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Management Ethics Chapter 1
1. Ethics-the principles of conduct governing an individual or a group.
Ex personal ethics-refers to the rules by which an individual lives his
personal lives. Accounting ethics refers to the code that guides the
professional conduct of accountants.
It also can also mean the discipline that examines one’s moral standard or
the moral standards of a society.
It asks how these standards apply to our lives and whether these standards
are reasonable or unreasonable-that is whether they are supported by
good reasons or poor reasons.Standards absorbed from family,friends,
schools etc.
Morality can be defined as the standards that an individual or group has
about what is right or wrong. Ex. a person believes that lying is bad
and honesty is good.
2. Two types of standards :
A. Moral standards- include the norms we have about the kinds of actions we
believe are morally right and wrong. Ex It is wrong to kill people.
B. Non moral standards-the standards by which we judge what is good or bad
and right or wrong in a non moral ways.Ex the standard used to judge a
good or bad football game, good or bad art, god or bad grammar. These
standards are not moral standards.
What are the characteristics that distinguish moral standards from standards that
are not moral?Ethicists have suggested 5 characteristics that help pin down
nature of moral standards:
a.moral standards deal with matters that we think can seriously injure or seriously
benefit human beings. Our moral standards against rape,theft etc
b.Moral standards are not established or changed by decisions of particular
authoritative bodies(ex law-legislative body).the validity of moral standards
rests on the adequacy of the reasons that are taken to support and justify
them.
c.Moral standards should be preferred to other values including self interest.
It is wrong to choose self interest over morality.Ex. Lie to retain job or be honest
about test report to lose job
3. d. Moral standards are based on impartial/neutral considerations. The fact
that you will benefit from a lie and that I will be harmed is irrelevant
to whether lying is morally wrong. *
e.moral standards are associated with special emotions and a special
vocabulary. Ex. if I act contrary to a moral standard, I will normally
feel guilty, ashamed and feel bad about myself.
Business ethics is a specialised study of moral right and wrong. It
concentrates on moral standards as they apply to business
institutions,organisations and behavior. How moral standards are
applied to the social systems and organisations through wish modern
soceities produce and distribute goods and services and to the
behaviors of the people who work within these organisations.
The 3 types of issues that business ethics investigstes are
a. Systemic issues-Ethical questions being raised about the
economic,political,legal and other social systems or institutions within
which the business operates.ex. questions about governments direct
negotiation for purchasing products instead of tender(government
policies that encourage corruption), capitalism, communism.
4. b.Corporate issues-ethical questions raised about a particular
organisation.These includes questions about the morality of the
activities,policies,practices or the organisational structure of an
individual company taken as a whole.Ex. questions about morality of a
company’s corporate decision to “qualify” things even though there
are flaws in production.
c.Individual issues-ethical questions raised about a particular individuals
within a company and their behaviors and decisions. These include
questions about the morality of the decisions, actions, or character of
an individual. Ex. whether it was moral for a manager to allow his
researchers to develop a product that would probably not generate
profits.
It is helpful when analysing the ethical issues raised by a particular
decision or case to sort out the issues in terms of whether they are
systemic,corporate or individual issues. The kinds of solutions that are
appropriate for dealing with systemic or corporate issues are not the
same as the kinds of solutions that are appropriate for dealing with
individual issues.
5. If a government culture permits bribery(systemic issue)-then it must be
dealt with through the coordinated actions of many social groups. If
a company has a culture that encourages moral wrong
doing(corporate issue), then changing the culture requires the co
orperation of many different people that constitute the
company.Finally, individual ethical issues need to be solved
through individual decisions and perhaps individual reform.
Applying Ethics to corporate organisations
The statement that corporate organisations can be ethical or unethical
raises a puzzling issue. Can we really say that the acts of
organisations are moral or immoral in the same sense that the
actions of human individuals are? “Companies don’t commit
crimes, individuals do?”
2 thoughts on this:
a.One side argues that because the rules that tie organisations together
allow us to say that corporations act as individuals and have
intended objectives for what they do, we can also say that they are
morally responsible for their actions and that their actions are moral
or immoral in exactly the same sense that a human being’s are.
