BL252/BU9302:

Ethics and Social

p
y in the
Responsibility
Information Age

Harry SK Tan
Assoc Prof, Nanyang Business School

Copyright Reserved, 2012

Seminar Objectives
1. Define business ethics and their relationship to
personal ethics.
2. Explain the relationship between the law and
ethics.
3. Compare and contrast duty-based
duty based ethics and
utilitarian ethics.
4. Discuss the questions that are typically
considered in the ethical decision-making
process.
5. Identify the various groups to whom
corporations are perceived to owe duties.
2

The Nature Of Business Ethics

Ethics can be defined as the study of what
constitutes right or wrong behavior.
Business ethics focuses on how moral and ethical
principles are applied in the business context.
The law reflects societys convictions on what
constitutes right or wrong behavior.
The law has its limits, though, and some actions may be
legal yet not be ethical.

Exercising your rights vs.

Doing the right thing

What is Ethics?
Ethics gives us standards of behavior that
tell us what human beings ought to do in
the many situations in which we find
ourselves as friends, parents, children,
citizens, businesspeople, teachers,
professionals, and so on.

What is NOT Ethics?

Ethics is
Ethics is
Ethics is
Ethics is
norms.

not
not
not
not

our feelings.
religion.
law.
following socially accepted

Identifying Ethical Standards

Two fundamental questions that we face in
identifying the ethical standards we are to
follow:
On what do we base our ethical

standards?
How do these standards get applied to
specific situations that we face?

Sources of Ethical Standards

Duty-based ethics:

Outcome-based ethics:

Ethics based on
religious beliefs and
philosophical
reasoning, such as
that of Immanuel
Kant.

Ethics based on
philosophical reasoning,
such as that of John
Stuart Mill.
Example: utilitarianism

Example: Ten
Commandments

Immanuel Kant
Kant maintained that each of us has a worth or a dignity
that must be respected. This dignity makes it wrong for
others to abuse us or to use us against our will.
Kant expressed this idea in a moral principle: humanity
y be treated as an end,, not merelyy as a
must always
means.
To treat a person as a mere means is to use a person to
advance one's own interest. But to treat a person as an
end is to respect that person's dignity by allowing each
the freedom to choose for himself or herself.
8

Six different sources of ethical standards

1. The Rights Approach - ethical action is the one which
best protects and respects the moral rights of those
affected.
2. The Fairness or Justice Approach: treat all human
beings equally or if unequally, then fairly based on some
inequality
thatt is
i
lit th
i defensible.
d f
ibl
3. The Utilitarian Approach: the greatest good for the
greatest number, or produces the most good or does the
least harm.

"the good of the many outweighs the good of the few,

or the one"
Spock Star Trek - The Wrath of Khan
9

Six different sources of ethical standards

4. The Common Good Approach: every society needs
common conditions which are important to the goodness
of everyone. This may be a system of laws, effective police
and fire departments, guaranteed health care, a public
educational system, or even public recreational areas.
5. The Virtue Approach:virtues are dispositions and
character traits that enable us to be and to act with our
highest potential, traits that are commonly admired by
society. Honesty, courage, compassion, generosity,
fidelity, integrity, fairness, self-control, and prudence are
all examples of virtues.
6. The Compassion Approach: relationships are the basis of
all human society and that compassion and concern for
others especially the vulnerable -- are essential to
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relationships and to the functioning
of society.

Selling Banned Drugs Overseas

U.S. drug laws are among the toughest in the world.
Therefore, companies with products banned from
sale in the U.S. will naturally look elsewhere for
potential customersparticularly in developing
countries that do not have such extensive restrictions
on consumer p
products.
Is it unethical of U.S. companies to sell banned drugs

overseas?

Would your answer be different if the drugs

significantly benefited the health of consumers in

overseas markets?

11

Obstacles To Ethical Business Behavior

The corporate structure:

The Management:

Uncertainty on the part of

Collective decision
employees as to what
making tends to deter
kind of behavior is
individual ethical
expected of them makes
assertiveness.
it diffi
difficult
them to
lt ffor th
t
The corporate structure
behave ethically.
tends to shield
Unethical conduct by
corporate actors from
management shows
personal responsibility
employees that ethical
and accountability.
behavior is not a priority.

