beneficiaries of the corporation's activities, but they do not have "dominion" over a piece of property. They do not own shares Shareholders are not owenrs of the corporation in any traditional sense of the term, nor do they have owners' traditional incentives to exercise care in managing it Some 70% of shares in US listed companies today are held by mutual funds, pension funds, insurance companies, and other institutional investors, which manage them on behalf of beneficiaries such as households, pensioners, policy holders, and governments The porfess Shareholders are not accountable as owners for the company's activities, nor do they have the responsibilities that officiers and directions do to protect the company's interest Shareholders bear no such responsibility. Under the doctrine of limited liability, they cannot be held personally liable for the corporation's debts or for corporate acts and omissions that result in injury to others. Giving shareholders the rights of ownership The theory's doctrine of alignment spreads moral hazard throughout a company and narrows management's field of vision When the interests of successive layers of management are aligned with shareholders int he manner of agency primacy theory, The theory's assumption of shareholder uniformity is contraty to fact: shareholders do not have the same objectives and cannot be treated as a single "owner" Shareholder have differing investment objectives

Corporate Citizenship:

Corporation has a rightful place in society Limited states that a good citizen can or does give back to society that it is located in but it does so voluntarily Equivalent Extended has responsibility to act in accordance with law and moral expectations in doing so it attributes rights to a company → company has responsibilities & rights (social, civil, and political- relations with government and environment have a voice) Dixie Manufacturing Information: paper waste, water waste production, customer service - quality, etc.

Problems with stakeholder approach

Different groups have different interests - you can't make everyone happy Question priorities of one group over another → image issue Can lead to ignoring minority groups Environmental issues - aren't usually urgent and don't have a lot of powe

Consequences, Rights & Character - freeman

Dominant model = best outcome for all○ Relates back to Adam Smith ● It is still working with our individual interests with the new model ○ Our interests are joint ○ If we make decisions that hurt other groups, we all fail ● Executives must think about how their decisions a ect the rights of their stakeholders ○ What is owed to them● Considering the executive vision ○ "What kind of company do they want to create and build?" ○ Put themselves into the shoes of their stakeholders

Benefits of Stakeholder approach:

Efficiency - lack of opposition Trust, support of public Reputation in community Happier workers Access to infrastructure, etc. Long term sustainability Strong Relationship with suppliers and buyers

Ethical Values - Honesty

HONESTY -HONOR COMMITMENTS AND PROMISES THAT MARKETERS DELIVER -OFFER THE SERVICE OR PRODUCT THAT MARKETERS PROMOTE -STAND BEHIND THE PRODUCT OR SERVICE IF IT FAILS TO DELIVER

AMA

IN THE PREAMBLE THE AMA TALKS ABOUT HOW THEY ARE COMMITTED TO PROMOTING THE HIGHEST ETHICAL NORMS AND VALUES. NORMS ARE "STANDARDS OF CONDUCT" VALUES "COLLECTIVE CONCEPTION" OF WHAT SOCIETY AS A WHOLE DEEMS TO BE "DESIRABLE" AND "PROPER" VALUES ARE A BENCHMARK FOR OUR OWN ACTIONS WRAP IT UP BY STATING MARKETERS HAVE A DUTY TO UPHOLD THE ETHICAL NORMS AND VALUES BECAUSE THEY HAVE RESPONSIBILITIES AND OBLIGATIONS TOWARDS MANY STOCKHOLDERS LIKE INVESTORS EMPLOYEES CUSTOMERS ETC. AMA members must be active in their organizations, maintaining the ethical standards highlighted. Companies should not just be taking part in these standards for the benefits but because it is the right thing to do.

Problematic and Assertoric Hypothetical Imperatives

If the imperative is directed towards a possible purpose that has a preference or can be attained by a skill, it is referred to as a problematic hypothetical imperative Example: Practicing more to get better at playing the piano If the imperative is directed towards an end which everybody recognizes as good then it is an assertoric hypothetical imperative. Any individual can give their method on the best way to reach the goal. Example: If someone wants to be happy, they can travel more/spend time with loved ones

Ethical Values - Responsibility

RESPONSIBILITY - GEARED TOWARD RESPONSIBILITY TO STAKEHOLDERS -STRIVE TO SERVE THE NEEDS OF CONSUMERS -RESPONSIBILITY TO LOOK AFTER MARGINALIZED STAKEHOLDERS SUCH AS CHILDREN, ELDERLY, OR THE IMPOVERISHED -DUTY TO CONSIDER THE ENVIRONMENT IN THEIR MARKETING DECISIONS -ACKNOWLEDGE SOCIAL OBLIGATION THAT COMES WITH INCREASED MARKETING POWER

Agency Theory

Shareholder centric approach Problem is that it doesn't have full accountability - no legal duties to protect the company and do not need to consider or view the affect of their actions on corporations, society, etc. Proposes managers, executives, or directors are responsible for acting on the interests and desires of the shareholders expected to execute the decisions made and preferred had by shareholders.

there is no single shareholder value

Shareholder primacy theory makes the mistake of viewing shareholder's from a singular perspective ○ Shareholders of a company ultimately have different desires■ Some are holding for quick profits, some are holding for long term gains, some are speculators, etc. ○ This means that serving one shareholder's interests might hurt another's ○ Lastly, many shareholders also are invested in other company's so the practices of one stock might severely negatively impact the rest of a shareholder's portfolio ■ Example can be seen in BP's effects on other oil companies and companies operating in the Gulf

