bus 481 ethics and social responsibilty

why study ethics?

• to help decide right from wrong

• to help us decide what kind of people we want to be

• to help us decide what kind of society we want to live in

moral imagination

• when one is facing an ethical decision, the ability to envision various alternative choices, consequences, resolutions, benefits, and harms

inattentional blindness

• if we happen to focus on or are told specifically to pay attention to a particular element of a decision or event, we are likely to miss all of the surrounding details, no matter how obvious

normative myopia

• the tendency to ignore, or the lack of the ability to recognize, ethical issues in decision making

philosophical ethics

• what people should value (normative ethics) vs what people do value (descriptive ethics)

morality

• how should I act, virtues (personal integrity)

  • has this life been worth living?

  • am i proud of my life? and of the person i have been?

ethos

• conform to what is typically done, to obey the conventions and rules of one’s society and religion (social ethics)

normative ethics

• what people should value

descriptive ethics

• what people do value

stakeholders

• parties affected by or affecting the organization

ethical decision making: determine the facts and ____ ____

perceptual differences

ethical decision making: recognize _____ _____ involved

ethical issues

ethical decision making: identify the _____

stakeholders

ethical decision making: consider the _____

alternatives

ethical decision making: weigh the _____

alternatives

ethical decision making: make a _____

decision

ethical decision making: ____ & ____ from the outcomes

monitor; learn

consequentialist based theory

• focus on outcomes/results

which theories are based on consequences?

• utilitarianism

• egosim

principle based theory

• focus on duties, rights, and principles regardless of consequences

which theories are principle based?

• deontological/Kant

• social justice

• virtue ethics

ethical relativism

• an important perspective within the philosophical study of ethics that holds that ethical values and judgements are ultimately dependent on, or relative to, one’s culture, society, or personal feelings. relativism denies that we can make rational or objective ethical judgements

what are some criticisms of ethical relativism?

• makes moral criticism of other cultures impossible

• self-contradictory (if all views are equal, relativism itself is just one view)

what is a ethical relativism trap?

• you shouldn’t confuse the fact there there is wide disagreement about values with the conclusion that no agreement is possible

what is a ethical relativism trap?

• do not confuse values such as respect, tolerance and impartiality with relativism

utilitarianism

• an ethical theory that tells us that we can determine the ethical significance of any action by looking to the consequences of that act

what are criticisms of utilitarianism?

• can sacrifice individual rights for overall good

• difficult to measure “greatest good”

• ignores justice

how is utilitarianism identified?

• with the policy of “maximizing the overall good” or, in a slightly different version, of producing “the greatest good for the greatest number”

what is the version of utilitarianism in public policy regarding experts?

• they can predict the outcome of policies and carry out policies that will attain the greatest good. administration and legislative bodies of government

what is the version of utilitarianism in public policy regarding competitive markets?

• they are the best means for attaining utilitarian goals

deontological ethics

• moral philosophy that judges whether an action is right or wrong based on adherence to rules and duties, completely ignoring the consequences of that action

what are criticisms of deontological ethics/Kant?

• conflicting duties

• absolutism can lead to rigid decisions

• unclear how to resolve rights conflicts

how does the UN Declaration of Universal Human Rights relate to deontological ethics?

• inherent dignity, equal and inalienable rights, freedom, justice, peace; important because they establish global standards protecting individuals from abuse

social justice

• the moral principle that all people deserve fair and equitable treatment, equal economic and social opportunities, and basic human rights regardless of their background

what are some criticisms of social justice?

• impractical

• may discourage innovation

• difficult to apply in business

social justice concept

• fairness in distribution of society’s benefits and burdens

egoism

• a psychological theory that states people act only from self-interest. empirical evidence strongly suggests that this is a mistaken account of human motivation. it holds that humans ought to act for their own self-interest. ethical egoists typically distinguish between one’s perceived best interests and one’s true best interests

virtue ethics

• an approach to ethics that studies the character traits or habits that constitute a good human life, a life worth living. the virtues provide answers to the basic ethical question

corporate social responsibility

• The responsibilities that businesses have to the societies within which they operate

  • can refer to the voluntary actions that companies undertake to address the economic, social, and environmental impacts of their business operations and the concerns of their principal stakeholders

what are some criticisms of corporate social responsibilty?

• a concept whereby companies decide voluntarily to contribute to a better society and a cleaner environment - European Commission

ethical relativism concept

• no absolute right or wrong

• ethics depends on culture/society/individual

utilitarianism concept

• greatest good for the greatest number

• consequences determine morality

deontological ethics concept

• duty-based

• certain actions are right or wrong regardless of consequences

• respect for persons

egoism concept

• acting in one’s self-interest

• enlightened self-interest = helping others ultimately benefits oneself

what are the criticisms of egoism?

• ignores genuine altruism

• can justify exploitation

• not a true ethical theory

virtue ethics concept

• focuses on character/traits that constitute a good and full human life

what are criticisms of virtue ethics?

• vague guidance for action

• different virtues may conflict

• culturally relative

agency theory

• explains the conflicts of interest that happen when one party (the agent) makes decision on behalf of another party (the principal)

who is the principal in agency theory?

• the owner or client who delegates authority (such as shareholders in a company or a client hiring a financial advisor)

who is agent in agency theory?

