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Business Ethics
The application of general ethical concepts
to the unique situations confronted in business. It asks what is right or wrong behavior in business and what principles or rules can be used as guidance in business situations.
Two Characteristics
Tells people what they ought to do
Relativism
Egoism
Utilitarianism
Deontologism
Relativism
There is no universal standard by which
morality can be judged What is correct for one society may be wrong for another Ethics and morality are relative
What do you think of this?
Egoism
One ought to act in his or her own self
interest Ethical behavior is that which promotes ones own self interest Does not mean should not obey laws - only do so if in self interest
Utilitarianism
The morality of an action can be determined
by its consequences An action is ethical if it promotes the greatest good for the greatest number
Deontologism
Derived from the Greek word for Duty
consequences. Factors other than good outcomes determine the rightness of actions
important
Catagorical Imperative
Developed by Immuel Kant
that I can also will that my maxim should become a universal law Are you willing to permit everyone to adopt the action? Yes - Moral No - Immoral
to an end, but as ends in themselves To treat people as ends requires respect for persons Reject slavery Deals with murder, rape, etc How to deal with employees
and trust in a society These are public goods created by generally ethical behavior
Ethical Tests
Is It Legal Test?
Ethical Quadrant II Ethical and Illegal
Codification Manifestation
Illegal
Corporate Decisions
Legal
Ethical Tests
1. Is It Legal? I Ethical - Legal II Ethical - Illegal III Unethical - Legal IV Unethical - Illegal I and IV Easy II and III Difficult
Ethical Tests
2. Benefit Cost Test Do the benefits exceed the costs to whomsoever they accrue? 3. Categorical Imperative Are you willing to allow everyone to practice the proposed action or do you want to be a special case?
Ethical Tests
4. Light of Day Test What would be your reaction if the action were brought out into the open for public scrutiny? 5. Do Unto Others Test Golden Rule - If you would like others to do the same to you - passes the test
Ethical Tests
6. Ventilation Test Seek out others views. Discuss the 5 tests with them. If others feel it is OK passes the test
Have two interests - cannot purse one without having negative impact on other Two Types Private Interest Conflicts with Corporate Business Interest Conflicts with Public
Whistleblowing
Act of disclosing wrongdoing in an
organization Like blowing a whistle to call attention to a thief Types Internal External
organization Breach of Loyalty - Perceived as one who violates confidentiality and loyalty Accusation - Singles out specific individuals as threats to organization or the public
Possible Retaliation
Fired
Blacklisted
Transferred to undesirable locations
Ethics of Whistleblowing
When is it ethical to reveal wrongdoing ? When is it ethical to remain silent?
Whistleblowing Example
In charge of Quality Control
brakes Find defect in brake part Could cause failure in brakes Failure not certain May take many years to develop
Bribery
A payment, usually to a public official, to
several years - not clear why Want concessions from labor Tell labor that plant will be closed if no concessions are made. In reality , no such plans contemplated Is This Ethical?
Managerial Implications
Top Management Leadership
Organizational Culture Realistic Goal Setting Ethics Audit Code of Ethics Ethics Committee
Managerial Implications
Ethics Advocate
Whistleblowing Mechanism
Ethics Training