The two ways business can contribute to society is by putting shareholders or stakeholders first

Shareholders ● Investors have a large part in economic activities and profits ● Long-term relationships with investors leads to product innovations, highly valued products and more employment opportunities ● Both Friedman and Rodgers believe this will increase people's living standards

Five Step Job Screening Process by:Collins

Step 1: Set legal ground rules ●Make sure that information gathered does not discriminate against candidates ●Respect all laws and regulations concerning recruitment Step 2: Seek behavioral information ●Conduct background checks, integrity tests, and review other info provided Step 3: Determine personality traits ●Conduct Workplace Productivity Profile tests ●Evaluate organizational citizenship behavior traits Step 4: Conduct interview ●Interview candidates regarding ethics from previous jobs ●Ask candidate about their response to potential ethical dilemmas Step 5: Conduct other tests ●Alcohol and drug tests. Final integrity tests

Socially responsible business

That responsibility is to conduct the business in accordance with their desires, which generally will be to make as much money as possible while conforming to their basic rules of the society, both those embodied in law and those embodied in ethical custom. A group of persons might establish a corporation for an eleemosynary purpose--for example, a hospital or a school. The manager of such a corporation will not have money profit as his objectives but the rendering of certain services.

Categorical Imperatives

The categorical imperative is based on something that is an end in itself - an end that is a means only to itself and not to some other need. (Y will happen) "The categorical imperative would be that one which represented an action as objectively necessary for itself, without any reference to another end." (31)

Hypothetical Imperatives

The means of achieving something else that is willed. If I do X, Y will happen. It can be a means to a possible or actual purpose. Hypothetical imperatives are also broken down into two more categories: problematic and assertoric hypothetical imperatives. Hypothetical imperatives "represent the practical necessity of a possible action as a means to attain something else which one wills (or which it is possible that one might will)" (31) Example: If you want to learn how to play the piano, you should practice.

lynn stout's theory- stout

The purpose of Lynn Stout's article was to discuss how the traditional view, regarding managerial focus on shareholder interest, can be harmful for both the corporation and for the shareholders themselves. lynn stout instead suggests that it is advisable for managers to focus on several objectives rather than just shareholder's interest

Archie Carroll's Pyramid of CSR

The role of business is to produce goods and services and to make an acceptable profit in the process Businesses must obey the law as part of the social contract between business and society Must follow ethical expectations of society that are not within the law Responsible to be a good corporate citizen and engage in activities that promote human welfare and goodwill

Whistle Blowing

Whistle Blowing - When current/former employees disclose illegal/immoral organizational activities. Enron/WorldCom ●Can be advantageous for companies in the long run. ○Getting rid of wrongdoing ○Establishing a new and ethically sound culture ●At times seen as unethical behavior on the part of the whistleblowing employee ○Whistleblowing can be considered as the ultimate form of loyalty toward a corporation ○Allows the company to move past any wrongdoing, admit fault, and make actionable steps toward a culture that promotes honesty and ethically sound behavior

Put profits first (TJ Rodgers)

hile a company that provides a good return to small investors-who simply put their money into their own retirement funds or a children's college fund-is somehow selfish?" ● Rodgers, the CEO of Cypress Semiconductor (a design & manufacturing company), believed stakeholders should be allowed to control property of the shareholders ○ Ex. Cut the cost of a transistor from $3 (1960) to $0.000003 (today) ● He believes increasing shareholders' value will eventually help the society. Company should increase profits and then multiply by reinvesting. ● He disagrees with Mackey and prefers to be a free market capitalist rather than a collectivist who cares about social means

Totalitarianism

how much utility it provides how happy you can provide - the affects of your actions - the greatest good for the greatest amount of people

good will

it is good in itself some examples - some smart people are dictators, you can be disciplined but be a hit man, you can be a kind slave owner. A person does not necessarily doing good in themselves. It is identified through intention which is greater than the consequence. Why you are doing something rather than not the outcome.

Laissez Faire Capitalism - freeman

"'Maximizing value for stockholders regardless of the consequences to others' is one that has outlived its usefulness" ● Economic theory by Adam Smith ● "Hands o approach" ● Acting with self-interest in mind ● No government interference ● Self-regulating ● Freeman believes this model is a myth ○ Very specialized conditions● This could be seen as a way that "business should operate, despite how actual businesses have evolved"

Stakeholders - freeman

"A stakeholder is any group or individual that can a ect or be a ected by the realization of an organization's purpose" ● Although not all stakeholders are shareholders, they all still matter in order to have a functioning business ● Employees & Suppliers: rely on wages in order to support their families and themselves ● Customers: rely on the goods or services that the business provides (especially in advertising) ● Communities: rely on the stimulation of their economies

Managing for Stakeholders: A Theory for Management & Business - freeman

"Business is about how customers, suppliers, employees, financiers (stockholders, bondholders, banks, etc.), communities and managers interact and create value." ● Business is made up of more than just the shareholders ○ These are groups of people who come together and create value ● Each group a ects the other ● Unlike Friedman, Freeman believes that "the executive's job is to manage and shape these relationships"

philanthropy - john mackey

"Certain amount of corporate philanthropy is simply good business and works for the long-term benefit of the investors ... In my experience, most investors understand that it can be beneficial to both the corporation and to the larger society." ● Example: Whole Foods holds five 5% days throughout the year where they donate 5% of total sales to a nonprofit organization ○ A marketing strategy that benefits Whole Foods investors ● If shareholders have an issue with company's philanthropy business, they can sell their investment ● Adam Smith's The Theory of Moral Sentiments explains how human nature is more than self-interest ○ As people grow they begin to care for others & find joy in seeing others flourishing

