Ethics of Business

Question 1

Business ethics

Answer 1

rules, standards, codes, or principles
that provide guidelines for morally right behaviour and
truthfulness in specific situations
➢ Means different things to different managers

Question 2

Levels of Ethical
Assessment

Answer 2

Level 1 Awareness of moral or Ethical implication

Level 2 Ethical implications assessed upon Individual, Organizational, Economic Efficiency, Governmental, and Social Influences- value judgement of Purpose, Moral Standards of Behavior, Decisions based upon influences

Level 3 Implications Assessed upon use of Ethical Principles- Decisions based upon systematic Analysis of Outcomes, and benefits versus Harms to Stakeholders

Question 3

Value judgments

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

Answer 4

the means by which individuals
judge their actions and the actions of others
➢ Based upon accepted behavior in society

Question 4

Moral standards

Answer 4

the means by which individuals
judge their actions and the actions of others
➢ Based upon accepted behaviour in society

Question 5

Influences become bases for an individual’s value
judgments and moral standards that determine behaviour 1-5
what are the 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

Answer 6

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

Question 7

Peter Drucker

Answer 7

Culture eats strategy for Breakfast

Question 8

Moral problems should be defined as

Answer 8

resulting in
harms to some and benefits to others
➢ Introduces more realism in the business context

Question 9

Self-Interest Ethic and corp
(Ethical Egoism)

Answer 9

Individuals or corporations set their own standards for
judging the ethical implications of their actions
➢ Individual’s values and standards are the basis for actions

Question 9

Seven most cited principles of ethical analysis

Answer 9

self
interest, personal virtues, caring, utilitarian benefits,
universal rules, individual rights, and justice
➢ Ethical principles are applied the same way in any context →
not subjective measures rather objective statements

Question 10

Problems with self-interest ethic:

Answer 10

Considered easy way out because person relies on own beliefs
without more complicated analysis
➢ Viewed as selfish behaviour
➢ Leads to absolutism; failing to take into consideration interest of
others

Question 11

Enlightened egoist

Answer 11

attentive to needs of others, and self
interest provides an incentive to restrain one’s self-interest

Question 12

Maximization of profits is acceptable

Answer 12

as long as interests
of relevant stakeholders are considered
➢ Corporation must stay within rules of operation provided in
society through government

Question 13

Personal Virtues Ethic

Answer 13

An individual’s or corporation’s behaviour is based upon
being a good person or corporate citizen.
Act virtous, acquired through learning and practice.

“Does this action represent the kind of person I am or
want to be, or present the desired corporate image or
reputation?

Question 14

Ethics of Caring

Answer 14

Gives attention to specific individuals or stakeholders
harmed or disadvantaged and their particular
circumstances
➢ Responsibility for reducing harm or suffering of others
➢ Solutions designed to respond to needs of particular individuals
or stakeholders

Golden Rule

Question 15

Utilitarian Ethic

Answer 15

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 16

Utilitarian Ethic Problems

Answer 16

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 17

Universal Rules Ethic

Answer 17

Ensures that managers or corporations 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 means to one’s own ends

Question 18

Categorical imperative ethics

Answer 18

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

Question 19

Individual Rights Ethic agreed upon

Answer 19

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
➢ Examples: Rights to safety, information, privacy, property

➢ Governments identify rights in constitutions

Question 20

Individual Rights Ethic Problems

Answer 20

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 21

Ethic of Justice

Answer 21

Considers that moral decisions are based on the primacy
of a single value: justice which will result in fair outcome
➢ Ethical dilemmas are a conflict among rights that can be
resolved by the impartial application of some general principle

Question 22

Different types of justice

Answer 22

Procedural justice
➢ Corrective justice
➢ Retributive justice
➢ Distributive justice

Question 23

Retributive Justice

Answer 23

Seeking to punish the offender; suffer same as victim

Question 24

Distributive Justice (economic Justice)

Answer 24

Fairness in what people receive- fair share

Question 25

Restorative Justice (corrective justice)

Answer 25

Putting things back together; helps offender and victim.

Question 26

Procedural justice

Answer 26

Process used to share goods. people will accept what they think is fair. fair play

Question 27

Ethic of Justice Advantages:

Answer 27

Looks at dilemmas logically and impartially
➢ All are perceived to have an equal right to equitable treatment

Question 28

Ethic of Justice Problems

Answer 28

Difficult to decide, outside of 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 29

Ethical Dilemmas

Answer 29

Situation or problem where a person has to make a
difficult choice between two alternatives, neither of
which resolves an issue or problem in an ethically
acceptable fashion
* Approach to handling:

➢ Identify 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 30

Moral Reasoning

Answer 30

Systematic approach to thinking or reasoning through the
implications of a moral problem or issue

• Steps to moral reasoning:
  ➢ Define moral issue or decision
  ➢ Gather all relevant information
  ➢ Identify 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 31

Ethical Leadership Forms

Answer 31

Ethical → communicate ethical standards and encourage ethical
conduct
➢ Responsible → narrow orientation focused on financial
performance and extended orientation with stakeholder view
➢ Servant leadership → emphasizes concern for others, and
combines motivation to lead with the need to serve others
* Includes the design and implementation of corporate ethics
programs

Question 32

Statement of Values

Answer 32

A description of the beliefs,
principles, and basic assumptions
about what is desirable or worth
striving for in an organization.

