Chapter #2 Introduction to Ethics

Chapter #2: Introduction to Ethics

Chapter #2 Overview
Introduction to business ethics Overview of ethical theories Thinking ethically for business decision making
The PLUS model Combining ethical theories Code of Ethics

Chapter #2: Introduction to Ethics

Nature and Significance of Ethics in Business Decision-Making

Ethics: Rational examination of moral beliefs and behavior; the study of morality.
Morality: Standards, conduct, and systems that provide guidance on how to act.

Law: Societys standards and values that are enforceable in court

Chapter #2: Introduction to Ethics

Former Supreme Court Justice Potter Stewart, Ethics is

knowing the difference between what you have a right to do and what is the right thing to do.

Is business ethics an oxymoron?

Overview of Ethical Theories

1.

2.
3. 4. 5. 6. 7.

Subjective relativism Cultural relativism Divine command theory Kantianism Act utilitarianism Rule utilitarianism Social contract theory

Relativism versus Objectivism: Where The Good Exists

1.

2.
3. 4. 5. 6. 7.

Subjective relativism Cultural relativism Divine command theory Kantianism Act utilitarianism Rule utilitarianism Social contract theory

Relativism
The Good is inside

Objectivism
The Good is outside

The Workable Ethical Theories: Rational Theories

Not a Workable Theory According to the Author

1. 2. 3. 4. 5. 6. 7.

Subjective relativism Cultural relativism Divine command theory Kantianism Act utilitarianism Rule utilitarianism Social contract theory

Workable Theories

Chapter #2: Introduction to Ethics

1. Subjective relativism
Relativism
No universal norms of right and wrong One person can say X is right, another can say X is wrong, and both can be right

Case for
Well-meaning and intelligent people disagree on moral issues Ethical debates are disagreeable and pointless

Case against
Blurs distinction between doing what you think is right and doing what you want to do Makes no moral distinction between the actions of different people SR and tolerance are two different things Decisions may not be based on reason Not a workable ethical theory (according to author)

Subjective relativism
Each person decides right and wrong for himself or herself Whats right for you may not be right for me

Chapter #2: Introduction to Ethics

2. Cultural relativism
What is right and wrong depends upon a societys actual moral guidelines These guidelines vary from place to place and from time to time A particular action may be right in one society at one time and wrong in other society or at another time
Chapter #2: Introduction to Ethics

Case for
Different social contexts demand different moral guidelines It is arrogant for one society to judge another Morality is reflected in actual behavior

Case against
Because two societies do have different moral views doesnt mean they ought to have different views Doesnt explain how moral guidelines are determined Doesnt explain how guidelines evolve Provides no way out for cultures in conflict Because many practices are acceptable does not mean any cultural practice is acceptable (many/any fallacy) Societies do, in fact, share certain core values Only indirectly based on reason 9 Not a workable ethical theory

3. Divine command theory

(the virtue approach)
Good actions: those Case for aligned with Gods will We owe obedience to our Bad actions: those Creator. contrary to Gods will God is all-good and all-knowing. Holy books reveal God is the ultimate authority. Gods will. We should use holy books as moral decision-making guides.

Case against
Different holy books disagree Society is multicultural, secular Some moral problems not addressed in scripture The good God (equivalence fallacy) Based on obedience, not reason

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4. Kantianism
(the rights approach)
Good will: the desire to Case for Case against Rational Sometimes no do the right thing rule adequately Produces characterizes an Immanuel Kant: Only universal moral action. guidelines thing in the world good There is no way Treats all persons to resolve a conflict without qualification is as moral equals between rules. Workable ethical good will. Kantianism allows theory no exceptions to Reason should cultivate moral laws. desire to do right thing.

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Consumer Bill of Rights

Chapter #2: Introduction to Ethics

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Negative Versus Positive Rights

Negative right (liberty right): A right that another can guarantee by leaving you alone Positive right (claim right): A right obligating others to do something on your behalf

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Discussion Questions
1.

2.

In the following (true) scenarios on the next two slides, tell whether the people are interpreting the right being claimed as a negative right or as a positive right. Explain your choice. In each scenario, which kind of right should it be and why?

Scenario A:
A man sued his health insurance company because it would not pay for Viagra. He argued that the insurers refusal to pay denied his right to a happy sex life.

Scenario B:
Two legislators who lost reelection votes sued an organization that ran ads criticizing their right to hold office.