Putting Customers Ahead of Investors ( John Mackey)

"I believe that the enlightened corporation should try to create value for all of its constituencies. From an investor's perspective, the purpose of the business is to maximize profits. But that's not the purpose for other stakeholders - for customers, employees, supplies, and the community." ● Successful businesses put customers before investors ● Customer happiness is the key to maximizing profits ● Company leadership must develop solutions that continually works for ALL stakeholders and the common goal ● Free market economy supporter

Making Philanthropy Out of Obscenity (Milton Friedman)

"Maximizing the profits in an end from the private point of view; it is a means from the social point of view. A system based on private property and free markets is a sophisticated means of enabling people to cooperate in their economic activities without compulsion ..." ● Friedman believed Whole Foods had no special competence in deciding how charity should be distributed ● Social responsibility of business is to increase its profits ● Companies should stay within the rules of the game and operate to maximize long-term shareholder value

The Integration Thesis & The Responsibility Principle - freeman

"Most business decisions, or sentences about business have some ethical content, or implicit ethical view. Most ethical decisions, or sentences about ethics have some business content or implicit view about business." ● Ethics has to do with the rules we use to coexist and interact with other people ○ Gives people perspective and prompts them to make reasonable decisions ● Need to redefine the business process○ The Responsibility Principle: "Most people, most of the time, want to, actually do, and should accept responsibility for the e ects of their actions on others."

The Pragmatist's Approach

"Pragmatists want to know how we can live better, how we can create both ourselves and our communities in way where values such as freedom and solidarity are present in our everyday lives to the maximal extent." ● Freeman wants us to consider our actions and decisions ○ Decency and perspective● We need to integrate this way of thinking into our lives to create better businesses, "better selves, and better communities"

What is "managing for stakeholders"? - freeman

"The basic idea is that businesses, and the executives who manage them, actually do and should create value for customers, suppliers, employees, communities, and financiers (or shareholders). " ● Creating shared value for everyone, not just financiers/shareholders ○ Own stocks or have a share of the company Contrasts "the dominant model"○ Business exists for the sole purpose of providing value for the shareholder

7. Happiness and Theoretical Study

-Happiness is activities in accord with virtue ( the best virtue). The most divine element in human is understanding. -The object of understanding is knowledge -The activity of study can bring happiness -The most continuous activity -Pleasure must be mixed into happiness -Wisdom is the most pleasant of the activities in accord with virtue -The most self-sufficient -Being liked because itself alone -Happiness seems to be found in leisure -Study aims at no end apart from itself and has its own proper pleasure -All features ascribed to the blessed person are features of study -For what's proper to each thing's nature is supremely best and most pleasant for it, and hence for a human being the life in accord with understanding will be supremely best and most pleasant.

6. Conditions for Happiness

-Recap: Happiness is an activity, not a state. -Happiness is choiceworthyin its own right. -Pleasant amusement is not happiness: Neglect of our bodies and possessions -People in supreme power spend their leisure in amusements -"For virtue and understanding, the sources of excellent activities, do not depend on holding supreme power." -Amusement is bodily pleasure -Different things appear honorable to different people. Real happiness is what's honorable and pleasant for the most excellent person. (Excellent people do activities in accord with virtue) -Happiness is character of actions in accord with virtue -Amusement is not the end

9. How Can We Reach the Mean?

-Steer clear of the more contrary extreme. "Hold the ship outside the spray and surge". -Take the lesser of the evils -Know our own tendencies from the pleasure or pain that arises in us. -Beware above all of pleasure and its sources We must sometimes incline toward the excess, sometimes toward the deficiency; for that is the easiest way to hit the intermediate and good condition. We must drag ourselves off in the contrary direction It is difficult to reach the intermediate condition, so we are not blamed if we deviate a little in excess or deficiency from doing well, but only if we deviate a long way.

7. The good is final and self-sufficient; happiness is defined

-The "better" good is something that is complete, something that's good in itself, without the need to refer to something else."The highest good must be something final... if there is only one final end, this will be the good we are seeking; if there are several, it will be the most final and perfect of them." -The most complete good — happinessHappiness is a complete end in itself, it is self-sufficient, and people choose most of the things because they are actually seeking happiness

9. From Ethics to Politics (Moral Education)

-The aim of study is action -Arguments have influence on civilized ones among young people but fail to turn most people toward fine and good. -Naturally obey fear is normal -Fear is a habit -Arguments cannot change habits. Teaching don't prevail on everyone but the soul of the student needs to have been prepared -For someone to be trained correctly for virtue needs to be brought up under correct laws -Legislators must urge people toward virtue -Education adapt to individual is better than common education for everyone -People who have valuable experience and wish to take care of others should learn legislative science. -Good legislators learn from past experiences -Some who advertise that they teach politics don't practice by themselves -Political activities participate -Collect different political systems and found what preserve or destroy cities. -Study what causes some cities to conduct politics well and some badly -Learn everything clearly before determining what habits and laws a city should follow.

8. Theoretical Study and Other Virtues

-The life in accord with the other kind of virtue is in a secondary way. -Other virtues require external supplies. The greater the actions, the more external goods needed -Study don't require any supply. External things may even distract from focus -Animals cannot have happiness because they cannot study. Human can have happiness to an extent just as far as study extents. -Study requires some sort of external supplies (health body, food and services), but people should not rely on external stuff and act on virtue based on what they have.

