Business Ethics Midterm

corporate citizenship social role of the corp in governing citizenship

social rights--> corporation as provider/ ignorer civil rights--> corporation as dis-/enabler political rights--> corporation as channel/ blockage

typical perspective

ethical dilmenna--> 'lens' of ethical theory--> single normative consideration for solving the ethical dilemma

economic responsibility

focus in USA on shareholders; France has extensive responsibility for employees; India has tradition of investment in the local community

relevance of globalization for business (stakeholders)

globalization provides potential for greater profitability, but also greater risks. Lack of regulation of global capital markets, leading to additional financial risks

advocate position of pluralism

middle ground between absolutism and relativism

what is the problem of democratic accountability

who controls the corporations? to whom are corporations accountable? **key to corporate accountability is transparency

ethical responsibility

wide range of local ethical values and preference: expectations vary

ethical theories

the rules and principles that determine right and wrong for any given situation

moral intensity Jones proposes that the intensite of an issue will vary according to 6 factors:

1. magnitutde of consequences 2. social consensus 3. probability of effect 4. temporal immediacy 5. prozimity 6. concetration of effect

questioning versus accepting capitalism

- US tend to accept the capitalist framework - Europe tend to question the ethical justification of capitalism

justifying versus applying moral norms

- US tend to focus on application of morality - Europe focus on justification and ethical legitimation of norms

individual versus institutional morality

- US tend to indivudalistic perspective - Europe towards wider economic and governing institutions

key features of a corporation

- a corporation is essentially defined in terms of legal status (independent) and the ownership of assets - corporations are typically regarded as 'artificial persons' in the eyes of the law - corporations are notionally 'owned' by shareholders. but exist independently of them - managers and directors have a 'fiduciary' responsibility to protect the investment of shareholders

a new role for management

- according to Freeman, this broader view of responsibility towards multiple stakeholders assigns a new role to management - rather than simply being agents of shareholders, management has to take into account the rights and interests of all legitimate stakeholders (stakeholder democracy and corporate governance)

why do corporations have social responsiblities (moral reasons)

- corporate activities have a social impact-- legal identity - corporations should use their power responsibly - every company has its own Organizational Culture - corporations rely on the the contribution of a wide set of stakeholders in society, not just shareholders

relevance of globalization for business ethics

- cultural issues - legal issues - accountability issues

main factors in deciding the moral status of a situation

- decision likely to have significant effects on others - decision likely to be characterized by choice, in that alternative courses of action are open - decision is perceived as ethically relevant by one or more parties

why do corporations have social responsiblities (business reasons)

- extra and/ or more satisfied customers (and workers) - reduce costs!!! - employees may be more attracted/ committed - managing risk and uncertainty - long-term investment which beenfits corporation

criticisms of CMD

- gender bias - implicit value judgements - invariance of stages

traditional ethical theories

- generally offer a certain rule or principle which one can apply to any given situation - these theories generally can be differentiated into 2 groups

reasons for the political role of the firm (government failure)

- govts retreating - govts unable or unwilling to address social needs - govts can only address social problems within their reach

postmodern business ethics emphasizes

- holistic approach - examples rather than principles - think local, act local - preliminary character

gender

- individual characteristic most often researched - results contradictory

reasons for the political role of the firm (corporate power on the rise)

- liberation and deregulation results in more power and choice for private actors - privatization of 'public' services - responsible for employment decisions - globalization - goats increasingly encourage self-regulation - race to the bottom

limitations of ethical decision-making models

- not straightforward or sensible to break model down to discrete units - various stages related or interdependent - national or cultural bias

the business responsibility of business is to increase its profits (milton Friedman)

- only humans beings have a moral responsibility for their actions - it is managers' responsiblity to act solely in the interest of shareholders - social issues and problems are the proper province of the state rather corporate manager

egoism

- relies on free competition and good information - 'enlightened egoism' however, markets do not function perfectly - anti-globalization movement - sustainbility debate

age

- results contradictory - however experiences may have impact

key elements to discourse ethics

- ultimate goal of ethical issues in business should be the peaaceful settlement of conflicts - different parties in a conflict should sit together and engage in a discourse about the settlement of the conflict, and ultimately provide a situation that is acceptable to all - 'ideal discourse' criteria (impartiality, non- persuasiveness, non-coercion, and expertise of participants)

problems with ethics of duties

- undervaluing outcomes - complexity - misplaced optimism?

john rawls' theory of justice

1. each person is to hae an equal right to the most extendive totaly system of basic liberties compatible with a similar system of liberty for all 2. social and economic inequalities are to be arranged so that they are both: -- to the greatest benefit of the least advantaged -- attached to offices and positions open to all under conditions of fair equality of opportunity

why is business ethics important?

