Introduction to Ethics

Chapter #2 Introduction to Ethics

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Chapter #2 Overview  Introduction to business ethics  Overview of ethical theories  Thinking ethically for business decision making  The PLUS model  Combining ethical theories  Code of Ethics

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Nature and Significance of Ethics in Business Decision-Making

 Ethics: Rational examination of moral beliefs and behavior; the study of morality.  Morality: Standards, conduct, and systems that provide guidance on how to act.

 Law: Society’s standards and values that are enforceable in court

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Former Supreme Court Justice Potter Stewart, “Ethics is

knowing the difference between what you have a right to do and what is the right thing to do.”

Is business ethics an oxymoron?

Overview of Ethical Theories 1.

2. 3. 4. 5. 6. 7.

Subjective relativism Cultural relativism Divine command theory Kantianism Act utilitarianism Rule utilitarianism Social contract theory

Relativism versus Objectivism: Where “The Good” Exists 1.

2. 3. 4. 5. 6. 7.

Subjective relativism Cultural relativism Divine command theory Kantianism Act utilitarianism Rule utilitarianism Social contract theory

Relativism “The Good” is inside

Objectivism “The Good” is outside

The Workable Ethical Theories: Rational Theories Not a Workable Theory According to the Author

1. 2. 3. 4. 5. 6. 7.

Subjective relativism Cultural relativism Divine command theory Kantianism Act utilitarianism Rule utilitarianism Social contract theory

Chapter #2: Introduction to Ethics

Workable Theories

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1. Subjective relativism  Relativism  No universal norms of right and wrong  One person can say “X is right,” another can say “X is wrong,” and both can be right

 Subjective relativism  Each person decides right and wrong for himself or herself  “What’s right for you may not be right for me”

Chapter #2: Introduction to Ethics

Case for Well-meaning and intelligent people disagree on moral issues  Ethical debates are disagreeable and pointless 

Case against Blurs distinction between doing what you think is right and doing what you want to do  Makes no moral distinction between the actions of different people  SR and tolerance are two different things  Decisions may not be based on reason  Not a workable ethical theory (according to author) 

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2. Cultural relativism  What is “right” and “wrong” depends upon a society’s actual moral guidelines  These guidelines vary from place to place and from time to time  A particular action may be right in one society at one time and wrong in other society or at another time Chapter #2: Introduction to Ethics

Case for Different social contexts demand different moral guidelines  It is arrogant for one society to judge another  Morality is reflected in actual behavior 

Case against Because two societies do have different moral views doesn’t mean they ought to have different views  Doesn’t explain how moral guidelines are determined  Doesn’t explain how guidelines evolve  Provides no way out for cultures in conflict  Because many practices are acceptable does not mean any cultural practice is acceptable (many/any fallacy)  Societies do, in fact, share certain core values  Only indirectly based on reason 9  Not a workable ethical theory 

3. Divine command theory (the virtue approach)  Good actions: those Case for aligned with God’s will We owe obedience to our  Bad actions: those Creator. contrary to God’s will God is all-good and all-knowing.  Holy books reveal God is the ultimate authority. God’s will.  We should use holy books as moral decision-making guides. 

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Chapter #2: Introduction to Ethics

Case against Different holy books disagree  Society is multicultural, secular  Some moral problems not addressed in scripture  “The good” ≠ “God” (equivalence fallacy)  Based on obedience, not reason 

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4. Kantianism (the rights approach)  Good will: the desire to Case for Case against Rational Sometimes no do the right thing rule adequately Produces characterizes an  Immanuel Kant: Only universal moral action. guidelines thing in the world good There is no way Treats all persons to resolve a conflict without qualification is as moral equals between rules. Workable ethical good will. Kantianism allows theory no exceptions to  Reason should cultivate moral laws. desire to do right thing. 

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Consumer Bill of Rights

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Negative Versus Positive Rights  Negative right (liberty right): A right that another can guarantee by leaving you alone  Positive right (claim right): A right obligating others to do something on your behalf

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Discussion Questions 1.

2.

In the following (true) scenarios on the next two slides, tell whether the people are interpreting the right being claimed as a negative right or as a positive right. Explain your choice. In each scenario, which kind of right should it be and why?

Scenario A: A man sued his health insurance company because it would not pay for Viagra. He argued that the insurer’s refusal to pay denied his right to a happy sex life.

Scenario B: Two legislators who lost reelection votes sued an organization that ran ads criticizing their right to hold office.

