MGMT 3000 Chapters 1-5

Business ethics

The study of business situations, activities, and decisions where issues of right and wrong are addressed.

Ethics

Principles and standards that guide what is considered right and wrong behaviour.

Globalization

The increasing interconnectedness of economies, businesses, and societies around the world.

Why can globalization create ethical problems?

Companies operate across countries with different laws, cultures, values, and ethical expectations.

Stakeholder

Any individual or group that can affect or is affected by an organization's activities.

Shareholder

A person or organization that owns shares in a company.

Stakeholder vs. shareholder

Stakeholders are anyone affected by the organization; shareholders specifically own part of the company.

Corporate Social Responsibility (CSR)

A company's responsibility for its impacts on society and its stakeholders.

CSR bolted-on

CSR activities are added separately rather than being integrated into the company's main operations.

CSR built-in

Social and ethical responsibilities are integrated into the company's core strategy and everyday operations.

A company donates money to charity but changes nothing about its normal business practices. What type of CSR?

Bolted-on CSR.

A company makes environmental sustainability part of its production strategy. What type of CSR?

Built-in CSR.

Triple bottom line

People, planet, and profit.

People in the triple bottom line

The company's social impact.

Planet in the triple bottom line

The company's environmental impact.

Profit in the triple bottom line

The company's economic performance.

Sustainability

Meeting present needs while considering long-term social, environmental, and economic impacts.

Why are stakeholders important in business ethics?

Business decisions can create benefits or harms for many groups beyond shareholders.

Consequentialist ethics

Determines whether an action is ethical primarily by examining its consequences.

Non-consequentialist ethics

Determines whether an action is ethical using principles such as duties and rights rather than only its outcomes.

Utilitarianism

An action is ethical when it creates the greatest overall good for the greatest number.

Is utilitarianism consequentialist or non-consequentialist?

Consequentialist.

A manager compares the total benefits and harms of each option and chooses the one producing the greatest overall benefit.

Utilitarianism.

Ethical egoism

An action is ethical when it promotes an individual's long-term self-interest.

Utilitarianism vs. ethical egoism

Utilitarianism considers overall good for everyone affected; egoism emphasizes one's own self-interest.

A manager chooses an option primarily because it produces the greatest long-term benefit for herself.

Ethical egoism.

Ethics of duties

Certain actions are right or wrong because of our obligations and duties, regardless of the consequences.

A manager refuses to lie because they believe lying itself is wrong, even if lying would produce a better outcome.

Ethics of duties.

Ethics of rights

Ethical decisions should respect people's fundamental rights and freedoms.

A company refuses to mislead customers because customers have a right to truthful information.

Ethics of rights.

Justice

Ethical decisions should emphasize fairness and equitable treatment.

A manager asks whether employees are being treated fairly when distributing bonuses.

Justice.

Utilitarianism vs. duties

Utilitarianism focuses on outcomes; duties focus on whether the action itself follows moral obligations.

Rights vs. justice

Rights protect individual freedoms and entitlements; justice focuses on fairness and equitable treatment.

Ethical decision-making process

Moral awareness → moral judgment → moral intent → moral behaviour.

Moral awareness

Recognizing that a situation contains an ethical issue.

Moral judgment

Determining which course of action is morally right.

Moral intent

Deciding to prioritize the ethical choice over competing interests.

Moral behaviour

Actually carrying out the ethical action.

An employee realizes falsifying a report would be an ethical problem. Which stage?

Moral awareness.

An employee decides reporting accurate information is the morally correct choice. Which stage?

Moral judgment.

An employee knows the right choice and decides ethics is more important than receiving a bonus. Which stage?

Moral intent.

An employee reports the accurate numbers despite pressure to change them. Which stage?

Moral behaviour.

Moral awareness vs. moral judgment

Awareness means noticing an ethical issue exists; judgment means deciding what the ethical choice is.

Moral judgment vs. moral intent

Judgment identifies the right action; intent means deciding to actually prioritize that action.

Can someone know what is ethical and still behave unethically?

Yes. They may have moral awareness and judgment but fail at moral intent or behaviour.

Moral intensity

The perceived ethical importance or seriousness of an issue.

Six factors of moral intensity

Magnitude of consequences, social consensus, probability of effect, temporal immediacy, proximity, and concentration of effect.

Magnitude of consequences

The total amount of harm or benefit resulting from an action.