12

The Corporate Balancing Act

Todays corporate decision
makers must balance
profitability against ethical
responsibility when making
their decisions.
Instead of maximum profits,
corporations increasingly aim
for optimum profitsprofits
that can be realized by the firm
while pursuing actions that are
not only legal and profitable
but also ethical.
13

Corporate Social Responsibility

Corporate social responsibility rests on
the assumption that corporations should
conduct their affairs in a socially
responsible manner
But there is disagreement as to what
constitutes socially responsible behavior

14

Corporate Social Responsibility

Corporations are perceived to hold duties to the
following groups, duties that often come into
conflict:
Shareholders

Consumers

Employees

Community
Society

15

Measuring Corporate
Social Responsibility
It is difficult to measure corporate social
responsibility because different yardsticks are
used.
Traditionally, corporate philanthropy has been
used as a means of measuring corporate social
responsibility.
Increasingly, corporate process, or how a
corporation conducts its business on a day-to-day
basis, is a key factor in determining whether a
corporation is socially responsible.
16

Duty to Shareholders
Because the shareholders are the
owners of the corporation, directors and
officers have a duty to act in the
shareholders interest (sometimes
understood as maximize profits).
This is a LEGAL DUTY

17

Duty to Employees
Employers have numerous legal duties to
employees, including providing employees with a
safe workplace and refraining from discriminating
against employees on the basis of race, color,
national origin, gender, religion, age, or
y
disability.
These duties often come into conflict.
Many believe that employers hold ethical duties
to their employees that go beyond those
prescribed by law.

18

Duty to Consumers
Corporate directors and officers have a legal
duty to the users of their products product
liability.
Most feel that corporations also have an
ethical duty that goes beyond what the law
requires.
Controversy exists over the point at which
corporate responsibility for consumer safety
ends and consumer responsibility begins.

19

Duty to Society
Most people hold that a corporation has a duty to
society in general, but they differ in their ideas on
how corporations can best fulfill this duty.
One view is that corporations serve societys needs
most effectively by maximizing profits because
profits generally increase national wealth and social
welfare.
Another view holds that corporations, because they
control so much of the countrys wealth and power,
should use their own wealth and power in socially
beneficial ways and not engage in actions that
society deems unethical.
20

Ethical Responsibilities of Firms

Do firms have a duty to prevent criminal misuses of

their products?

In a recent Colorado case, a man bought a cupful of

gasoline
gaso
e at a gas stat
station,
o , threw
t e itt o
on a woman,
o a ,a
and
d
set her on fire. The woman argued that the gas
station was negligent for selling him the gasoline.
The Colorado Appellate Court stated that knowing a
customer buying gasoline was going to intentionally
throw it on a victim and set the victim on fire was not
reasonably foreseeable.

Duty to the Community

Most people believe a corporation has a
duty to the community in which it
operates.
p
should consider the
The corporation
needs of the community when making
decisions that substantially affect the
welfare of the community.

22

Ethics In The Global Context

Despite the cultural and
religious differences
among nations, the
most important ethical
precepts are common to
virtually all countries.

23

Ethics In The Global Context

Engaging in an international business deal can

require different cultural courtesies
How might cultural differences cause ethical
conflicts between foreign businesspersons?

24

Ethics in the Global Context

Two notable differences relate to:
The role of women in society.
The practice of giving side payments to
foreign officials to secure favorable
contracts.
contracts

25

The Ever-Changing
Ethical Landscape
What is considered ethical in society
may change over time as social customs
change and new developments alter our
social and business environment.

26

Framework for
thinking Ethically

Framework for Thinking Ethically

Recognize an ethical issue.
Get the facts.
Evaluate alternative actions from various
ethical perspectives.
Make a decision.
Act, then reflect on the decision later.

28

Recognize an ethical issue

1. Is there something wrong personally,
interpersonally, or socially? Could the
conflict, the situation or the decision be
damaging to people or to the community?
2. Does the issue go deeper than legal or
institutional concerns? What does it do to
people as persons who have dignity, rights,
and hopes for a better life together?

29

Get the facts

3. What are the relevant facts of the case?
4. What individuals and groups have an important
stake in the outcome? Do some have a greater
stake because they have a special need or because
we have special obligations to them?
5. What are the options for acting? Have all the
relevant persons and groups been consulted? If
you showed your list of options to someone you
respect, what would that person say?

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10

Evaluate alternative actions

6. Which option will produce the most good and do
the least harm?
7. Which option is fair to all the stakeholders? Even if
not everyone gets all they want, will everyones
rights and dignity still be respected?
8. Which option would help all participate more fully
in the life we share as a family, community,
society?
9. Would you want to become the sort of person who
acts this way?
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Make a decision
10. Considering these perspectives, which of
the options is the right or best thing to do?
11. If you told someone you respect why you
p
, what would that person
p
chose this option,
say?

32

Act, then reflect

12. How did it turn out for all concerned? If
you have to do it over again, what would
you do differently?

33

11

For Review
1. What are ethics? What are business ethics?
2. What are some sources of ethical standards?
3. What questions are considered in ethical
business decision making?
4 To what groups does a corporation owe
4.
duties? Why do these duties sometimes come
into conflict?
5. What is the difference between maximum
profits and optimum profits?