What is happiness? How to define it? Fist define human function...

-The work of humans: An active life associated with reason. Not just having reason, but also applying it through thought and action. -Further... Aristotle defines human work as "activity of the soul in accordance with reason"Human good has something to do with activity of the soul in accord with the most complete virtue. (should be wrapped in a 'complete life', not young or immature). In order to define it, Aristotle believes that we need to first define human function. It can't just be living—life associated with growth—since even plants do that. And it can't be sense perception, since all animals have that.

8. Popular views about happiness confirm our position

-Three classes of good things:(1) external goods; (2) goods of the soul; (3) goods of the body -Some truths... The goods of the soul are the best goods.A truly happy person "lives well, behave and acts well" (happiness is an activity) -Hiving a virtue does no good if we don't use it. (possess/acts on virtues) -Happiness requires external additionslike health, wealth, friends, and family because they help a virtuous person engage in virtuous actions. it makes a difference whether a person simply possesses virtuous characteristics or actually acts on them

Kohlberg's Cognitive Moral Development Theory

1.Authority/fear of punishment stage: ○Person defines right or wrong based on the obedience to rules from those in power 2.Self Interest Stage ○Action chosen that satisfies the person's self interest most 3.Expectations of Others ○Judgement made about right and wrong based on the expectations of significant others and peers 4.Rules and Laws Stage ○Individuals moral judgement is externally oriented and based on whether the action respects rules and policies 5.Principled ○Decisions based on ethical principles of right and wrong and consider good to society 6.Universal Ethical Principles Stage ○Individual determines whether an action is right or wrong based on universal principles that everyone should follow -Kohlberg found that individuals move through 6 stages of moral reasoning -Authority/Fear of Punishment: -For example, an employee in a corporation may not bribe a foreign official because they fear the consequences if their boss finds out -Self Interest: -This employee would bribe the foreign official if it would lead to an increase in personal income -Expectations of Others: -This employee may not bribe because their reputation will suffer, and may be fired if the bribe is discovered -Rules and Laws Stage: -Simple: bribe violates company conduct so they wouldn't go through with the bribe -Principled: -Wouldn't bribe because it violates local cultural norms -Universal Ethical Principles Stage: -Wouldn't bribe because bribes are considered universally wrong

Criticism of Kohlberg's Theory

1.People don't go through rigid hierarchy model that he believes 2.Data collection methods were self reported 3.Kohlberg only studied males so females may be different

2. Moral Judgement

1.Recognize the ethical implications 2.Understand how to deal with the dilemma (moral judgement) ●Three aspects of moral judgement: ○Cognitive Moral Development ○Idealism & Relativism ○Ethical Theories

deontology

A priori laws - a moral law derived purely from reason -ex) math & physics If you're acting morally its because you think it's the right thing to do rather than thinking you are going to get something out of it. Kant thinks we have both reason and inclination battling against each other.

6. Virtue of Character: Its Differentia

A.Having feelings at the right times, about the right things, toward the right people, for the right end, and in the right way, is the intermediate and best condition, and this is proper to virtue. B.Virtues admit of excess, deficiency, and an intermediate condition. Not every action or feeling admits of the mean. Virtues admit of excess, deficiency, and an intermediate condition.

3. The Importance of Pleasure and Pain

A.Virtue of character is about pleasures and pains. B.Virtues are concerned with actions and feelings. → Virtue is about pleasures and pains; the actions that are its sources also increase it or, if they are done badly, ruin it; and its activity is about the same actions as those that are its sources. Pleasure causes us to do base actions, and pain causes us to abstain from fine ones. Plato says the correct education is to find enjoyment or pain in the right things from early youth. But every feeling and every action implies pleasure or pain, hence, for this reason too, virtue is about pleasures and pains.

Ethical Values - fairness

Advertising a product without misleading or deception builds trust with customers and promotes yourself as a "fair" brand. It is frowned upon to price fix products, gouge prices, or predatory price products due to the unfairness it has on competitors and customers. Driving competitors out of business because of underselling is an unfair tactic that raises the barriers to enter a market. Price fixing and gouge pricing is unfair to customers as companies can make their products prices unreasonably high. As a company you intake important private information from customers, it is your duty to protect this information to build trust. We've seen breaches of information with companies like Facebook, American Express, and Ashley Madison. Information leaked from these companies led to massive news stories and bad publicity.

Shareholder Value and its disappointments - stout

By the end of the 20th century a large consensus was reached amongst businesses that corporations should be governed according to the shareholder primacy philosophy○ This is the idea that executives should manage according to what owners want them to do, and that owners generally want executives to generate a profit● However, recently, shareholder primacy theory is being largely questioned for the reason that this method hasn't worked for shareholders○ The evidence to support this is that businesses as a whole have been underperforming, investors are receiving their worst returns since the Great Depression, the average lifespan for Fortune 500 companies has decreased, and the number of publicly listed companies has dropped by 40%

