Chap5PAD

Chapter 5: Ethics and Ethical Reasoning

Key Learning Objectives

• Defining Ethics and Business Ethics: Understand what constitutes ethics and specifically business ethics.

• Evaluating the Need for Business Ethics: Explore the practical and normative reasons businesses should be ethical.

• Understanding Ethical Issues in Business: Recognize the reasons ethical problems arise in the business environment.

• Influences on Ethical Decision Making: Identify how managerial values and spirituality impact ethical reasoning.

• Stages of Moral Reasoning: Familiarize with the stages of moral reasoning and their effects on ethical decisions.

• Ethical Problem Analysis: Analyze ethical dilemmas using widely accepted ethical theories.

• Impact of Moral Intensity: Understand how moral intensity influences individual ethical decision-making.

The Meaning of Ethics

• Definition: Ethics refers to a conception of right and wrong conduct, guiding moral behavior.

• Functions: It informs individuals about the morality of their actions and is central to human relationships.

Sources of Ethics

• Origins of Moral Beliefs:

  • Religious Beliefs: Teachings and doctrines from various religions influence ethics.

  • Family: Early upbringing and family values shape ethical perspectives.

  • Education: Formal and informal education plays a crucial role in ethical training.

  • Community/Neighborhood: Local cultural norms contribute to individual moral outlook.

  • Media: Influence of media on public perceptions of right and wrong.

  • Intuition: Individuals' instinctive feelings often guide ethical decision-making.

Ethical Relativism

• Definition: Ethical relativism posits that moral behavior is determined by context including time, culture, and personal opinion.

• Characteristics:

  • Lacks universal standards, emphasizing situational factors instead.

  • Ethical interpretation can vary significantly among different individuals or cultures.

Ethics vs. Laws

• Laws: Formal rules established by society that govern behavior.

• Difference: Ethical considerations are broader and more complex than legal rules, reflecting deeper moral principles.

Business Ethics

• Definition: The integration of general ethical principles into business practices and corporate governance.

Misconduct at Work

• Statistics: Since 2000, many employees have reported unethical behavior in the workplace, with conflict of interest being the most commonly observed misconduct in 2020.

• Other Issues: Abusive behavior, health violations, and corruption are also prevalent ethical problems.

Reasons for Businesses to be Ethical

• Practical Reasons: Ethical practices can enhance business performance, comply with legal obligations, and fulfill stakeholder expectations.

• Normative Reasons: Upholding moral values fosters a supportive workplace environment.

Five Key Reasons Businesses Should Be Ethical

1. Enhancing Business Performance: Research highlights a link between ethical behavior and financial success.

2. Compliance with Laws: Various legal frameworks, such as the U.S. Corporate Sentencing Guidelines and the Sarbanes-Oxley Act, guide ethical conduct.

3. Preventing Harm: The principle of "do no harm" guides ethical practices, exemplified in issues like insider trading.

4. Meeting Stakeholder Demands: Ethical practices encourage consumer trust and long-term engagement.

5. Promoting Personal Morality: A positive ethical atmosphere contributes to employee confidence and security.

Why Ethical Problems Occur in Business

• Key Reasons:

  • Personal Gain: Individuals may prioritize self-interest over collective needs.

  • Competitive Pressure: The urge to outperform others can compromise ethical standards.

  • Conflicts of Interest: Situations where personal interests clash with professional responsibilities.

  • Cross-cultural Contradictions: Differences in values across cultures lead to ethical dilemmas.

Core Elements of Ethical Character in Managers

• Managerial Values: Managers set examples for their teams, balancing short-term motivations with moral considerations.

• Spirituality at Work: Recognition of employees' spiritual needs impacts organizational ethics, although opinions on this vary.

• Moral Development: As individuals mature, their approach to ethical decision-making evolves through defined stages.

Stages of Moral Development

• Framework:

  • Stage 1: Ego-centered reasoning (punishment avoidance).

  • Stage 2: Reciprocity and self-interests.

  • Stage 3: Social membership and relationships.

  • Stage 4: Compliance with laws and customs.

  • Stage 5: Beyond social norms to human rights considerations.

  • Stage 6: Universal ethical principles guiding actions.

Analyzing Ethical Dilemmas

• Guidelines for Decision-Making:

  • Identify and evaluate ethical issues.

  • Consider the outcomes of various actions.

Methods of Ethical Reasoning

• Virtue Ethics: Focus on character traits that support good behavior, though it can be subjective.

• Utilitarianism: Weigh benefits against costs to measure overall good, yet may overlook minority rights.

• Rights: Upholding entitlements and individual rights, but posing challenges in conflicts.

• Justice: Fair distribution of benefits and burdens, though fairness can be difficult to define.

Moral Intensity of Ethical Issues

• Concept: Refers to the urgency and significance of an ethical issue.

• Dimensions:

  • Magnitude of Consequences: The extent of risks or benefits involved.

  • Proximity: The closeness in social or psychological terms to the issue.

  • Social Consensus: Level of agreement in society about the morality of an act.

  • Probability of Effect: Likelihood of an action causing intended outcomes.

  • Temporal Immediacy: Time between action and consequences.