Ethics Final
Product Safety: How effective is regulation?
1) Regulatory agencies (FDA, CPSC) often (but not always) succeed in protecting interests of consumers and stressing business responsibility. 2) Public opinion, media attention, pressure from consumer advocacy groups, and the prospect of class-action lawsuits are also effective in forcing companies to take product safety seriously. 3) Self-regulation: Businesses generally prefer self-regulation, competition, and voluntary safety standards set by their own industry. -But, self-regulation can easily subordinate consumer interests to profit making when the two goals clash. Under the guise of self-regulation, businesses can end up ignoring or minimizing their responsibilities to consumers.
"Is Business Bluffing Ethical?" Albert Z. Carr (HBR, 1968)
"Bluffing in business is a game strategy.." • Pressure to deceive: When is it justified? What is ethical? So what...??? • The poker analogy: Strategic skill wins the game. • "We don't make the laws" • Cast illusions aside: The realities of the game.
"Greed" Solomon Schimmel
"If money is not thy servant, it will be thy master. The covetous man cannot so properly be said to possess wealth, as that may be said to possess him." -- Francis Bacon. • The paradox of greed • Greed as a source of unhappiness
Deception and Unfairness in Advertising
The Federal Trade Commission's (FTC) role: Created in 1914 as an antitrust weapon, it was expanded to include protecting consumers against deceptive advertising and fraudulent practices. -Is the FTC (or other regulatory bodies) obligated to protect only reasonable, intelligent consumers who act sensibly in the marketplace? Or should it also protect ignorant consumers who are careless or gullible in their purchases?
"Social Responsibility and Economic Efficiency" Kenneth J. Arrow
The case against social responsibility • Profit proves that you are contributing to the greater good • Problems with this argument • Monopolies • Very unequal distribution of wealth • Discourages altruism Cases such as pollution • The corporation doesn't pay for the harm • Cases such as used car sales • The buyer doesn't have full knowledge • Enforcing social responsibility • An ethical code, as doctors have?
Michael Walzer's approach
The idea that different distribution principles depend on implicit social norms
"Respecting the Humanity in a Person" Norman E. Bowie
"Morality is the condition under which alone a rational being can be an end in himself, because only through it is it possible to be a lawgiving member in the realm of ends. Thus morality, and humanity insofar as it is capable of morality, alone have dignity." • What does Kant mean by this principle? • What does the respect for the person principle mean in terms of the policy and practices of an organization?
Corporate Social Responsibility
"The continuing commitment of business to behave ethically and contribute to economic development, while improving the quality of life of the workforce and their families, as well as of the local community and society at large. " (World Business Council for Sustainable Development, 1999, 2001) • The integration of social (including human rights), environmental and economic concerns into that companies values and culture, strategy, and operations
Honesty (and Dishonesty...), Trust (and Distrust ...) in Business - What's real and True? And Why?
** 3 Questions, with a focus on Kant's Categorical Imperative (Harvard Lecture: Professor Michael Sandel) • ** (Carr) Is Business Bluffing Ethical? • ** (Bowie) Does it Pay to Bluff in Business? • ** (Bok) Defining Secrecy: Some Crucial Distinctions • (De Wine) Giving Feedback: The Consultant's Craft • (Lancaster) Three Steps to a More Honest Business • ** (Frankfurt) On Bullshit. • (Eckman and Frank) Lies that Fail • (Solomon and Flores) Building Trust • (Frankel) Trust, Honesty, and Ethics in Business
"Does It Pay to Bluff in Business?" Norman E. Bowie
• A response to Carr.. • Carr's poker analogy and . . . • Labor relations • Undermining trust • Undermining the spirit of cooperation
"Why Business Leaders' Values Matter" Joanne B. Ciulla
• American culture honors successful business leaders • 18th and 19th centuries: success = strong moral character • 20th century: success = charisma, personality • Is there a relationship between virtue and success? • Is good (effective) leadership also good (moral) leadership?
Implications of relatavism
-There is no independent standard by which to judge the rightness or wrongness of other societies. -The idea of ethical progress loses its significance. -It wouldn't make sense to criticize the moral code of one's own society or culture.
Rights-Based Ethics
-We act within our rights and accord other people act within theirs. Right action is simply action within our rights and wrong action violates rights. • Rights may be negative - not to be harmed or deprived of free expression (liberties) • Rights may be positive - to be given what is promised your, including such things as medical treatment (benefits) • What is the role / obligation of business in this? Of government? • What ought we to do? What must we do?
Kantian Ethics
-"Categorical Imperative": We should always act in such a way that we can rationally will the principle that we are acting on to be a universal law. • Leaving someone to bleed to death on a road: why or why not? Under what conditions? • Act so that you see humanity as much in your own person of every other, always at the same time to an end and never merely as a means.
Deception and Unfairness in Advertising: Advertising to Children
-Advertising to children: Children are particularly susceptible to the exaggerations of advertising. -Advertisers say that parents still control what gets purchased and what doesn't. -Critics doubt the fairness of selling to parents by appealing to children. -Childhood obesity: The Institute of Medicine's 2005 report, reviewing 123 research studies spanning 30 years, showed that exposure to TV ads is "associated" with obesity in children under twelve.
Three questions for every day in the workplace
-Am I doing the right thing? -Am I doing it the right way? -Am I doing it for the right reasons?
