Ethics in the Business System 1

Ethics in the Business System

Chapter 7, Steiner & Steiner

Business Environment

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Ethics in the Business System 2

Objectives

• Do businesses and business corporations have to adhere to the same set of ethical standards as individuals?, or should business be “amoral?”

• Describe the four major sources of ethics. • Define “ethics”• Define your basic ethical values and apply

them in business cases

Ethics in the Business System 3

Correct Craft

• Review the facts of the case

• Was it ethical to cause that much suffering?

• How might you have responded to inspector?

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Two Theories of Business Ethics

• Theory of Amorality– Herbert Spencer

• Family ethics—relations and friends• State ethics—merit through competitive justice

• Theory of Moral Unity– One set of standards

• Business• People• Government

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Permissions to Break Your Moral Code

• Ignorance

• Incapacity– Unrealistic costs– No power to influence and outcome– No alternatives– External forces

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Major Sources/Theme?

• Religion

• Philosophical systems

• Cultural Experience

• Legal System

Ethics in the Business System--sources

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Religion

• Reciprocity– Religious works– Teachings of leaders

• US Impact• 67% of top execs attend church regularly

Ethics in the Business System--sources

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Western Philosophical Systems

• Greeks– – Absolute justice– Golden Mean

• Christian ethics– God’s will– Ten Commandments– Golden Rule

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Western Philosophical Systems (cont.)

• Secular Philosophies of Idealism– Logic leads to ethics

• Kant’s Imperative

– Bentham’s utilitarianism• Pleasure to the most,

• Pain to the fewest

– Rights: Locke – Life, liberty & pursuit of:• Happiness or property

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Western Philosophical Systems (cont.)

• Realist School of Ethics– Evil is permanent in human nature– Ends justify the means– Fit survive, and society prospers– Idealism in business is unachievable

Ethics in the Business System--sources

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Cultural Experience

– Hunting and gathering– Agricultural setting– Industrial setting– Information age setting?

Ethics in the Business System--sources

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The Legal System

• Fines – US Sentencing Commission

• Court awarded damages

• Prosecution of individual managers

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Business Ethics in Other Countries

• Additonal sources in other countries– Historical Experience– Stage of Economic Development

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Ethical Behavior

• Ethical relativism– Ethics are subjective

– No ethical superiority

• Ethical Universalism– Basic needs of justice, equity, humility

– Overlapping consensus• Human dignity—not to be manipulated

• Basic rights

• Support institutions & bonds of a community

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Factors that Influence Managerial Ethics

• Leadership & fast tracker at Bottlg Plt• Strategy and Performance – Pru-Bache• Corporate Culture

– Harvard MBA• Make your numbers

• Be loyal, team player

• Be legal

• Be realistic (not idealistic)

• Moral Muteness

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Factors that Influence Managerial Ethics (cont.)

• Individual Characteristics– Religious conviction– Age?– Business students vs. managers?

• Results can’t be consistently confirmed

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How Corporations Manage Ethics

• Ethics programs– Scandal– Muted damages

• General Dynamics– Major effort– Little progress

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Guidelines for Managing Ethics Programs

• Top Management

• Codes of ethics

• Organizational structure

• Training

• Enforcement– Cases on page 229

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Objectives

1. Do businesses and business corporations have to adhere to the same set of ethical standards as individuals?, or should business be “amoral?”

2. Describe the four major sources of ethics. 3. Define “ethics”4. Define your basic ethical values and apply

them in business cases