6. B,another side argues that it makes no sense to hold organisations
“morally responsible” or to say that they have moral duties. Here,
business organisations are the same as machines whose members must
blindly and undeviatingly conform to formal rules that has nothing to
do with morality.
*org consists of human beings.
Globalisation, Multinationals and business ethics.
-Many of the most pressing issues in business ethics today are related to
the phenomenon of globalisation. Globalisation is the worldwide
process by which the economic and social systems of nations have
become connected together so that goods services, capital, knowledge
and cultural artifacts are traded and moved across national borders at
an increasing rate. Same product available everywhere. Lowering of
trade barriers, open market, global communication
-Multinational corporation is a company that maintains manufacturing,
marketing, service or administrative operations in many different host
countries. They draw capital, raw materials and human labor from
wherever in the world where they are cheap and available.
7. Globalisation has enabled nations to specialise in producing and exporting
those goods and services that they can produce most efficiently and to
trade for goods that they are not so skilled at producing.But usually,
developed countries have high tech products to sell. Non developed
have lower end products or cheap primary commodities.
But globalisation all good?
Host country benefit?
Are MNCs really transferring technologies?
MNCs staying in one place forever or free to shift from one country to
another.?
Apart from that, because the multinationals operates in nations that have
different cultures and standards, critics claim that MNC also covertly
engage in practices that violate the norms and standards that we should
respect. Companies using the not so strict laws of the countries to
operate. Cheap wages in India.companies giving bribes to
governments to operate.
It is not easy for companies operating in a globalised world to deal with
different moral standards in other parts of the world.
8. Business ethics and cultural Differences
When faced with the fact that different cultures have different moral
standards, the managers of some multinationals have adopted the
theory of ethical relativism.
A theory that states that there are no ethical standards that are absolutely
true and that apply or should be applied to the companies and people
of all societies. The only way to determine whether action is morally
right or wrong is by asking the people of the society.
It is immoral to bribe in US but ok for US company to bribe in Arab.
Issues like polygamy,slavery,homosexuality. Have different perspective
in different countries.
Critics of this theory argued that there are certain moral standards that
9. -Despite numerous practices that are judged immoral by some societies that
other society deemed morally acceptable, critics of ethical relativism pointed out
that it does not follow/agree that there are no moral standards that are binding
the people everywhere. They argued that there are certain moral standards that
the members of any society must accept if that society is to survive and if its
members are to interact with each other effectively. Ex. All soceities have norms
against taking goods of other and killing people.
-Apart from that, many apparent differences among society turn out, on closer
examination, to mask deeper underlying similarities. Ex. Innuit-Ok to let
families abandon elders outdoors to ensure enough food for survival of family.
Other say not ok but they also ensure survival by protecting the elders who carry
within them the knowledge and experience the community needed.
-other critics of the theory of ER point out that, because different people have
different moral beliefs about some issue, it does not follow logically that there is
no objective truth about that issue nor that all beliefs about the issue are equally
acceptable. Ex scientific matters- disease cause by bacteria vs evil spirits.
10. -If ER is true, opponents claim, then it would meke little sense to critise the
practices of other societies so long as their practices conformed to their
own standards. Is this true for us?
-Is moral standards of the society the only criteria to judge what is right or
wrong?
-Popular vs right? Any difference.
Technology and Business Ethics
-Technology consists of all those methods , processes and tools that human
invent to manipulate their environment.
-the way we do business is being continuously influenced by new technologies
and this will raise new ethical issues for business.
-Field of IT-The use of extremely powerful and compact computers,the
internet and so forth have made it easier to capture manipulate, monitor
and move information in new ways. Ex.-privacy, copyright
-Field of genetic engineering-mixing the genes to create new organisms. Are
we playing god? Gene padi and anggur
11. MORAL DEVELOPMENT AND MORAL REASONING
A person’s values are not formed during childhood only. According to
Kohlberg, there is a sequence of six identifiable stages in the development
of a person’s ability to deal with moral issues.There are:
1.Level One:Preconventional Stages:
Here right or wrong are interpreted in terms of the pleasant or painful
consequences of actions or in terms of the physical power of those who set
the rules. “Stealing is bad because my mommy will acne me”
a.Stage one:Punishment and Obedience Orientation:The child’s reasons for
doing the right thing are to avoid punishment or defer of superior physical
power of authorities. (based on consequences)There is little awareness that
others have needs and desires similar to one’s own.
b.Stage two:Instrumental and Relative orientation. Here,right actions are
actions that can serve as instruments for satisfying the childs own needs or
the needs of those for whom the child cares. The child is now aware that
others have needs and desires similar to his own and begins to defer to
them to get them to do what he wants.