Virtue Ethics
-Aristotle, Confucius • Not rule-centered; concentrates on being good as persons • Asks what kind of person do we want to be? How do we want to be seen by others we care about? • "Be" rules, rather than "do" rules • Role models are critical for learning
"Boundaryless Careers and Employability Obligations" Harry J. Van Buren III
-Boundaryless careers unfold in multiple employment settings • Employee may be short term, temp, contract worker • Increased flexibility for the employer • Increased risk to the employees • Contrast with a traditional career • Employer offers job security and invests in employee • Employee with rare, sought-after skills versus employee who is easily replaced • Short-term workers usually not unionized or sufficiently protected by employment contracts • Employers' obligation to invest in workers
Product Safety
-Business's general responsibility for product safety, due to: The 1) complexity of an advanced economy and the 2) necessary dependence of consumers on business to satisfy their many wants increase business's responsibility for product safety. The legal liability of manufacturers: The 1916 MacPherson vs. Buick Motor Car case expanded the liability of manufacturers for injuries caused by defective products. -Prior to that case, consumers could recover damages only from the retailer of the defective product. -The MacPherson case replaced the older caveat emptor ("let the buyer beware") doctrine of consumer-seller relationship with a due care one. Strict product liability: The MacPherson case still left the injured consumer with the burden of proving that the manufacturer had been negligent. -Negligence is difficult to prove. -A product might be unsafe despite the manufacturer's having tried to exercise caution. Strict product liability: In the 1960s, legal thinking became dominated by the doctrine of strict product liability, based on: -Henningsen vs. Bloomfield Motors (1960) -Greenman vs. Yuba Power Products (1963) -This holds the manufacturer responsible for injuries suffered as a result of defects in the product, regardless of whether the manufacturer was negligent. -Government safety regulation: In 1972, Congress passed the Consumer Product Safety Act. -It empowered the Consumer Product Safety Commission (CPSC) to protect the public against "unreasonable risks of injury associated with consumer products." -The CPSC aids consumers in evaluating product safety, develops uniform standards, gathers data, conducts research, and coordinates product safety laws (local, state, federal) and enforcement.
The Debate over Advertising
-Consumer needs: Defenders of advertising (such as Harvard business professor Theodore Levitt) view its imaginative, symbolic, and artistic content as answering real human needs. -Manipulation: Critics (such as John Kenneth Galbraith) say that advertising manipulates those needs or even creates artificial ones. He also suggests that: -The same process that produces products also produces the demand for those products (the dependence effect). -Advertising encourages a preoccupation with material goods and leads us to favor private consumption at the expense of important public goods and services. -Market economics, free speech, and the media: Defenders of advertising say that it has three advantages: -It is a necessary and desirable aspect of a free-market system -It is a protected form of free speech -It is a useful sponsor of the media, especially television
Product Safety (2)
-Economic costs: Safety regulations benefit consumers but raise the price of products - critics worry that the expense is not always worth it. -Consumer choice: Consumers may dislike some mandated safety technology - but in other cases safety regulations may prevent individuals from choosing to purchase a riskier, though less expensive, product. -Legal paternalism: The idea that the law may justifiably be used to restrict the freedom of individuals for their own good. (1) In the increasingly complex consumer world, the assumption that consumers know their own interests better than anyone else is doubtful. (2) Paternalistic regulation may infringe individual autonomy but bring more gain in social welfare. (3) Some product safety affects not just consumers who purchase products but also third parties.
Utalitarianism
-John Stewart Mill -Choose an act that is best that: 1) increases human happiness and 2) decreases human suffering. • Utilitarianism calls for maximization. • Ratio of good to bad outcomes • Not just " the greatest good for the greatest number"...direct and indirect consequences for various groups of people (college students vs. tax cuts)
The justification of moral norms
-Moral philosophers study mainly the justification, rather than the origin, of moral norms. -The claim that morality is based on religion: -Religion provides incentives to be moral -Religion provides moral guidance - Moral norms are in essence divine commands
Morality and personal values
-Morality in the narrow sense: The moral principles or rules that do, or should, govern the conduct of individuals in their relations with others -Morality in the broad sense: The values, ideals, and aspirations that influence the decisions and lifestyles of individuals and entire societies -Business ethics are mainly concerned with morality in the narrow sense. -But values, ideals, and aspirations also affect the behavior and ethical choices of business professionals.
Deception and Unfairness in Advertising (Savan, The Bribed Soul)
-The goal of advertising: Advertising provides little useful information about goods and services, but has as its goal to persuade us to buy certain ones. -Deceptive techniques: Providing frank product information is not always the most effective way to sell something - advertisers are tempted to misrepresent and deceive by exploiting ambiguity, concealing facts, exaggerating, and using psychological appeals.
Relativism and the "game" of business
-The idea that business is a just game captures the thesis of Albert Carr. -He argued that business professionals are expected to follow a code that has little or nothing to do with ethics in other contexts. -This view entails - incorrectly - that the practices of business professionals cannot (or should not) be evaluated from an ordinary moral standpoint.
Moral principles and self-interest
-The morality of an action can run counter to our self-interest -The moral point of view requires that we restrict our self-interest to satisfy social co-existence. -In situations of conflict between moral principles and self-interest, it is important to appeal to shared principles of justification.
"Exploring the Managed Heart" Arlie Hochschild
-The one area of her occupational life in which she might be "free to act," the area of her own personality, must also be managed, must become the alert yet obsequious instrument by which goods are distributed." - C. Wright Mills • "When he...." A child laborer in a wallpaper factory. • Delta Airlines Stewardess Training Center • Producing service: The emotional style of offering the service is part of the service itself • What does it mean to be "managed"? To be a "manager"?
