MGMT 2010 · HKUST BUSINESS SCHOOL
Business Ethics & the Individual
Lecture 1: Introduction
Detailed Revision Notes · Compiled March 2026
1 Course Objective
The course aims to empower you to make the best business decisions for yourself — grounded in real-world
contexts, not abstract moral philosophy alone. The focus is practical: how do you handle genuinely hard
ethical dilemmas as a future business leader?
Core insight from Day 1: Right and wrong is not always clear. Few executives are "obviously evil."
Understanding context is everything — which is why the course uses in-depth case studies.
RE AL D E CISIONS CAS E ST U D IE S YOU R R E AS ON I N G
Applied to genuine business Deep context provided via Goal is to improve how YOU
dilemmas you'll face as a real corporate cases. Ethical reason morally — not to tell
manager, executive, or frameworks are tools, not you what to think.
entrepreneur. textbook answers.
2 Three Real-World Cases
These cases show that ethical dilemmas are messy, contested, and often have no single "correct" answer.
They illustrate three recurring tensions in business ethics.
Case 1: Apple Operations International — Tax Avoidance
Apple used Irish subsidiaries with a negotiated tax rate of 2%. Some subsidiaries had no country of tax
residence and paid no taxes at all. Apple Sales International paid little or no tax on $74 billion in profit
(2009–2012) — all perfectly legal.
Discussion question: Should Apple's executives change this tax structure?
Lesson: There's a gap between legal (what the law permits) and ethical (what is morally right). Legality ≠
morality.
Case 2: Cathay Pacific — Salary-Slashing Contracts
In 2020, Cathay Pacific asked aircrew to accept pay cuts of 40–60% as part of restructuring. Nearly all
pilots (2,613) accepted. The company was under enormous financial pressure from COVID-19.
Discussion question: Should Cathay Pacific force employees to slash salaries?
Lesson: What is "right" (protecting employee welfare) and what is "practical" (business survival) do not always
match.
Case 3: Trump vs. Harvard — Academic Freedom
The Trump administration froze $2.2 billion of Harvard's funding, demanding it end DEI programs,
implement "viewpoint diversity" audits, and change governance. Harvard refused, citing First
Amendment academic freedom, and sued the federal government.
Discussion question: If you were Harvard's president, would you agree to a deal with Trump?
Lesson: Power, institutional autonomy, and ethical principles clash. Stakeholders with competing legitimate
interests make every "right" answer contested.
Three recurring ethical tensions illustrated by these cases:
1. Legal vs. Moral | 2. Practical vs. Ethical | 3. Institutional Power vs. Individual Rights
3 Moral Reasoning: How to Decide What Is Moral
The Basic Framework
Every moral judgment requires combining two ingredients:
IN PU T 1 IN PU T 2 OU TPU T
Factual Information + Moral Standards → Moral Judgment
"Emma killed a kitten" "Killing kittens is wrong" "Emma was bad"
The key question this raises: How do we know that killing kittens is bad? This is the job of moral
standards — and where ethical frameworks come in.
Moral Reasoning as Iteration (Michael Sandel, Justice)
Moral reasoning is not a one-shot formula. According to Sandel, it is a continuous cycle of reflection and
revision:
Step 1: Start with an intuition or conviction about what is right.
Step 2: Reflect on the reason — what principle underlies that conviction?
Step 3: Test the principle: encounter a hard case that challenges it.
Step 4: Feel "moral confusion" — the principle seems to break down.
Step 5: Revise either the specific judgment OR the underlying principle.
Step 6: Repeat — moral insight is iterative, not final.
Example (Ned Stark from Game of Thrones): Ned was a man of rigid honour who refused to compromise
his principles — even when doing so cost him his life. The course uses him to ask: Is strict adherence to
duty always ethical? Does context matter? Does outcome matter? This mirrors the tension between
deontology and consequentialism.
Exam tip: You may be asked to apply the moral reasoning framework to a case. Always separate factual
claims (what happened?) from normative claims (what is right/wrong?) in your answer.
4 Key Concepts & Definitions
You must be able to define and distinguish all five of these terms precisely.
Ethics A system of right and wrong behaviour — the study of moral principles and
values that govern how people ought to act.
Business Ethics Ethics applied specifically in a business decision-making context — what is
right and wrong for firms, managers, and individuals in commercial settings.
Normative Ethics Moral standards that regulate right and wrong. It tells us what we should do.
Divided into three main theories: virtue, duty, and consequentialism.
Meta-ethics Where ethical principles come from. Questions like: Are moral facts real? Is
morality objective or subjective? What does "good" mean?
Applied Ethics How to make good, specific moral judgments in real situations. The bulk of
the course — using case studies to apply frameworks.
How they relate: Meta-ethics → Normative Ethics → Applied Ethics. Meta-ethics provides the foundation,
normative ethics provides the frameworks, and applied ethics uses those frameworks on real decisions.
5 Three Types of Normative Ethics
This is the core theoretical backbone of the course. Every ethical dilemma you analyse will be viewed through
these three lenses.
Virtue Ethics Duty Ethics / Consequentialism
(Character) Deontology "What produces the best
"What kind of person should I "What duty am I obligated to outcome?"
be?" follow?"
