MGMT 117 Business Ethics, MGMT 117 Final Study Set

Second Overarching Theory (NC/D) KANT ARISTOTLE (virtue ethics) SOLOMON

Non-sequential > Idea that actions are not based on their outcomes/consequences Deontological > actions judged on inherent righteousness or wrongfulness -choice that follows moral duty/rules developed -Kant supports somethings are "just wrong"

Hostile Environment -Elizabeth Anderson

Occurs when unwelcome sexual conduct has the effect of unreasonably interfering with job performance or creating an intimidating or hostile, working environment

Zwolinki View of Choice v Meyers View of Choice

Zwolinski: they choose the best preferred option out of limited pool AND companies are "helping" society by providing job at all Meyers: this is not an autonomous-exercising decision because they are not making it at fee will if a need pushed them to decision

Mutually beneficial exploitation

both parties "benefit" in some way but one more than the other. * both parties are slightly better off than before ie sweatshop because employer getting job done (more benefited party), employee gets a job

Consequentialism

every action should be judged based on the basis of consequences -Cost/benefit analysis-Who faced consequences and what are the impact of such consequences? + Adam Smith and Milton Friedman supported because it considers what was best for the outcome of the business Ford Pinto= consequentialist based decision

Rawl's idea of a social contract (give to receive)

free rational people will give up some natural born rights to authority in order to protect rights -ie giving up some privacy to protect people from terrorism

HB fuller case HELP BABIES case

glue produced was harming locals and children dying from consumption, but the producers kept making more RULING- in glue company favor, their warning label should have warned child

1st (lowest) level of environment view: Unlimited resources

there are unlimited resources for our unlimited use

Work place incivility -Lilia Cortana

"low intensity deviant behavior with ambiguous intent to harm the target, in violation of workplace norms for mutual respect... displaying lack of regard for others" 56

Manipulation (ARA) Ie goldman sachs

- Autonomy-robbing action - An indirect, dishonest way to control or influence others IE Goldman Sach's betting on consumers lack of knowledge to get the amount of loans they were in the housing crisis, they knew they were not putting loans through the same scrutiny as before but packaged the deal anyway

Kant Ethics Principles

- obligation comes from our nature as autonomous rational agents that can reason -moral obligations are categorical imperatives that are inescapable (universal application and treating as ends) - Duty depends on the principle motive that is acted on - ALL stakeholders should be considered in bus. decisions - businesses have a genuine duty of beneficence to consumers

Milton Friedman (Adam Smith was basic of his ideology) CAPITALIST

-Corporation is not a person = does not have social responsibility, but the executives who are people MAY have responsibility - Executives have contractual agreement/obligation make profit for shareholders - one should omit personal social responsibility when working

Solomon's 6 Dimensions of Virtue Ethics C, E, RI, I, J, H "Can Everyone Remain Integrated & Just Hole"

1. Community- corporation is a community 2. Excellence- it is not enough to only do no wrong 3. Role Identity- many roles goals clash, ie one wants to make highest profit one wants to get the best customer satisfaction 4. Integrity- acting honorably 5. Judgement- consideration in decisions, making the right judgement 6. Holism- harmonization of roles

Solutions to Tragedy of the Commons PL, ESI, CR, NCR

-Privatizing land -enlightened self interest -Coercive regulation (water control in CA) -Non-coercive/mutual Gov. regulations (taxes for better city) another example is of cap and trade and incentivizing for betterment of society

Negative Fiduciary Duty v Positive Fiduciary Duty

Neg: a duty NOT to commit Pos: a duty to do something (ie disclose)

limitations of CSR

-may be used a guilt-washing tool to ease negative action -may perpetuate the demeaning sense of charity -may be used a cloth to unethical business PHILANTHROPY /= SOCIALLY RESPONSIBLE

3 Fiduciary Duties: C/D (jordan v. duff) D/C (wells Fargo) L/SR (Meinhard v/ Solomon)

1. Candor and disclosure: duty to disclose info in Jordan V Duff&Phelps 2. Diligence and Care: Duty to become informed, ie Wells Fargo Execs cannot say they were "unaware" of actions of employees, its their job to be informed 3. Loyalty and self restraint: no self-centered/dealing choices Meihart V. Solomon (not informing of new partnership)

