Transcript Business and Society - Gunadarma University

Canadian Business and Society:
Ethics & Responsibilities
Chapter
Five
Ethics of Business:
The Theoretical Basis
Prepared by Mark Schwartz, York University
Copyright © 2008 McGraw-Hill Ryerson Ltd.
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Chapter Outline
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Business Ethics: Key Terms
Ethical Implications in Business
Influences on Ethical Behaviour
Theoretical Basis for Ethical Conduct
Moral Reasoning Process
Kohlberg’s Stages of Moral
Development
Chapter 5
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Business Ethics
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Ethics of business: rules, standards, codes,
or principles that provide guidelines for
morally right behaviour and truthfulness in
specific situations.
Value judgments: subjective evaluations of
what is considered important.
Moral standards: the means by which
individuals judge their actions and the actions
of others.
Chapter 5
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Ethical Implications in Business
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Owners
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fair and accurate disclosure
Competitors
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Employees
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hiring; firing; wages;
privacy; discrimination;
honesty; conflicts of
interest; insider information
Consumers
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dishonest advertising;
product safety
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Suppliers
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kickbacks; gifts; bribes
Government
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non-competitive behaviour;
industrial espionage
legal compliance; lobbying
Society
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respect for environment;
corporate giving
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Influences on Ethical Behaviour
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Individual morals
National and ethnic cultures
Government legislation and regulation
The legal system
Religion
Colleagues or peers
Education
Chapter 5
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Influences on Ethical Behaviour
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Media
Corporate mission, vision, and values
statements
Union contracts
Competitive behaviour
Activists or advocacy groups (NGOs)
Business or industry organizations
Professional associations
Chapter 5
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Moral Reasoning Process
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Define moral issue or decision
Gather all relevant information
Identify the stakeholders involved
Develop possible alternative solutions
Consider applicable value judgments, moral
standards, ethical principles
Identify harms/benefits to stakeholders
Determine practical constraints
Decide on action
Chapter 5
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Principles - Which One?
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Although variations exist among
the groups studied, the following
principles have been rejected as
guides to ethical decision making;
the conventionalist ethic,
 the hedonistic ethic, the market ethic,
the might-equals-right,
 the might-equals-right ethic and
 the relevation ethic.
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Chapter 5
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Business Ethics - The Field
Organisation Sociology/
Theory
Social Theory
Business
Studies
Theology
Normative
Philosophy
Political
Theory
Organisation Law
and Legal Empirical
Behaviour
Studies
Social Studies
Chapter 5
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The Field of Business and
Society/Business Ethics
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Friedman’s (1972) "The Social
Responsibility of Business."
Started by philosophers: Bowie, Werhane,
Van Luijk.
No agreement on what ‘business ethics’ is.
Consensus on theory...DeGeorge (1982)
"[m]astery of ethical theory....provides the
necessary tools to engage intelligently in
personal and social analysis of moral
issues
Chapter 5
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The Role of Theory in Business Ethics
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Theory not very well conceptualised within
the field (cf. Robertson and Ross 1990).
Standard Model - Apply general normative
philosophical principles to business ethics
dilemmas.
But how do you apply the theory? What
specific theories do you choose?
Chapter 5
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Egoism
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Egoism is a prominent moral philosophical theory.
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Its main concern may be seen as the promotion of one's selfinterest.
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Egoism, as a normative theory, has been advocated by both
ancient and modern philosophers.
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There are two major approaches to egoism - psychological and
philosophical.
Chapter 5
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Deontological Theory
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Deontological theory holds that the concept of duty may be
seen as independent of the concept of good and some
actions are right or wrong for reasons other than their
consequences.
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Deontology holds that factors other than good outcomes
justify at least some moral judgements and actions.
Chapter 5
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Consequentialism
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Utilitarian, consequence or teleological theory holds that
the moral worth of an action is determined solely by the
consequences of actions or practices.
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Utilitarianism espouses an action or practice is right if it
leads to the greatest possible balance of good
consequences, or to the least possible balance of bad
ones.
Chapter 5
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Contract Theory
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Contract theory is based on the premise that the sources of
rights and/or ethics are based on some form of ‘contract.’
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Much of the attractiveness of the social contract approach
to ethics is that it seems to provide simple and related
answers to two questions:
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what are the demands morality makes of us, and
why should we feel obliged to obey them?
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Contract Theory
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The demands of morality are fixed by the agreements
humans make to regulate their social interaction, and we
should obey these demands because we have agreed to
them.
The Social Contract Model - the social contract model
assumes that the participants in the social contract are real
persons who are presented within a hypothetical situation.
The social contract theory therefore requires "rational"
persons who are willing to agree out of self-interest to
certain principles which set policy for the entire society in
terms of rights, obligations, privileges and prerogatives.
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Rights Theory
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Deontological ethics, as discussed earlier, are concerned
with the rules and principles which guide actions and based
on systems of rights and duties.
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Another version of deontology is offered by philosophers
who focus on rights and principles which govern society at
large.
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This concern with rights and justice may be seen as
basically a macro-version of deontological questions.
Chapter 5
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Rights Theory
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Chapter 5
The notion of ‘rights’ belongs to a tradition of
ethical reasoning which goes back to antiquity.
The Greeks, in particular the Stoic philosophers,
recognised the possibility that actual human laws
might be unjust
A theory of justice ideally results in decisions
which are based on equity, fairness, and
impartiality
The ethics of justice is above all concerned with
protecting the individual against the coercive
power of society.
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The Questions
Egoism
1. What is your own self-interest?
2. How can this self-interest be pursued?
3. How can this self-interested be maximised?
Deontology
1. What are your duties, obligations, in the situation being examined?
2. The action that you are deciding to take, is it possible to do it in all situations?
3. Does the action being contemplated make sense? Does it seem
the rational thing to do?
4. Does the course of action fulfil the obligations and duties set out in no. 1?
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The Questions
Consequentialism
1. What is the best possible outcome for the situation being considered?
2. Will this outcome be the best possible outcome for the greatest number
of people?
3. If there is no best possible outcomes, what is the worst possible
outcome?
How can this worst possible outcome be minimised?
Social Contract
1. Is there anything owed to you by society? Do you owe anything to society?
2. Why are these obligations owed to you? Why do you owe them to society?
3. Are they owed to everyone else in society in an equal manner?
4. Does the action which you are considering affect society or the structure
of the environment in which you are operating?
Chapter 5
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Questions - Continued
Rights
1. In the situation you are examining, are there any inherent rights involved
(i.e. the right to free speech, the right to due process)?
2. Are any of those rights being violated?
3. What do you think your rights are in this situation?
Are these rights the same as other actors in the case?
4. Is the decision being made fair, impartial and equal to all the parties concerned?
Chapter 5
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Kohlberg’s Stages of
Moral Development
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Pre-Conventional Level (Self)
Stage 1 – Punishment and obedience orientation
Stage 2 – Individual instrumental purpose/exchange
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Conventional Level (Others)
Stage 3 – Mutual interpersonal expectations
Stage 4 – Law and order orientation
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Post-Conventional Level (Humankind)
Stage 5 – Social contract orientation
Stage 6 – Universal ethical principle orientation
Chapter 5
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