5. Act Utilitarianism  Jeremy Bentham and John Stuart Mill, 19th century  The best ethical course of action is the one that brings the greatest good for the greatest number  An action is good if it benefits someone  An action is bad if it harms someone

 Utility: tendency of an object to produce happiness or prevent unhappiness for an individual or a community  Happiness = advantage = benefit = good = pleasure  Unhappiness = disadvantage = cost = evil = pain

 Principle of Utility (The Greatest Happiness Principle) 18  An action is right (or wrong) to the extent that it increases (or decreases) the total happiness of the affected parties.

Chapter #2: Introduction to Ethics

Act utilitarianism - Continued  Act utilitarianism applies Principle of Utility to individual actions  Act utilitarianism  Add up change in happiness of all affected beings  Sum > 0, action is good  Sum < 0, action is bad

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Case for Focuses on happiness  Down-to-earth (practical)  Comprehensive  Workable ethical theory 

Case against Unclear whom to include in calculations  Too much work  Ignores our innate sense of duty  Susceptible to the problem of moral luck 

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6. Rule utilitarianism  We ought to adopt moral rules which, if followed by everyone, will lead to the greatest increase in total happiness  Rule utilitarianism applies Principle of Utility to moral rules Chapter #2: Introduction to Ethics

Case for Compared to act utilitarianism, it is easier to perform the utilitarian calculus.  Not every moral decision requires performing utilitarian calculus.  Moral rules survive exceptional situations  Avoids the problem of moral luck  Workable ethical theory 

Case against All consequences must be measured on a single scale.  Utilitarianism ignores the problem of an unjust distribution of good consequences. 

Utilitarianism does not always mean “the greatest good of the greatest number”  That requires a principle of justice  What happens when a conflict arises between the Principle of Utility and a principle of justice? 

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7. Social contract theory (The Common Good Approach)  Thomas Hobbes  “State of nature”  We implicitly accept a social contract  Establishment of moral rules to govern relations among citizens  Government capable of enforcing these rules

 Jean-Jacques Rousseau  In ideal society, no one above rules  That prevents society from enacting bad rules Chapter #2: Introduction to Ethics

Case for Framed in language of rights  Explains why people act in selfinterest without common agreement  Provides clear analysis of certain citizen/government problems  Workable ethical theory 

Case against No one signed contract  Some actions have multiple characterizations  Conflicting rights problem  May unjustly treat people who cannot uphold contract 

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Thinking Ethically for Business Decision Making

 How exactly should we think through an ethical issue?  What questions should we ask?  What factors should we consider? The first step is obvious but not always easy:

GET THE FACTS!

Primary/Direct Stakeholders Chapter #2: Introduction to Ethics

Secondary/Indirect Stakeholders 22

Basic Business Decision Making Model

Step 1: Define the problem Step 2: Identify alternatives Step 3: Evaluate the alternatives Step 4: Make the decision Step 5: Implement the decision Step 6: Evaluate the decision Chapter #2: Introduction to Ethics

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Example of an Ethical Filter: The PLUS Model

• P = Policies Is it consistent with my organization's policies, procedures and guidelines? • L= Legal Is it acceptable under the applicable laws and regulations? • U = Universal Does it conform to the universal principles/values my organization has adopted? 24 Chapter #2: Introduction to Ethics • S= Self

Six Steps to Ethical Decision Making Using the PLUS Model Step Step Step Step Step Step

1: 2: 3: 4: 5: 6:

Define the problem PLUS Identify alternatives Evaluate the alternatives PLUS Make the decision Implement the decision Evaluate the decision PLUS

Ethical Filters

Using Multiple Theories for Ethical Problem Solving

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What moral rights do the affected parties have, and which course of action best respects those rights? 2. What benefits and what harms will each course of action produce, and which alternative will lead to the best overall consequence? 3. Which course of action treats everyone the same, except where there is a morally justifiable reason not to, and does not show favoritism or discrimination? 4. Which course of action advances the common good? 5. Which course of action develops moral virtues? 26 Chapter #2: Introduction to Ethics 6. Other Approaches

Codes of Ethics (Ethics Codes, Ethics Policies, Core Values, Integrity Policies, etc.)  Formal statement of ethical principles and rules of conduct  United Technologies – http://www.utc.com/responsibility/ethics/index.htm  JMU CoB Faculty Integrity Policy http://www.jmu.edu/cob/CoB2/FacPolicies.shtml#FIP  JMU Finance Code of Ethics http://www.jmu.edu/financeoffice/code_of_ethics.shtml  Advice from the Ethics Office of Texas Instruments http://www.onlineethics.org/CMS/workplace/workcases/tiethics.aspx

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Copyright  All Rights Reserved Copyright  2008 by Theresa B. Flaherty, Ph.D. No part of these materials may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage and retrieval system, without the express written consent of Dr. Theresa B. Flaherty.