Ethical relativism
-The view according to which moral norms derive their ultimate justification from the customs of the society in which they occur. -This means that moral norms are not universal, but are dependent upon a particular cultural or social context.
Why do Companies Adopt Sustainable, Socially Responsible Business Practices?
1. Financial Drivers • Research reports mixed relationship between financial performance (includes relationship with some external stakeholders, such as shareholders and investors) and socially responsible business practices. • Financial effects vary by industry, community, and stakeholder relationships 2. Non-Financial Drivers • Ethical values and principles, identity and reputation,regulation, community pressures and membership • Research indicates that these are significant drivers and motivators 3. Ecosystem Concerns AMA study (2007): Survey of 1500 companies worldwide found this to be the most significant driver of sustainable business practices.
What it means to have principles
Accepting moral principles is not just a matter of intellectual recognition, but of profound individual commitment to a set of values
Corporate Social Responsibility and Crisis" Richard Parker
Adolf Augustus Berle • Proposed controls on business to prevent another crash like the one in 1929 • Government would have final responsibility • Businesses should be responsible to all stakeholders
Some Paradoxes of Whistleblowing" Michael Davis
Burden - cost to the whistle-blower Harm - what counts as harm? Failure - whistle-blowing may not prevent harm
"Morality, Money, and Motor Cars" Norman Bowie
Business has no obligation to protect the environment • Business has the obligation to avoid intervening in the political arena in order to weaken or defeat environmental legislation • Business has obligation to obey the law • The noninterventionist policy
"Integrity" Lynne McFall
Coherence • Consistency between one's principles • Upholding them in the face of temptation • For the right reasons • Integrity and importance • Principles must be important • Integrity, friendship, and the Olaf principle • Identity-conferring commitments
"Confucian Trustworthiness" Daryl Koehn
Confucianism says that people have an obligation to become refined and trustworthy (jen) • Make allowances for people rather than accusing them of betrayal • Examine yourself more than others • Contracts cannot be the basis for trust • Guanxi, family connections
Conscience and its limits
Conscience is not always a reliable guide because it can be (1) conflicted and (2) erroneous.
"Trust, Honesty, and Ethics in Business" Tamar Frankel
Culture considered as social habits: Trust and alternative verification, that people tell the truth and keep their promises. • Social barriers to Abuse of Trust • Morality: Self-regulation, rather than enforcement • Law: Government (judicial) imposed constraints. ex. Sarbanes Oxley Act. • Market: Open information, regulation and free market • Inevitable reduction in trust. • What do you believe? What do you see?
Business and Ecology
Definition of ecology: The science of the interrelationships among organisms (especially humans) and their environments. -Ecosystems: A total ecological community, both living and nonliving, webs of interdependency structure ecosystems - a change in one element can have ripple effects through the system. -Business inevitably intrudes into ecosystems as it produces the things we want - but not all or all kinds of intrusions are justifiable.
Justice
Definitions of justice: Justice is related to morality as part to a whole Two types of justice: retributive (criminal justice system based on fair (?) punishment) and distributive (fair allocation of resources). Talk of justice generally involves related notions of: 1) fairness 2) equality 3) desert and 4) rights.
"Defining Secrecy—Some Crucial Distinctions" Sissela Bok
Differences between lying and secrecy (intentional concealment) • Depth of secrecy (sacredness, intimacy, privacy, etc.) • Distinction between secrecy and privacy • Where secrecy and privacy overlap • Conflicts over secrecy in business • What does this have to do with business, anyway? • Application: UPS Confidential and Proprietary Information (p. 8)
Five rival principles of distribution
Each an equal share Each according to individual need Each according to personal effort Each according to social contribution Each according to merit
Giving Feedback: The Consultant's Craft" Sue De Wine
Feedback is information about... • A person's behavior • The impact that behavior can have on others • Types of feedback • Evaluative: "You are undependable" • Interpretive: "You are trying to do too many things" • Descriptive: "You were 45 minutes late today" Effective feedback • Useful content • Timeliness • Clarity and accuracy Tips on providing feedback • Be clear, especially about negative feedback • Be specific, not general • Refer to actions, not to personalities • Tailor feedback to the person • Use humor if appropriate • Be subtle if appropriate
"Finance Ethics", John R. Boatright
Financial markets: Markets must be fair (substantively and procedurally) • Unfair trading practices (fraud (information,), manipulation, insider trading) -> unfair treatment in transactions and loss of investor confidence in markets. • Fair conditions (level playing field) -> information asymmetry, insider trading, inequalities of bargaining power. • Financial contracting - > Express and implied contracts, limitations in cognitive ability to process, complexity. • Financial services: a solution • Fiduciaries and agents - entrusted to act on behalf of someone (Principal): conflict of interest (in-house incentives, confidentiality of information, "piggyback trading,"), inability of principals to monitor agents (opportunism (shirking), moral hazard (risk is shifted onto others), adverse selection (less suitable prospects to seek more insurance). • Sales practices -> ("twisting": replacing a policy for the commission; "flipping" and other forms of loan abuse.; predispute arbitration (PDAA)) • Financial services firms (institutional investors) -> political contributions; other conflicts of interest; "hands off" or "on" • Financial management: Deploying assets (running the company) rather than investing them • Balancing competing interests: shareholder wealth maximization(SWM) and competing interests (ex. level of risk and hostile takeovers) • The level of risk (systemic risk vs. unique risk) - bankruptcy for all stakeholders, or just for shareholders. • Hostile takeovers: whose responsibility? Accountability to whom?
