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
Utilitarianism
Weighing 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 individuals 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 ones 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 Kants 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 Kants 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 societys 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 someones 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

Rawls 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 everyones
advantage
b) Attached to positions and offices open to all


Rawls 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