12. 2.Level two: Conventional Stages: Mainatining the expectations of one’s own
family,peer group or nation is now seen as valuable in its own right,
regardless of the consequences. The person at this level of development
does not merely conform to expectations but exhibits loyalty to the group
and its norms.”it is right my friends/america think so” ‘ it is what our law
says”
a.Stage Three:Interpersonal Concordance orientation:Right action is
conformityto what is generally expected in one’s role as a good
son,daughter, brother etc.Doing what is right is motivated by the need to be
seen as a good performer in one’s own eyes and in the eyes of others.
b.Stage four:Law and order orientation:What is right or wrong here, is now
determined by loyalty to one’s own larger nation or surrounding society.
Laws are to be upheld except where they conflict with other fixed social
duties.
13. 3.Level Three: Postconventional, Autonomous or principled stages:Here, a
person no longer simply accepts values and norms of the groups to which
he or she belongs to. Instead, the person now tries to see situations from a
point of view that impartially takes everyone’s interests into account. The
person questions the laws and values that a society has adopted and
redefines them in terms of self chosen principles that can be justified in
rational terms. If an adult at this stage is asked why something is wrong,
the person will respond in terms of what has been decided through
processes that are fair to everyone or in terms of justice.
a.Stage Five:Social Contract Orientation:Here, the person becomes aware that
people hold a variety of conflicting personal views and opinions and
emphasizes fair ways of reaching consensus by agreement, contract and
due process.
b.Stage Six:Universal Ethical Orientation: At this final stage, the right action
comes to be defined in terms of moral principles chosen because of their
logical comprehensiveness,universality and consistency. These ethical
principles are not concrete,but abstract general principles dealing with
justice,socirty’s welfare,equality of human rights,respect for the dignity of
individual human beings.the person’s reasons for doing what is right are
based on a commitment to these moral principles.
14. Kohlberg’s theory is useful because it helps us understand how our moral
capacities develop and reveals how we can become increasingly
sophisticated and critical in the use and understanding of the moral
standards that we hold . Not everyone go through all the stages. Some get
stuck.
-Critics of this theory criticise K for claiming that the higher stages are
morally preferable to lower stages. Broader perspective does not mean
better.
--Gilligan-psychologist-because most of K’s subjects are male, his theory
failed to take into account the patterns of moral thinking of woman.
Moral Reasoning/Pertaakulan
-It refers to the reasoning process by which human behaviors,institutions or
policies are judged to be in accordance with or in violations or moral
standards.
-It has two essential components:
a.An understanding of what reasonable moral standards require,prohibit,value
or condemn
b.Evidence or information that shows that a particular person,policy
,institution or behavior has the kinds of features that these moral standards
require,prohibit,value or condemn.
15. • Ex. Factual Moral judgment
Moral information on the rightness
standar concerning the or wrongness of
ds policy, institution the policy,
or behavior under institution or
consideration behavior
Ex. A
society Ex. In american
society,41% EX.america
is unjust
Of negros fall below n society is
if it does
the un just.
not treat
minoriti poverty line as
es as compared with
equal to 12% Of whites
whites
16. There are various criteria that ethicists use to evaluate the adequacy of moral
reasoning:
a. Moral reasoning must be logical: It means the logic of the arguments used
to establish a moral judgment must be rigorously examined, all the
unspoken moral and factual assumptions be made explicit, and both
assumptions and premises be displayed and subjected to criticism.
b.The factual evidence cited in support of a person’s judgment must be
accurate,relevant and complete(not just lopsided evidence).
c.The moral standards involved in a person’s moral reasoning must be
consistent.Ex. Moral standards-employee disobeying is bad and it is
wrong to help someone who is endangering innocent people’s life. One
day your boss calls you to do something that can endanger the lives of
others.So , need to do modification, we need to look at the reasons behind
the two moral standards to see which is important. here, maybe modify the
first standard that employees have to obey except when they threaten
human lives.