"Work and Life" Joanne B. Ciulla
Four values • Meaningful work • Leisure time • Money • Security
"The Cringing and the Craven: Freedom of Expression in the Workplace" Bruce Barry
Freedom of expression is often constrained in the workplace. • Political views different from employer's • Criticizing employer • Kinds of expression • At work versus during off-work hours • Public speech versus private speech • Content related to work versus content not related to work • Why this issue is becoming more important • Legal rulings and precedents • Changes in the workplace • People spending more hours at work • Advances in technology • Growing awareness among researchers and managers • U.S. law has not evolved over the years to allow for employee freedom of expression.
"3 Steps to a More Honest Business" Adelaide Lancaster
Honesty with others • Customers • Employees • Honesty with self • What do you want from your business? • Honesty about the experience • Don't make your story too polished and perfect
Cigarette Health Warning (US): 1966-2013
In 1966, the United States became the first nation in the world to require a health warning on cigarette packages. • In 1973, the Assistant Director of Research at R.J. Reynolds Tobacco Company wrote an internal memorandum regarding new brands of cigarettes for the youth market. He observed that, "psychologically, at eighteen, one is immortal" and theorized that "the desire to be daring is part of the motivation to start smoking." He stated, "in this sense the label on the package is a plus." • In 1999, Philip Morris U.S.A. purchased three brands of cigarettes from Liggett Group Inc. The brands were: Chesterfield, L&M, and Lark. At the time Philip Morris purchased the brands from Liggett, the packaging for those cigarettes included the statement "Smoking is Addictive". After Philip Morris acquired the three Liggett brands, it removed the statement from the packages.
Mill on justice as a moral right
Justice implies something that is not only right to do, and wrong not to do, but something that an individual can claim from us as a moral right
Workplace Bullying" Loraleigh Keashly
Kinds of bullying • Physical/verbal, active/passive, direct/indirect • Threats to professional status • Personal insults or abuse • Isolation and withholding information • Unrealistic expectations • Destabilization - not getting credit for work, removing responsibility • Bullying can occur boss to subordinate, peer to peer, subordinate to boss• Characteristics of bullying versus other conflict • Repeated and patterned • Prolonged over time • Power imbalance • Cyberbullying has unique characteristics • Bully can be anonymous • Impact can be global • Messages can be hard to remove from Internet
"Lies That Fail" Paul Ekman and Mark G. Frank
Lies betrayed by thinking clues • Unprepared, or can't remember the lie • Lying about feelings • Concealing emotion or portraying a false one • Feelings about lying • Fear of being caught • Deception guilt
"Loyalty, Corporations, and Community" George D. Randels
Loyalty, duty, and virtue • What is loyalty? • Linked to one's self-identity • Loyalty and the standard account of business • Capitalist mindset assumes everyone will act out of self interest • Loyalty is not the opposite of self-interest • Being loyal is investing yourself in the object of loyalty • Corporate loyalty in the postmodern business world • A corporation may be a community
"Information Ethics in a Worldwide Context" Elizabeth A. Buchanan (1999)
Qualities of the information age • Information inequity • An imbalance in access to information • Control, dissemination, and content construction • Third-world citizens unable to contribute • Qualitatively grounded inequities • Cultural values Information commoditization • The Internet: Perpetuating inequity worldwide • More universality, less cultural uniqueness • Traditional cultures unprepared for an onslaught of Western points of view • English-language imperialism
Rawls's Theory of Justice: Justice as Fairness
Main features: John Rawls (1921-2002), one of the most influential contemporary social and political philosophers, suggests a social concept of justice in his ground-breaking work A Theory of Justice. Two important features of Rawls's theory: The hypothetical-contract approach The principles of justice that Rawls derives through it The original position: Rawls proposes a thought experiment - individuals are allowed to choose the principles of justice that should govern them prior to any existing political or social arrangement. The nature of the choice: Each individual will choose the set of principles that will be best for him/herself (and loved ones). The veil of ignorance: To avoid disagreement with others while pursuing one's self-interest, all circumstances and conditions that can influence one's choice of principles of justice (economic background, talents, privileges, etc.) ought to be removed. Once the basis for bias is eliminated, the groundwork for a choice of fair principles of justice is established. Choosing the principles: Regardless of their particular interests, people in the original position will want more, rather than less, of the so-called primary social goods (income and wealth, rights, liberties, opportunities, status, and self-respect). The maximin principle: People in the original position will also choose conservatively, by trying to maximize the minimum that they will receive. They want to make sure that the worst that could happen to them is the least bad of the alternatives Two Principles of Rawls' Theory: 1.Each person is to have an equal right to the most extensive total system of equal basic liberties, compatible with a similar system of liberty for all. 2.Social and economic inequalities are to satisfy two conditions: 1. To be attached to positions open to all under conditions of fair equality of opportunity, and 2. To give the greatest expected benefit to the least advantaged members of society. Explanation of the Principles 1. The first principle takes priority over the second - it guarantees as much liberty to individuals as possible, compatible with others having the same amount of liberty. 2. The first part of the second principle articulates the familiar ideal of equality of opportunity. 3. The second part of the principle - called the difference principle - stipulates that inequalities are justifiable only if they benefit the least advantaged members of society. Fairness and the basic structure: Rawls rejects utilitarianism because it could permit an unfair distribution of benefits and burdens. Contrary to Nozick, Rawls believes that social justice concerns the basic structure of society, not transactions between individuals. Benefits and burdens: According to Rawls, justice requires that the social and economic consequences of arbitrarily distributed assets (natural characteristics and talents) be minimized
Marketing Defined
Marketing is "an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders." -- American Marketing Association • At the base of this concept is an exchange relationship between a seller and a buyer.
