Introduction to Business Ethics PDF
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University of Applied Sciences and Arts Northwestern Switzerland
Hein Schellekens
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This document is an introduction to business ethics, focusing on ethics theory & values, and exploring ethical dilemmas. It's course material, providing valuable insight for students of business ethics.
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Critical Approach & Business Ethics Introduction to Business Ethics Hein Schellekens www.fhnw.ch General information Weekly lectures, rotating Preparatory tasks will be lecturers...
Critical Approach & Business Ethics Introduction to Business Ethics Hein Schellekens www.fhnw.ch General information Weekly lectures, rotating Preparatory tasks will be lecturers announced on Moodle Script: Crane et al. (2016/2019): Business Contact: Ethics. Oxford University [email protected] Press Critical Approach & Business Ethics - Introduction www.fhnw.ch 2 Content Introduction to business ethics Ethical theories and values Stakeholders, social responsibility, and corporate governance Sustainability: Economic, environmental, and social dimensions Globalisation of ethical decision making Ethical dilemmas: Case Studies Corporate culture and ethical leadership Regulating and institutionalizing business ethics Critical Approach & Business Ethics - Introduction www.fhnw.ch 3 Expectations Presence is highly recommended, but not mandatory. Be prepared and active! No dogma! Feel free to ask questions and challenge me! No personal attacks. Use arguments instead. I feel quite bad if everyone is looking on his/her/their tablet or smartphone all the time. Critical Approach & Business Ethics - Introduction www.fhnw.ch 4 Ethics www.fhnw.ch 5 What is ethics? Ethics is normative: It talks about how the world should be, not how it is. Ethics critically engages with the fundamental assumptions under which our world operates. Ethics talks about human decisions and actions, not natural phenomena. Ethics deals with important questions, not minor issues (as compared to rules of etiquette). “Ethics is concerned with the study of morality and the application of reason to elucidate specific rules and principles that determine morally acceptable courses of action.” (Crane et al, 2019: 8) Critical Approach & Business Ethics - Introduction www.fhnw.ch 6 Ethical dilemmas: tough choices Investing in the weapon industry: security vs. financing warfare Personalised medicine: Access to healthcare vs. affordability Whistleblowing: telling the truth vs. loyality to the company Critical Approach & Business Ethics: Introduction to Business Ethics www.fhnw.ch 7 The trolley problem: harming one to save others? Critical Approach & Business Ethics - Introduction www.fhnw.ch 8 Side note: the moral compass of ChatGPT Critical Approach & Business Ethics - Introduction www.fhnw.ch 9 Simply a matter of taste? Moral values (can) differ across cultures and people. They are the outcome of a complex set of individual and socio-cultural factors. However, the absence of «objective» moral facts does not imply that «anything goes». Moral judgements can (and should) be evaluated on the basis of observable facts and rational arguments and translated into ethical theories, in order to: > Develop an understanding of where moral judgments come from, > Enable a debate and ultimately, > Support the resolvement of moral disagreements www.fhnw.ch 10 Values www.fhnw.ch 11 The relationship between morality, ethics and ethical theory Ethics …to produce …that can be applied rationalises ethical theory.. to a situation Potential morality.. Ethical solutions to Morality Ethics theory ethical problems Values? Why (and/or Deontology: lying is Politicians should always wrong never lie when) does it Honesty & matter to Consequentialism: Politicians should lie if Truth speak the it depends on the the collective benefits truth? outcome outweigh the «costs» Critical Approach & Business Ethics - Introduction www.fhnw.ch 12 Two types of value: moral and economic “Important and lasting beliefs or ideals shared by the members of a culture about what is good or bad and desirable or undesirable. Values have major influence on a person's behavior and attitude and serve as broad guidelines in all situations.” Economic Values Moral Values Profit Justice Growth Fairness Efficiency Truth Competition Autonomy Private Property Well-being Welfare Rights “Nowadays people ….. …. know the price of everything and the value of nothing.” Economic values have their origin in moral values. But in a market-driven society, economic values can serve and/or (re)define / crowd out moral values. That is because markets do not only allocate goods; they also express and promote Oscar Wilde certain attitudes toward the goods being exchanged. Critical Approach & Business Ethics - Introduction www.fhnw.ch 13 Ethical theories: underlying values and norms VALUE NORM Justice “To each his due (what the person deserves)!” Fairness “Distribute burdens and benefits in a fair way!” Wellbeing “Do no harm! Do good!” Autonomy “Respect the will of a person! Do not use anyone as a mere means to your goals!” Rights “Respect, protect and fulfill human rights!” Truth “Do not lie / cheat / deceive / plagiarize!” Dignity “Every person has the same intrinsic value!” Integrity “Do not deviate from your ethical principles! Be incorruptible!” Critical Approach & Business Ethics - Introduction www.fhnw.ch 14 Fairness The terms “fairness”, “justice” and “equity” are often used interchangeably. The most basic conception of justice/fairness: "equals should be treated equally and unequals unequally.