Unit 3 - Making Ethical Decisions (23)

Question 1

In the absence of any roles and relationships, including those in firms, individuals and the firms relate

Answer 1

to each other as market actors who are bound only by ethics governing market transactions.

Question 2

Although the market ethics is extensive, it does not include the

Answer 2

requirement that market actors consider any interests but their own. The justification for this market ethics is due primarily to the fact that the two parties in a market transaction reach a mutually beneficial agreement and give their consent to it.

Question 3

Much of the need for ethics in the markets, as well as regulation, occurs when

Answer 3

markets are imperfect because of market failures or when market outcomes are unfair.

Question 4

Although market actors typically have no

Answer 4

obligation to consider the interests of others, such an obligation may nevertheless arise through the market itself when individuals and firms agree to assume certain roles or enter into certain relationships.

Question 5

In business, roles and relationships are

Answer 5

ubiquitous, and the obligations that attend these roles and relationships, including activity conducted in firms, constitute much of business ethics. The exact content of these role and relationship obligations are determined by the agreements or contracts that create them.

Question 6

The justification for these role and relationship

Answer 6

obligations and their specific terms derives, like the justification of market transactions, from the voluntary consent that creates them.

Question 7

Business firms are constituted by

Answer 7

myriad roles and relationships that involve a complex set of obligations. Many of these obligations are those of market ethics, while others arise from specific roles and relationships.

Question 8

Because firms are community-like organisations to which people devote much of their life and on which their livelihood depends, managers must attend to the

Answer 8

organisational ethical climate, to justice within the organisation, and to the possible organisational harms that could be produced.

Question 9

No framework can be comprehensive enough to capture the full

Answer 9

Complexity and diversity of ethical reasoning. However, it is possible to formulate a few basic ethical principles that are commonly recognised by business people and are expressed in corporate codes of conduct.

Question 10

A framework is of no use unless a person recognises that

Answer 10

a situation presents an ethical issue which requires some moral reflection. So, an awareness of the ethical dimensions of a situation is a necessary precondition for the application of any framework.

Question 11

One factor that might make one aware of an ethical issue is the consideration of

Answer 11

any harm that is done. What makes moral wrongdoing of any significance is that someone is usually made worse off. Not every action that harms another is wrong, but any harm should be investigated for possible wrongdoing. That is, anytime a person is harmed, we should stop to consider whether a moral wrong has occurred. Hence, a careful consideration of the consequences of any action helps increase moral awareness.

Question 12

Another factor that increases moral awareness is the

Answer 12

language used to describe actions. Once we are aware that there may be a moral issue in a situation, the next task is to identify that issue. This task is facilitated by gathering and understanding all the relevant facts, including the full range of consequences.

Question 13

Next the major task of ethical reasoning is to identify the relevant ethical concepts or principles.

Answer 13

The main value of these principles lies in posing a set of questions that a person should ask when making a decision in a situation that raises ethical issues.
* Welfare
* Duty
* Rights
* Fairness
* Honesty
* Dignity
* Integrity

Question 14

Welfare

Answer 14

where we consider the alleviation of suffering to be a moral imperative. In general, inflicting harm becomes a moral matter only when some wrongful act is committed. Welfare should be promoted, and any infliction of harm requires some moral justification. In business, the welfare principle requires that the manager take into account the impact that personnel decisions and policies have on employees, that products and services have on consumers, and that corporate activities have on communities.

Question 15

Duty

Answer 15

the moral requirement to act in a certain way, something that we ought to do. Many duties in business arise from agreements or contracts, which are kinds of promises, and from the assumption of specific roles and relationships, as is done by agents and fiduciaries. Duties are especially associated with professionalism since professionals explicitly assume certain responsibilities that they have a duty to fulfil.

Question 16

Rights

Answer 16

An entitlement whereby a person is due certain treatment from others. Rights are said to be correlated with duties such that if one person has a right, then another person has a duty to treat others in a certain way. In business, certain rights are generally recognised for employees, consumers and investors. One of the most important rights in business is property rights, which are basic to markets (since a transaction is a transfer of property rights) and important for profitability. Rights are also closely related to the welfare principle inasmuch as wrongful harms are wrong precisely because they involve the violation of some right.

Question 17

Fairness

Answer 17

means very roughly, equal treatment or different treatment according to some justified differences – is applied to a wide range of activities and practices in business. We speak of fairness in market exchanges; of fair competition; of fair labour practices; of the fair sharing of burdens; and of fairness to creditors and investors.

Question 18

Honesty

Answer 18

is important enough in business to be considered a basic ethical principle. Markets require a certain amount of information, and fraud, which involves the misrepresentation of a material fact, is a prominent violation of market ethics. Furthermore, the business system requires an abundance of accurate and reliable information. This is especially true of financial information, which companies are required to disclose and which is subject to certified audits

Question 19

Dignity

Answer 19

the concept of dignity expresses the fundamental ethical principle that all people deserve respect as human beings. All moral systems regard persons as autonomous moral agents who should be free to make their own decisions and pursue their aims in life. Human dignity is denied when people are subject to violence, coercion, manipulation, degradation, or the risk of serious injury or death. Often, people’s dignity is denied when their rights – especially fundamental human rights – are violated. The principle of dignity is most commonly employed in business in operations in less-developed countries where standards of acceptable business conduct may be lower or in efficiently enforced.

Question 20

Integrity

Answer 20

This is an elastic term that denotes a person of character or virtue who holds the right values and has the courage of his or her convictions. The concept is also widely adopted in business
codes of conduct not only to describe an ideal for employees but also to characterise the business itself. A person or an organisation with integrity would be one that adheres to the other six ethical principles described above.

Question 21

Leaders need to set the

Answer 21

standard of ethical behaviour and good corporate governance within the organisation. At all levels within an organisation, standards of behaviour and service delivery need to be clear. There must be no contradiction between espoused and actual values.

Question 22

Ethics and governance starts with our own

Answer 22

personal values. We will therefore start with a reflection on behaviours that we would or would not condone or accept as ethical.

Question 23

The 2009 King Report III
Directly addresses the issue of what leaders and boards in an organisation should be doing to foster more ethical organisational practices. The findings are summarised as follows:

Answer 23

• Ethical leaders leverage the strategic planning process to ensure that their ethical principles are embodied in the business.
• The ethical principles discussed are focussed on the sustainability of the business, in all respects.
• The concept of “sustainability” covers the business operating in the world system, not just the financial system, but also the societal and environmental systems.
• The business is guided via the strategy, by an ethical leadership, to ensure sustainability and minimised negative impact on the world system.