Sustainable Business Practices in Global Companies
Operational Controls and Human Resource Practices -Employee selection, compensation, training and development, working with suppliers -Eco-efficiency Practices -Operational practices such as reducing greenhouse gas emissions,,reducing waste materials, improving energy efficiency) -Employee-centered Ethical Practices -Work-life balance, empowered decision-making, financial transparency, attention to employee health and safety concerns, ethical accountability at all levels
Common-Sense Ethical Pluralism (Ethical Intuitionism)
Ordinary ethical principles: • Prohibit injustice, harming others, lying, and breaking promises • Calling for good deeds toward others, and • Making efforts for self-improvement
Organizational Norms
Organizational norms- Employees of business organizations (especially corporations) are: -Expected to further profit goals -Often pressured to compromise moral values and ignore or violate rules of ethical conduct -Conformity: Studies show that individuals are more prone to act unethically when they are a part of an organization or a group. -Groupthink: The pressure on group members to conform to morally questionable policies or strategies, often resulting in unethical conduct. -Diffusion of responsibility: The multiplicity, complexity, and distribution of tasks that can lead individuals to feel less responsibility or accountability for their actions.
"Facial Discrimination" Harvard Law Review
People judged unattractive are discriminated against • Standard job interviews allow for discrimination on basis of attractiveness • Options include telephone interviews or interviewing behind a screen • Interviewers could pass along objective information to a decisionmaker • Efficiency does not justify discrimination
"On Pleasure" Epicurus
Pleasure versus pain • Pleasure is freedom from pain in the body and from trouble in the mind • We act to avoid pain and fear • Pain is the absence of pleasure
Other Areas of Business Responsibility
Product quality: Warranties are obligations for product quality and reliability that sellers assume. -There are two kinds of warranty: (1) Express: The claim that a seller explicitly states (2) Implied: The claim, implicit in any sale, that a product is fit for its ordinary, intended use, called the implied warranty of merchantability - it's not a promise that the product will be perfect but a guarantee that it will be of passable quality Pricing: For many consumers, higher prices mean better products, so sellers raise prices to give the impression of superior quality or exclusivity - but higher prices do not always mean better quality. -Manipulative pricing: Consumers are misled by prices that conceal a product's true cost - this trickery or manipulation raises moral questions about business's view of itself and its role in the community. Price fixing: The effort to control a given market and conspire to force consumers to pay artificially high prices. There are two kinds of price fixing: (1) Horizontal: Occurs when competitors agree to adhere to a set price schedule (not to cut prices below a certain minimum, or to restrict price advertising or the terms of sales or discounts). (2) Vertical: Takes place when manufactures and retailers, as opposed to direct competitors, agree to set prices. Price gouging: A seller's exploitation of a short-term situation by raising prices when buyers have few purchase options for a much-needed product. -Thought generally viewed as unethical, there is disagreement about what it is and whether all instances of it are wrong. -The question "What is a fair price?" is not an easy one to answer - one must consider the costs of material and production, operating and marketing expenses, profit margin, etc.
Triple Bottom Line
Profit (economic prosperity) Planet (environmental prosperity) People (social equity)
The Responsibilities of Business
Protecting the consumer requires more than just obeying the law. It also requires business to: (1) Give safety the priority warranted by the product (2) Abandon the misconception that accidents result solely from consumer misuse (3) Monitor closely the manufacturing process itself. (4) Review the safety implications of their marketing and advertising strategies (5) Provide full details about product performance (6) Promptly investigate consumer complaints -Some businesses respond quickly to suspected hazards. Examples of two successful companies: -JCPenney and Burning Radios: It withdrew an entire line of defective radios, ran national ads to inform the public, and offered immediate refunds. -Johnson Wax and Fluorocarbons: It withdrew all its aerosol fluorocarbon products worldwide after studies showed the released chemicals were depleting the earth's fragile ozone layer.
Utilitarian View: happiness and well-being is key
Reconciling rival principles of justice: Mill argued that rival principles of justice can be reconciled only on the basis of the principle of utility, such as through considerations of general well-being. However, Utilitarianism does not tell us which economic system will produce the most happiness Deciding which system will promote most happiness depends on knowing: The type of economic ownership The form of production and distribution The type of authority arrangements The range and character of material incentives The nature and extent of social security and welfare provisions Worker participation: In his Principles of Political Economy (1848), Mill argued for the formation of labor and capital partnerships promoting equality between workers and industrialists. Greater equality of income: Utilitarians are more likely to favor equal income distribution on the basis of the so-called declining marginal utility of money
How do we Achieve our Environmental Goals?
Regulations: The use of direct public (state and federal) regulation and control in determining how the pollution bill is paid. Four drawbacks: (1) Requiring firms to use the strongest feasible means of pollution control is problematic. (2) Although regulations treat all parties equally, this often comes at the cost of ignoring the special circumstances of particular industries and individual firms. (3) Regulation can take away an industry's incentive to do more than the minimum required by law. (No polluter has an incentive to discharge less muck than regulations allow. No entrepreneur has an incentive to devise technology that will bring pollution levels below the registered maximum.) (4) Regulation can also cause plants to shut down or relocate Incentives: A widely supported approach to the problem of cost allocation for environmental improvement through government investment, subsidy, and general economic incentive (e.g. by means of tax cuts, grants or awards). -The advantage is that it minimizes regulatory interference and coercion. -The disadvantage is that it moves slowly, pays polluters not to pollute, and is not always cost-effective. Pricing mechanisms: Also called effluent charges, they spell out the cost for a specific kind of pollution in a specific area at a specific time. Prices are tied to the amount of damage caused so may vary from place to place and time to time. Pollution permits: Allow companies to discharge a limited amount of pollution or trade pollution "rights" with other companies. -Critics argue that this approach entails an implicit right to pollute, and reject this as immoral.