An action is morally right if
If you develop good Duty compels you to meet the consequences are more
character, you will naturally your obligations regardless favourable than
make virtuous choices. of consequences. Rules are unfavourable. Associated
Focus is on cultivating traits absolute. Associated with with Bentham & Mill
like honesty, courage, and Immanuel Kant and his (Utilitarianism).
justice. Associated with Categorical Imperative.
Key idea: Greatest good for the
Aristotle. greatest number. The ends can
Key idea: Treat people as ends,
never merely as means. Act only justify the means.
Key idea: Eudaimonia
(flourishing). The "golden mean" on maxims you could will to be
— virtue lies between two vices. universal law.
Quick Comparison Table
Dimension Virtue Deontology Consequentialism
Focus Character / who you are Duties / rules Outcomes / results
Key Thinker Aristotle Kant Bentham / Mill
Central Q What would a virtuous What is my duty? What maximises good?
person do?
Weakness Vague guidance in Rigid; ignores Can justify harmful acts if
dilemmas consequences majority benefits
Exam tip: A common question is to analyse a case from all three perspectives. Practice applying each
framework to the Apple / Cathay / Harvard cases as an exercise.
6 Course Structure & Design
The course is deliberately layered — you build theoretical foundations first, then apply them to real cases.
L AYE R 1 L AYE R 2 L AYE R 3
Meta-ethics → Normative Ethics → Applied Ethics
"Just enough" foundation 3 frameworks, "just enough" Deep case studies
The emphasis is on applied business ethics. Theory is a means to an end — not an end in itself. You're
being trained to reason well, not to memorise doctrines.
K E Y TA K E AWAY S F O R R E V I S I O N
1 Ethics is complex — right and wrong is rarely obvious, and few decisions are black-and-white. This course
gives you tools to navigate grey areas.
2 Moral reasoning = Factual information + Moral standards → Moral judgment. You must identify both
components when analysing a case.
3 Moral reasoning is iterative (Sandel): start with an intuition → extract a principle → test against hard cases
→ revise. Never treat your first moral reaction as final.
4 Know the five key concepts precisely: Ethics, Business Ethics, Normative Ethics, Meta-ethics, Applied
Ethics — and how they relate hierarchically.
5 Know the three normative ethics frameworks and their key thinkers: Virtue (Aristotle), Deontology (Kant),
Consequentialism (Bentham/Mill).
6 The three case studies reveal three tensions: Legal ≠ Moral (Apple), Practical ≠ Ethical (Cathay), Power vs.
Rights (Harvard/Trump).
Business Ethics & the Individual
Lecture 1: Introduction
Detailed Revision Notes · Compiled March 2026
1 Course Objective
The course aims to empower you to make the best business decisions for yourself — grounded in real-world
contexts, not abstract moral philosophy alone. The focus is practical: how do you handle genuinely hard
ethical dilemmas as a future business leader?
Core insight from Day 1: Right and wrong is not always clear. Few executives are "obviously evil."
Understanding context is everything — which is why the course uses in-depth case studies.
RE AL D E CISIONS CAS E ST U D IE S YOU R R E AS ON I N G
Applied to genuine business Deep context provided via Goal is to improve how YOU
dilemmas you'll face as a real corporate cases. Ethical reason morally — not to tell
manager, executive, or frameworks are tools, not you what to think.
entrepreneur. textbook answers.
2 Three Real-World Cases
These cases show that ethical dilemmas are messy, contested, and often have no single "correct" answer.
They illustrate three recurring tensions in business ethics.
Case 1: Apple Operations International — Tax Avoidance
Apple used Irish subsidiaries with a negotiated tax rate of 2%. Some subsidiaries had no country of tax
residence and paid no taxes at all. Apple Sales International paid little or no tax on $74 billion in profit
(2009–2012) — all perfectly legal.
Discussion question: Should Apple's executives change this tax structure?
Lesson: There's a gap between legal (what the law permits) and ethical (what is morally right). Legality ≠
morality.
Case 2: Cathay Pacific — Salary-Slashing Contracts
In 2020, Cathay Pacific asked aircrew to accept pay cuts of 40–60% as part of restructuring. Nearly all
pilots (2,613) accepted. The company was under enormous financial pressure from COVID-19.
Discussion question: Should Cathay Pacific force employees to slash salaries?
Lesson: What is "right" (protecting employee welfare) and what is "practical" (business survival) do not always
match.
Case 3: Trump vs. Harvard — Academic Freedom
The Trump administration froze $2.2 billion of Harvard's funding, demanding it end DEI programs,
implement "viewpoint diversity" audits, and change governance. Harvard refused, citing First
Amendment academic freedom, and sued the federal government.
Discussion question: If you were Harvard's president, would you agree to a deal with Trump?
Lesson: Power, institutional autonomy, and ethical principles clash. Stakeholders with competing legitimate
interests make every "right" answer contested.