Framework of virtue ethics 6 dimensions

Community As individuals, our identity only exists within a community The large focus put on competitions presumes that there is a lreadya degree of cooperation Excellence It is not enough to simply no wrong Role identity To work for a company is to accept a set of particular obligations and a certain standard of excellence and conscientiousness that is largely defined by the job itself The problem with this is that people in a business will often play multiple conflicting roles at once Integrity This is the key to aristotelian ethics as the lynchpin of all virtues and an anchor Judgment (phronesis( Aristotle thought that was judgment that was of great importance in ethics Good judgment was the product of a good up-bringing, a proper education, takes into account the particularly of the persons and circumstances involved Solomon believes that encouraging abstract ethical theory Community Excellence: virtue - you don't just expect people to not harm each other. It is not don't be a serial killer or liar - do no harm is not sufficient. More than "do no harm" Role Identity: attention to context, details. What is needed of me? Integrity: know when courage is needed over loyalty and vice versa Judgment: the ability to weigh contingent factors Holism: Harmony, see everything as part of the larger picture of living an ethical life

Ethical Values - Citizenship

Companies should strive to be ethical in regards to the environment. Being environmentally active is important in this day and age as global warming has become a highlighted talking point. Being seen as a company that actively participates in helping the environment can cause good publicity and higher rate of bringing in and retaining customers. It is not just the environmental companies should focus on improving. They should strive to improve the communities they are engaged in. In the recent case we studied with Barrick Gold Corporation, they were hated by the local community because of their inability to help a struggling community. Especially since the struggle was due in part to a mine they owned and operated in.

Ethical Norms

DO NO HARM -AVOID ANY HARMFUL ACTIONS OR OMISSIONS BY OBEYING ALL APPLICABLE LAWS AND ETHICAL CODES FOSTER TRUST IN THE MARKETING SYSTEM -DEALS WITH OPERATING IN AN HONEST MANNER AND NOT TRY TO DECEIVE PEOPLE -THEY WANT TO STRIVE FOR "GOOD FAITH AND FAIR DEALING" EMBRACE ETHICAL VALUES -EMBRACING THE ETHICAL VALUES THAT ARE TO BE LISTED IN THE COMING SLIDES WILL ENSURE AND AFFIRM INTEGRITY IN THE AMERICAN MARKETING SYSTEM AND ALLOW PROTECT CONSUMER CONFIDENCE.

Kant on Duty.

First, Kant distinguishes certain acts from being the purest form of "duty" he wishes to discuss. These are actions in conformity with duty, where human beings have no immediate inclination but nevertheless perform them due to another inclination. Kant writes "it is easy to distinguish whether the action in conformity with duty is done from duty or from a self-seeking aim. It is much harder to notice this difference where the action is in conformity with duty and the subject yet has besides this an immediate inclination to it. According to Kant, securing one's own happiness is a duty, for the lack of contentment with one's condition, in a crowd of many sorrows and amid unsatisfied needs, can easily become a great temptation to the violation of duties. "Duty is the necessity of an action from respect for the law." Kant believes only that which is connected with will merely as a ground, never as an effect, only what does not serve inclination but outweighs it, or at least wholly excludes it from the reckoning in a choice, hence only the mere law for itself, can be an object of respect and hence a command.

Profit centric business

Focus: Investors ● Profits will be shared among investors; the rich will only get richer and poor will get poorer ● Rodger's company follows this logic. They create more competitors and recognize employees. ● Distribution of wealth is limited as it is only shared among investors

Customer centric business

Focus: People ● The priority here is customers and their happiness ○ Ex: To provide organic food to consumers ● 5% donation will impact and make positive impression on stakeholders ● If people are able to believe in a company for the good corporate work they are doing, then consumers are more likely to purchase from that company. This will increase revenue. ● Organizations with focus on CSR have earned more profits ○ Rolex, Lego, Walt Disney, Adidas, Microsoft, etc.

Ethical Values - Respect

For a company to show its respect towards its customer base and potential customers they must make sure not to stereotype. Creating advertising campaigns that don't inappropriately depict gender, race, or sexual orientation is important. We've seen massive hatred towards companies when not abiding by this ethical code. H&M is an example, on multiple occasion they have taken a lot of heat when stereotyping in their advertisements, specifically among the african american community. Companies must make sure to listen to the wants and needs of customers. The customers must be given respect and have a voice that can impact a company's decisions. They must understand their stakeholders and make changes and improvements accordingly. Everyone within and outside the company (competitors and customers) must be treated with respect. Those within the company must be credited and appreciate with the hard work they do for the company.

Debunking the Shareholder Value Myth: Law

Friedman, according to Stout, mistakenly believes that shareholders own corporations when legally, "corporations are legal entities that own themselves" ○ Shareholders own shares (contracts which give legal rights) are on equal footing with bondholders, suppliers, employees, etc. ● Stout also critiques the residual claimants argument that states that shareholders are entitled to all profits after fixed contractual claims are paid ○ This is only true in cases of bankruptcy, when the company is healthy, legally the company itself is its own residual claimant ■ This means the company can choose to give the money to shareholders as a dividend or use it raise salaries, invest in R&D, or any other project The third legal error is that executives are shareholders' "agents" ○ Legally, a principal of an agent must have the right to control an agent's behavior Given that typically shareholders' powers are indirect and limited i.e. they can choose who can sit on the board, and they can sue for breach of fiduciary duty. It is usually difficult to remove an incumbent board member, and lawsuits are rarely successful unless there is a breach of loyalty (an executive steals from the firm) The business judgment rule ensures that, contrary to popular belief, the managers of public companies have no enforceable legal duty to maximize shareholder value ● In summation, legally, managers have no duty to maximize shareholder value