"Is It Better to Be Loved than Feared?" Niccolo Machiavelli
Safer for a leader to be feared than loved • Love is more fickle than fear of punishment • But try not to be hated • Especially don't take people's property • Be tougher in military contexts • A reputation for cruelty keeps your army under control • If you don't have these qualities, just appear to have them • That will work just as well
"Business Ethics Gone Wrong" Alexei M. Marcoux
Shareholders and stakeholders • Corporate social responsibility (CSR) is negative toward capitalism • Stakeholder theory undermines the value of shareholder property Stakeholder theory makes it harder to discipline self-serving managers • Stakeholder theory allows politics and interest groups into business, reducing efficiency • Stakeholder theory is a flawed business ethics
"Values in Tension: Ethics Away from Home" Thomas Donaldson
Should a company invest in a country where civil and political rights are violated? • (Cultural) Relativism versus absolutism • Balancing the extremes -- 3 guiding principles: 1) respect for core human values, 2) respect for local traditions, and 3) the belief that context matters when deciding what is right or wrong • Defining the ethical threshold: core values • Creating an ethical corporate culture • Conflicts of development and conflicts of tradition • Guidelines for ethical leadership • Treat corporate values and formal standards of conduct as absolutes • Design and implement conditions of engagement for suppliers and customers • Allow foreign business units to help formulate ethical standards and interpret ethical issues • In host countries, support efforts to decrease institutional corruption • Exercise moral imagination
Reconciling rival principles of distribution
Some philosophers argue that principles are applicable in some circumstances and not in others - but it is not always clear how to reconcile two or more rival principles in the same circumstances.
The Ethics of Environmental Protection
The "free rider" problem: Protecting the environment is in everyone's self-interest, but a company may rationalize (unfairly) that the little bit it adds to the total pollution problem doesn't make any difference. -So, it benefits from the efforts of others to prevent pollution but "rides for free" by not making the same effort itself. Questions about the costs of pollution control: (1) What kind of environment do we want? (2) What is required to bring about the kind of environment we want? -The costs of pollution control: Determining the cost of pollution control requires cost-benefit analysis - which is difficult because it involves controversial factual assessments and value judgments. Ecological economics: A recent discipline, which attempts to expand the boundaries of environmental cost-benefit analysis. -It calculates the value of an ecosystem in terms of what it would cost to provide the benefits and services it now furnishes us. -For example, the worth of a wetland in terms of the cost of constructing structures that provide the same flood control and storm protection that natural wetlands do. Who should pay the cost? This is a question of social justice. Two popular answers are currently in circulation: (1) Those responsible for causing the pollution ought to pay (2) Those who stand to benefit from protection and restoration should pick up the tab
Enron case
The Enron scandal, publicized in October 2001, eventually led to the bankruptcy of the Enron Corporation, an American energy company based in Houston, Texas, and the de facto dissolution of Arthur Andersen, which was one of the five largest audit and accountancy partnerships in the world. In addition to being the largest bankruptcy reorganization in American history at that time, Enron was cited as the biggest audit failure.[1] Enron was formed in 1985 by Kenneth Lay after merging Houston Natural Gas and InterNorth. Several years later, when Jeffrey Skilling was hired, he developed a staff of executives that - by the use of accounting loopholes, special purpose entities, and poor financial reporting - were able to hide billions of dollars in debt from failed deals and projects. Chief Financial Officer Andrew Fastow and other executives not only misled Enron's Board of Directors and Audit Committee on high-risk accounting practices, but also pressured Arthur Andersen to ignore the issues
"Four Concepts of Loyalty" David E. Soles
The idealist account • Willing, practical, sustained service • Patriot to country or captain of ship • Companies are not worthy of idealist loyalty The common-sense conception • Positive attitude, obligations, personal connection • Note that you can't have a duty to feel positive about something! • This loyalty is compatible with whistle-blowing Loyalties as norms • A norm defines a moral community • Not a helpful definition for moral questions The minimalist account • Meeting reasonable expectations • Carrying out responsibilities • Employees ought to be loyal in this sense • But that doesn't mean remaining silent about unethical activities
Conscience
The internalized set of moral principles taught to us by various authority figures - parents and social institutions.
Where are Business Ethicists when you need Them?
The lack of awareness of the ethical implications of the information age is the "myth of amoral computing and information technology." The myth says that computers are not good or bad, information systems are not good or bad - they simply have a logic and rationality of their own. • The task of the business ethicist in the present period of (technology) transition - and a task in which few are engaged - is to help anticipate the development and ease the transition by not losing the sight of the effects on people.