1. power and influence of business in society 2. potential to provide major contribution to society 3. potential to inflict harm 4. increasing demands from stakeholders 5. lack of business ethics education or training 6. continued occurrence of ethical infractions 7. evaluating different ways of managing business ethics 8. interesting and rewarding

two main differences between religious and philosophical theories

1. sources of rules and principles - religions typically invoke deities or organized systems of belief as the origins of norms. Philosophy typically stems from belief in human reasons to derive norms 2. consequences of morality (or immorality) - philsophy typically sees consequences as a matter of creating tangible social benefits or harms for others. Religions also point to apirtual consequences, inlcuding enlightment, reincarnation, damnation, and salvation

pluralism

Crane and Matten argue that for the practical purpose of making effective decisions in business: - not suggest one theory or one approach as the best or true view of a moral dilemma - suggest that all these theoretical approaches throw light from different angles on one and same problem - complementary rather than mutually exclusive

philanthropic responsibility

Europe tends to compel giving via legal framework; elsewhere (ex: USA, India, China), companies are expected to share their wealth

why stakeholders matter?

Milton Friedman- businesses should only be run in the interests of their owners Freeman- others have a legitamate claim on the corporation Legal perspective - 'stake' in corporation already protected legally in some way Economic perspective - agency problem--> short temr interests of 'owners' vs long-term interests of managers, employees, customers

ethics of duty (maxim 1)

consistency - act only according to that maxim by which you can at the same time will that it should become a universal law

what is globalization?

a process which diminishes the necessity of a common and shared territorial basis for social, economic, and political activities, processes, and relations

extended view of Corporate Citizenship (CC)

acknowledges the extended political role of the corporation in society

systems of reward

adherence of ethical principles and standards stands less chance of being repeated and spread throughout a company when it goes unnoticed and unrewarded

discourse ethics

aims to solve ethical conflicts by providing a process of norm generation through rational reflection on the real-life experiences of all relevant participants

utilitarianism

an action is morally right if it results in the greatest number of people affected by the action - also called the 'greatest happiness principle' - based on cost (pain)-benefit (pleasure) analysis

theory of egoism

an action is morally right if the decision-maker freely decides an action to pursue either their (short-term) desires or their (long-term) interests

postmodern ethics

an approach that locates morality beyond the sphere of rationality in an emotional 'moral impulse' towards others. It encourages individual actoors to question everyday practices and rules, and to listen to and follow their emotions, inner convictions and 'gut feelings' about what they think is right and wrong in a particular incident of decision-making

feminist ethics

an approach that prioritizes empathy, harmonious and healthy social relationships, care for one another, and avoidance of harm above abstract principles

personal values

an enduring belief that a specific mode of conduct or end-state of existence is personally of socially preferable to an opposite or converse mode of conduct or end-state

locus of control

an individual's locus of control determines the extent to which they believe that they have control over the events in their life

bureaucracy

argued that it has a neagtive effect on ethical decision-making - suppression of moral autonomy - distancing - denial of moral status

ethics of human rights

basic, inalienable entitlements that are inherent to all human beings, without exception - based on consensus about nature of human dignity - increasingly important: enshrined in principles of UN Global Compact and the "Ruggie Principles"

moral muteness

because of concerns regarding perceived threats to: - harmony - efficiency - image of power and effectiveness

ethical relativism

claims morality is context-dependent and subjective - no universal right and wrongs that can be rationally determined; depends on person making the decision & culutre in which they are located - typically contemporary ethical theories

ethical absolutism

claims that are eternal, universally applicable moral principles - right and wrong are objective wualities, can be rationally determined - typically traditional ethical theories

define morality

concerned with the norms, values, and beliefs embedded in social processes which define right and wrong for an individual or a community

define ethics

concerned with the study of morality and the application of reason to elucidate specific rules and principles that determine right and wrong for any given situation. These rules and principles are called ethical theories

moral imagination

concerned with whether one has "a se nee of the variety of possibilities and moral consequences of their decisions, the ability to imagine a wide range of possible issues, consequences, and solutions

virtue ethics

contends that morally correct actions are those undertaken by actors with virtuous characters. Therefore, the formation of a virtuous character is the first step towards morally correct behavior acquired traits - intellectual virtues - moral virtues

relevance of globalization for business (employees)

corporations outsource production to developing countries in order to reduce costs in global marketplace- this provides jobs but also raises the potential for exploitation of employees through poor working conditions

personal integrity

defined as an adherence to moral principles or values

rationalization tactics

denial of responsibility, denial of injury, denial of victim, social weighing, appeal to higher loyalties, metaphor of the ledger

descriptive business ethics theories seek to...