Hiring, Recruitment, and Selection

Hiring process ●Collins argues that the key to developing an ethical organization is by selecting employees with high ethics and reject those with unethical value ●By selecting these potentially candidates, Collins suggest companies using integrity test Recruitment ●The process of identifying and attracting qualified people to apply for vacant positions in a organization ●Methods of recruitment: newspaper, internet, job posting and using public/ private agencies Selection ●Company chooses a person to fill a vacant position Integrity test- asking employees if they committed or condone unethical workplace behavior, personality tests, interviews, and other diagnostics test Selection- U.S selection process is guided by legal consideration, as employers need to ensure that they do not discriminate against the candidate when it comes to race, gender, religion, color, national origin, age, and disability

9. Happiness is acquired

How does someone achieve happiness? Happiness is divine (god-given), but could also be cultivated through -Learning and education, Effort and diligence Aristotle recaps: happiness is an activity of the soul in harmony with virtue; other goods are additions, though sometimes necessary; the political art is best, as it makes citizens good. -Dogs, children, people who suffer bad luck cannot be happy

Kant's examples of universifying maxims

Kant brings into question the idea of suicide, and if that is something that is morally wrong for humans to do "But then one soon sees that a nature whose law it was to destroy life through the same feeling whose vocation it is to impel the furtherance of life would contradict itself, and thus could not subsist as nature" One cannot want to create life, as well as destroy it, therefore, suicide is morally wrong Kant brings into question the idea of borrowing money with no intention of paying the person back "For the universality of a law that everyone who believes himself to be in distress could promise whatever occurred to him with the intention of not keeping it would make impossible the promise and the end one might have in making it" If one were to lie just because they were in distress, then anyone could lie, which would cause any promises or concept of them to slowly lose all of their meaning The first example is whether or not someone should pursue skills they have, and the second one brings the question of empathy into play Kant admits that while it might be possible for society to exist this way, it should not Kant says that while if these are not followed they will not contradict the laws of human nature, but the laws of human will

Real World Examples

More and more companies are adopting a policy of flex time. Thus employees gain some autonomy and independence ́Development of rational capacities: you wouldn't hire someone who is under or over qualified ́Cross utilization fosters teamwork, eliminates silos, and allows dull positions to remain interesting

Stakeholder attributes

Namely Power - the degree to which stakeholders can exert pressure on a company - coercieve ex) government - make rules, shareholders - vote on certain issues Normative power Legitimacy - the degree to which a stakeholder's needs are consistent with societal values and beliefs ex) environmental, community Urgency - the degree to which stakeholder needs have to be prioritized ex) car manufactur has a malfunctioning part they have to do a recall

Contemporary Interpretations

Negative Freedom ́For Kant negative freedom is the ability to act independently of determination by alien causes ́Justification for Characteristic 1: meaningful work is freely entered into ́Justification for Characteristic 2: meaningful work allows employee to exercise autonomy and independence ́Positive Freedom ́Treat humanity as an end in itself ́Justification for Characteristic 3: meaningful work allows employee to develop rational capacities

Triple Bottom Line (TBL)

People Focus on human rights, diversity, community outreach, labor relations Planet Environmental stewardship and sustainable environmental practices Profit Shareholder returns, growth, risk management, and innovation center for all is sustainability TBL center between all is sustainability and thsi will help reduce costs and consider them all together not as a separate ideals.

7. The Particular Virtues of Character

There are means in different things, and what is excessive or deficient is not a virtue. It is a mean between two vices, one of excess and one of deficiency. Eg.wastefulness, generosity, ungenerosity.

An Executive's Role Stakeholders are real people and do not only want money. - freeman

These relationships are mutually beneficial ● Have a normal stake in the company like any other employee and are a ected by other stakeholders ● Goal is to keep everything balanced and healthy ● All stakeholder values are connected ○ Need to see these values and interests as "joint" ● Tradeo s are inevitable○ "Reframe questions" and make all tradeo s better for all parties ● Primary responsibility is to create value for the stakeholder (hopefully without tradeo s) ● Should be mission-driven/uphold company purpose

Ethical values - transparency

Transparency is an important value for a company to maintain. Honest communication speaks volumes, even when the company messes up it is important to own up to your mistakes and be transparent. Being able to take constructive criticism is important as well. Sometimes it may not be what the company wants to hear but it is necessary to improve and shows stakeholders you care and value their opinions. When there is a blunder within the company that can lead to defects it is important for a company to be transparent and honest with its stakeholders, thus building trust. We see this happen with recalls, it is better to recall a product and lose money in the short term than to sweep a problem under the rug which could lead to a massive problem in the long term. A company should always be transparent with their pricing. No one likes hidden fees, and these fees can even turn away customers.

1.How a Virtue of Character Is Acquired

a.Virtue of thought i.Grows from teaching ii.Needs experience and time b.Virtue of character i.Results from habits ii.'Ethical' c.A state [of character] results from [the repetition of] similar activities. None of the virtues of character arises in us naturally. Thus we are able to acquire virtues, and we are completed through habit. We need to have virtues by having activated them. It's important to acquire one sort of habit or another, right from our youth.

satisfying

companies should not focus on optimizing one variable but doing sufficiently well in multiple variables ○ Advantages of this strategy include not trying to resolve conflicts between shareholders, and allowing managers to retain earnings for long term growth and other necessities

