Business 303 Sheppard

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Business 303 Sheppard

• Business Society Ethics, Week 7
• If its up to us what is right? Basic
  Business Ethics

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BUSINESS ETHICS WEEK 7 MAIN QUESTIONS / ISSUES

1. What is it business ethics (B.E.)?
2. Can / should business ethics be taught?
3. What are the basic questions we as a society
   should try to address socially/economically?
4. What should Business Ethics aim at?
5. Does capitalism raise expectations?
6. Should B.E. promote freedom?
   Hows that work? The Lockean Proviso?
7. Should B.E. promote equality
   who should get what economically?

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Basic Definition of Business Ethics

• The assessment of business conduct according to
  ethical principles (knowledge of good evil).
• The improvement of this conduct according to
  ethical practice.

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1. Ethical Principles Types (1/4)

• Universal principles assumes situations people
  encounter are similar enough so principles can be
  adopted as ethical guides.
• Ethics of religion / Kohlberg.
• Situation ethics assumes that situations are
  unique and that abstract principles fit them
  poorly situation ethicists don't think much of
  rules, one is expected to use good judgment, be
  intuitive.
• Ethics of professions / M.D.s deal with each
  patient as unique.

F. Neil Brady. A systematic approach to teaching
ethics in Business, Journal of Business Ethics
April 1999
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1. Ethical Principles Types (2/4)

• Character / social ethics People flourish by
  pursuing certain virtues (e.g. knowledge,
  fortitude, humility). These are virtues that
  apply to all human lives. To fail to pursue
  them is to fail to achieve full humanity in life.
  
• Ethics of economics Utility max., moral
  equality of preferences
• Self-actualization Most important ethical
  determinant is not the situation, but the
  self. For one person, a compassionate approach
  may be best, for another a more
  intellectual approach might work best, etc.
• Ethics 4 entrepreneurs / job enrichment prog.s,
  worker particp.

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1. Ethical Principle Types (3/4)

• Universal care Advocates care for all. This need
  not refer to humans only it could refer to other
  objects of value. What is important is not one's
  own character but connection to, and welfare of,
  the other.
• Ethics of Nature and the environment.
• Ethic of relationships. Personal relationships,
  trust and cooperation are the starting point for
  ethics and important for the business world where
  activity depends on personal
  relationships.
• Ethics of stakeholder theory / Gilligan.

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1. Ethical principle Types(4/4) Summary

• Universal principles principles as ethical
  guides.
• Situation ethics use good judgment, be
  intuitive.
• Character / social ethics To fail to pursue
  certain virtues is to fail to achieve full
  humanity in life.
• Ethics of economics the virtue of productivity.
• Self-actualization Ethics should advance the
  self.
• Universal care Insuring the welfare of others.
• Ethic of relationships Personal relationships,
  trust
• and
  cooperation.

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2a. Can Ethics be Taught?

• Kohlberg and Moral Development
• Preconventional Level Punishment obedience /
  Learn- ing to accommodate the interests of others
  Orientations.
• Conventional Level Group conformity / Law
  Orientations.
• Postconventional Level Social contract /
  Universal ethical principle Orientations.

Exposure to the Topic to Enhance the Ability of
Business Students to Recognize Ethical Issues.
Rick Gautschi
Tom Jones,
What's new pussycat?
Enhancing the Ability of Business Students to
Recognize Ethical Issues, Journal of Business
Ethics, 1998, 17(2) 205-216.
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2b. Can Ethics be Translated into Moral
Action?
Young Sheppard (2007)
The Routes of Moral Development and the Impact of
Exposure to the Milgram Obedience Study J.
of Business Ethics, 75 (4) 315-33

• Rest Components of Moral Action

Depends on more than just your stage of Moral
development
2c. Impacts on taking a Moral Act

• Individual Factors (Trevino, 1986)
• Moral Intensity (Jones)
• Org. / Situational Factors (Milgram / Zimbardo)

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2d. Should Ethics be Taught?
Isnt there an inherent tension between business
ethics?

• Isnt there a special ethics for business?
• Is ethics practical in the ruthless world of
  business?
• What is the cost of being unethical in the world
  of business?

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2e. Bus. Ethics the University (1/3)

• An overemphasis on technical education (skills
  training).
• The classical meaning of the university the
  promotion of thinking.

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2e. Bus. Ethics the University (2/3)

• There are business schools - now mostly in
  Europe, at one time many in the U.S. - that
  educated their under-graduate students they
  didnt set out to train them.
• Business schools are, of course, beset with
  calls for practical education.  But that term
  is an oxymoron. 
• Anyone who insists on a practical undergraduate
  education should be sent to a trade school
  he or she has no business in a
  university.

Henry Mintzberg, Managers Not MBAs (2004), 384.
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2e. Bus. Ethics the University (3/3)

• Bus. Ed. is devoted overwhelmingly to
  technical training. This is ironic, because even
  before Enron studies showed that executives who
  fail, financially as well as morally - rarely do
  so from a lack of expertise.
• Rather, they fail because they lack
  interpersonal skills and practical wisdom what
  Aristotle called prudence. 
• Aristotle taught that genuine leadership
  consisted in the ability to identify serve the
  common good.
• To do so requires more than tech. training. It
  requires an education in moral reasoning, which
  must include history, philosophy, literature,
  theology, logic

W. G. Bennis J. OToole, How Business Schools
Lost Their Way, Harvard Business Review,  May
2005, 104.
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3a. Kluckholm Basic Questions a Society must
Address

• a. What is the innate nature of people?
  (Good / evil, changeable /
  unchangeable.)
• Peoples Relationship with one Another
  (individual, collective, hierarchical).
• What are Peoples Relation to Nature?
  (Mastery, subjugation, harmony.)
• Nature of Human Activity
  (doing, thinking, being).
• What are Peoples Time Orientation?
  (Past, present, future.)
• Space
  (public vs. private.)