5. Act Utilitarianism
Jeremy Bentham and John Stuart Mill, 19th century The best ethical course of action is the one that brings the greatest good for the greatest number
An action is good if it benefits someone An action is bad if it harms someone

Utility: tendency of an object to produce happiness or prevent unhappiness for an individual or a community
Happiness = advantage = benefit = good = pleasure Unhappiness = disadvantage = cost = evil = pain

Principle of Utility (The Greatest Happiness Principle)

Chapter #2: Introduction to Ethics 18 An action is right (or wrong) to the extent that it increases (or decreases) the total happiness of the affected parties.

Act utilitarianism - Continued

Act utilitarianism applies Principle of Utility to individual actions Act utilitarianism
Add up change in happiness of all affected beings Sum > 0, action is good Sum < 0, action is bad Case for
Focuses on happiness Down-to-earth (practical) Comprehensive Workable ethical theory

Case against
Unclear whom to include in calculations Too much work Ignores our innate sense of duty Susceptible to the problem of moral luck

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6. Rule utilitarianism
We ought to adopt moral rules which, if followed by everyone, will lead to the greatest increase in total happiness Rule utilitarianism applies Principle of Utility to moral rules
Chapter #2: Introduction to Ethics

Case for
Compared to act utilitarianism, it is easier to perform the utilitarian calculus. Not every moral decision requires performing utilitarian calculus. Moral rules survive exceptional situations Avoids the problem of moral luck Workable ethical theory

Case against
All consequences must be measured on a single scale. Utilitarianism ignores the problem of an unjust distribution of good consequences.

Utilitarianism does not always mean the greatest good of the greatest number That requires a principle of justice What happens when a conflict arises between the Principle of Utility and a principle of justice?

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7. Social contract theory

(The Common Good Approach)
Thomas Hobbes
State of nature We implicitly accept a social contract
Establishment of moral rules to govern relations among citizens Government capable of enforcing these rules

Case for
Framed in language of rights Explains why people act in selfinterest without common agreement Provides clear analysis of certain citizen/government problems Workable ethical theory

Case against
No one signed contract Some actions have multiple characterizations Conflicting rights problem May unjustly treat people who cannot uphold contract

Jean-Jacques Rousseau
In ideal society, no one above rules That prevents society from enacting bad rules
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Thinking Ethically for Business Decision Making

How exactly should we think through an ethical issue? What questions should we ask? What factors should we consider? The first step is obvious but not always easy:

GET THE FACTS!

Primary/Direct Stakeholders
Chapter #2: Introduction to Ethics

Secondary/Indirect Stakeholders
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Basic Business Decision Making Model

Step 1: Define the problem Step 2: Identify alternatives Step 3: Evaluate the alternatives Step 4: Make the decision Step 5: Implement the decision Step 6: Evaluate the decision
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Example of an Ethical Filter: The PLUS Model

P = Policies Is it consistent with my organization's policies, procedures and guidelines? L= Legal Is it acceptable under the applicable laws and regulations? U = Universal Does it conform to the universal principles/values my organization has adopted? 24 Chapter #2: Introduction to Ethics S= Self

Six Steps to Ethical Decision Making Using the PLUS Model

Step Step Step Step Step Step 1: 2: 3: 4: 5: 6: Define the problem PLUS Identify alternatives Evaluate the alternatives PLUS Make the decision Implement the decision Evaluate the decision PLUS

Ethical Filters

Using Multiple Theories for Ethical Problem Solving

What moral rights do the affected parties have, and which course of action best respects those rights? 2. What benefits and what harms will each course of action produce, and which alternative will lead to the best overall consequence? 3. Which course of action treats everyone the same, except where there is a morally justifiable reason not to, and does not show favoritism or discrimination? 4. Which course of action advances the common good? 5. Which course of action develops moral virtues? 26 Chapter #2: Introduction to Ethics 6. Other Approaches

1.

Codes of Ethics
(Ethics Codes, Ethics Policies, Core Values, Integrity Policies, etc.)
Formal statement of ethical principles and rules of conduct United Technologies http://www.utc.com/responsibility/ethics/index.htm JMU CoB Faculty Integrity Policy http://www.jmu.edu/cob/CoB2/FacPolicies.shtml#FIP JMU Finance Code of Ethics http://www.jmu.edu/financeoffice/code_of_ethics.shtml Advice from the Ethics Office of Texas Instruments http://www.onlineethics.org/CMS/workplace/workcases/tiethics.aspx

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Copyright All Rights Reserved Copyright 2008 by Theresa B. Flaherty, Ph.D. No part of these materials may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without the express written consent of Dr. Theresa B. Flaherty.