From common rational moral cognition to philosophical moral cognition

there is nothing in the world that can be good without limitation except only a good will. In the natural predisposition of an organized being (i.e. a being arranged purposively for life), we assume this being will not encounter any instrument for any end except that which is most suitable and appropriate. If this being has reason and will, its preservation, welfare, and happiness are the real end of nature. However Kant suggests if this were the case, nature would be incorrectly attributing the organisms welfare to its' reason. Rather, Kant believes instinct, rather than reason can more accurately assess the being's actions it executes. Kant recognizes that reason is not sufficient in guiding the will safely in regards to its objects and the satisfaction of all our needs while a natural instinct could have more certainly done so. However this does not mean that reason is then without purpose. Kant states the true vocation of reason as "not to produce volition as a means to some other aim, but rather to produce a will good in itself, for which reason was absolutely necessary, since everywhere else nature goes to work purposively in distributing its predispositions." (12)

Moral Well-Being

́ Justification for Characteristic 5: meaningful work supports the moral development of employees ́ Duty of Benevolence: balance between love and respect ́ On the one hand we must be concerned with the activities that others would adopt in order to be happy. This is the love. On the other hand we cannot impose on them our views of what activities they should engage in to make them happy. That is respect. ́ Employers must not coerce (violate the negative liberty) of their employees ́ Justification for Characteristic 6: meaningful work is not paternalistic in the sense of interfering with the worker's conception of how she wishes to obtain happiness.

Humanity as an End to Itself

́Humanity includes the following capacities: ́1. The capacity and disposition to act on the basis of reasons ́2. The capacity to act on principles of prudence and efficiency ́3. The power to set any end (goal) ́4. The capacity to accept categorical imperatives. ́5. Some ability to understand the world and to reason abstractly Hill's take is too focused on rational capacity ́Kant states being indifferent to someone does not treat them as a means merely (merely use them) ́Kant argues that one has both a duty of perfection to oneself and a duty to promote the happiness of others. ́Entails concern with physical welfare of others and their moral well-being

Bowie's Response

́Meaningful work enhances quality and productivity ́Firms can gain a competitive advantage if they focus on their employees ́Meaningful work provisions are economic necessities ́Example: U.S. firms are concerned with quality of products to survive competition ́If meaningful work is needed to produce high quality goods, then meaningful work is an effective and moral strategy

The Separation Fallacy & The Open Question Argument - freeman

● Business decisions are made with no ethical influence ● Ethical decisions are made with no business influence ● Freeman believes that there is no separation ● This is meant to prove why the Separation Fallacy is not true ● Every business decision should take into account these questions ● Goal is to "build a theory that answers these questions" ● Milton Friedman believes that profit is key but should be within the confines of the law and ethics ○ Law and ethics → gives us a "morally rich answer" ● Freeman believes that there should be more of an integration of business and ethics ○ Ethics does not hinder profit-making initiatives

The Dominant Model & the Law - freeman

● Government has been putting constraints on business that are in accordance with Freeman's philosophy ● Caveat emptor becomes caveat venditor ○ Buyer responsibility to seller responsibility● Companies have a fiduciary duty to not only its shareholders but also its customers○ Product recalls, disclosing ingredients ● Labor laws, anti discriminatory laws ● Environmental laws ● Regulations are di erent in various countries ○ Better to keep it ethical!

The Dominant Model - freeman

● In the past, business was smaller ○ Confined to family members and simple business models ○ Less people were involved ● New processes → assembly lines (specialization and e ciency) ○ Diversification of ownership ● Laissez faire and shareholder capitalism ● Influenced by military and civil service bureaucracy → structured and divisionalized ● Creating value for shareholders are frequently only tied to stock prices and EPS ○ The measurement of success ● Predictability & success > innovation

The Dominant Model: Its Inability to Change - freeman

● Inherent resistance to change ● Hierarchy where shareholders are at the center ○ More valuable than suppliers, employees, communities, etc.● Change only occurs when the shareholders want it○ Usually will only concern monetary value or returns● Business is dynamic ○ Predictability and stability is not guaranteed ● Need to anticipate change and adapt to it

Corporate Social Responsibility: The Three Views

● Mackey: "I believe that the enlightened corporation should try to create value for all of its constituencies." ● Friedman: "The social responsibility of business is to increase its profits." ● Rodgers: "Corporations add far more to society by maximizing 'long-term shareholder value' than they do by donating time and money to charity."

Moral Disengagement 1st form

●1st Form: Cognitive Reconstruction ○Moral Justification: occurs when individuals justify certain actions to make them seem more morally acceptable ○Euphemistic Labeling:t he use of morally neutral language to make something seem less immoral ○Advantageous Comparison:occurs when someone compares a worse behavior with another behavior that rationalizes the behavior on that basis -Cognitive reconstruction: people reconstruct behaviors cognitively to make them acceptable -Moral Justification: -Ex. CEO may employ child workers in a foreign factory believing kids from poor families would be doing worse things in order to help make money for their family -Euphemistic Labeling -Ex. Killing your own soldier is called friendly fire; killing a civilian is called "collateral damage" → changing language lessens the unethicalness of the action -Advantageous Comparison -Ex. Student asking a general question about an exam to another student who has seen the exam believing it is better than asking a specific question

moral disengagement 2nd form

●2nd Form: Mechanisms that minimize one's responsibility for unethical behavior ○Displacement of Responsibility:occurs when the perpetrator of an unethical behavior can attribute the behavior to other factors ○Diffusion of Responsibility:occurs if decisions are being made by a group where decisions made can be attributed to the group rather than an individual ○Distortion of Consequences:occurs when an individual can disconnect actions from the harmful connections of the action -Displacement of Responsibility: -Ex. Blaming misreported sales figures on boss who wanted the behavior -Diffusion of Responsibility: -Ex. a director can attribute the decision to close a plant to the whole board, rather than 1 individual -Distortion of Consequences: -Ex. Customer returning a used product believing this will have no effect on the large company it was bought from (e.g, Walmart)

