Business Ethics MSc 2019 - 2020
Lecture 1
Questions Mentimeter:
1. Would you want to work for a company that made landmines?
2. Is tax avoidance morally permissible?
3. Should you help a friend who is applying for a job at your company? → Individual risk
assessment to make sure I am not running any risk with having this friendship.
What is business ethics: the applied ethics discipline that addresses the moral features of
commercial activity
- Theoretical component - concepts and principles to evaluate what is the right
thing to do.
- Application - how should we think about certain situations and issues and what
to do about them, judgement, empathy, imagination.
→ What is the right thing to do is there all the time. Migrants arrive at the shore of the Greek
Island Kos on a small raft. Why is the cruise ship not doing anything?
Morality is concerned with the norms, values and beliefs embedded in social processes which
define right and wrong for an individual or a community.
Ethics is concerned with the study of morality and the application of reason to elucidate specific
rules and principles that determine right and wrong for any given situation.
These rules and principles are called ethical theories.
Ethical theories are the rules and principles that determine right and wrong for any given
situation.
- Normative ethics prescribes morally correct way of acting → lying to customers is not
good, stealing of properties from the company is also not good.
- Descriptive ethics describes how ethics decisions are actually made in business →
decisions are not only made on normative ethics.
Scope of Business Ethics
A. Systematic ethical issues concern the social, political, legal or economic systems within
which companies operate.
B. Corporate ethical issues concerning corporations and their policies, culture, climate,
impact or actions.
C. Individual ethical issues concern a particular individual’s decisions, behaviour or
character.
A. Systematic - citizen
- Public policy
- Intellectual property rights
, - International trade institutions/treaties
- Environmental law
- Broader still
- Is capitalism morally justified?
- What variety of capitalism is best?
B. Corporations
- Size and influence make them special
- As an employee you can contribute to
- Corporate culture and values
- Corporate decision-making procedure (Triple bottom line)
- As a consumer, social activist, citizens can also have opinions
Corporate Social Responsibility (CSR)
- Refers to a corporation’s responsibilities or obligations toward society
- Business ethics is both a part of corporate social responsibility and part of the
justification for corporate social responsibility.
- Two main accounts: Shareholders vs. stakeholders
- Turns around what corporations
The social responsibility of business is to increase its profits:
1. Moral responsibility
‘Only human beings have a moral responsibility for their actions’
2. Shareholder interests
‘It is managers’ responsibility to act solely in the interests of shareholders’
3. Role of corporations and state
‘Social issues and problems are the proper province of the state rather than managers’
Stakeholders
- A stakeholder of an organization is any group or individual who can affect, or is affected
by, the achievement of the organization’s objectives.
- Stakeholders have legitimate claims towards the organization
- Principle of corporate rights: corporation has an obligation not to violate the rights
of others.
- Principle of corporate effect: corporation is responsible for effects of actions on
others. .
C. Individual
- Organizational ethics - member of a community, a profession, a hierarchy
- Team spirit, duties and loyalty
- Conflicts with morality as usual
- Competitive ethics violates the Golden Rule
- Greater implications of your conduct
, - Fiduciary responsibility (e.g. Generosity)
- Autonomy - this compatible with the moral character you want to be?
Some challenges to the idea of business ethics:
1. Moral relativism
2. Egoism
3. The market will take care of everything
4. Ethics and the law
AD1: Moral relativism
- According to moral relativism there are no ethical standards that are absolutely true and
that apply to people and companies of all societies.
- Point of moral relativism:
- Accept social obligations that are not unethical
- Tolerance of difference (‘subsidiarity’)
- Take opportunity for self-scrutiny
According to Integrative Social Contracts Theory, there are two kinds of moral standards:
1. Hypernorms: moral standards that should be applied to people in all societies
2. Microsocial norms:
norms that differ from
one community to
another and that should
be applied to people
only if their community
accepts those particular
norms.
