1 1

Business Ethics FundamentalsBusiness Ethics Fundamentals

MGT 3800 Chapter 6MGT 3800 Chapter 6

2

Chapter Outline

Business Ethics and Public OpinionWhat Does Business Ethics Mean?Ethics, Economics and Law: Venn ModelFour Important Ethics Questions

Three Models of Management EthicsMaking Moral Management ActionableDeveloping Moral JudgmentElements of Moral JudgmentSummary

3

Introduction

Business EthicsPublic’s interest in business ethics increased during the last four decadesPublic’s interest in business ethics spurred by the media

4

Introduction

Inventory of Ethical Issues in Business

Employee-Employer RelationsEmployer-Employee RelationsCompany-Customer RelationsCompany-Shareholder RelationsCompany-Community/Public Interest

5

Public’s Opinion of Business Ethics

Gallup Poll finds that only 17 percent to 20 percent of the public thought the business ethics of executives to be very high or high To understand public sentiment towards business ethics, ask three questions

Has business ethics really deteriorated?Are the media reporting ethical problems more frequently and vigorously?Are practices that once were socially acceptable no longer socially acceptable?

6

Business Ethics: What Does It Really Mean?

Expe

cted

and

Ac t

u al L

eve l

sof

Bus

ines

s Eth

ics

Ethical Problem

Ethical Problem

Society’s Expectations of Business Ethics

Actual Business Ethics

1950s Early 2000sTime

Business Ethics:Today vs. Earlier Period

7

Business Ethics: What Does It Really Mean?

DefinitionsEthics involves a discipline that examines good or bad practices within the context of a moral dutyMoral conduct is behavior that is right or wrongBusiness ethics include practices and behaviors that are good or bad

8

Business Ethics: What Does It Really Mean?

Two Key Branches of EthicsDescriptive ethics involves describing, characterizing and studying morality

“What is”

Normative ethics involves supplying and justifying moral systems

“What should be”

9

Conventional Approach to Business Ethics

Conventional approach to business ethics involves a comparison of a decision or practice to prevailing societal norms

Pitfall: ethical relativism

Decision or Practice Prevailing Norms

10

Sources of Ethical Norms

Fellow Workers

Family

Friends

The Law

Regions of Country

Profession

Employer

Society at Large

Fellow Workers

Religious Beliefs

The Individual

Conscience

11

Ethics and the Law

Law often represents an ethical minimumEthics often represents a standard that exceeds the legal minimum

Ethics Law

Frequent Overlap

12

Making Ethical Judgments

Behavior or act that has been committed

Prevailing norms of acceptability

Value judgments and perceptions of the observer

compared with

Ethics, Economics, and Law

6-14

14

Four Important Ethical Questions

What is?What ought to be?How to we get from what is to what ought to be?What is our motivation for acting ethically?

15

3 Models of Management Ethics

1. Immoral Management—A style devoid of ethical principles and active opposition to what is ethical.

2. Moral Management—Conforms to high standards of ethical behavior.

3. Amoral ManagementIntentional - does not consider ethical factorsUnintentional - casual or careless about ethical considerations in business

16

3 Models of Management Ethics

Three Types Of Management Ethics

Three Approaches to Management Ethics

6-18

Three Models of Management Morality and Emphasis on CSR

6-19

Moral Management Models and Acceptable Stakeholder Thinking

6-20

20

Making Moral Management Actionable

Important FactorsSenior managementEthics trainingSelf-analysis

Developing Moral Judgment

6-22

Developing Moral Judgment

6-23

23

Developing Moral Judgment

External Sources of a Manager’s Values

Religious valuesPhilosophical valuesCultural valuesLegal valuesProfessional values

24

Developing Moral Judgment

Internal Sources of a Manager’s Values

Respect for the authority structureLoyaltyConformityPerformanceResults

25

Elements of Moral Judgment

Moral imaginationMoral identification and orderingMoral evaluationTolerance of moral disagreement and ambiguityIntegration of managerial and moral competenceA sense of moral obligation

26

Elements of Moral Judgment

Amoral Managers Moral Managers

Moral ImaginationMoral IdentificationMoral EvaluationTolerance of Moral Disagreement and AmbiguityIntegration of Managerial and Moral CompetenceA Senses of Moral Obligation

27

Selected Key Terms

Amoral managementBusiness ethicsCompliance strategyConventional approach to business ethicsDescriptive ethicsEthical relativism EthicsFeminist EthicsImmoral management

Integrity strategyIntentional amoral managementKohlberg’s levels of moral developmentMoral developmentMoral managementNormative ethicsUnintentional amoral management

28

Selected Key Terms

Amoral managementBusiness ethicsEthicsImmoral managementLevels of moral developmentMoral managementMorality