CH5 - Ethics of Business: The theoretical Basis

Question 1

Business ethics

Answer 1

rules, standards, codes or principles that provide guidelines for morally right behavior and truthfulness in specific situations
-> means different things to different managers

Question 2

3 (6 total) levels of ethical assessment

Answer 2

level 1 = awareness of moral or ethical implications

level 2 = ethical implications assessed upon individual, organizational, economic efficiency, governmental, and societal influences
-> value judgement purpose + moral standards of behavior
=> decisions or actions based upon influences

level 3 = implications assessed upon use of Ethical Principles
-> decisions / actions based upon systematic analysis of outcomes and benefits verses harms to stakeholders

Question 3

value judgments def

Answer 3

subjective evaluations of what is considered important
-> based on how managers intuitively feel about the goodness or rightness of various goals

Question 4

moral standards def

Answer 4

the means by which individuals judge their actions and the actions of others
-> based upon accepted behavior in society

Question 5

5 categories of influences

Answer 5

1. influences of individuals
2. corporate or organizational influences
3. economic efficiency influences
4. government and legal system influences
5. social influences

Question 6

ethical relativism def

Answer 6

belief that ethical answers depend on the situation and no universal standard or rules exist to guide or evaluate morality

Question 7

difference between value judgments, moral standards and ethical principles

Answer 7

VJ: decide what is right or wrong, subjective (manager’s own values)

MS: decision making, represent expectations of society, vary with indiv. and cultures, subjective and inconstant, intuitive

EP: examine standards of behavior and choice of goals, study of what is good/right in human beings, logical and systemically manner of thinking about morality, objective, are fundamental rules

Question 8

how should moral problems be defined

Answer 8

• as resulting in harms to some and benefits to others

Question 9

7 most cited principles of ethical analysis

Answer 9

1 self-interest
2 personal virtues
3 caring
4 utilitarian benefits
5 universal rules
6 individual rights
7 justice

Question 10

1. self-interest ethic def

Answer 10

(ethical egoism)
- individuals / corps set their own standards for judging the ethical implications of their actions
-> individual’s values and standards are the basis for actions

Question 11

problems with self-interest ethic

Answer 11

• considered easy way out because person relies on own beliefs without more complicated analysis
• viewed as selfish behavior
• leads to absolutism, failing to take into consideration interest of others

Question 12

enlightened egoist

Answer 12

def = attentive to the needs of others, and self-interest provides an incentive to restrain one’s self-interest
=> it is acceptable for an individual to be appropriately self-concerned as long as interests of others are considered (same for maximization of profits)

Question 13

2. personal virtues ethic def

Answer 13

An individual’s or corp’s behavior is based upon being a good person / corporate citizen
- emphasizes traits (virtues) such as courage, honestly, wisdom, generosity
- people should act in ways to convey honor, pride and self-worth
- virtues are acquired through learning and practice and will become habits

Question 14

3. Ethics of Caring

Answer 14

gives attention to specific individuals or stakeholders harmed or disadvantages as their particular circumstances
- responsibility for reducing harm / suffering of others
- solutions designed to respond to needs of particular individuals or stakeholders

Question 15

Advantages to ethics of caring

Answer 15

• responsive to immediate suffering or harm
• it allows for flexibility, enabling the manager to respond quickly to changing circumstances
• precedents are not a concen

Question 16

problems with ethics of caring

Answer 16

• lose sight of the bigger picture thus unintentionally harming some other stakeholders
• caring actions rely on subjective criteria that limit understanding of all factors involved

Question 17

4. utilitarian ethic

Answer 17

• focuses on the distribution of benefits and harms to all stakeholders with the view to maximizing benefits
  => “the greatest good for the greatest number”

Question 18

problems with utilitarian ethic

Answer 18

• does not account for what is just
• what should be maximized to result in community’s happiness?
• cannot accurately measure some costs and benefits (and/or risk of miscalculating them)
• no method for distributing costs or benefits

Question 19

5. Universal Rules ethic

Answer 19

Ensures that managers / corps have the same moral obligations in morally similar situations
-> “what individuals believe is right for themselves, they should believe is right for all others”
-> persons should be treated as end in themselves, worthy of dignity and respect and never as a mean’s to one’s own end

Question 20

categorical imperative ethics def

Answer 20

rules and morals in society should be fair to everyone, they should universally apply and apply over time

Question 21

problems with universal rules ethic

Answer 21

• difficult to determine if someone is being used merely as a means to an end
• not possible to always work to universal rules (i.e. exceptions exist)
• no scale between actions that are considered morally right or wrong