“ Underlying question of fairness: what are justifiable criteria for treating people differently? Some suggestions: need, desert, contribution, effort.. On the other hand, there are criteria that we believe are not justifiable grounds for giving people different treatment (age, sex, race, religious preferences etc.) Whenever individuals are treated unequally on the basis of characteristics that are arbitrary and irrelevant, their fundamental human dignity is violated. Critical Approach & Business Ethics - Introduction www.fhnw.ch 15 Truth / Honesty Honesty or truthfulness is a facet of moral character that connotes positive and virtuous attributes such as integrity, truthfulness, straightforwardness The fundamental prerequisite for honesty is a shared notion of truth (“facts”) > not easy nowadays! Truthfulness is the cornerstone of trust, both at the personal and the societal level. Philosophical theories place different weight on the moral obligation to tell the truth, from absolute (Kant) to situational. Uttering true statements does not guarantee lack of deception; it is possible to mislead or deceive someone even when telling true statements! Critical Approach & Business Ethics - Introduction www.fhnw.ch 16 Freedom / Autonomy Freedom or liberty can be divided into two categories (Isaiah Berlin): Negative liberty: the freedom from external restraint on one’s actions Positive liberty: the ability to act on one's free will Overlaps with the concepts of self-governance and autonomy: to govern oneself, to be directed by one’s own considerations, desires, conditions, and characteristics. The precise interpretation depends on the weight ascribed to the (potential) factors that influence autonomy: (a) Coercion (b) Manipulation (c) Persuasion. Critical Approach & Business Ethics - Introduction www.fhnw.ch 17 Business Ethics www.fhnw.ch 18 Business ethics: what is it? Business ethics is a form of applied ethics, it is concerned with the practical aspects of moral considerations (in a corporate context). Topics within business ethics typically center around a conflict of values and interpretations of responsibility. Business ethics is concerned with both practical as well as more fundamental ethical questions, such as the legtimisation of ownership or the purpose of a company. “The study of business situations, activities, and decisions where issues of right and wrong are addressed.” (Crane et al, 2019: 4) Critical Approach & Business Ethics - Introduction www.fhnw.ch 19 Why study business ethics? (1/2) Studying business ethics will help you begin to identify ethical issues when they arise and recognize the approaches available for resolving them. You will learn more about the ethical decision-making process and about ways to promote ethical behavior within your organization. By studying business ethics, you may also begin to understand how to cope with conflicts between your own personal values and those of the organization in which you work. Awareness of ethical risks Language to express ethical concerns Frameworks that support ethical decision-making Methods and approaches to establish an ethical business culture Critical Approach & Business Ethics - Introduction www.fhnw.ch 20 Why study business ethics? (2/2) Employee commitment INSTRUMENTAL Primary responsibility The “business case” of business is to Investor loyalty Performance? for ethical increase shareholder behaviour value Customer trust Social responsibility Corporate Social NORMATIVE The “prescriptive” Responsibility: Environmental responsibility case for ethical business should create behaviour value for all Political responsibility stakeholders, not just shareholders. Critical Approach & Business Ethics - Introduction www.fhnw.ch 21 But what about the law? Law and ethics possess a common vocabulary of rights, duties, obligations, considerations of the good, and so forth. However, it is a mistake to conclude that law and ethics are therefore the same. Covered by both law and ethics LEGAL BUT NOT ETHICAL Typically concerns «practical» aspects of our behaviour, such as traffic rules. ETHICAL BUT NOT LEGAL («GREY AREA») Concerns moral questions that are insufficiently answered by the law. Critical Approach & Business Ethics - Introduction www.fhnw.ch 22 Why a legal system alone is not enough The law (typically) operates reactively: it remedies harms that already have taken place. The law has limited power: it is written in generalised terms and cannot cover every aspect of life, thereby leaving space for interpretation and loopholes. Legislative power is predominantly rooted in national authorities, whereas ethical issues often have an international character. A world which would rely on compliance alone would be very ineffective, costly and hostile! Critical Approach & Business Ethics – Introduction www.fhnw.ch 23 Where the law ends and ethics «begins» In this Congressional hearing, a Goldman Sachs executive is asked about the selling of risky debt (mortgage-linked securities) that it expected would tumble in value (“Timberwolf”) Goldman kept marketing Timberwolf even after Thomas Montag, an executive, in an email to a colleague called Timberwolf "one shitty deal.“ Timberwolf provided a vehicle for Goldman to unload its toxic inventory and to profit from the decline in value of the very securities it was recommending that its clients purchase. In 2016, Goldman Sachs Group Inc. and an Australian hedge fund agreed to end a $1 billion lawsuit over the sell of Timberwolf Critical Approach & Business Ethics – Introduction www.fhnw.ch 24 Different context, different questions Systemic Ethical questions about the social, political, legal, or economic systems within which companies operate Corporate Ethical questions about a particular corporation and its policies, culture, climate, impact, or actions Individual Ethical questions raised about a particular individual or particular individuals within a company and their behaviours and decisions. Critical Approach & Business Ethics – Introduction www.fhnw.ch 25