Three recurring ethical tensions illustrated by these cases:
1. Legal vs. Moral | 2. Practical vs. Ethical | 3. Institutional Power vs. Individual Rights
3 Moral Reasoning: How to Decide What Is Moral
The Basic Framework
Every moral judgment requires combining two ingredients:
IN PU T 1 IN PU T 2 OU TPU T
Factual Information + Moral Standards → Moral Judgment
"Emma killed a kitten" "Killing kittens is wrong" "Emma was bad"
The key question this raises: How do we know that killing kittens is bad? This is the job of moral
standards — and where ethical frameworks come in.
Moral Reasoning as Iteration (Michael Sandel, Justice)
Moral reasoning is not a one-shot formula. According to Sandel, it is a continuous cycle of reflection and
revision:
Step 1: Start with an intuition or conviction about what is right.
Step 2: Reflect on the reason — what principle underlies that conviction?
Step 3: Test the principle: encounter a hard case that challenges it.
Step 4: Feel "moral confusion" — the principle seems to break down.
Step 5: Revise either the specific judgment OR the underlying principle.
Step 6: Repeat — moral insight is iterative, not final.
Example (Ned Stark from Game of Thrones): Ned was a man of rigid honour who refused to compromise
his principles — even when doing so cost him his life. The course uses him to ask: Is strict adherence to
duty always ethical? Does context matter? Does outcome matter? This mirrors the tension between
deontology and consequentialism.
Exam tip: You may be asked to apply the moral reasoning framework to a case. Always separate factual
claims (what happened?) from normative claims (what is right/wrong?) in your answer.
4 Key Concepts & Definitions
You must be able to define and distinguish all five of these terms precisely.
Ethics A system of right and wrong behaviour — the study of moral principles and
values that govern how people ought to act.
Business Ethics Ethics applied specifically in a business decision-making context — what is
right and wrong for firms, managers, and individuals in commercial settings.
Normative Ethics Moral standards that regulate right and wrong. It tells us what we should do.
Divided into three main theories: virtue, duty, and consequentialism.
Meta-ethics Where ethical principles come from. Questions like: Are moral facts real? Is
morality objective or subjective? What does "good" mean?
Applied Ethics How to make good, specific moral judgments in real situations. The bulk of
the course — using case studies to apply frameworks.
How they relate: Meta-ethics → Normative Ethics → Applied Ethics. Meta-ethics provides the foundation,
normative ethics provides the frameworks, and applied ethics uses those frameworks on real decisions.
5 Three Types of Normative Ethics
This is the core theoretical backbone of the course. Every ethical dilemma you analyse will be viewed through
these three lenses.
Virtue Ethics Duty Ethics / Consequentialism
(Character) Deontology "What produces the best
"What kind of person should I "What duty am I obligated to outcome?"
be?" follow?"
An action is morally right if
If you develop good Duty compels you to meet the consequences are more
character, you will naturally your obligations regardless favourable than
make virtuous choices. of consequences. Rules are unfavourable. Associated
Focus is on cultivating traits absolute. Associated with with Bentham & Mill
like honesty, courage, and Immanuel Kant and his (Utilitarianism).
justice. Associated with Categorical Imperative.
Key idea: Greatest good for the
Aristotle. greatest number. The ends can
Key idea: Treat people as ends,
never merely as means. Act only justify the means.
Key idea: Eudaimonia
(flourishing). The "golden mean" on maxims you could will to be
— virtue lies between two vices. universal law.
Quick Comparison Table
Dimension Virtue Deontology Consequentialism
Focus Character / who you are Duties / rules Outcomes / results
Key Thinker Aristotle Kant Bentham / Mill
Central Q What would a virtuous What is my duty? What maximises good?
person do?
Weakness Vague guidance in Rigid; ignores Can justify harmful acts if
dilemmas consequences majority benefits
Exam tip: A common question is to analyse a case from all three perspectives. Practice applying each
framework to the Apple / Cathay / Harvard cases as an exercise.
6 Course Structure & Design
The course is deliberately layered — you build theoretical foundations first, then apply them to real cases.
L AYE R 1 L AYE R 2 L AYE R 3
Meta-ethics → Normative Ethics → Applied Ethics
"Just enough" foundation 3 frameworks, "just enough" Deep case studies
The emphasis is on applied business ethics. Theory is a means to an end — not an end in itself. You're
being trained to reason well, not to memorise doctrines.
K E Y TA K E AWAY S F O R R E V I S I O N
1 Ethics is complex — right and wrong is rarely obvious, and few decisions are black-and-white. This course
gives you tools to navigate grey areas.
2 Moral reasoning = Factual information + Moral standards → Moral judgment. You must identify both
components when analysing a case.
3 Moral reasoning is iterative (Sandel): start with an intuition → extract a principle → test against hard cases
→ revise. Never treat your first moral reaction as final.
4 Know the five key concepts precisely: Ethics, Business Ethics, Normative Ethics, Meta-ethics, Applied
Ethics — and how they relate hierarchically.
5 Know the three normative ethics frameworks and their key thinkers: Virtue (Aristotle), Deontology (Kant),
Consequentialism (Bentham/Mill).
6 The three case studies reveal three tensions: Legal ≠ Moral (Apple), Practical ≠ Ethical (Cathay), Power vs.
Rights (Harvard/Trump).
