MGMT 320 Final Tod Bergstrom

Ethics vs Laws

Ethics are different than "laws," which are formal, written rules or codes.

Ethical principles are guides to moral behavior, which come from multiple sources.

Two Theories of How Businesses should approach ethics

1. The "theory of amorality" /conventionist ethic

2. The Theory of Moral Unity/ethic relativism

The CONVENTIONIST ETHIC

1. The "theory of amorality" is the belief that business should be conducted without reference to the full range or ethical standards, restraints and ideals in society.

example- teen doing jello shots, not "drinking" alcohol, story of backpage.com and societal response

ETHICAL RELATIVISM

1. The Theory of Moral Unity holds that businesses should be judged by the same moral/ethical considerations that apply throughout society.

Ethical relativism is the idea that there are no fixed, static ethical rules, but that ethics rules depend upon the time, place and circumstances.

e.g. paying attention to culture where business is taking place

Why should businesses act ethically?

1) To enhance performance - there is a positive link to being perceived as an ethical company (recall "reputation").

(2) To comply with legal requirements.

(3) To prevent or minimize harm -

4) To meet demands of business stakeholders

Stakeholders include customers, who prefer to buy from ethical firms

(5) To promote personal morality

An ethical company aligns with individuals' desires to act ethically.

(6) How do you value of "trust"?

Kohlberg's 6 stages of development (psychology)

The 6 stages of moral development:

1. To avoid punishment.

2. To satisfy self-centered needs and elicit a positive external response.

3. To conform to the group interest to please others in the group.

4. To accept legal restrictions as being in the best interest of society.

5. To accept legal restrictions balanced with individual rights as being in the best interests of society and the individual.

6. To find satisfaction in being ethical and moral for personal reasons.

Kohlberg's 6 stages of development - divided

Pr-conventional 1-2

Conventional 3-4

Post conventional 5-6

Knowing why ethical problems occur in business

1. Personal Gain and Selfish Interest- e.g. brian jorgenson and insider trading

2. Competitive Pressure

When companies are squeezed for profits they sometimes engage in unethical behavior.

3. Conflicts of interest

Conflicts of interest exist whenever a person or organization is incentivized in a way that compromises that person's, or organization's loyalty, or objectivity, vis-à-vis another party.

4. Cross-cultural contradictions.

Frequently, businesspeople, companies and corporations are unaware of cultural norms - and laws - in foreign countries, and this can lead to unethical conduct

5. Rationalization

Ethical failures can also be "justified" rationalization., e.g. "ends justify means"