Virtue Ethics: Character and Moral Development

Virtue Ethics

• Focuses on the character of a person, including intellectual dispositions, characteristics, and sensibilities that influence behavior
• Concerned with developing virtues (good character traits) and avoiding vices (bad character traits)
• Emphasizes cultivating virtues to achieve a well-lived life
• Honesty, kindness, temperance and loyalty are examples of virtues
• Greed, arrogance and impatience are examples of vices
• Shaped by environment, education, and social influences
• Ethical choices should promote good character and long-term well-being
• Examines whether capitalism undermines good character
• Social policies should account for character development
• Professional ethics thrive where people of good character work together
• The doctrine of the Golden Mean states that virtue lies between two extremes
• Ethics should focus on how to live one's own life from an egoistic perspective
• Alternatively, ethics should emphasize empathy and relationships

Ayn Rand and Objectivism

• Advocates egoism and individualism as essential for human flourishing
• Believes in rational self-interest, where individuals should pursue what is best for themselves
• Adheres to three key principles:
  • Independence where people are not defined by relationships
  • Productivity where the noblest human activity is productive work
  • Justice where people should be rewarded based on their contributions
• Supports free market capitalism as the best system for individual success
• Psychological egoism is the view that people are naturally motivated by self-interest
• Overemphasis on self-interest can overlook the importance of community and relationships

Integrative Social Contracts Theory

• Society functions through implicit social contracts, shaping moral understandings and expectations
• Moral obligations arise from relationships and cooperation
• Addresses global business ethics
• Calls for overarching ethical norms (hypernorms) that apply across cultures
• Local business norms are valid only if they are voluntarily accepted and align with global ethical standards
• Authentic norms are derived from community relationships and must not be forced
• Micro-social contracts refer to ethical norms set by local communities
• Global hypernorms are fundamental human rights, such as personal freedom, security, and dignity
• Ethical business conduct should respect local norms, provided they do not violate global ethical principles
• Provides practical guidance in ethical dilemmas where broad ethical theories fall short

Ethic of Care

• Introduced by Carol Gilligan in the feminist tradition
• Focuses on the quality of caring relationships rather than abstract principles of justice and rights
• Challenges traditional moral development theories, arguing they reflect a male bias
• Ethics is rooted in relationships and responsibilities to others
• Ethical motivation is not just intellectual but deeply tied to emotional connections
• A care-based approach is a better ethical framework for everyone
• Ethical decisions should consider context and emotional understanding
• Encourages ethical corporate culture based on mutual care and responsibility
• Businesses should recognize their interdependence with employees and society
• Rejects compartmentalization of morality and supports ethical business relationships based on mutual care and respect

Key Takeaways

• Virtue ethics focuses on developing good character over time
• Objectivism prioritizes rational self-interest and productivity
• Social contracts theory states ethical obligations arise from relationships and societal agreements
• The ethic of care prioritizes caring relationships and empathy
• Ethical decision-making should integrate character, relationships, and community norms
• Ethical business conduct must balance individual success with social responsibilities

Shareholder Value Perspective

• A corporation is a legal entity chartered by the state with distinct rights and responsibilities separate from individuals working within it
• Corporations can be sued without individual employees being held personally liable
• Shareholders own the corporation by purchasing shares
• Shareholders hold claim-rights to sell shares and receive returns on profits
• Shareholders have limited control over operations but can vote for the board of directors
• Shareholders are only liable for their investment amount and not corporate debts due to the principle of limited liability
• Shareholders expect managers to act on their behalf to maximize profits within the law
• Managers are agents hired to generate returns for shareholders
• Corporate donations to charity may violate shareholders' property rights and deviate from maximizing profits
• Shareholder primacy theory holds that managers should not use corporate funds for social causes unless they serve financial interests
• Courts recognize managers' legal duty to advance shareholder interests but grant them discretion in business decisions
• Shareholder primacy supports individual freedom and efficient markets
• Proponents argue capitalism has reduced poverty and increased wealth
• CSR is often a financial strategy to improve a company's image and increase sales
• Government, not corporations, should address social problems through laws and regulations
• Corporations should focus on profit-making within legal constraints
• Self-interest is the primary motivator in business
• Psychological egoism says people act based on self-interest
• Ethical egoism claims people should act in their self-interest
• The separation of ownership (shareholders) and control (managers) presents ethical challenges

Stakeholder Theory

• Assigns corporations ethical duties beyond profit maximization
• Stakeholders include employees, customers, shareholders, communities, society, environment, and suppliers
• In regions with weak laws, corporations must uphold ethical responsibilities
• Businesses should "do no harm"
• Corporations wield significant power and must consider their impact on all stakeholders
• Managerial responsibilities extend beyond maximizing shareholder profits to include employee rights, fair labor practices, and environmental sustainability
• UN Global Compact (10 Principles):
  • Human Rights: Avoid complicity in abuses
  • Labor: No forced or child labor, ensure fair treatment
  • Environment: Promote sustainability and green technology
  • Anti-Corruption: Combat bribery and corruption
• Corporations should help alleviate global inequalities and promote justice
• Ethical capitalism enhances long-term efficiencies and public trust
• Recognizing employees, customers, and communities as integral to corporate success
• CSR is a reflection of evolving societal norms and expectations
• Corporations actively engage in CSR by hiring CSR officers and setting sustainability goals
• In some cases, corporations must address social issues where governments lack capacity
• Businesses may manipulate government policies for their benefit through regulatory capture
• Stakeholder theory allows room for ethical motives in business
• People desire ethical business practices and social responsibility
• CSR is not just a marketing tool but a social movement changing corporate purpose

Key Takeaways

• Shareholder theory states corporations exist to maximize profits for shareholders within legal limits
• Stakeholder theory states corporations have responsibilities to all stakeholders, including employees, communities, and the environment
• The debate centers on whether businesses should prioritize financial returns or broader social responsibilities
• Both perspectives influence corporate governance, legal frameworks, and ethical business practices

Blowing the Whistle

• Reporting a serious problem at work
• Proceed with caution, as whistleblowers often face retaliation
• Think of courage at work as "calculated risk-taking"
• Personal values and convictions are a key consideration
• Ask: Does this issue cross an ethical line for you?
• Intentions should serve the greater good
• CEOs have great power and convincing others is often necessary
• Assess potential societal good vs. damage to personal/professional reputation
• Consider reputational harm for all involved
• If urgency is low, take time to prepare and reflect on risks
• Consider what steps to take if the desired outcome is not achieved or if you are willing to leave your job
• Approach your immediate manager first, if appropriate
• If ignored, try again and document the concern in writing by using memos/emails to create a paper trail
• Consult the ethics officer or ombudsman if available and identify if there are formal processes for raising issues
• Whistleblowing can cause personal and professional stress, discuss with family
• Keep copies of correspondence, memos, and a diary of conversations as documentation
• Escalating internally means going to the next level of management if necessary
• Consider HR, legal department, or auditors
• Laws protecting whistleblowers:
  • False Claims Act awards whistleblowers 15-30% of damages recovered by the federal government
  • Sarbanes-Oxley Act protects whistleblowers in publicly traded companies who disclose issues affecting share value
  • Dodd-Frank Wall Street Reform and Consumer Protection Act where the SEC pays 10-30% of government recoveries over $1 million for whistleblowers providing original information
• If the stress of whistleblowing is too intense, resigning may be an option