Ethics

1. Ethics and Behavior
in Organizations

2. Introduction
Inventory of Ethical Issues in Business
• Employee-Employer Relations
• Employer-Employee Relations
• Company-Customer Relations
• Company-Shareholder Relations
• Company-Community/Public Interest

3. Public’s Opinion of Business Ethics
• Gallup Poll finds that only 17 percent to 20 percent
of the public thought the business ethics of
executives to be very high or high
• To understand public sentiment towards business
ethics, ask three questions
– Has business ethics really deteriorated?
– Are the media reporting ethical problems more
frequently and vigorously?
– Are practices that once were socially acceptable no
longer socially acceptable?

4. Public’s Opinion of Business Ethics
• Gallup opinion polls about ethical behavior (see
text book Figure 3.1)
– Pharmacists ranked highest
– Car salespeople ranked lowest
– Business executives ranked near the middle
– People in the United States do not have a positive
view of ethics and behavior in organizations

5. Business Ethics: What Does It
Really Mean?
Definitions
• Ethics involves a discipline that examines good
or bad practices within the context of a moral
duty
• Moral conduct is behavior that is right or wrong
• Business ethics include practices and
behaviors that are good or bad

6. Business Ethics: What Does It
Really Mean?
Two Key Branches of Ethics
• Descriptive ethics involves describing,
characterizing and studying morality
– “What is”
• Normative ethics involves supplying and
justifying moral systems
– “What should be”

7. Conventional Approach to Business
Ethics
• Conventional approach to business ethics
involves a comparison of a decision or practice
to prevailing societal norms
– Pitfall: ethical relativism
Decision or Practice Prevailing Norms

8. Sources of Ethical Norms
Fellow Workers
Family
Friends
The Law
Regions of
Country
Profession
Employer
Society at Large
Fellow Workers
Religious
Beliefs
The Individual
Conscience

9. Ethics and the Law
• Law often represents an ethical minimum
• Ethics often represents a standard that exceeds
the legal minimum
Ethics Law
Frequent Overlap

10. Making Ethical Judgments
Behavior or act
that has been
committed
Prevailing norms
of acceptability
Value judgments
and perceptions of
the observer
compared with

11. Ethics, Economics, and Law

12. Four Important Ethical Questions
• What is?
• What ought to be?
• How to we get from what is to what ought to be?
• What is our motivation for acting ethically?

13. 3 Models of Management Ethics
Three Types Of Management Ethics

14. Three Models of Management
Morality and Emphasis on CSR

15. Making Moral Management
Actionable
Important Factors
• Senior management
• Ethics training
• Self-analysis

16. Developing Moral Judgment
External Sources of a Manager’s Values
• Religious values
• Philosophical values
• Cultural values
• Legal values
• Professional values

17. Developing Moral Judgment
Internal Sources of a Manager’s Values
• Respect for the authority structure
• Loyalty
• Conformity
• Performance
• Results

18. Can Business Ethics Be Taught
And Trained?
• Ethic courses should not:
– Advocate a set of rules from a single perspective
– Not offer only one best solution to specific ethical
problems
– Not promise superior or absolute ways of thinking
and behaving in situations

19. Can Business Ethics Be Taught
And Trained?
• Scholars argue that ethical training can add value
to the moral environment of a firm and to
relationships in the workplace by:
– Finding a match between employer’s and
employee’s values
– Handling an unethical directive
– Coping with a performance system that
encourages unethical means

20. Ethics-Moral Disengagement
• Social Learning Theory
– Moral reasoning translates to moral action through
self regulatory processes
• You do things that bring you self-worth
• You avoid things that avoid self censure
• You have to disengage from your normal internal
self sanctions to commit unethical or deviant
acts

21. Moral Disengagement
• Scoring the questionnaire
– Moral justification-A
– Euphemistic language-B
– Displacement of responsibility-C
– Advantageous comparison-D
– Diffusion of responsibility-E
– Distorting consequences-F
– Attribution of blame-G
– Dehumanization-H

22. Chapter 3
Ethics and Behavior
in Organizations

23. Ethical and
Unethical Behavior
• Ethical behavior is good, right, just, honorable,
and praiseworthy
• Unethical behavior is wrong, reprehensible, or
fails to meet an obligation
• Judgment of behavior is based on a specific
moral philosophy or ethical theory

24. Ethical and
Unethical Behavior (Cont.)
• Nagging issues
– Finding a standard of judgment with which all
reasonable people can agree
– Defining the meaning of “good,” “bad,” “right”, and
“wrong”
– Add the nasty issue of cross-cultural ethical behavior

25. Ethical and
Unethical Behavior (Cont.)
Find 1 cent Find $1
Find wallet with $1,000
and no identification.
Find wallet with $1,000
and identification.
Ethical dilemmas

26. Legal Versus Ethical Behavior:
The Issue of Lying
Ethical
behavior
Legal
behavior
Testifying under
oath in court.
Lying: deliberate misrepresentation of the truth.
Lying to a customer
about the safety of
a product.
“How does my
hair look?”