Moral Disengagement - 3rd form

●3rd Form: focuses on the targets' unfavorable acts ○Dehumanization:occurs when the target of the decision is derogated or is seen as lacking in human qualities ○Attribution of Blame:occurs when the decision maker attributes the blame for the decision to the target -Dehumanization: -Ex. A company justifying polluting a river even though wildlife is destroyed -Attribution of Blame: -Arguing that torturing terrorists is acceptable because they have brought such actions on themselves

Moral Awareness (one of the most important phases)

●How people evaluate moral intensity of action: ○Magnitude of Consequences: degree of harm victims of unethical choice will have to endure ○Social Consensus: degree to which others agree specific behavior is wrong ○Probability of Effect:chance that any action will result in harm to victims of the action ○Temporal Immediacy: length of time between the action and the harmful consequences of such actions ○Proximity: the psychological or cultural nearness to the victim ○Concentration of Effect: the # of people affected by the act -With any increase in any of these elements, the moral intensity of an action increases -Students applied to get into MBA programs at each school and 200 applicants were given way to access decisions on their applications that were not made available yet. Once this was discovered, the schools denied entry to all of them but many felt this was the wrong choice. Going through the 6 steps to evaluate moral intensity, they were all low. As a result, the applicants did not feel

Moral Philosophies: Idealism & Relativism

●Idealism ○Degree to which an individual will minimize harmandmaximize gainto others when making a decision ○More idealistic→ likely to be cognizant of negative impact of actions ●Relativism ○Degree to which individuals adhere to universal rules regardless of the situation when making decisions with ethical consequences -Idealism: more idealistic a person is, the more they'll try to maximize welfare of others and the higher desire to minimize harm to others -Ex. A manager that is idealistic may not give a raise to some employees if it means laying off others to do so -Relativism: -those who believe in low relativism believe that all situations should be guided by universal moral principles -Ex. High relativism àmore likely to make unethical choices such as believing sweatshops are acceptable in order to maximize profits

Unconscious Biases

●Implicit Prejudice: occurs when people rely on unconscious biases and prejudice when people judge others ●In-Group Favoritism: occurs because people tend to favor those who share similar characteristics to their own ●Motivated Blindness: takes place when an individual turns a blind eye to unethical behavior because it favors them ●Conflicts of Interest: occurs when decision making can be unconsciously affected because the decision maker may benefit from the chosen decision ●Unconscious Biases: the last section talked about justification of unethical decision → Unconscious biases occur, however, when the most well-meaning person unwittingly allows unconscious thoughts and feelings to influence seemingly objective decisions ●Implicit Prejudice: ○Ex. Price Waterhouse vs Hopkins → Woman sued PWC for not being appointed partner even though she was a great employee and it turned out managers had an implicit prejudice ●In Group Favoritism: ○Ex. Favoring someone from the same school, social class, religion or ethnicity ●Motivated Blindness: ○Ex. Not punishing an employee who fraudulently expenses something because they are the highest performer ●Conflicts of Interest:

Ethical Theories: Utilitarian and Kantian Ethics

●Kantian Ethics ○Categorical Imperative/Universalizable ○Decisions should respect dignity of humans ●Advantages ○Forces managers to considers universal rules ○Human beings emphasized and treated with dignity (unlike utilitarianism) ○Focuses on principles rather than consequences ●Disadvantages ○Does not provide as useful guidelines as utilitarian ethics ○Places the responsibility on each individual to make the moral choice -Kantian Ethics:follow the universal norms that prescribe what people ought to do, how they should behave and what is right or wrong -Consequence of an action are irrelevant; the moral worth of any action is the action itself and whether the action respects universal rules and norms -Categorical imperative: I should never act except in such a way that I can also will that my maxim should become a universal law -Decisions should also respect the dignity of humans; every human being has an inherent worth that should be respected and treated with dignity; never treat someone as a means

Alternative Model - Rest

●Pre-Conventional Level ○Decisions driven internally by either reward or punishment ●Conventional Level ○Decisions made based on external rules and norms coming from family, friends, peers and society ●Post-Conventional Level ○Individuals driven by consideration of universal principles and values -Rest came up with an alternative model to Kohlberg that has 3 stages; This model combines 2 of Kohlberg's stages into 1

Moral Disengagement

●Social Cognitive Theory → people have developed personal standards of moral behavior that guide good behavior and deter bad behavior ○Moral Disengagement: the deactivation of this process, where people will deactivate their personal standards and engage in the behavior ○Helps justify the action ●3 Forms of Justification -Even though companies have ethics training, we still see many cases of unethical actions. Moral disengagement is one reason why

Individual Ethics

●Unethical Behavior- any action that violate accepted social norms ●Organizational culture can play a role in unethical behavior ●Individuals create and enforce culture

Ethical Theories: Utilitarian and Kantian Ethics

●Utilitarian Ethics:the moral worth of an action is based on the consequences of that action ●Advantages ○Simple way to gauge the impact of decisions ○No special preference given to any group (objective) ●Disadvantages ○People argue it is difficult to measure gains and losses ○The needs of minorities ignored ○The rights of people are ignored -Ethical Theories: refers to concerns regarding acceptable ways to solve ethical dilemmas -Two popular ethical theories are Utilitarian ethics and Kantian Ethics -Utilitarian Ethics: Individual will consider pros and cons caused by action and choose the one that maximize good and minimize harm