Consistency also refers to the requirement that one must be willing to
accept the consequences of applying one’s moral standards consistently to
all persons in similar circumstances. You lie-OK. Others lie-not OK
17. ARGUMENTS FOR AND AGAINST BUSINESS ETHICS
Three objections of bringing ethics into business:
a.In perfectly competitive free markets, the pursuit of profit will by itself
ensure that the members of society are served in the most socially
beneficial way. To be profitable, managers will need to produce what
society wants. So no need for managers to impose their on values on
business. Managers need to concentrated on making profits
But are all economies perfectly competitive free(some monopoly business.)
Sometimes , steps to increase profits can socially harmful. ex.corruption,
pollution etc.Apx.art from that, the market consists of rich and poor
people.Companies will only produce things that are good for rich people.
b.A second kind of argument sometimes advanced to show that business
managers should single-mindedly pursue the interests of their firms and
should ignore ethical considerations is embodied in Michales “loyal
agent’s argument” – “An employer would want to be served in whatever
ways will advance his or her self interests. Therefore, as a loyal agent of
the employer, the manager has a duty to serve the employer in whatever
ways will advance the employer’s self interests.”
18. However-the phrase is an example of unproved moral standards.It is really
good.Furthermore, a manager’s duty has legal limitations.Code of conduct
for lawyers , real estate agents etc.
c.It is ethical enough to just obey the law. But is ethics the same as law.
The Case for Ethics in Business
a.Ethics should govern all voluntary human activities and because business is
a voluntary human activity, ethics should govern business.
b.Like any other human activities, a business cannot exist unless the the
people involved in the business and its surrounding community adhere to
some minimal standards of ethics .managers who lie, customers who still.
c. Good ethics is good profit.?
d. Customers and employees care about ethics. Boycot unethical companies.
19. MORAL RESPONSIBILITY AND BLAME
Moral reasoning is sometimes directed at a different kind of judgment:
determining whether a person is morally responsible for an injury or for a
wrong.The kind of moral responsibility we are discussing here is the kind
of moral responsibility a person has when we say a person is to be blamed
for something.
-Traditional view-A person is morally responsible for an injury when the
person caused the injury and did so knowingly and freely. But it ignores
the fact that people are sometimes responsible for injuries which they did
not cause but which they could and should have prevented.
So, a person is morally responsible for an injury or wrong if:
a.The person caused or help caused it, or failed to prevent it when he could
and should have; and
b.The person did so knowing what he was doing; and
c.The person did so of his own free will.
Company keep posion-no proper labelling-worker open can and overcome by
gas and dies.
20. Corporate responsibility
-Who should be responsible for corporate act/ action/activities?
Within the modern day corporations, responsibility for a corporate act is often
distributed among a number of cooperating parties. Corporate acts
normally are brought about by several actions or omissions of many
different people all cooperating together so that their linked actions and
omisions jointly produce the corporate act.one team designs cars ,another
make it, another sells it. One group knowingly defrauds buyers and another
group knowingly but silently enjoying the profit. So who is morally
responsible for such jointly produced acts?
-traditional view is that those who knowingly and freely did what was
necessary to produce the corporate act are each morally responsible.The
person is fully responsible for the wrong or injury even if this
responsibility is shared with others. You use others help to commit fraud.
-Critics say that when an organised group such as corporation acts together,
their corporate act may be described as the act of a group and corporate
group.so the group and not individuals of the group that must be held
responsible.ex. Defective car, we blame proton. Not its enginners.
21. The law typically attributes the acts of a corporation’s managers to corporation
(act within their authority)and not to managers as individuals.
However, in large organisations, consisting of different departments. Members
of one department might not know what is going on in the next department.
Engineering might submit design to production department. After that
that’s it. Sometimes , employees can also be pressured into such activities.
Is he morally responsible?
Subordinates Responsibility
-Corporations usually have a hierarchical structure of authority in which
orders and directives pass from those higher in the structure to a variety of
agents at lower levels. Who is morally responsible when a superior orders
a subordinate to carry out an act that both of them know is wrong?
-following orders good enough to escape?