• the hired professional or manager tasked with acting in the principal’s best interest

what are some agency problems?

• self-interest

• agency costs

• governance

• incentives

what is Milton Friedman’s Free Market Economic Theory?

• there is one and only one social responsibility of business — to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game…engages in open and free competition without deception or fraud

what is the classical model of SR?

• maximizing profits “while conforming to the basic rules of society, both those embodied in law and those embodied in ethical principle”.

what is the utilitarian defense to classical model?

• profit maximization leads to greatest overall good

what is private property defense for classical model?

• owners have right to use property as they see fit

what are deontological arguments to classical model?

• respect for property rights, contracts, and autonomy

what is the egoism defense to classical model?

• self interest drives economic success

what are criticisms from the Frederick article?

• ignores market failures

• assumes perfect competition

• neglects externalities

what are market failures of classical model?

• situations where markets fail to allocate resources efficiently

what is moral minimum?

• legitimacy of placing ethical limitations on the pursuit of profit

what is they key question for moral minumum?

• where should limits be set?

what theory is moral minimum based off of?

• deontological

what are the ethical imperatives or moral minimum?

• cause no harm

• prevent harm

• do good

what are the criticisms of moral minimum?

• too minimal

• doesn’t address positive duties

• vague about the definition of “harm”

• may be used to justify doing nothing

what is stakeholder theory?

• the role of management is balancing multiple claims of conflicting stakeholders

what is a primary social stakeholder?

• a human group or individual with a direct, formal, or contractual economic stake in an organization, without whom the business cannot survive

  • financiers, customers, employees, suppliers, communities

what is a secondary social?

• an individual, group, or entity that is indirectly affected by or can indirectly influence a company, but is not engaged in direct economic or financial transactions with the firm and is not essential for its immediate survival

  • NGOs, environmentalists, governments, critics, media

what is a primary nonsocial?

• a non-human or environmental entity that is directly affected by or has a direct stake in a company’s operations, even though it cannot speak or act for itself

  • natural environment, future generations

what is a secondary nonsocial?

• an organization, group, or entity that indirectly represents or advocates for nonhuman elements of the environment or future generations

  • animal species

agency model

• prioritizes maximizing shareholder wealth

stakeholder model

• balances the interests of all affected groups

shareholders

• people/institutions that own equity in a company

• have a direct financial interest

stakeholders

• a broader group that includes anyone affected by or interested in the company’s actions

• employees, customers, suppliers, local communities, and shareholders

what is integrative model of CSR?

• integrating economic and social goals by bringing social responsibility into the CORE of the business model

what is an example of integrative model of CSR?

• creative capitalism

• social enterprise

social enterprise spectrum

• maps organizations based on their core motives, ranging from purely philanthropic at one end to purely commercial at the other

what is the tandem hybrid social enterprise?

• framework that pairs a traditional for-profit commercial business with a separate nonprofit foundation in a symbiotic relationship to maximize both financial sustainability and social impact

what are the core values of the tandem hybrid social enterprise?

• driven by social mission

• financed by commercial success

• structured to retain control

• scalable and sustainable for the long haul

• impact and measurement

quick: economic/classical model of CSR

• maximize profit within the law

quick: moral minimum model of CSR

• maximize profit with the ethical limitation to “cause no harm”

quick: stakeholder model of CSR

• business managers have responsibilites to a range of stakeholders

quick: integrative model of CSR

• social responsibility is integrated directly into the mission and purpose of the organization

what are criticisms of tandem hybrid social enterprise?

• difficulty measuring social impact

• tension between profit and purpose

• legal structures may be complex

negative externalities/market failures

• costs imposed on third parties not reflected in market prices

  • ex: pollution

first generation problems (Frederick)

• traditional problems of business ethics

  • ex: fraud, safety

Mill’s Harm Principle

• the only purpose for which power can be rightfully exercised over any member of a civilized community, against his will, is to prevent harm to others

narrow view of stakeholders

• those essential to the firm’s survival

wide view of stakeholders

• all who affect or are affected by the firm

what is corporate culture?

• shared pattern of beliefs, expectations, and meanings that influence and guide thinking and behaviors of the members of the organization

how do you know what culture is?

• observe artifacts, language, norms, rituals, stories, heroes

what is ethical corporate culture?

• where employees are empowered and expected to act in ethically responsible ways even when the law does not require it

  • expected to go above and beyond the law

how do you know if the culture is ethical?

• look at outcomes, behavior, accountability

what are the organizational outcomes of effective ethics programs?

• improved decision making, reduced legal risk, enhanced reputation, employee satisfaction

what is whistleblowing?

• the act of an employee or stakeholder revealing illegal, immoral, unsage, or unethical practices within a public or private organization to internal or external authorities

what are the types of components of culture?

• formal and informal

what are the formal components of culture?

• structure

• code of ethics

• reward and performance appraisal

• core values

• mission statement

what are the informal components of culture?

• language

• norms

• rituals

• stories/heroes

what is compliance based culture?

• focused on adhering to external laws, industry regulations, and internal policies through strict rules, and penalties for violations

what is values based culture?

• guided by a shared set of core moral principles rather than just a strict compliance with external rules

what is the first step of the DeGeorge conditions?

• real threat of serious harm