Ethics Test - Lara Grow

shareholder theory

Managers have a duty to maximize SH value, maximize profitability

cases to know for shareholder theory

Dodge v. Ford Motor (1919)

Shlensky v. Wrigley (1968)

who is known for shareholder theory

Milton Friedman

Dodge v. Ford

dodge is complaint, Ford is not giving out dividends as he wants to reinvest $ to increase production, lower cost of cars, dodge won the case. embraces short term vision of SH theory

shlensky vs. wrigley

install lights for night games to increase attendance, but wrigley didn't want to disturb neighborhood. wrigley has more of a vision for daytime baseball. wrigley wins, more of a long term view of SH theory

stakeholder theory

Rebuke to the shareholder primacy theory, other parties(stakeholders) need to be considered for any corporate action

who is known for stakeholder theory

freeman

ethical business decision

utilitarianism + deontological (kant) + rights + justice (rawls)

utilitarianism

The right action or policy is one that produces the greatest good for the greatest number. it is ends based thinking and consequentialist

who is known for utilitarianism

bentham and mill

Deontological

Rule based: The morality of an action is judged based on the action's adherence to rules or principles. No matter how good the consequences, some choices are morally forbidden. Kant's categorical imperative

kants categorical imperative

universibility and reversibility, to determine the principle is something that you want to adhere to, you would be comfortable with it being a universal standard of behavior

deontology and who created it

kant

rights theory

Rights-based approach to ethical decisions (which option best respects the rights of the stakeholders?) Prioritizes basic over non-basic rights

who is known for rights theory

werhane

justice theory

Many different theories of justice, but most theories revolve around the idea that stakeholders must be treated fairly, distribute benefits and burdens fairly

who is known for justice theory

rawls and distrubutive justice (protecting the most vulnerable stakeholder)

gaia hypothesis

earh is a living creature

virtue theory

Any action is morally right if in carrying out the action the agent exhibits amorally virtuous character• Character-based (as opposed to action-based) approach to morality• Are you exhibiting the character of person you want to be when carrying out the decision?

virtue theory step 1

Identify the pool of virtues you/your company wants to cultivate:

- Look to philosophers on the core virtues of humanity; or

- Company's mission statement; or

- Class community election

virtue theory step 2

define the virtues

virtue theory step 3

which virtues are relevant to the situation?

virtue theory step 4

apply the relevant virtues (need to decide how to prioritize virtues)

behavioral ethics

Examining the situational, psychological, and social forces that influence decision-making. Increase awareness of the disconnect between our actual behavior and our reflective morals

behavioral economics

people will do what is in their economic best interest, hence a market economy

normative

how you should act (philosophy)

descriptive

how people actually act (behavioral/psych)

confirmation bias

tendency to seek, interpret, favor, and recall information that confirms one's existing beliefs. How we frame a question can be a function of confirmation bias

conformity bias

People tend to behave like those around them instead of exercising independent judgment (herd mentality), see ansch and milgram

how to counteract conformity bias

neutral questions, devils advocate

fundamental attribution error

Tendency people have to overemphasize personal characteristics and ignore situational factors in judging others' behavior

ansch

line test

milgram

electric shock test

informational confirmtion/conformity

where subject actually believes they were wrong

normative conformity

go along with the group to avoid uncomfortibility

implicit bias and in group favoritism

more likely to favor beliefs/values of your group and vice versa with outgroup

why we conform

1. compliance driver

2. identification

3. internalization

4. ingratiation

1. compliance driver (why we conform)

want to gain benefits/rewards

2. identification (why we conform)

view oneself as wanting to be part of a group and reflect traits of those groups

3. internalization (why we conform)

you actually believe what the group believes is the truth (ex. vegetarianism)

4. ingratiation (why we conform)

you want someone to view you in a favorable way

incrementalism

enron and college admission scandals (slippery slope), see varsity blues

overconfidence bias

unconsiously lowering your ethical standards over time because you can get away with it

rationalizations

denial of responsibility, denial or injury, denial of the victim, condemning the condemners, appeal to higher loyalty, metaphor of the ledger, claim of entitlement, claim of relative acceptability/normality

denial of responsibility

"i didn't do anything wrong, it was an accident"/ "it was an emergency, i needed it"

denial of injury

"nobody got hurt"/ "I didn't steal, I just borrowed"

denial of the victim

"I'm the real victim here"/ "they got what they deserved"

condemning the condemners

"this place is unfair or corrupt"/ "the rules are unjust anyway"

appeal to higher loyalty

"I did it for the company"/"I had to put my family first"

metaphor of the ledger

"ie done way more good than bad in my life"/ "for all i've done for this place, this is nothing

claim of entitlement

"I deserve this"/ "i've earned the right to have this"

claim of relative acceptability/normality

"there are people way worse than me" or "everybody does it"

Hosmer step 1

Identify the moral problem

Hosmer step 2

Identify additional unknown facts helpful to making a decision

Hosmer step 3

Identify the alternatives available to apply to the problem

Hosmer step 4

Identify the personal impacts to the decision-maker (not stakeholder, but personal) & Behavioral Ethics

Tombstone Test

How do you want to be remembered?

Newspaper Test

How would it sound with a reporter summarizing your actions

Hosmer step 5

apply 3 leading contemporary theories of business ethics (ex. shareholder, stakeholder, virtue)

Hosmer step 6

Conclude with a decision