Business Ethics

Week 4 Lecture 1

Recap !!

Ethics and business

Moral reasoning & Dev. – personal values

Who is responsible – the clash of values

Can businesses be made ethical – what do the theories say?

Plan for today !!!

Ethical principles in Business

What do we have here?

The three approaches:

Utilitarianism

Rights, duties and justice

The ethics of care

Approach 1

UtilitarianismWeighing the social costs and benefits

Utilitarianism

Businesses seek to make a profit – income exceeding costs

The family budget example !!

Utilitarianism

Calculating what we want , balancing our wishes with our resources, and comparing present versus long term desires

So what does utilitarianism say??

Utilitarianism

An ethical theory that holds that an action is right if it produces or if it tends to produce

the greatest amount of good for the greatest number of people affected by the

action. Otherwise the action is wrong.

Consider an example !!!

Example: An airplane manufacturer spent great deal of money

developing new airplane. The company badly needs cash because it is financially overextended and facing the danger of closing down the entire plant putting thousands of workers out of jobs. The president of company is trying to interest key governmental ministers. One of key person is heavily in debt because of gambling. He quietly contacts the minister and gives him $ 1 million cash , who later awards the contract. The president argues it is justifiable as it saved jobs and the town, minister paid debts, foreign country got planes they needed. The goods produced, he argues, is greater than any harm done by payment to minister. Is he correct?

Utilitarianism

This theory does not force on us something foreign to our ordinary rational way of acting.

Its systemizes and makes explicit what its defenders believe most of us do in our moral thinking and much of our other thinking

It is reasonable for rational beings to choose actions that produce more good than less good

Consider another example !!!

Lying

Utilitarianism

Businesses translate “good” in monetary form so those actions which generate max money are good

The use of utility curves…

Equated with efficiency- lowest input max output

The problems

Problems Measuring utility e.g. person on same job

Costs benefit analysis – suppose that installing an expensive exhaust system would eliminate harmful gases from factory increasing the life of workers by 5 years. How the value of added years can be justified against cost of system

What is a cost and what is a benefit – funding a club

The non-economic goods – love, life, health

The Defenders

Use of commonsense judgment where things become incomparable – cancer or cold

Where quantitative data for comparing costs and benefits is unavailable other quantitative measures may be used like attitude surveys etc

Utilitarianism and Bribery

Negative consequences of bribery…

Now go back to example of plane manufacturer !!

- Should all company in financial difficulties be

allowed to bribe govt. officials?

Cutting off the investigation

of consequences

at the point most suitable

is what is done in practice

What about Justice and rights?

Consider an example …

Your uncle owns a big chemical factory which does not have safety devices. Your uncle is sick and doctors have said that he would die in a year thus he is reluctant to have safety measures. On his death you will inherit his factory and you also intend to install safety device ….

What would you do?

Would you murder your uncle?

One done one more to go … Take a 5 minutes break

Approach 2 Moral Duty, Rights and Justice

How many times you have read or heard??

Right to own the property…. Right to work … Right to just and fair remuneration… Right to join unions So on…

The concept of right and correlative notion of duty lie at the heart of much of our moral discourse

Concept of Right …

Right is an individual’s entitlement to something Derived from law – Legal rights e.g. freedom of

speech Derived from system of moral standards – Moral

rights e.g. not to be tortured

- considered as universal regardless of the legal system they are under

Where they are used?

Absence of prohibition – right to do whatever law does not prohibit

Authorized/empowered- police officer

Existence of prohibitions or requirements on others – right of free speech

Tightly correlated with duties

Provides individual with autonomy to pursue their interests

Basis for justifying one’s actions and for invoking the protection of others

Contrast to utilitarian approach

The Two Types

Contractual right – the obligation (marriage, work relations, doctors etc)

Moral right – based on moral principles

The Kant’s approach to moral right Moral Principle (categorical imperative) : everyone

should be treated as a free person equal to everyone else

First formulation : Concept of Universalizability and Reversibility

Focus on the interior motivations not on consequences of external actions

Advancing own interests or pleasure , the action has no moral worth. Actions which invoke sense of duty and willingness to have every person act on e.g. breaking a contract

The Kant’s approach to moral right Second formulation: A action is morally right for a

person if and only if that person does not only use others merely as means for advancing his or her own interests but also respects and develops their capacity to choose freely for themselves

Example: deceiving others to sign a contract

The Justice part

Kinds

Distributive Justice: distributing society’s benefits and burdens fairly

Example: If Susan and Bill are working on the same job and doing same work, they should be paid equally. If time spent on the job is the basis for payment and Susan spends more time though doing same work. Should she be paid more??

Principles of Distribution Fundamental: distribute benefits and burdens equally

to equals and unequally to unequals

Egalitarian: Distribute equally to everyone

Capitalistic: Distribute by contribution

Socialist: Distribute by need and ability

Libertarian: Distribute by free choices – taxes?

Compensatory Justice:

Fairly restoring to a person what the person lost when he was wronged by someone else

e.g. destroying someone’s property , held morally responsible for paying damages

What where damage cannot be measures? e.g. loss of reputation

Retributive Justice

Fairly blaming or punishing persons for wrong doing

The ignorance and inability , e.g. cotton mills and lung disease

The harshness of penalty should be same Enough evidence

Rawl’s Approach

First: Each person is to have equal rights to the most extensive basic liberty compatible with similar liberty for others

Second: Social and economic inequalities are to be arranged so that they are both

a) Reasonably expected to be to everyone’s advantage

b) Attached to positions and offices open to all

Rawl’s Approach Criticism :

This approach does not comply with all the questions of justice

e.g. discrimination

Next Class

Pick up a case study from Sarfraz

Wal Mart: The Challenge of Managing Relationships with Stakeholders