Objections:
- Some moral standards
are found in all
societies
- Moral differences do
not logically imply
relativism
- Relativism has incoherent consequences
- Relativism privileges whatever moral standards are widely accepted in a society
AD2: Egoism → All that matters is to advance your own interests
Some objections:
- Doesn’t work: no one trusts a pure opportunist. Egoism collapses into other - regarding
morality
, - You are not the corporation (and, is a corporation the kind of entity that can have an
ego?
- What interests should you maximise? (Is the good life about money or virtue?)
AD3: The market will take care of everything
- Market actors are rational
- Customers, suppliers etc willy only do business with companies with a reputation for
integrity
- Thus, corporations that do not act morally will suffer economically
- Companies can see this for themselves so they have an incentive to act moral
Business ethics cannot only be about providing new factual information that better informs
enlightened self-interest.(Social sciences) Must also provide alternative moral thinking
bout how you ought to behave.
resources a
AD4: Ethics and the law
- ‘Political obligation’ to obey the law even if it seems unreasonable.
- Sanctions are to reinforce that moral obligation, don’t define it
- You may have other moral obligations too
- Generally: correct response to bad law is acting as a citizen - in extreme cases civil
disobedience
Ethics is more than the law
- Lots of things are legal but that doesn’t make them morally right. Bijv. Visiting Japan to
hunt dolphins, advertising junk food to children, tax avoidance, dumping toxic waste in
developing countries.
- We need ethics for the grey areas where law isn’t clear.
I. Preconventional Level
A. Obedience and p unishment orientation → behavior determined by rewards or
punishment.
B. Instrumental orientation → ‘You’ll scratch my back, I’ll scratch yours’
II. Conventional Level
A. Interpersonal accord, conformity and mutual expectations → behavior
determined by what peers expect from you → go along to get along
B. Law and order or social accord → behavior determined by what larger social
group expects from you.
III. Postconventional Level
A. Social contract → go beyond expectations (bijv. Law) and behavior determined
by concern for rights.
B. Universal ethical principles → behavior determined by autonomous choice and
principles such as justice, equality
Lecture 1
Questions Mentimeter:
1. Would you want to work for a company that made landmines?
2. Is tax avoidance morally permissible?
3. Should you help a friend who is applying for a job at your company? → Individual risk
assessment to make sure I am not running any risk with having this friendship.
What is business ethics: the applied ethics discipline that addresses the moral features of
commercial activity
- Theoretical component - concepts and principles to evaluate what is the right
thing to do.
- Application - how should we think about certain situations and issues and what
to do about them, judgement, empathy, imagination.
→ What is the right thing to do is there all the time. Migrants arrive at the shore of the Greek
Island Kos on a small raft. Why is the cruise ship not doing anything?
Morality is concerned with the norms, values and beliefs embedded in social processes which
define right and wrong for an individual or a community.
Ethics is concerned with the study of morality and the application of reason to elucidate specific
rules and principles that determine right and wrong for any given situation.
These rules and principles are called ethical theories.
Ethical theories are the rules and principles that determine right and wrong for any given
situation.
- Normative ethics prescribes morally correct way of acting → lying to customers is not
good, stealing of properties from the company is also not good.
- Descriptive ethics describes how ethics decisions are actually made in business →
decisions are not only made on normative ethics.
Scope of Business Ethics
A. Systematic ethical issues concern the social, political, legal or economic systems within
which companies operate.
B. Corporate ethical issues concerning corporations and their policies, culture, climate,
impact or actions.
C. Individual ethical issues concern a particular individual’s decisions, behaviour or
character.
A. Systematic - citizen
- Public policy
- Intellectual property rights
, - International trade institutions/treaties
- Environmental law
- Broader still
- Is capitalism morally justified?
- What variety of capitalism is best?
B. Corporations
- Size and influence make them special
- As an employee you can contribute to
- Corporate culture and values
- Corporate decision-making procedure (Triple bottom line)
- As a consumer, social activist, citizens can also have opinions
Corporate Social Responsibility (CSR)
- Refers to a corporation’s responsibilities or obligations toward society
- Business ethics is both a part of corporate social responsibility and part of the
justification for corporate social responsibility.
