Business Ethics Midterm #1 PDF

# Business Ethics Midterm #1 ## Chapter 1 **Ethics and the Law** * The law incorporates many ethical standards. * But some laws are illegal but not clearly unethical (e.g., jaywalking). **Ethics and Feelings** * Many people equate ethics with feelings, "gut" instincts. * But this is subjective...

# Business Ethics Midterm #1 ## Chapter 1 **Ethics and the Law** * The law incorporates many ethical standards. * But some laws are illegal but not clearly unethical (e.g., jaywalking). **Ethics and Feelings** * Many people equate ethics with feelings, "gut" instincts. * But this is subjective as feelings deviate from what is ethical (e.g., being vegan). **Ethics and Religion** * Most religions advocate for high moral standards, but this idea is incomplete. * But if ethics was confined to religion, it would only apply to religion. **Ethics and Society** * Is ethics just the norms, conventions, and customs of our society? * This introduces the problem of **culture/ethical relativism**. **Three Problems:** 1. **Logistically Challenging** * If ethics is "what society accepts", it must be clear what society accepts. 2. **Societal Standards of behavior may be ethical** (e.g., taking care of elders). 3. **Why Should Consensus Matter** (e.g., Challenging Society: Civil Rights movement)? **Culture/Ethical Relativism** * The view that moral values are entirely relative to particular environments. **So What?** * Generally, ethics is the study of theoretical foundations of moral principles governing individual behavior and the practical application of those principles. **Moral Principle:** "Moral Law" e.g., "it is wrong to harm other humans!!" **Moral Intuition:** A gut feeling we have if an action is right or wrong (e.g., genocide). **Normative/Perspective:** What we should believe is right and wrong. **Argument:** A series of statements intended to establish a definite conclusion. ## Chapter 2 **Moral Diversity in the Globalization of Business** * (a) Should Companies Conform to local practices in order to be competitive? * (b) How do we conduct business in other parts of the world? * "When in Rome, do as the Romans do" - Conforming to local practices. **Case that relates: Italian Tax Mores** * Should American bank pay taxes or follow local customs and lie? * Outcome: If not lied, bank paid 3x in taxes as they should follow "de facto" law and because everyone is cheating, it is the equalizer. **The Lance Armstrong Exception** * He is a competitive bicyclist caught for taking performance enhancing drugs. * Some argue it may be permissible to cheat when cheating is a well-known feature of the game. * But not following the "rules" of the game unfairly disadvantages oneself. * This assumes all players are aware of these rules, and is free to accept or reject them, therefore putting all players on an equal playing field. * Cheating would become unfair only if some companies are aware of the mores. **Richard Garliko's POV on the Lance Armstrong exception** 1. If everyone is cheating. 2. And it's widely known and ignored by officials. 3. And cheating can't be eliminated. 4. Then it isn't really cheating; just re-equalizing the players. **Ethical Reasoning:** * John Rawls described a method known as **"Reflective Equilibrium"** for striving towards consistency in our moral beliefs: * A state of balance among a set of beliefs arrived at by a process of deliberative mutual adjustment among general principles and particular judgments. * Reflective equilibrium requires you to do the following: * **Revise:** The original principle (moral) in order to articulate and distinguish the situations in which apparent inconsistency in beliefs arises. * **New Principle:** "It is wrong to kill innocent people" unless it is necessary to save a larger number of innocents. **Ethical Theories: Utilitarianism** **Four Essential Features:** 1. **Consequences of actions.** 2. **Principle of utility.** 3. **Overall Welfare for most.** 4. **POV of spectator.** * **(1) Consequences:** Places value on consequences of actions, rather than motives. * **(2) Principle of utility:** An action is right if it is likely to promote the most amount of happiness for the most amount of people involved. * **(3) Long-term overall welfare:** Overall welfare for most people = promoting long-term pleasure and diminishing pain. * **(4) Disinterested spectator:** "As between his own happiness and that of others, utilitarianism requires him to be as strictly impartial as a disinterested spectator." **Ethical Theories: Deontology** * **Deontology: Intentions:** What matters is the morality of the action itself, measured by Kant's ethics. Focuses on the rightness/wrongness of the action itself, regardless of the outcome (contrary to utilitarianism). * **Categorical Imperatives: absolute Commands** **First Formulation:** * "Act only according to the maxim by which you can at the same time will that it should become a universal law." * What would happen if everyone acted the same way one time? **Second Formulation:** * Human beings are an "end": not to be treated as a "mere means to an end." * Intrinsically Valuable. **Lessons of the Trolley Problem: Philippa Foot** * **Intent to harm** vs **unintended consequence**. * Worse to push the large man than pull a lever. * This provides an explanation for a variety of behaviors in the business context. **Neuropsychological Response from Josh Greene (fMRI Investigation)** * Our emotions are brought on by proximity: the act is up close and personal rather than disembodied by the technology of the track switch. **Case that relates: The Ford Pinto