BUSA 2106 2nd EditionExam # 2 Study Guide Lectures: 2, 8, 14, 15Chapter 2: Ethics and Decision MakingEthics: Moral principles and values applied to social behavior. Knowing the difference between what you have a right to do, and what is the right thing to do.The study of ethics includes:- The process of determining what is and is not a reasonable standard of moral conduct, and - The process of problem-solving to resolve situations in which there is actual or potential physical, in mental or economic harm to an individual or group.Business Ethics: Ethics in business context; a consensus as to what constitutes right or wrong behavior in the world of business and the application of moral principles to situations that arise in business editing.Moral Minimum: The minimum degree of ethical behavior expected of a business firm, which is usually defined as compliance with the law.Motivation of Unethical Behavior- Greed- Stress that leads to ethical shortcuts- Emphasis on short-run profits- “Rewards of winning”- Ineffective deterrentsWhy Do Ethical Problems in Business Occur?- Culture encourages illegal & unethical behaviors -Personal and professional ethics are separate -“Everyone else is doing it” or “I’m a team player.” - Cynicism, low morale, indifference - Inadequate training in ethical decision-making -Inability to see ethical dimension, issue -Inability to identify appropriate stakeholders -Inability to evaluate alternatives in ethical terms “Revolving door” between business and regulatorsHow congruent are law and morality? Is law a “moral minimum?”- Law and morality overlap -“Morally wrong” behavior is also illegal -But, is what is legal always “morally right?” - Law is morally neutral - Law is morally repugnant - Morality transcends the lawIs the Law Always Clear?- Reasons for lack of legal clarity- Overlapping and conflicting regulations -“Gray areas” in the law, e.g., what is “reasonable” or “foreseeable”? -What is the standard of care for handling personal information?Ethical Decision-Making Models- Make Guidelines for Employees- Is the action lawful? - Is the action consistent with company policies and procedures? - Am I following the “spirit” as well as the “letter” of the law or policy? - Is my conscience clear? - Am I living up to prior commitments? - Would my “hero” make the decision that I am contemplating?- Law-Based Compliance Models-Am I violating any laws?-What does my action contribute to stakeholders?-What are the consequences of this action to these stakeholders and me?- Newspaper Test-Contemplate the business act-Employee should ask themselves whether they would be willing to see it immediately described by and informed and critical reporter in the front page news-there to read by their spouse, children, and friends.- Mirror Test-If I make this decision, will I be able to look at myself in the mirror tomorrow morning?-Variations: The “tummy” test; the “Mom” test- GSU ModelUtilitarianism- Morality is based on consequences or outcomes of the decision, not intent of actor- Actor balances net social benefits and harms -Identify alternatives -Determine costs & benefits for each stakeholder -Select alternative that maximizes benefit- Concerns- Can we predict all the consequences of an act? -Does utilitarianism justify sacrificing minority interests to benefit the majority and produce the “societal good?”-John Stewart Mill (1806-1873)Deontology or Duty Ethics- Moral duties must be -Universal, consistently applied and reversible *Kant’s categorical imperative and the “Golden Rule” - Examples -Duty to be honest and truthful, to obey the law, to adhere to contracts, etc - Duties imply rights-Basic rights (life), rights derived from respect for others (privacy, impartiality) and property rightDuty Ethics and Intent- Morality is based on intent of actor, rather than consequences (which may be indefinite and uncertain) -Choose an action consistent with duties and best respects rights of stakeholders*What happens if rights conflict? Whose rights are superior? -Treat every person with respect, not as a means to an end- Concerns- Is an action ethical if your intent is good and you follow your duty, but *The consequences are not good OR*The action doesn’t promote the general utility?Justice Ethics- Essence is fairness - Justice principles can resolve conflicts among stakeholders -Process justice (e.g., procedural due process) ensures fairer and more consistent treatment -Outcome justice focuses on a more equitable distribution of benefits and burdens *Ex: fair day’s wage for fair day’s work- Treat people the same except when they differ in relevant ways, e.g., -Needs -Characteristics related to the task - Develop distribution policies behind a “veil of ignorance” -What does this mean? Why did Rawls regard it as “beneficial?”- Concerns -Does a distributive justice system discourage individual initiative? -Does it lead to greater social cooperation?-John Rawls (1921-2002)Virtue Ethics- Focus is on moral character and qualities that make us a “good person” - Aristotle’s nine “virtues” included -Wisdom, prudence, justice, fortitude, courage, magnanimity and temperance - Modern philosophers often add honesty and compassion- Concerns-Different cultures may have different views on what is a “virtue” -Difficulty in applying virtue ethics*How does focus on character guide actor in determining which actions are morally permitted and which are not-Aristotle (384 to 322 BC)Social Responsibility of Business: Duty owed by business to act in a socially responsible manner in producing and selling goods and services.Theories of Corporate Social Responsibility- Maximize profits for stockholders (Milton Friedman) - Moral minimum -Avoid causing harm and compensate for harm caused- Stakeholder approach -Consider the interests of all stakeholders, e.g., stockholders, employees, customers, suppliers, creditors, and community - Social Contract and Corporate Citizenship -Conform to society’s evolving expectations in exchange for benefits of corporate status -Do good and solve social problemsPromoting Ethical Behavior- How can companies promote ethical behavior? -Commit to ethics from the top down -Treat employees fairly -Adhere to corporate mission statements -Develop and enforce codes of ethics