Key components to value
statements:
➢ Key stakeholder interests to be
satisfied and balanced
➢ Emphasis on quality
➢ Efficiency
➢ Work climate
➢ Observance of codes of conduct

Question 33

Codes of Conduct
and Ethics

Answer 33

Code of conduct → explicitly states what appropriate
behaviour is by identifying what is acceptable and
unacceptable

• Code of ethics → a statement of principles or values
  that guide behaviour by describing the general value
  system within which a corporation attempts to operate
  in a given environment

Question 34

Types of codes

Answer 34

Corporate or business enterprise
➢ Professional organizations
➢ Industry and sector
➢ Single issue
➢ Codes from national and international bodies

Question 35

Codes institutionalize ethical behaviour by

Answer 35

Increasing awareness
➢ Discouraging ethical apathy
➢ Facilitating ethical decision making
➢ Making it easier to refuse an unethical request

Question 36

Content of codes has evolved over time and through
five generations

Answer 36

First generation → conflict of interest
➢ Second generation → commercial conduct
➢ Third generation → employee rights and motivation of the
workforce
➢ Fourth generation → wider responsibility, with attention on
environment and respect for communities
➢ Fifth generation → international concerns, including human
rights, the rule of law and labour conditions

Question 37

Criticisms

Answer 37

Unenforceable standard
* Unnecessary, as most corporations operate at ethical level
above code
* Only necessary for the less scrupulous
* Penalties may be insignificant
* Convincing everyone to comply is not easy
* Often idealistic and written in meaningless generalities
* Merely to control competitive conduct among
corporations, designed to prevent government legislation
* Serve as a response to public criticism

Question 38

Ethics Training

Answer 38

Involves teaching employees about the values and
policies on ethics they should follow in their decision
making
* Teaching sessions can involve:
➢ Managers or outside consultants
➢ Addressed to all levels of employees, with emphasis on
management
➢ Online exercises
➢ Practical checklists and tests to evaluate actions

Question 39

Checklists and Tests Nash

Answer 39

plainly worded questions should be used by
managers when examining ethics of a business decision
➢ Examples: Have you defined the problem accurately? How did this
situation occur in the first place? Etc

Question 40

Pagano model 1987

Answer 40

identifies six tests that provide
insights into the ethics of a business’ actions:
1. Is it legal
2. Benefit/cost test
3. Categorical imperative
4. Light of day test
5. Do unto others
6. Ventilation test

Question 41

Conflict of interest

Answer 41

situation in which an individual
has a private or personal interest that is sufficient to
appear to influence the objective exercise of that
individual’s duties

Question 42

Three types of conflict

Answer 42

Real
Apparent
Potential

Question 43

Ethics Audits,
Managers, and Committees

Answer 43

Systematic effort to discover actual or potential
unethical behaviour in an organization
➢ Designed to uncover unethical behaviour and identify existing
opportunities for unethical behaviour
➢ Useful in conjunction with a code of ethics
➢ Conducted by consultants → advise management on how to
put “integrity” into corporate culture

Question 44

Whistleblowing

Answer 44

act of voluntary disclosure of
inappropriate behaviour or decisions to persons in
positions of authority in an organization
➢ Many ethical issues related to whistleblowing have ethical
implications for whistleblowers and managers

Question 45

Whistleblowing: Ethical
Implications

Answer 45

Remain silent, quit, or disclose wrongdoing?
➢ Range of concerns from clearly illegal to maybe illegal to issue of
morality
➢ Does obligation to employer supersede obligation to self,
profession, or industry?
➢ Will the whistleblower be believed?
➢ Is the whistleblower a hero or a snitch?
➢ When and who to tell?
➢ What will the consequences be

Question 46

Boards of directors have two tasks in relation to ethics

Answer 46

To collectively identify values that determine acceptable
behaviour in the firm
➢ Put in place a process that ensures values are reflected in action

Question 47

Success of any ethics programs depends on commitment
of top management:

Answer 47

Announce the program
➢ Champion its development and implementation
➢ Aspire to lead in an ethical manner

Question 48

Immoral

Answer 48

A posture or approach that is devoid
of ethical principles and actively
opposed to what is moral

Question 49

Amoral

Answer 49

lacking a moral sense; unconcerned with whether something is right or wrong

Question 50

Moral

Answer 50

Conform to high
standards of ethical
behaviour or professional
standards