27. Theories of Ethics
• Four major theories of ethics in the Western
world
– Utilitarianism: net benefits
– Rights: entitlement
– Justice: fairness
– Egoism: self-interest

28. Theories of Ethics (Cont.)
• Utilitarianism
– examine an action’s effects to decide whether it is
morally correct
– Action is morally right if the total net benefit of the
action exceeds the total net benefit of any other
action
– Assumes a person can assess all costs and benefits
of an action

29. Theories of Ethics (Cont.)
• Utilitarianism (cont.)
– Assessment of net benefits includes any important
indirect effects
– Example: assessing the effects of pollutant
discharge from a factory on the immediate
surrounding environment and those down stream or
down wind from the factory
– Two forms: act and rule

30. Theories of Ethics (Cont.)
• Utilitarianism (cont.)
– Act utilitarianism asks a person to assess the
effects of all actions
– Rejects the view that actions can be classified as
right or wrong in themselves
– Example: lying is ethical if it produces more good
than bad

31. Theories of Ethics (Cont.)
• Utilitarianism (cont.)
– Rule utilitarianism asks a person to assess actions
according to a set of rules designed to yield the
greatest net benefit to all affected
– Compares act to rules
– Does not accept an action as right if it maximizes net
benefits only once
– Example: lying is always wrong or “thou shalt not
lie”

32. Theories of Ethics (Cont.)
• Utilitarianism (cont.)
– Two main limitations
• Hard to use in difficult to quantify situations
• Does not include rights and justice
– Other ethical theories meet these objections

33. Theories of Ethics (Cont.)
• Rights
– Right: a person’s just claim or entitlement
– Focuses on the person’s actions or the actions of
others toward the person
• Legal rights: defined by a system of laws
• Moral rights: based on ethical standards
– Purpose: let a person freely pursue certain actions
without interference from others

34. Theories of Ethics (Cont.)
• Rights (cont.)
– Features
• Respect the rights of others
• Lets people act as equals
• Moral justification of a person’s action
– Examples
• Legal right: right to a fair trial in the United States
• Moral right: right to due process within an organization

35. Theories of Ethics (Cont.)
• Rights (cont.)
– Rejects view of assessing the results of actions
– Expresses moral rights from individual's view, not
society's. Does not look to the number of people
who benefit from limiting another person's rights
– Example: right to free speech in the United States
stands even if a person expresses a dissenting view

36. Theories of Ethics (Cont.)
• Rights (cont.)
– Types of rights
• Negative rights: do not interfere with another person’s
rights
• Positive rights: A person has a duty to help others
pursue their rights
Negative: do not stop a person from whistleblowing
Positive: coworker helps another person blow
the whistle on unethical actions

37. Theories of Ethics (Cont.)
• Justice
– Looks at the balance of benefits and burdens
distributed among members of a group
– Can result from the application of rules, policies, or
laws that apply to a society or a group
– Just results of actions override utilitarian results
– Rejects view that an injustice is acceptable if others
benefit the action

38. Theories of Ethics (Cont.)
• Egoism
– Self-centered form of ethics
– Two forms of ethical egoism: individual and
universal
– Individual ethical egoism
• Judges actions only by their effects on one’s interests
• Usually rejected by moral philosophers as a defensible
basis of ethics

39. Theories of Ethics (Cont.)
• Egoism (cont.)
– Universal ethical egoism
• Can include the interests of others when assessing one’s
actions
• Still self-centered: pursuing pleasure and avoiding pain
• “Enlightened self-interest.” Considers the interests of
others because the person wants others to do the same
toward him or her

40. Theories of Ethics (Cont.)
• Egoism (cont.)
– Objections raised by moral philosophers
• Does not resolve conflicts in people’s interests
• One party would always have the pursuit of his or her
interests blocked

41. Theories of Ethics (Cont.)
• Questions from the ethical theories
– Utilitarianism: does the action yield the greatest
net benefits?
– Rights: does the action negatively affect someone’s
moral rights?
– Justice: does the action give a fair distribution of
costs and benefits among those affected?
– Egoism: will the action lead to other people
behaving toward me in a way I would like?

42. International Aspects
of Ethics
• Sharp contrasts exist between U.S. attitudes
toward business ethics and those of other
countries
• Of the major capitalist nations, the United States
has the highest frequency of reporting ethical
violations, the toughest laws, and the greatest
prevalence of organization codes of ethics

43. International Aspects
of Ethics (Cont.)
Cultural
relativism
Ethical
realism
Multinational
organization
Two ethical views

44. International Aspects
of Ethics (Cont.)
• Ethical views (cont.)
­ Cultural relativism
• Cultural relativism refers to differences in ethical
values among different cultures
• Premise: right and wrong should be decided by
each society's predominant ethical values
• Cultural relativists base their argument on three
points

45. International Aspects
of Ethics (Cont.)
• Ethical views (cont.)
- Cultural relativism(cont.)
• Three points
– Moral judgments are statements of feelings and opinions; neither
wrong nor right
– Moral judgments are based on local ethical systems; cannot
judge right or wrong across cultures
– Prudent approach: do not claim an action is either right or wrong

46. International Aspects
of Ethics (Cont.)
• Ethical views (cont.)
- Cultural relativism(cont.)
• Managers should behave according to local ethical
systems, even if their behavior violates the ethical
systems of their home country
• Many philosophers have rejected cultural relativism's
argument that codes of ethics cannot cross national
boundaries
• Agree, however, that countries vary in what they define as
right and wrong

47. International Aspects
of Ethics (Cont.)
• Ethical views (cont.)
– Ethical realism
• Morality does not apply to international transactions
• Because no power rules over international events, people
will not behave morally
• Because others will not behave morally, one is not morally
required to behave ethically
– See text for a revision to this view of ethical realism

48. International Aspects
of Ethics (Cont.)
• International ethical dilemmas
– Goods made in a country with no child labor laws
– Goods made in a country with child labor laws that
are not enforced
– Changing the behavior of local people
– Making small payments that are allowed under the
FCPA