Adam Smith's 2 Basic Assumptions DL IH

1. Division of Labor increased productivity, saves tine, and increases specialization 2. Invisible hand, power of the profit motive -ones own advantage to do best = better society -those who actually try to help society are less helpful/successful

Acts that protect employees/encourage whistle blowing: False Claims Act, SOX (think subsidize), Dodd Frank Act

1. False claims act: you will be forced to pay 3x amount if you falsely claim wrongful act 2. SOX: provides remedies for attorneys & reinstatement 3. Dodd Frank Act: those who provide SEC (securities and exchange commission) info will be reimbursed, provides financial incentive

Framework for Ethical Decision Making II, IS, IO, CBO

1. Identify issues/options 2. Identify stakeholders 3. brainstorm and evaluate alternatives 4. choose the BEST course of action

Platos 3 Key Arguments

1. Should not consider what others think unless they are wise 2. Should never deliberately do wrong 3. Its wrong to break the law

Strudler's Argument of deception (absolutism)

1. depiction is always wrong 2. the more honesty, the more morality 3. deception is acceptable in certain aspects of business or defending on self AND not violating trust (home negotiating)

Civil Fraud Requirements misrep, knowledge, intent, reliance, proximate cause

1. false misrepresentation/concealment 2. statement made with knowledge of falsity 3. Intent to induce person 4. Such person relies on info if non-disclosing party 5. damage incurred by information

Carr

Business Bluffing - Business is a game that demands both special strategy and ethics. - Everything not against the law is morally permissable - Relates to poker, bluffing is morally permissable. - People don't expect honesty in business - Problems - One doesn't consent to play business - difficult to avoid business transactions -expectation of truth is vague

Harmful Exploitation

A person benefits at the expense of another through an unfair exchange * one party is extremely worse off than before Ie sex trafficking

Mod 1: Approaches to ethics- Ethical dilemma:

A situation in which one is forced to make a decision between two or more courses of action both that entail of transgressing a moral value

Carr's argument about business practices (game)

Business is similar to a poker game, no one expects others are playing by rules and it is separate from regular daily life 1. deception in business is always okay

Arrington

Advertising and Behavior Control -Pro Advertising -Vs Crisp who is against -Autonomous Desire debate -States advertisers do not do so intentionally of malice -Advertisers don't control us or induce new desires

Integrative Social Contracts Theory (ISCT) Donaldson and Dunfee

All humans including businesses, industries, consumers, and economies deserve respect through implied, not plainly expressed, contracts

Caveat Emptor (now obsolete)

Buyer alone is responsible for acquiring product information

2 provisions to Foreign Corrupt Act AB & Acct.

Anti bribery: no corrupt payment to gain or retain business bribing could be "good will building", gift exchange, tipping, setting up for future relation/payment Accounting provision: mandates bookkeeping and filing of records

Arrington V Crisp's View of advertising

Arrington: advertisement don't control use, they tap into our existing desires Crisp: Advertisements CREATE desires and feed of their own creation= manipulation

Autonomy (rational) V heteronomy (impulse)

Autonomy is when actions are driven by choosing agents, reason, and moral principles V Heteronomy is when one's will is governed by impulses/instinct, driven by an outside source/impulse with no moral reflection

B Corporation

Benefit corporation -company is legally required to adhere to socially beneficial practices, such as helping consumers, employees, or the environment -similar structure to corporation but execs required to consider broad impact of business

Mod 3: Obligations to Clients/Customers Carr v Studler

Car believes that there is room for deception and consumers expect it, its a poker game mentality Strudler: there is limited situations for deception such as negotiating for a home when one is attempting to protect themselves, but people do not generally expect to be lied to

Reed vs. King

Civil Fraud Case -False representation or Concealment of Fact - Made with knowledge of it's falsity -with intent -Murder home example -Fiduciary duty, Reed won

First Overarching Theory (Consequentialist, utalitariamism MPMP) SMITH (invisible hand) FRIEDMEN

Consequentialist > every action should be judged based on the basis of the consequences -Cost/benefit analysis -Who faced consequences and what are the impact of such consequences? + Adam Smith and Milton Friedman supported because it considers what was best for the outcome of the business ie FORD PINTO case Utilitarianism > benefit for the majority -total "utilities" produced by the act should be whatever creates greatest good -maximize pleasure and minimize pain + John Stuart Mill supports "greatest good for the many"