Libertarian View: individual liberty is key
The principle of liberty: Libertarians refuse to restrict individual liberty even if doing so would increase overall happiness. Nozick's theory of justice: Nozick developed an influential statement of the libertarian position in his book Anarchy, State, and Utopia, based on the idea of negative and natural rights borrowed from the writings of the British philosopher John Locke (1632-1704). Principles of Nozick's entitlement theory: A person who acquires a holding in accordance with the principle of justice in acquisition is entitled to that holding. A person who acquires a holding in accordance with the principle of justice in transfer, from someone else entitled to the holding, is entitled to the holding. No one is entitled to a holding except by (repeated) applications of statements 1 and 2 Distinctive libertarian ideals: Liberty: Libertarians support economic laissez-faire and oppose any governmental economic activity that interferes with the marketplace, even if the point is to enhance the performance of the economy. Free markets: Libertarians don't contend that people morally deserve what they get in a free market, but only that they are entitled to it. Moreover, justice does not necessarily help those in need Property rights: For libertarians, property rights exist prior to any social systems and legislative acts, reflecting one's initial appropriation of a product or exchange between consenting adults. Criticisms of libertarian property rights: Property includes more than material objects. It also has many abstract forms. Property ownership is not a simple right but involves a bundle of different rights
"Why Shouldn't Corporations Be Socially Responsible?" Christopher D. Stone
The promissory argument: relationship between corporation's obligations to shareholders. • The agency argument: shareholders designate mangement as their agents • The role argument: assumed role or status • The "polestar" argument: moral arguments are "peculiar, arbitrary, or vague - perhaps even meaningless." They are intangible and unmeasurable.
The 1 Percent: How Lucky They Are" Greg Beining
The richest 1% become rich by chance Capitalism inevitably puts wealth in the hands of a few Are the superrich entitled to keep all of their money?
Business Ethics
The study of right and wrong, duty and obligation, moral norms, individual character, and responsibility - in the context of business
Ethics
The study of right and wrong, duty and obligation, moral norms, individual character, and responsibility.
Economic justice concerns a network of moral issues in our society.
These issues are raised by society's norms about distribution of wealth, income, status, and power. Should CEOs give themselves enormous salaries at the expense of stockholder profits and employee salaries? Should expensive medical procedures be available only to those who can afford them? Should corporations be treated in the same manner as individual citizens? What are the moral rights and obligations of corporations as citizens and community members?
The Ethics of Environmental Protection: Who should pay the cost?
Those responsible: Business has profited greatly from treating the environment as a free good, but consumers have paid lower costs for products. -Some would blame consumers, not businesses, for pollution because they create demand for products whose production impairs the environment. -But, this argument fails to recognize the deep-rooted causes of pollution - population growth, increasing urbanization, and rising affluence. -Those who would benefit: Critics of this argument point out that every individual, rich or poor, and every institution, large or small, stands to benefit from environmental protection and restoration, albeit not necessarily to the same degree. -The problem: If pollution concerns all of us to a different degree, how would we determine the amount individuals and companies should pay, based on the degree to which they benefit?
Corporate Sustainability
To create and implement business strategies and business practices that serve to benefit multiple stakeholders and achieve operational and strategic success: • "Corporate Sustainability can accordingly be defined as meeting the needs of a firm's direct and indirect stakeholders (shareholders, employees, clients, pressure groups, and communities, etc.) WITHOUT compromising its ability to meet the needs of future stakeholders as well. • Toward this goal, firms must maintain and grow their economic, social, and environmental capital base while actively contributing to sustainability in the political domain. " (Dyllick and Hockert, 2002)
Delving Deeper into Environmental Ethics: More Questions
To satisfy its disproportionate consumption of nonrenewable resources, America turns to foreign lands. -This raises two critical moral questions: (1) How is the continued availability of foreign resources to be secured? (2) Does any nation have a right to consume the world's irreplaceable resources at a rate so grossly out of proportion to the size of its population? -Obligations to future generations: A broader view of environmental ethics considers our duties to other societies and upcoming generations. -Some say we must respect the right of future generations to inherit an environment that is not seriously damaged. -Others argue that by putting ourselves in the "original position," we can balance our interests against those of our descendants. Factory farming: Business's largest and most devastating impact on animals is the production of animal-related products—in particular, meat. -The economizing of the meat and animal-products industries leads to their treating animals in ways that many reject as cruel and immoral. -Is it wrong to eat meat? The answer depends on whether animals have moral rights, and whether and to what extent these rights are on a par with human rights. The value of nature: A radical approach to environmental ethics challenges the human centered assumption that preserving the environment is good only because it is good for us. -Adopting a naturalistic, non-anthropocentric ethic would change our way of looking at nature, but many philosophers are skeptical of the idea that nature has any intrinsic value. Our treatment of animals: Business affects the welfare of animals very substantially. -One way is through experimentation and the testing of products on animals. -Critics such as Peter Singer contend that most experiments and tests are unjustified on moral grounds because animals have moral rights. -Utilitarians stress the moral necessity of taking into account animal pain and suffering.
Business's Traditional Attitudes Toward the Environment
Traditionally, business has regarded the natural world as a free and unlimited good - pollution and the depletion of natural resources is the result. -Spillover: Unintended costs to third parties from transactions; also called "externalities" -In viewing things strictly in terms of private industrial costs, business overlooks spillover. -So business often derives a profit from a product without considering the overall social cost - the damage the product or the production process has caused to the environment and human populations
Aristotle on justice as fairness
Treat similar cases alike except where there is some relevant difference
An Ethical Framework for Marketing Ethics
What moral / ethical principles underlie a market exchange? 1) The transaction must be truly voluntary • Is the exchange "voluntary"? 2) Informed consent is needed • Is the consent to exchange really "informed"? 3) Benefits might not occur • Are people truly benefited" 4) Other values might conflict • Justice - is it fair? • Market failure (externalities)
"The Social Responsibility of Business Is to Increase Its Profits" Milton Friedman
• Can a business's (corporate executives') actions can be rationalized as "social responsibility"? To whom are they accountable? • "There is one and only one social responsibility of business - to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud." • The responsibility of a business is to increase profits • Without fraud or illegal activity • "Business" social responsibilities • Can a business have responsibilities? • Individual business people and "social responsibility" • Should he or she spend his employer's time and money? • When is he or she acting as a citizen and when as an individual? • Would that make the businessman a public servant?