A decision could cause severe injuries to thousands of customers. Which moral-intensity factor is especially high?

Magnitude of consequences.

Social consensus

The extent to which society agrees that an action is right or wrong.

Nearly everyone agrees that stealing from customers is wrong. Which factor?

Social consensus.

Probability of effect

How likely it is that the predicted harm or benefit will actually occur.

There is a 95% chance a defective product will injure someone. Which factor?

Probability of effect.

Temporal immediacy

How soon the consequences of an action will occur.

Harm will occur tomorrow rather than 20 years from now. Which factor?

Temporal immediacy.

Proximity

How close a decision-maker feels socially, culturally, psychologically, or physically to those affected.

A manager is especially concerned because the people who could be harmed live in her community. Which factor?

Proximity.

Concentration of effect

Whether consequences are concentrated on a small number of people or spread across many people.

A decision causes severe harm to three employees rather than tiny harm spread among thousands. Which factor?

Concentration of effect.

Individual influences

Personal characteristics that affect ethical decision-making.

Examples of individual influences

Personal values, beliefs, psychological factors, personality, and locus of control.

Situational influences

Features of the organizational environment that influence ethical behaviour.

Examples of situational influences

Organizational culture, managers, coworkers, authority, reward systems, incentives, and workplace pressure.

An employee behaves unethically because their supervisor threatens them if they miss a sales target. Individual or situational?

Situational influence.

An employee's personal values cause them to reject an unethical request. Individual or situational?

Individual influence.

Psychological factors

Individual characteristics affecting how people perceive, interpret, and respond to ethical situations.

Locus of control

A person's belief about how much control they have over events and outcomes.

Internal locus of control

Belief that your own actions and decisions significantly influence outcomes.

External locus of control

Belief that outcomes are largely controlled by outside forces such as luck, fate, or powerful others.

"I can make a difference by choosing to speak up." Which locus of control?

Internal locus of control.

"There's nothing I can do because management controls everything." Which locus of control?

External locus of control.

Rationalization

Creating excuses or justifications that make questionable or unethical behaviour seem acceptable.

"Everyone else does it."

Rationalization.

"The company makes millions, so taking a few supplies won't hurt."

Rationalization.

"No one will ever know."

Rationalization.

"I'm only doing what my boss told me to do."

Rationalization.

"I deserve this because the company underpays me."

Rationalization.

Easy clue for recognizing rationalization

Look for an excuse explaining why normally questionable behaviour is supposedly okay.

Reward systems and ethics

Rewards can encourage unethical behaviour when employees are rewarded for results without considering how those results are achieved.

A company gives huge bonuses for sales but ignores how employees obtain them. What ethical risk exists?

Employees may use unethical methods to achieve rewarded outcomes.

Organizational culture

Shared values, beliefs, expectations, and norms that influence behaviour within an organization.

How can organizational culture affect ethics?

It can encourage ethical behaviour or normalize unethical behaviour.

Why can authority influence ethical behaviour?

Employees may obey managers even when they have ethical concerns.

Why can coworkers influence ethical behaviour?

Group norms and peer pressure can make certain behaviours appear acceptable.

Ethical issue

A situation requiring a judgment about what is right or wrong.

Legal vs. ethical

Something can be legal but still ethically questionable; ethics extends beyond simply following the law.

A company follows the law but knowingly treats customers unfairly. Can this still be an ethical issue?

Yes.

What should you ask when you see "greatest overall good" on the midterm?

Utilitarianism.

What should you ask when you see "my own long-term interest"?

Ethical egoism.

What should you think when you see "obligation" or "regardless of consequences"?

Ethics of duties.

What should you think when you see "fundamental freedom or entitlement"?

Ethics of rights.

What should you think when you see "fairness" or "equitable treatment"?

Justice.

What should you think when someone says "It's okay because…" after questionable behaviour?

Rationalization.

What should you think when a question mentions company pressure, bonuses, bosses, or workplace culture?

Situational influences.

What should you think when a question mentions personal beliefs, values, or personality?

Individual influences.

What are the four ethical decision-making stages in order?

Moral awareness → moral judgment → moral intent → moral behaviour.

Which ethical decision stage answers "Is there an ethical problem here?"

Moral awareness.

Which ethical decision stage answers "What is the right thing to do?"

Moral judgment.

Which ethical decision stage answers "Will I prioritize doing the right thing?"

Moral intent.