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3b. Issues for the economic society

• a. Who produces and owns what?
  (individuals, corporations, the
  state).
• b. How is production distributed?
  (Need, Quota, Markets).
• c. How is labor treated
  (Servitude, At will employee, Contract,
  Unions).
• d. Who should profit from production?
  (Workers, Inventors, Owners, The State).
• e. Whats the proper distribution of wealth?
  (Need, Luck, Wealth, Labor).
• f. What is Wealth? (Gold, military, productivity).

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4. What should Bus. Ethics aim at? (1/2)

• Consequentialism in ethics?
• Theory that holds results of an action form the
  basis for valid moral judgment about the action.
• The morally right action is viewed as the action
  which produces good consequences.
• Moral theories that hold consequences are more
  important than other normative criteria.
• Ends means
• The goal of productivity justifies the means.
• Virtue of competition 220.

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4. What should Bus. Ethics aim at? (2/2)

• We want a system that not only provides for
  material betterment but,
• Some sensible distribution of such improvement.
• The Crisis comes from the increasing primacy of
  material betterment without concern for other
  social aspects.
• Some background follows

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5a. Wealth of Nations The Theory of Moral
Sentiments

• Self Enrichment as a key to wealth.
• People as empathetic beings.
• Voluntary wealth redistribution.
• Increasing overall distributed wealth.
• Rise of the middle Class.

• Smith 201-203 Kristol 213-218

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6. Does capitalism encourage higher expectations?

• All social movements of the past 200 yrs were
  middle-class movements. 215
• The rise of the middle class The Theory of
  Moral Sentiments
• Drive for government enforced Social Justice.

Irving Kristol
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7a. Should B.E. promote freedom? The free market
approach (1/2)

• Smith the propensity to truck, barter, and
  exchange one thing for another. 201
• We address ourselves, not to their humanity but
  to their self-love. 202

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7b. Should B.E. promote freedom? The free market
approach (2/2)

• The Lockean proviso
• Compensation must go to a party that is made
  worse off by an exchange.
• Freedom to assume risk?
• Social Justice is totalitarian. 219
• Humans are high-risk beings who will accept some
  risk to improve their lot.
• Rationality will save us.

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7c. Should B.E. promote freedom? Questions how
free is the market?

• Are workers as free as producers?
  see A Latin Viewpoint pp. 204-05
• Is Locke right that workers own their labor?
  205
• Is there democracy in the workplace? see
  Exploitation of Need pp. 205-208

The Rationale behind the E.C.
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8a. Should B.E. promote equality? What is the
egalitarian approach (1/2)

• Distributive justice. 197
• John Rawls Distributive
  Justice, Original position the
  Veil of
  ignorance. 209
• Equal right to liberty.

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8b. Should B.E. promote equality? The
egalitarian approach (2/2)

• Arrange inequalities so that these are open to
  all and benefit all. 209
• Closing the poverty gap via redistribution.
  210-212
• Rawls approach assumes humans are low-risk
  beings in the market, especially if no one knows
  his place in future outcomes. 208

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8c. Should B.E. promote equality? Questions

• Can capitalism produce Social Justice? 213, 216
• Equality of opportunity is enough? 213
• The state is more coercive than the market who
  has authoritative knowledge of the common good?
  217
• Only a few special interest groups benefit from
  statist approach. 221

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WEEK 7 MAIN POINTS

• 1. Virtue of markets for material improvement.
• 2. This virtue (the market) works best when
• One follows ones self interest
• There is equality of opportunity
• Self interest is tempered by Moral Sentiment
• Theres freedom (free unfettered exchange).
• 3. Markets have imperfections
• May be a lack of freedom in labor markets
• Not all have the same equality of opportunity.
• 4. How do we adjust for income disparities?
• Social Justice per Rawls to guide society? or
• Lockean Proviso to min. guide exchanges.

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9a. Questions on the Lockean proviso

• A couple buys a house near a nuclear power plant.
  
• They are aware of the plants existence.
• Over time, its children contract mild symptoms of
  radiation.
• Is the nuclear power plant responsible?

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9b. Questions on the Lockean proviso

• A couple buys a house
  in a residential area.
• Without warning, government converts part of this
  area to commercial use and allows the
  construction of a casino.
• The couples house suffers a decrease in property
  values.
• Is the government responsible?
• What about a property value increase?

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9c. Questions on the Lockean proviso

• A mining firm develops a mine in a
  wilderness area.
• Several years later, the mine is abandoned and
  the area experiences the construction of houses.
  
• Some of the new homes suffer from the run-off of
  materials coming out of the old mine.
• Is the firm responsible?

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9d. Questions on the Lockean proviso

• A long-time consumer of fast food gains
  considerable weight over several years.
• He sues the fast food industry for manipulation
  leading to damaged health.
• Is the industry responsible?

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9e. Questions on the Lockean proviso

• A stock broker strongly advises an investor to
  put into gold right now.
• But the price of gold plummets.
• Is the broker responsible?

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