Stout

Contradictions to Shareholder model - Gets the law wrong - Gets the economics wrong - Gets the evidence wrong - No single Shareholder Value

Friedman

Corporate Responsibility - Corporate Executives do not pursue one's one social responsibility - Direct contractual obligations to owners - Shareholder Theory -Principle-Agent Model

Freeman

Corporate Responsibility Alternate - Stakeholder Theory - Each stakeholders value not valued over another - Segregation and Integration fallacy

Whitehouse

Corporate Social Responsibility (CSR) -Any kind of corporate self-regulation -Triple Bottom Line, People, Planet, Profit -B-corps -Concerns include -Inefficient, Short-term, Guilt-washing, denouncing charity, disguises problems, dodge real regulation, political manipulation, tax evasion.

Corporation V Market

Corporation: legal entity, limited liability, endless lifetime Market: free market free of legal entities impacting it

Rachels

Debate over Utilitarianism - Consequence based ethics - Highest Overal utility, highest overall happiness - Common Sense is wrong

Strudler

Deception -Contradicts Carr - Deception is always wrong, too strong - Honesty is morally better, gradient - Deception always ok, poker (carr) view - Deception acceptable when other party does not expect the truth - not ethically permissable because of manipulation - breach of trust -Reasonable in self-defense, and doesn't violate trust

Business Judgment Rule (BJR)

Directors of corporation are clothes in presumptions to do best for shareholders WITHOUT tainting of personal interests

Jordan v. Duff and Phelps, Inc. (1987)

Employee Jordan bought stocks in the company and then planned to move to Houston but company did not inform of a merger which would substantially increase stock value RULING- corporation has a fiduciary duty to disclose merger changes

Payne v. The Western & Atlantic Railroad Company (1884)

Established employment at will. Payne was a local merchant and the railroad notified their employees they would be fired for purchasing from him. RULING- in railroads favor and said they can fire employees "... for good cause, for no cause, or even for cause morally wrong, without thereby being guilty of a legal wrong"

Meinhard v. Salmon

Fiduciary Duty Case - Salmon tried to renew a lease on a new property without informing business partner meinhard - Ruled Salmon had fiduciary duty to inform partner - Meinhard wins case - Duty of loyalty also breached

Gioia

Ford Pinto - Cost versus benefits - marginal utility and value of a human life - Consequential based decision - Knowing versus unknowing

Advertising- 2 major views: Foreseeability and Recipient Based

Foreseeability Based: companies only have something wrong if it was foreseeably offensive term-36 Recipient Based: Evaluates the extend to which companies have done something wrong, regardless if they could have foreseen it

Fried Man v FREEMAN consider share & stakeholders

Friedman: believed in profit for shareholder FREEMAN: believed in stakeholder theory

Smith

Goldman Sachs

Aristotle's Virtue Ethics endlessly active, golden mean, cannot be temporary

Good people do good things In order to be ethical we have to exhibit certain behaviors in accordance with the golden mean between vices (most and least altruistic or selfish) -asks "what type of person do I want to be?" -virtues are always ACTIVE, not temporary

Mod 2: Corporate Firm and Purpose Social Contract Theory:

Implicit and Explicit agreements that consider norms and authority that brings rules/laws into existence

Kantian Ethics (NC/D)

Kant supported that: humans were naturally rational/have reason and that morality was determined by the motivation behind actions, NOT the action itself or the consequence

Bowie

Kantian Approach to Business Ethics - Universal Law - Stealing bad because if I can steal everyone can steal and that is not morally permissable. - Open book management - Think about all stakeholders as people with morals

Velleman

Kantian Ethics - Rational Agents, What should I do - Categorical Imperatives - Duty depends on principal motive - We all have right to be treated as means within ourselves.