Case:** * Producing cars with a high fatalities rate but knew this and did a cost-benefit analysis to determine lawsuits less expensive than producing new tanks. ## Chapter 3 **The Dirty Hands Problem:** * Even if someone does the morally right thing, that person has also done something that is morally wrong. * The moral wrongness doesn't evaporate simply in virtue of the rightness of the act. * "Damned if you do and damned if you don't." **Case that relates: Bisha Mine, Eritrea** * Nevsun - Canadian Mining Company. * Eritrea, North Africa -  "North Korea" of Africa, Human Rights Violations, Dictator, Killings. **Lawsuit:** * **Plaintiffs:** "Cruel, inhumane & degrading treatment." * Lived in constant fear of threats of torture and intimidation. * **Nevsun:** "We are confident that the allegations are unfounded… the Mine has adhered to all standards of governance, health & safety." **Case that relates: Guantanamo Bay Detention Camp** * After 9/11, CIA tortured 1000 prisoners to get info. * **Moral remainders:** To experience regret and remorse: the left-over "stuff" after a moral problem has been solved. **The Dirty Hands Problem: Business Context:** * By extension of Machiavelli's The Prince. * For a business to survive, is it necessary to get your hands dirty. **Public vs Private Morality** * **(Role Morality)** * The morality and moral requirements and considerations present when one has a public person, role or position. * **The morality and moral requirements and considerations present in one's personal affairs, whether or not those affairs are private.** **Albert Z. Carr: Is business just a game?** →Business is a form of "gamesmanship" - winning is the end goal. * Like poker, creating, bluffing, and dishonesty are acceptable and essential to success. * There is no inconsistency between having a different set of values at home vs. in public. * "With the accepted rules of the business game, no moral culpability attached to it." * Hence: Public/role morality and private morality are distinct. **Objections to Carr:** 1. The strategy of bluffing is less effective the more it becomes known. * The economic system would collapse without mutual trust. 2. To call business a "game" is to trivialize what amounts to the method people use to make a living. 3. Violates the **"is-ought" fallacy** (might doesn't make it right). 4. Even though there is justifiable exceptions to ethical rules, business doesn't count. **The Purpose of Work:** * **Meaningful work leads to job satisfaction and overall happiness.** * A person finds meaningful work only when the job is good. * **Harry Frankfurt:** "Integrity is a matter of integrating various parts of our personality into a harmonious, intact whole." ## Chapter 4 **Corporate Purpose - Sam Walton** * Many believe that a primary purpose is "Serve customer interests." * Corporate executives particularly defensive of customer primacy. * "There is only one boss. The customer. And he can fire everybody in the company from the Chairman down, simply by spending his money somewhere else." - S.W. **Four Key Terms:** 1. **Corporation:** "a group of individuals legally authorized to act as a single entity; the basic unit of commerce today!" * **Milton Friedman:** The most influential economist of the second half of the 20th century... possibly all of it (economist). * Corporations exist to generate profit. 2. **Shareholders:** Any person/people who bear ownership shares in the company. * **Milton Friedman:** Shareholder theory. → A corporation's owners, stockholders, should "be the primary beneficiaries of business decisions." * E.g., when making important decisions, executives should make it their top priority to benefit the company's owners. → Business' purpose is profitability; therefore, the manager's primary responsibility is to the profit-bearers. → Friedman: Shareholders have a rightful claim to a corporation's concern and its profit. ★Instrumentalist: All decisions are made for the ultimate goal of maximizing profit for shareholders★ * E.g., result = profit. **Limitations of Shareholder Theory:** 1. **Too narrow:** Corporations are a complex organism with many interests, stakes, and goals. 2. If the aim of the business is profit maximization, and maximization is production without limit, then there is no constraint on a business' profit maximizing goals. 3. **Maximization without limit wreaks havoc.** * **Greed w/o limits:** (a) Ford Pinto, (b) Nevsun, (c) Corporate greed 1990s-2000s. * **Critics:** The corporation is a member of the moral community with relevant responsibilities and capabilities. **Stakeholder:** Any person/group/organization who has an interest or concern in an organization. * **Edward Freeman:** Professor. * **Background assumption:** Businesses exist for purposes other than just profit. * **There is social value to businesses.** **Stakeholders:** * **Primary (narrow):** Any group vital to survival and success of corporation. * Customers, employees/investors. * Essential to long-term survival. **Case: Marks & Spencer** * Management monitored floor to see how customers being treated. Shop assistant fainted and Simon found out her husband is unemployed and she isn't eating. Next week, Simon introduced nutritious meals for all staff at nominal prices. Why? * **Milton Friedman:** * Nutritious meals = less fainting = more productivity = $.  * Instrumental reasoning: nutritious meals valuable only insofar as they increase profits. * **Simon Marks:** * Non-instrumental reasoning: meals are valuable in themselves - employee welfare. * Led to reputation for quality and staff loyalty, in turn growing profits. **Shareholder Primacy:** The view that a business manager's primary responsibility is to the corporation's shareholders. * **Corporate Social Responsibility (CSR):** The corporation is a member of the moral community with relevant responsibilities. * **Corporate Self-regulation:** Aims to contribute to societal and philanthropic goals voluntarily. **CSR:** 1. Economic responsibility (make money). 2. Legal responsibility (follow spirit of the law). 3. Ethical responsibility (do the right thing - even when law doesn't apply). 4. Philanthropic responsibility ("Contribute to society's projects even when they're independent from business") **Reminder:** * **Instrumental reasoning:** Making decisions to favor profit maximization. * **Non-instrumental reasoning:** Valuing things in themselves (friendship, memories, health) **Case: Merck Pharmaceuticals:** * 1942: Penicillin made for the first time by Merck. * Merck shared secrets on how to make so he could save lives. * "We try never forget medicine is for the people, not for the profits." **Possible to be ethical and profitable.** **Greed aka "unenlightened Self-interest":** When one acts accordingly to short-term selfishness, group suffers... But sometimes furthering the interests of others ultimately serves our own self-interest ("Enlightened Self-interest").  **The Three Views:** 1. **The moral person view:** * Corporations are like persons in that their actions can affect others. * Corporations are full moral agents with moral rights and responsibilities. 2. **The moral actor view:** * Corporations have special moral status that is similar to, but not exactly like, that of persons. * Corporations have legal rights but they are not persons with the full set of moral rights (e.g., right to life). * Corporations have some moral responsibilities (e.g., not harm others). 3. **The legal compliance view:** * A corporation's only true obligations are its legal obligations. ## Chapter 5 **The 3 moral advertising concerns:** * **Macro-level:** The moral justifications of the practice of advertising as a practice and its place and role within a society. * **Micro-level:** The moral justifications about particular advertisements. * **Different types of products:** Special advertising considerations for certain products (alcohol, cigarettes). **An advertisement is a public notice which:** 1. **Conveys information about product / service**. 2. **In order to persuade the buyer of product / service**. * Advertising is a fundamental aspect of the markets: (a) Inform buyers about what is available in the market. (b) Sellers communicate virtues of their goods & services. (c) Allows comparisons of products and prices. **Shockvertising:** * Benetton Ads (1990-2000), Italy. * Ad depicts mafia killing from 1982, "How does my father’s death enter into publicity for sweaters?" * New Ad again backlashed for spreading AID’s fear of sufferers and commodified suffering. * Another Ad campaign featuring death row murderers. **Deception in Advertising:** * The act of believing something untrue. * E.g., advertising from McDonald's not showing unhealthy. **Partial Disclosure:** Involves a company withholding or omitting information about the product or service. **False advertising is illegal in CA & USA; but law is blurry for partial disclosure.** **Whats wrong with deception? Autonomy: A person's capacity for self-governance.** **Galbraith's the Dependence Effect:** * John Kenneth Galbraith: The Affluent Society * Corporations don't use advertising to inform us, rather "brings into being wants that previously did not exist." E.g., desires are created by the very process through which they are satisfied. * Galbraith: "This is like a doctor routinely running over pedestrians in order to keep the hospital beds full." * The aim of advertising is to create consumers dependent on product consumption. * Create desires THEN offer a way to satisfy desires. **Utilitarian Desires:** * It undermines the overall welfare (happiness) of the majority of people. * By fabricating desires, it makes most people discontented and dissatisfied for their long-term well-being. **Deontologist Desires:** * Advertising that fabricates desires uses us as a mere means to an end * It fails to treat us as autonomous agents by modifying our behaviors for profits. ## The age of Surveillance Capitalism: * S. Zuboff, Harvard prof., Age of Surveillance Capitalism. * The digital revolution has transformed marketplaces. * Zuboff argues: high-tech companies began the age of surveillance capitalism, where they exploit and commodify our personal data for their own ends. * Used to predict future behaviour, info is sold to companies for profit. * "Surveillance Capitalism unilaterally claims human experience as free raw material for transaction into behaviour data!" * Unilaterally = one sided, Companies know us, we don't know them. * Google first discovered this behaviour surplus data. * This data is fed into an advanced manufacturing process known as "machine intelligence." * They are then turned into "prediction products" that anticipate what you will do. * These "prediction products" are then sold in a very lucrative marketplace to companies. **Why is this a concern?** * We barely understand how sophisticated algorithms predict and shape our personalities and desires for commercial purposes, both online and offline. * "Our experience in the world is turned into products for commodification." **Harms:** 1. Difficult to have any sense of self that isn't harvested for value. 2. Undermines our autonomy without our consent or knowledge. 3. Political harms: erodes demographic process.