- Two main accounts: Shareholders vs. stakeholders
- Turns around what corporations
The social responsibility of business is to increase its profits:
1. Moral responsibility
‘Only human beings have a moral responsibility for their actions’
2. Shareholder interests
‘It is managers’ responsibility to act solely in the interests of shareholders’
3. Role of corporations and state
‘Social issues and problems are the proper province of the state rather than managers’
Stakeholders
- A stakeholder of an organization is any group or individual who can affect, or is affected
by, the achievement of the organization’s objectives.
- Stakeholders have legitimate claims towards the organization
- Principle of corporate rights: corporation has an obligation not to violate the rights
of others.
- Principle of corporate effect: corporation is responsible for effects of actions on
others. .
C. Individual
- Organizational ethics - member of a community, a profession, a hierarchy
- Team spirit, duties and loyalty
- Conflicts with morality as usual
- Competitive ethics violates the Golden Rule
- Greater implications of your conduct
, - Fiduciary responsibility (e.g. Generosity)
- Autonomy - this compatible with the moral character you want to be?
Some challenges to the idea of business ethics:
1. Moral relativism
2. Egoism
3. The market will take care of everything
4. Ethics and the law
AD1: Moral relativism
- According to moral relativism there are no ethical standards that are absolutely true and
that apply to people and companies of all societies.
- Point of moral relativism:
- Accept social obligations that are not unethical
- Tolerance of difference (‘subsidiarity’)
- Take opportunity for self-scrutiny
According to Integrative Social Contracts Theory, there are two kinds of moral standards:
1. Hypernorms: moral standards that should be applied to people in all societies
2. Microsocial norms:
norms that differ from
one community to
another and that should
be applied to people
only if their community
accepts those particular
norms.
Objections:
- Some moral standards
are found in all
societies
- Moral differences do
not logically imply
relativism
- Relativism has incoherent consequences
- Relativism privileges whatever moral standards are widely accepted in a society
AD2: Egoism → All that matters is to advance your own interests
Some objections:
- Doesn’t work: no one trusts a pure opportunist. Egoism collapses into other - regarding
morality
, - You are not the corporation (and, is a corporation the kind of entity that can have an
ego?
- What interests should you maximise? (Is the good life about money or virtue?)
AD3: The market will take care of everything
- Market actors are rational
- Customers, suppliers etc willy only do business with companies with a reputation for
integrity
- Thus, corporations that do not act morally will suffer economically
- Companies can see this for themselves so they have an incentive to act moral
Business ethics cannot only be about providing new factual information that better informs
enlightened self-interest.(Social sciences) Must also provide alternative moral thinking
bout how you ought to behave.
resources a
AD4: Ethics and the law
- ‘Political obligation’ to obey the law even if it seems unreasonable.
- Sanctions are to reinforce that moral obligation, don’t define it
- You may have other moral obligations too
- Generally: correct response to bad law is acting as a citizen - in extreme cases civil
disobedience
Ethics is more than the law
- Lots of things are legal but that doesn’t make them morally right. Bijv. Visiting Japan to
hunt dolphins, advertising junk food to children, tax avoidance, dumping toxic waste in
developing countries.
- We need ethics for the grey areas where law isn’t clear.
I. Preconventional Level
A. Obedience and p unishment orientation → behavior determined by rewards or
punishment.
B. Instrumental orientation → ‘You’ll scratch my back, I’ll scratch yours’
II. Conventional Level
A. Interpersonal accord, conformity and mutual expectations → behavior
determined by what peers expect from you → go along to get along
B. Law and order or social accord → behavior determined by what larger social
group expects from you.
III. Postconventional Level
A. Social contract → go beyond expectations (bijv. Law) and behavior determined
by concern for rights.
B. Universal ethical principles → behavior determined by autonomous choice and
principles such as justice, equality