"Silence As Complicity: Elements of a Corporate Duty to Speak Out Against the Violation of Human Rights" Florian Wettstein
• Changing nature of wrongdoing in the global age • Direct, indirect, beneficial, and silent complicity • Two requirements for silent complicity: • Omission: Agent failed to speak out to protect victims • Legitimization: This omission had a legitimizing effect • Omission requirement • A positive duty to speak out • Voluntariness: Agent must have autonomy • Connection: Agent must be connected to the violation in a morally significant way • Power: Agent must have power to influence situation in a positive way • Legitimization requirement • Agent's silence implies endorsement • Implied endorsement serves to legitimize the violation
"Doing Business in Dangerous Places" The Economist
• Kinds of risks: violence, disease • Employers' obligation to reduce the risk • Risks must be kept under review • The employee may consent to risk for the wrong reasons • The "boiling frog" syndrome
"Moral Leadership and Business Ethics" Al Gini
• Leadership is a two-way relationship -Leaders are powerless without followers • Leadership is value-laden -Leaders cannot have completely self-serving agendas • Leadership requires mutual goals -Leaders and followers share a common purpose • Corporations can create a self-contained worldview • Internal loyalty becomes more important than external ethics • Anything that serves the company is rationalized • Neither leaders nor followers are independent agents • Like fiefdoms of the Middle Ages • A commitment to moral leadership must start at the top
"On Bullshit" Harry G. Frankfurt
• Lying (deliberately promulgating a falsehood) and bluffing (a matter not of falsity but of fakery). They are both modes of misrepresentation or deception. • Bullshitting: "the essence of bullshit is not that it is false, but that it is phony." • Is bullshit morally different from bluffing and lying? When is bullshit harmful and when is it benign?
"What Is (Good) Leadership?" Joanne B. Ciulla
• Our fascination with pizzazz • Is charisma really more important than ethics? • It's good to be king! • Holding leaders to moral standards • The challenge of consistency • Morally inconsistent leaders lose trust • Machiavellianism and Robinhoodism • "He's our son-of-a-bitch"• Ethics and effectiveness • In some cases one and the same • Unethical or stupid? • Incompetence can create unethical outcomes • Blinding morality • Overly strong convictions can be blinding
"Intellectual Property Rights and Computer Software" (2001) Deborah C. Johnson
• The philosophical basis of property: Social utility vs. social justice or natural rights. • What is property? What is ownership? • How does this relate to software? • Natural rights argument: John Locke • Locke's labor theory of property: based on the "natural right of ownership via the labor one puts into creating and/or cultivating it." • Critique of moral rights in software • Eliminate property rights altogether • Intellectual things are not the same as tangible things • Copying a program and using it makes it another program: The question is to whom does the profit belong? • Against ownership: "mental steps" cannot be owned Consequentialist arguments: What are the consequences of ownership? What are the consequences of insufficient protection? • Profit • Incentives to create? • Development • Conclusions from the philosophical analysis of property • What is ownable? • How can we draw a line between what can and cannot be owned so that software developers can own something of value but not something that will interfere in the long rn with development in the field? • Is it wrong to copy proprietary software? • Prima facie obligation to obey the law
Two perspectives on the exchange relationship between a business and its customers
• The purpose of a business is to create and keep a customer. To do that you have to produce and deliver goods and services that people want and value at prices and under conditions that are reasonably attractive related to those offered by others. - Theodore Levitt • [The function of production] both makes the goods and makes the desires for them. It recognizes that production, not only passively through emulation, but actively through advertising and related activities, creates the wants it seeks to satisfy. - John Kenneth Galbraith
"The Bathsheba Syndrome: The Ethical Failure of Successful Leaders" Dean C. Ludwig and Clinton O. Longenecker
• The story of David and Bathsheba • David loses strategic focus • David has privileged access • David has control of resources • David has an inflated belief in his ability to control the outcome Success as an antecedent to ethical failure • David got into trouble because he had so much success and power The dark side of success • Success can have negative psychological effects, leading to moral failures •Advice to successful leaders • Don't assume it could never happen to you
"On the Good Life" Aristotle
• What is the highest of all goods achievable by action? • Life of pleasure or wealth • Political life • Contemplative life • The function of man • Happiness is the final end of all action • Pleasure and pain • Pleasure is not the final end itself, but accompanies the best activities
"Whistleblowing and Employee Loyalty" Ronald Duska
• Whistle-blowing as disloyalty? • Does one have a duty of loyalty to an employer? • Companies are not proper objects of loyalty • Companies are instruments for profit-making, not ends in themselves • Companies are not teams; business is not a game
"Servant Leadership: A Journey into the Nature of Legitimate Power and Greatness" Robert Greenleaf
• Who Is the servant-leader? • First desire is to serve others' needs • Do others grow while being served? • Everything begins with the initiative of an individual • What are you trying to do? "Dov Seidman: What are our goals? Freedom from or Freedom to..