Question 22

6. Individual Rights ethic

Answer 22

relies on a list of agreed-upon rights for everyone that will be upheld by everyone and that becomes the basis for deciding what is right, just, or fair
- ex. rights to safety, information, privacy, property
-> governments identify rights in constitutions

Question 23

problems with individual rights ethic

Answer 23

• determining and agreeing upon the list of rights
• rights and/or holders of those rights can be in conflict
• rights are not absolute and overemphasis on one might result in injustice

Question 24

7. Ethic of Justice

Answer 24

Considers that moral decisions are based on the primary of a single value: justice which will result in fair outcome

Question 25

ethical dilemmas (ethics of justice)

Answer 25

conflict among rights that can be resolved by the impartial application of some general principle

Question 26

different types of justice (4)

Answer 26

1. procedural justice
2. corrective justice
3. retributive justice
4. distributive justice

Question 27

procedural justice def

Answer 27

involves the impartial application of rules or procedures

Question 28

corrective justice def

Answer 28

stakeholders are compensated appropriately for wrong or injustices that they have suffered, which can involve providing monetary payments

Question 29

retributive justice def

Answer 29

this form is concerned with punishing an individual / corp in a way that fits the offence but will be just and fair

Question 30

distributive justice def

Answer 30

There is a concern for how all stakeholders are treated. They are treated the same unless they differ in some relevant way. Criteria considered for similarity or difference include the stakeholder’s contribution or productivity, merit or seniority, needs and abilities. Benefits or harms are distributed in a way that is just and fait. This form of justice is often applicable in business situations

Question 31

advantages to ethics of justice

Answer 31

• looks at dilemmas logically and impartially
• all are perceived to gave an equal right to equitable treatment

Question 32

problems with ethics of justice

Answer 32

• difficult to decide, outside the law, who has the moral authority to reward or punish whom
• ensuring benefits distributed fairly is challenging
• interests of particular stakeholders may be overlooked
• perceived as being impersonal, inflexible, cold and uncaring

Question 33

ethical dilemmas

Answer 33

situation or problem where a person has to make a difficult choice between two alternative, neither of which revolves an issue/problem in an ethically acceptable fashion

Question 34

approach to handling ethical dilemmas

Answer 34

• identity the ethical principles involved
• review or analyze the problem using one of the ethical principles outlined above
• examine the problem from an ethical perspective different from the one(s) used initially

Question 35

Moral reasoning def

Answer 35

def = systematic approach to thinking or reasoning through the implications of a moral problem or issue

Question 36

steps to moral reasoning

Answer 36

-> define moral issue or decision
-> gather all relevant information
-> identify all the stakeholders involved
-> develop possible alternative solutions
-> consider applicable value judgments, moral standards, principles
-> identify harms/benefits to stakeholders
-> determine practical constraints
-> decide on action

Question 37

Approaches to Considering Ethical Implications in Business Decisions

Answer 37

Amoral (ignore ethical implications)
May be appropriate (evaluate alternatives with value judgments and moral standards)
Most appropriate (evaluate alternatives in terms of ethical principles)
Inappropriate (make decision and then search for value judgements + ethical principles to justify decision/ rationalize)

Question 38

Kohlberg’s Stages of Moral Development

Answer 38

-> Individuals have identifiable cognitive skill levels that they use in resolving moral dilemmas
-> developed over time as a result of educational experience and the socialization process in maturing from childhood to adulthood
-> six stages of moral development divided into three levels:
- Level 1: Pre-Conventional Level (self)
- Level 2: Conventional Level (Others)
- Level 3: Post-conventional Level (humankind)

Question 39

LEVEL I: Pre-conventional (Self)

Answer 39

• Stage 1 – Punishment and obedience orientation
• Stage 2 – Individual instrumental purpose/
  exchange

Question 40

LEVEL II: Conventional Level (Others)

Answer 40

• Stage 3 – Mutual interpersonal expectations
• Stage 4 – Law and order orientation

Question 41

LEVEL III: Post-Conventional Level (Humankind)

Answer 41

• Stage 5 – Social contract orientation
• Stage 6 – Universal ethical principle orientation

Question 42

Challenges in Ethics in Business

Answer 42

1. Too simplistic approaches
   Indicating “just do the right thing” is not satisfactory
2. Myths
   - Its easy the be ethical
   - Unethical behaviour in business is simply result of “bad apples”
3. Lack of awareness
   - most people believe they behave ethically towards others, but self-perception often falls short
   - four biases: prejudice, favoritism, overclaiming credit and conflict of interest