Shell

Lying in negotiations -Fraud -Criminal wrongdoing (govt. vs defendant) -Civil Fraud (private vs. defendant) -Affirmative defense of contract law (defendant not abiding under fraud)

Meinhard v. Salmon (1928)

Meinhard, the investor was not informed of Solomon's new business venture RULING- Solomon had a fiduciary duty to inform investor of ending of venture before beginning new one

CSR (Corporate Social Responsibility) Lisa Whitehouse PPP & SRI

People, planet, profit resource based new of CSR SRI= sustainable/socially responsible investment

Crisp

Persuasive Advertising -Morally wrong to manipulate people -Persuasive ads manipulate people -First and second order desires -Autonomy robbing actions are manipulative -

Merck and River Blindness

Pharma Obligations - Developed drug for river blindness cure - Gave drug away for free - River blindness soon to be eradicated - Means or ends? Ends

Purdue Case supported by Friedman beliefs

Pharmaceutical company who sells opioids, off brand, and the drug to ween off of opioids -work for their own self interest (milton friedman) and did a disservice to society

4TH Level of environment view: preservation

Preservation: since most activities will inevitably harm the environment, we must preserve certain areas to remain untouched

Two man views of around work Quasi Aristotelian & Quasi Religious

Quasi Aristotelian: Work is to give us function and purpose, happiness is obtained through being productive Quasi Religious: Work is a calling from God, a chance to find yourself

Reed v. King (Fraud: Materiality)

Reed purchased a house from King. Neither King nor his real estate agents told Reed that a woman and her four children were murdered there 10 years earlier. She sues seeking rescission and damages. King knew about the murder and that it would affect the market value. He also asked a neighbor not to inform Reed of the even. RULING- this was concealment of fact. A seller has a duty to disclose information that would materially affect the value or desirability of a property

Tragedy of the Commons (Hardin) Ie: the fishing example

Tendency of individuals to deplete an unowned, rival resource for their own gain, even if they know that it will harm everyone involved in the long term. Ie: the fishing example

Shlensky v. Wrigley (1968)

Shlensky, a minority shareholder wanted Wrigley, the majority shareholder to have lights installed for night game. RULING- on behalf of Wrigley, that lights were not required because there was no fraud, illegality, or conflict of interest and

Donaldson and Dunfee

Social Contract Theory - Morality is collective - Cooperation gives up some freedoms in exchange for safety - upholding rational agreements we freely made is the right thing to do - 4 Business applications -Corporations as citizens - Business Ethics as social contract among rational actors -Corporations as social contract among stakeholders - Corporations as an institution within social contract theory

Plato

Socrates student - We should not care about what others think unless they are wise - Never deliberately do wrong - Wrong to break the law, even if it benefits you explicit vs implicit societal arguements

Stakeholder v Shareholders -what is the decision making tool

Stakeholder: business owner Shareholder: consideration of secondary stakeholders like media, gov, competitors, consumers, community, environment tool - Business judgment rule(do good for business/people and it will multiply

H.B. Fuller

Street Children of Central America -children becoming high off glue supply -company attempted to curb factors that enable children to sniff -Sells only in bulk to factories, are they morally wrong? -Consequentialism yes, Deontological no

Singer

Suffering - Within our power, one should give until sefl-suffrage - Distance isn't morally relevant - Morality demanding - Working towards long-term solution

quid pro quo harassment -Elizabeth Anderson=pioneer of addressing sexual harassment in workplace

Type of sexual harassment that occurs when an employee is forced to choose between giving in to a superior's sexual demands and forfeiting an economic benefit such as a pay increase, a promotion, or continued employment.

consequetialism vs utilitarianism

Utilitarianism = a theory based on consequentialism centered on maximizing the overall good.

Aristotle

Virtue Ethics - Falls under consequentialism - About the individual character - no CBA, no categorical imperatives - Good people do good things - What kind of person should I be? - All things have purpose, Teleology - Ultimate aim of action - Deliberate, active, more than one virtue

Solomon

Virtue Ethics some more - 6 Dimensions of ethics - Community, Excellence, Role-Identity, Integrity, Judgement, Holism - Arguably relativism, conflict among the common, unprincipled.

Adam Smith

Wealth of Nations - Benefits on Why corporations exist - Division of Labor - Saves time and mechanization, specialization - Profit Motive (Invisible Hand) - Own self interest is society's best interest

Zwolinski (they consent) V Meyers (only consent because they have no choice)

Zwolinski: believes although sweatshops may be a bad place to work in, employees choose that job and there may be "worse off" jobs like human trafficking to be apart of in these types of countries Meyers: while they may consent, they may only agree to negative circumstances due to their needs (finances)

West Virginia Environmentalist V. Citizen (homeowner in video)

mountain top removal RULING- state was guilty of stopping natural lake flow and that the mining companies must abide by environment regulations in place

Paternal Prejudice -Lilia Cortana

racism for groups other than your own due to your upbringing