ADMS 3660 MIDTERM
ETHICAL DILEMAS
- Bribery (soborno)
- Forced labor:
o Not paid at all
o Really bad working conditions
o Includes children
o Young kids die
o Change suppliers, put a press release and gain profits from there- good publicity
o Change suppliers, lost revenues will be just for the first year and the suppliers are not worth it
- Toxic Pollution:
o Shouldn’t install the equipment because the number of people laid off if company closes results in worst
results
o How many people work for the company? That makes a huge different
o You have to install the equipment because you cannot put a price tag to people’s life but unemployment
also kills people
o Arguments against society vs benefits to society
o People hasn’t given permission to be exposed to this substance
- Philanthropy:
o The money is not the CEO’s to donate
o When it is held by shared holders, one argument is that it’s not their money to give away
o However, all the shared holders might approve it, it is part of the brand and it is a business decision
o They could do more money if customers feel good about it
Steps to analyze decisions:
1. What are the facts of the situation?
2. What are the options?
3. What are the outcomes of the options? How will different possible decisions affect different stakeholders?
4. What criteria (standards) of right and wrong are applicable?
5. Apply criteria to options à decision
- We usually apply criteria implicitly
Structure of dilemmas:
1. When “what to do” is/seems debatable, uncertain
2. Dilemmas arise from:
- Competing goals of decision-maker or organization
- Competing interests/values among stakeholders
- Dispute or uncertainty re relevant facts
- Dispute or uncertainty re relevant ethical principles/ norms/ values
Ethics not all about dilemmas:
- Been a good ethical person is not really about been good about solving dilemmas but finding ways to avoid them
- Other skills:
o Creatively developing solutions that avoid dilemmas/trade-offs
o Doing the right thing in situations where there is no dilemma but some incentive to do the wrong thing
o Developing practices, procedures and culture that support, make easy, make routine doing right thing, reduce
incentives for wrong doing
Ethics: the study of morality, when we are studying morality we are doing ethics
Morality: refers to the standards (criteria) that an individual or group has about what is right or wrong, good or
evil
They are sometimes used to mean the same
Sometimes we can use morality to refer to the zero order, beliefs, values people use to act on what is right or not
and ethics is the analysis of that (the study of that)
Morality is about what is right or wrong depending on your values, and ethics is right or wrong given different
values
, Ethics, professional code
Business ethics
Ethics and other kinds of norms:
Ethics is about norms, categorical imperatives (if you want to do something, then do this)
Norms: behavior guiding
Not all norms are ethical
- Norms are rules, statements or attitudes that guide behaviour, including
o Prescriptions (“you should do X”)
o Imperatives (“do X!”),
o Proscriptions (“don’t do Y”),
o and some kinds of feelings (“Y? Eeeww!”) – guilt, shame, disgust
- Morality consist of norms
o But so do law, etiquette (manners) and much of religion
Law and ethics:
Questions:
1. When do law and ethics overlap?
2. When do they not overlap?
Law, area of norms
Example of a norm that is legal and moral: don’t steal things from stores (illegal to steal and it is ethically wrong)
Example of illegal but immoral norm: smoking marihuana
Example of moral norm that is illegal: abortion
Two kinds of ethics (two ways of studying morality):
1. Descriptive: describes people’s actions and believes
- It doesn’t attempt go against these norms
- Social and behavioral sciences
- Not our focus
- What do individuals or groups think is right and wrong, good or evil? What are the observable social norms in a
given group?
o What causes members to think that way?
o How does it affect their behaviour?
- These are empirical (scientific, factual) questions studied in psychology, sociology, anthropology
2. Normative/prescriptive:
- What ought people to think is right and wrong, good and evil?
o What is the best (most coherent, best grounded) set of moral standards/criteria?
o Why should people follow them?
- These are normative and conceptual questions studied in philosophy
Our focus in this class
What we think, and then we ask ourselves why
Judgement-> why? = principle -> judgement?
Business Ethics:
Definitions:
Business Ethics is a specialized study of moral right or wrong. It concentrates on moral standards as they
apply to business policies, institutions, and behavior
- Includes both descriptive and normative approaches
Corporate Social Responsibility refers specifically to a description and moral evaluation of the impact that a
business organization has on society
Relationship of Law and Business Ethics/CSR
, 1. Law may refer to ethical norms, codes of practice etc.