34

AH
Hypothetical
h l Retail
R l Case
C

A hypothetical case
In the atomic world, many of us go to stores, make
our purchases and go home to make use of or
enjoy the products. Let us imagine that:
A store owner - took our photograph once we
entered the store, arranged the photographs in a
file,
file and sometimes resold the photographs to
other vendors
Told an employee to place a homing device on your
car, and copy down the license plate number
Assume that the homing device is tied to software that
provides a track of everyplace the your car visits so that
when you return to the store, the owner already knows your
religion, many of your friends and other stores you visited.
38

12

A hypothetical case
Suppose that the store owner kept a file of your
travels and sold the information to other
vendors that call use the data for their
telemarketing campaigns
Suppose also that the store owner sold the
travel files to private detectives who were hired
by attorneys representing your spouse in a
divorce proceeding.

39

A hypothetical case
Suppose when you return home your discover
that - there are additional contract terms that
apply to your purchase of the product:
If you do not make every purchase on time,
the store owner is entitled to p
push a button
and the product stops functioning
There is a clause in the contract which
entitles the store owner to disable your
product if you criticize their product to the
press or Consumer Reports

40

A hypothetical case
Suppose that using your license plate, the store
owner was able to get your NRIC number
With your NRIC the vendor could run a credit
check on you
Using the credit check,
check the vendor could get
your cell phone number
Suppose that every time you wanted to use
the cell phone, you had to listen to a
commercial from the store owner

41

13

Reality of Online Purchases

Are these activities illegal?
If not, are they unethical?
In addition,
addition several of the acts
described are illegal and most would
agree these acts ought to be illegal
Basically all of these acts in modified
form take place everyday on the
Internet
42

Reality of Online Purchases

In order to become members, many web sites
require visitors to register by revealing all kinds
of information
Sometimes games and contests are used for
that purpose also
In order to find out what happens that
information, you have to dig deep into the
web sites Privacy Statement
A number of firms have been prosecuted
for lying in their Privacy Statements

43

Reality of Online Purchases

Cookies are exactly analogous to homing
devices on cars
Web site are very interested in identifying
target markets, which they can do with
cookies
Cookies reveal clickstreams of browsers in
between visits
There is other software, sometimes called
Spyware, that reports to vendors, uses made
of the software, unknown to the user
44

14

Reality of Online Purchases

The terms of online sales contracts are not
apparent to buyers when they offer their credit
card to pay for the goods
Clickwrap, shrinkwrap, and boxtop licenses are
now common place
Unless you object and return the goods within
the time frame required in X-wrap agreement,
you are bound by those terms
Common terms include forum selection clauses,
arbitration agreements, restrictions on use
There are vendors who have authority, via the
X-wrap license, to disable software purchased
(really, licensed) by customers
45

Reality of Online Purchases

The government, at various levels, keeps all
kinds of files and information that is accessible
for many questionable purposes
Criminal records are now available online
The FBI has developed something called
Carnivore, that can process millions of emails
transmitted by ISPs
The govt. continues to maintain huge files on
health care

46

Reality of Online Purchases

Computerized healthcare files continue to
proliferate
In order to be treated, patients must divulge
their healthcare records
When they divulge that information they do
nott check
the d
doctor
h k tto see whether
h th th
t and
d
HMO
Reserve the right to sell that information
of others including: Vendors of Medical
Products, Employers, and Medical
Researchers, Law Enforcement
Genetic tracking is already here and will
become more prevalent
47

15

Legal and Ethical Issues

Does a web site have an ethical obligation to
obtain consent before attaching a cookie to a
web browser?
Does a web site have an ethical obligation to
have a privacy policy?
What about sales of clickstream information
and the results of registration in games and
contests to third parties?

48

Legal and Ethical Issues

What about targeting groups whose sophistication
levels are known to be low?
Elderly, children, disabled, unemployed?
What about web sites that have Privacy Policies,
but reserve the right to change it?
What if the customer or member claims that
information about them in a file is incorrect?
Do members have a right to be informed a
file is being kept about them?
Do members have a right to examine files for
accuracy?
49

Future Legal and Ethical Issues

Computerized medical databases will have
genetic information
Should that information be marketable?
Doesnt it enhance medical treatment
Global Positioning Devices (GPDs)
With cell phones and GPDs in cars, someone
will know where you are virtually all the time
Already GPDs are being used in divorce cases
Should that data be available for criminal
prosecutions?
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16

Future Legal and Ethical Issues

Next time you watch an action thriller and the
good guys use mobile computers to track down
the bad guys, that you could be the target of
these probes
Should employers be able to buy your medical
records?
Who should have access to your educational
records?

51

Q&A

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