describe how ethics decisions are actually made in business, and what influences the process and outcomes of those decisions

sustainable development

development that meets the needs of the present without compromising the ability of future generations to meet their own needs

equivalent view of Corporate Citizenship (CC)

essentially equates CC with CSR

a limited view of Corporation Citizenship (CC)

essentially equates CC with corporate philanthropy

pluralistic perspective

ethical dilemma--> "prism" of ethical theories--> variety of normative considerations in solving the ethical dilemma

relevance of globalization for business (civil society-- NGOs, etc)

global business activities brings the company in direct interaaction to local communities with possibility for erosion of traditional community life; globally active pressure groups emerge with aim to "police" the corporation where governments are weak and tolerant

relevance of globalization for business (consumers)

global products provide social benefits to consumers across the globe, but may also meet protests about cultural imperialism and westernization. Globalization can bring cheaper prices to customers, but vulnerable consumers in developing countries may also face the possibility of exploitation by MNCs

relevance of globalization for business (government & regulation)

globalization weakens governments and increases the corporate responsibility for jobs, welfare, maintenance of ethical standards, etc. Globalization also confronts governments with corporations from different cultural expectations about issues such as bribery, corruption, taxation, and philanthropy

ethics of duty (maxim 2)

human dignity - act so that you treat humanity, whether in your own person or in that of another, always as an end and never as a means only

corporate social responsibility

includes the economic, legal, ethical, and philanthropic expectations placed on organizations by society at a given point in time

influences on ethical decision-making

indiduval factors and situational factors

hofstede influence

influential in shaping our understanding of these differences- our 'mental programming' - individualism/ collectivism - power distance - uncertainty avoidance - masculinity/ feminity - long-term/ short-term orientation - indulgence

rule utilitarianism

looks at classes of action and ask whether the underlying principles of an action produce more pleasure than pain for society in the long run

act utilitarianism

looks to single actions and bases the moral judgement on the amount of pleasure and the amount of pain this single action causes

relationship between morality, ethics and ethical theory

morality (ethics rationalize morality)--> ethics (...to produce ethical theory...)--> ethical theory (..that can be applied to any situation...)--> potential solutions to ethical problems

2 groups of traditional ethical theories

non-consequential ethics: motivation/ principles and action consequential ethics: action and outcomes

situational factors

particular features of the context that influence whether the individual will make an ethical or unethical decisions - work context - the issue itself including -- intensity -- ethical framing

authority

people do what they are told to do-- or what they think they're being told to do

adam smith thought on egoism

pursuit of individual interest moraly acceptable as invisible hand of market creates benefit for all

4 'philosophies' or strategies of social responsiveness

reaaction, defense (traditional CSR), accommodation, proaction (contemporary CSR)

stages in ethical decision-making process

recognizes moral issues, make more judgement (normative theories), establish moral intent, engaged in moral behavior

cognitive moral development (CMD)

refers to the different levels of reasoning that an individual can apply to ethical issues and problems. depending on their cognitive capacity

sustainability

refers to the long-term maintenance of systems according to enviornmental, economic, and social considerations

corporate accountability

refers to whether a corporation is answerable in some way for the condequences of its actions. firms have begun to take on the role of 'political' actors-- taken up many of the functions previously undertaken by government because: - government failure - increasing power and influence of corporations

key elements to feminist ethics

relationships - decisions taken in context of personal human interractions responsibility - active 'taking' of responsibility, rather than merely 'having' it experience - learn and develop from experience

international perspective on ethical decision-making

research on individual factors influencing ethical decision-making has a strong US and asian bias - consistent with choice within constraints research on situational factors originated by european authors - consistent with concern for constraints themselves

descriptive ethical theories

seek to describe how ethics decisions are actually made in business

outcomes of CSR

social policies social programmes social impacts

legal responsibility

state seen in Europe as key enforcer of rules; elsewhere government seen with more scepticism (corrupt, interfering with liberty)

problems with utilitarianism

subjectivity - this has led to the refinement of theory -- act utilitarianism -- rule utilitarianism issues around quantification and distribution of utility

relevance of globalization for business (suppliers & competitors)

suppliers in developing countries face regulation from MNCs through supply chain management. Small scale indigenous competitors exposed to powerful global players

define transparency in terms of corporate accountability

the degree to which corporate decisions, policies, activities, and impacts are acknowledged and made visible to relevant stakeholders

moral framing

the same problem or dilemma can be perceived very differently according to the way that the issue is framed - language important aspect of moral framing (using moral language likely to trigger moral thinking)

ethics of justice

the simultaneously fair treatement of individuals in a given situation with the result that everybody gets what they deserve - fair procdeures (procedural justice) - fair outcomes (distributive justice)

what is business ethics?

the study of business situations, activities, and decisions where issues of right and wrong are addressed

triple bottom line (TBL)

this thinking suggests sustainability as a goal 3 dimensions (planet, people, and profit) - environmental perspeectives - economic perspectives - social perspectives (bearable, equitable, sustainable, viable)

normative theories

those that propose to prescribe the morally correct way of acting

limits of traditional theories

too abstract, too reductionalist, too objective and elitist, too impersonal, too rationist and sodified, too imperialist

education and employment

type and quality of education may be influential - e.g.: business students rank lower in moral development than others and more likely to cheat 'amoral' business education reinforces myth of business as amoral

individual factors

unique characteristics of the individual making the relevant decision - given at birth - acquired by experience and socialization (national culture)

ethics of duty (maxim 3)

universality - act only so that the will through its maxims could regard itself at the same time as universally lawgiving (would others agree? would you be happy to see your decision reported in the press?