- E.g., standards of “reasonable care”
- Compliance with voluntary code as due diligence defense when charged with regulatory breach
2. Whether to obey law is often an ethical decision:
- Compliance as SOP vs “costing” of fine discounted by odds of getting caught
If you take reasonable care to avoid violating an environmental code, you may not be punished
Perspectives on Ethics in Business:
1. Ethics as a business constraint: limits your ability to maximize profit, cost on business, constraint on what you
could do
- “Ethics costs”
2. Ethics as a business advantage: companies advertise that they are responsible, that they are green, etc. It can
be used as a branding tool
- “Ethics pays”
3. Ethics as underpinning of business: certain level of internalized ethics is needed
- Business can’t take place without a minimal degree of ethics (e.g., trust)
Ways to think about the relationship of ethics and business
Ethics and morality is about solving collective action problems
o What does this mean? Example slide 20
o All ethics is about collective action problems
o Voluntary cooperation is situations where everyone has to cooperate or you are in disadvantage
Structure of collective action problem
I’m better off not cooperating regardless of what you do
You’re better off not cooperating regardless of what I do
So, “rational” choice is not to cooperate:
BUT we are both better off if we both share than if neither of us do
o $120 K vs $100 K
- Rational to agree to cooperateà ethics, law
Equilibrium
A rational response to a situation where narrow rationality leaves everyone worst off in the long run
How do we enforce this agreement? LAW to ensure everyone cooperates but it may cost us more... so law
doesn’t always work because it is itself an expense
So we have norms of trust and loyalty- social norms, morality
Did ethics affect your decision?
Self-interest? (free-rider)
Trust? (uncertainty, risk)
Honesty? (vs. bluffing)
Promise-keeping? (vs. need for legal contract)
Integrity? (consistency)
Loyalty? (co-workers, company, friends, family)
Caring? (avoiding harm or doing good)
(Canadian and US perceptions of honesty and ethical standards, Slides 24 & 25)
CEOs are not very trusted
The concept of CSR
- Issue: What obligations does a firm have toward society?
- “The idea of social responsibility supposes that the corporation has not only economic and legal obligations, but
also certain responsibilities which extend beyond these obligations”
(Macguire, 1963)
ETHICAL DILEMAS
- Bribery (soborno)
- Forced labor:
o Not paid at all
o Really bad working conditions
o Includes children
o Young kids die
o Change suppliers, put a press release and gain profits from there- good publicity
o Change suppliers, lost revenues will be just for the first year and the suppliers are not worth it
- Toxic Pollution:
o Shouldn’t install the equipment because the number of people laid off if company closes results in worst
results
o How many people work for the company? That makes a huge different
o You have to install the equipment because you cannot put a price tag to people’s life but unemployment
also kills people
o Arguments against society vs benefits to society
o People hasn’t given permission to be exposed to this substance
- Philanthropy:
o The money is not the CEO’s to donate
o When it is held by shared holders, one argument is that it’s not their money to give away
o However, all the shared holders might approve it, it is part of the brand and it is a business decision
o They could do more money if customers feel good about it
Steps to analyze decisions:
1. What are the facts of the situation?
2. What are the options?
3. What are the outcomes of the options? How will different possible decisions affect different stakeholders?
4. What criteria (standards) of right and wrong are applicable?
5. Apply criteria to options à decision
- We usually apply criteria implicitly
Structure of dilemmas:
1. When “what to do” is/seems debatable, uncertain
2. Dilemmas arise from:
- Competing goals of decision-maker or organization
- Competing interests/values among stakeholders
- Dispute or uncertainty re relevant facts
- Dispute or uncertainty re relevant ethical principles/ norms/ values
Ethics not all about dilemmas:
- Been a good ethical person is not really about been good about solving dilemmas but finding ways to avoid them
- Other skills:
o Creatively developing solutions that avoid dilemmas/trade-offs
o Doing the right thing in situations where there is no dilemma but some incentive to do the wrong thing
o Developing practices, procedures and culture that support, make easy, make routine doing right thing, reduce
incentives for wrong doing
Ethics: the study of morality, when we are studying morality we are doing ethics
Morality: refers to the standards (criteria) that an individual or group has about what is right or wrong, good or
evil
They are sometimes used to mean the same
Sometimes we can use morality to refer to the zero order, beliefs, values people use to act on what is right or not
and ethics is the analysis of that (the study of that)
Morality is about what is right or wrong depending on your values, and ethics is right or wrong given different
values
, Ethics, professional code
Business ethics
Ethics and other kinds of norms:
Ethics is about norms, categorical imperatives (if you want to do something, then do this)
Norms: behavior guiding
Not all norms are ethical
- Norms are rules, statements or attitudes that guide behaviour, including
o Prescriptions (“you should do X”)
o Imperatives (“do X!”),
o Proscriptions (“don’t do Y”),
o and some kinds of feelings (“Y? Eeeww!”) – guilt, shame, disgust
- Morality consist of norms
o But so do law, etiquette (manners) and much of religion
Law and ethics:
Questions:
1. When do law and ethics overlap?
2. When do they not overlap?
Law, area of norms
Example of a norm that is legal and moral: don’t steal things from stores (illegal to steal and it is ethically wrong)
Example of illegal but immoral norm: smoking marihuana
Example of moral norm that is illegal: abortion
Two kinds of ethics (two ways of studying morality):
1. Descriptive: describes people’s actions and believes
- It doesn’t attempt go against these norms
- Social and behavioral sciences
- Not our focus
- What do individuals or groups think is right and wrong, good or evil? What are the observable social norms in a
given group?
o What causes members to think that way?
o How does it affect their behaviour?
- These are empirical (scientific, factual) questions studied in psychology, sociology, anthropology
2. Normative/prescriptive:
- What ought people to think is right and wrong, good and evil?
o What is the best (most coherent, best grounded) set of moral standards/criteria?
o Why should people follow them?
- These are normative and conceptual questions studied in philosophy
Our focus in this class
What we think, and then we ask ourselves why
Judgement-> why? = principle -> judgement?
Business Ethics:
Definitions:
Business Ethics is a specialized study of moral right or wrong. It concentrates on moral standards as they
apply to business policies, institutions, and behavior
- Includes both descriptive and normative approaches
Corporate Social Responsibility refers specifically to a description and moral evaluation of the impact that a
business organization has on society
Relationship of Law and Business Ethics/CSR
, 1. Law may refer to ethical norms, codes of practice etc.
- E.g., standards of “reasonable care”
- Compliance with voluntary code as due diligence defense when charged with regulatory breach
2. Whether to obey law is often an ethical decision:
- Compliance as SOP vs “costing” of fine discounted by odds of getting caught
If you take reasonable care to avoid violating an environmental code, you may not be punished
Perspectives on Ethics in Business:
1. Ethics as a business constraint: limits your ability to maximize profit, cost on business, constraint on what you
could do
- “Ethics costs”
2. Ethics as a business advantage: companies advertise that they are responsible, that they are green, etc. It can
be used as a branding tool
- “Ethics pays”
3. Ethics as underpinning of business: certain level of internalized ethics is needed
- Business can’t take place without a minimal degree of ethics (e.g., trust)
Ways to think about the relationship of ethics and business
Ethics and morality is about solving collective action problems
o What does this mean? Example slide 20
o All ethics is about collective action problems
o Voluntary cooperation is situations where everyone has to cooperate or you are in disadvantage
Structure of collective action problem
I’m better off not cooperating regardless of what you do
You’re better off not cooperating regardless of what I do
So, “rational” choice is not to cooperate:
BUT we are both better off if we both share than if neither of us do
o $120 K vs $100 K
- Rational to agree to cooperateà ethics, law
Equilibrium
A rational response to a situation where narrow rationality leaves everyone worst off in the long run
How do we enforce this agreement? LAW to ensure everyone cooperates but it may cost us more... so law
doesn’t always work because it is itself an expense
So we have norms of trust and loyalty- social norms, morality
Did ethics affect your decision?
Self-interest? (free-rider)
Trust? (uncertainty, risk)
Honesty? (vs. bluffing)
Promise-keeping? (vs. need for legal contract)
Integrity? (consistency)
Loyalty? (co-workers, company, friends, family)
Caring? (avoiding harm or doing good)
(Canadian and US perceptions of honesty and ethical standards, Slides 24 & 25)
CEOs are not very trusted
The concept of CSR
- Issue: What obligations does a firm have toward society?
- “The idea of social responsibility supposes that the corporation has not only economic and legal obligations, but
also certain responsibilities which extend beyond these obligations”
(Macguire, 1963)
