Chapter 1 - Introduction to Business Ethics PDF

Chapter 1 Introduction to Business Ethics- Understanding Business Ethics  Ch1 –Introduction to Business Understanding Business...

Chapter 1 Introduction to Business Ethics- Understanding Business Ethics  Ch1 –Introduction to Business Understanding Business Ethics Table of Contents table of contents...................................................................................1 Chapter Objectives...............................................................................3 1. WHAT IS ETHICS?........................................................................4 1.1.1 The Role of Values in Ethical Decision Making........................4 1.1.2 VALUE CONFLICTS................................................................7 1.1.3 DOING THE RIGHT THING....................................................8 1.2 Ethical Theories.............................................................................9 1.2.1 VIRTUE ETHICS.......................................................................9 1.2.2 ETHICS FOR THE GREATER GOOD...................................10 1.2.3 UNIVERSAL ETHICS.............................................................10 1.3 Ethical Relativism........................................................................11 1.4 Ethical Dilemmas.........................................................................11 1.5 RESOLVING ETHICAL DILEMMAS......................................12 References..........................................................................................15 2  Ch1 –Introduction to Business Understanding Business Ethics Objectives By the end of this chapter, you are expected to be able to: – Understand the role of values in ethical decision-making. – Understand opposing ethical theories and their limitations. – Discuss ethical relativism. – Explain an ethical dilemma and apply a process to resolve it. 3  Ch1 –Introduction to Business Understanding Business Ethics 1. What is Ethics? Ethics is the manner by which we try to live our lives according to a standard of “right” or “wrong” behavior—in both how we think and behave toward others and how we would like them to think and behave toward us. How people arrive at the definition of what’s right and wrong is a result of many factors, including how they were raised, their religion, and the traditions and beliefs of their society. Society is a structured community of people bound together by similar traditions and customs. 1.1.1 The Role of Values in Ethical Decision Making. Moral standards are principles based on religious, cultural, or philosophical beliefs by which judgments are made about good or bad behavior. o Culture is a particular set of attitudes, beliefs, and practices that characterize a group of individuals. Beliefs can come from many different sources: o Friends o Family o Ethnic background o Religion o School o The media—television, radio, newspapers, magazines, or the Internet o Personal role models and mentors 4  Ch1 –Introduction to Business Understanding Business Ethics One’s personal set of morals—morality—represents a collection of all these influences as they build up over one’s lifetime. Standards of ethical behavior are absorbed by osmosis as an individual observes the examples (both positive and negative) set by everyone around the individual—parents, family members, friends, peers, and neighbors. o When individuals share similar standards in a community, the terms values and value system are used. o The terms morals and values are often used to mean the same thing—a set of personal principles by which you aim to live your life. o A value system is a set of personal principles formalized into a code of behavior. person’s values can be said to have a specific “worth” for them. That worth can be expressed in two ways: o An intrinsic value—the quality by which a value is a good thing in itself and is pursued for its own sake, whether anything comes from that pursuit or not. For example, happiness, health, and self-respect. o An instrumental value—the quality by which the pursuit of one value is a good way to reach another value. For example, money is valued for what it can buy rather than for itself. The impact of a person’s or a group’s value system can be seen in the extent to which his or her daily lives are influenced by those values. o The greatest test of any personal value system comes when an 5  Ch1 –Introduction to Business Understanding Business Ethics individual is presented with a situation that places those values in direct conflict with an action. For example: o Lying is wrong—but what if you were lying to protect the life of a loved one? o Stealing is wrong—but what if you were stealing food for a starving. o child? o Killing is wrong—but what if you had to kill someone in self- defense to protect your own life? o It is this grey area that makes the study of ethics so complex. If individuals asked their friends and family what ethics means to them, they would probably arrive at a list of four basic categories: o Simple truth—right and wrong or good and bad. o A question of someone’s personal character—his or her integrity. o Rules of appropriate individual behavior. o Rules of appropriate behavior for a community or society The first category—a simple truth—also may be expressed as simply doing the right thing. The second category—personal integrity, demonstrated by someone’s behavior—looks at ethics from an external rather than an internal viewpoint. Rules of appropriate individual behavior represent the idea that the moral standards people develop for themselves impact their lives on a daily basis in their behavior and the other types of decisions they make. 6  Ch1 –Introduction to Business Understanding Business Ethics Rules of appropriate behavior for a community or society remind people that they must eventually bring their personal value system into a world that is shared with people who will probably have both similar and very different value systems. Each category represents a different feature of ethics. o On one level, the study of ethics seeks to understand how people make the choices they make—how they develop their own set of moral standards, how they live their lives on the basis of those standards, and how they judge the behavior of others in relation to those standards. o On a second level, people then try to use that understanding to develop a set of ideals or principles by which a group of ethical individuals can combine as a community with a common understanding of how they “ought” to behave. For some, the goal of living an ethical life is expressed by the Golden Rule—do unto others as you would have them do unto you or treat others as you would like to be treated. o The danger with the Golden Rule is that not everyone thinks like you, acts like you, or believes in the same principles that you do, so to live your life on the assumption that your pursuit of an ethical ideal will match others’ ethical ideals could get you into trouble. 1.1.2 Value Conflicts The impact of a person’s or a group’s value system can be seen in the extent to which their daily lives are influenced by those values. However, the greatest test of any personal value system comes when you are 7  Ch1 –Introduction to Business Understanding Business Ethics presented with a situation that places those values in direct conflict with an action. How do you resolve such conflicts? Are there exceptions to these rules? Can you justify those actions based on special circumstances? Should you then start clarifying the exceptions to your value system? If so, can you really plan for every possible exception? It is this gray area that makes the study of ethics so complex. We would like to believe that there are clearly defined rules of right and wrong and that you can live your life in direct observance of those rules. However, it is more likely that situations will arise that will require exceptions. 1.1.3 Doing the Right Thing There are four basic categories of what do we understand by ethics: 1. Simple truth—right and wrong or good and bad. 2. A question of someone’s personal character—his or her integrity. 3. Rules of appropriate individual behavior. 4. Rules of appropriate behavior for a community or society Establishing an ethical ideal for a community or society allows that group of people to live with the confidence that comes from knowing they share a common standard. Each category represents a different feature of ethics. On one level, the study of ethics seeks to understand how people make the choices they make—how they develop their own set of moral 8  Ch1 –Introduction to Business Understanding Business Ethics standards, how they live their lives on the basis of those standards, and how they judge the behavior of others in relation to those standards. On a second level, we then try to use that understanding to develop a set of ideals or principles by which a group of ethical individuals can combine as a community with a common understanding of how they “ought” to behave. For some, the goal of living an ethical life is expressed by the Golden Rule: Do unto others as you would have them do unto you or treat others as you would like to be treated. This simple and very clear rule is shared by many different religions in the world: 1.2 Ethical Theories The subject of ethics has been a matter of philosophical debate for over 2,500 years—as far back as the Greek philosopher Socrates. Over time and with considerable debate, different schools of thought have developed as to how we should go about living an ethical life. Ethical theories can be divided into three categories: virtue ethics, ethics for the greater good, and universal ethics. 1.2.1 Virtue Ethics The Greek philosopher Aristotle’s belief in individual character and integrity established a concept of living your life according to a commitment to the achievement of a clear idea— what sort of person would I like to become, and how do I go about becoming that person? The problem with virtue ethics is that societies can place different emphasis on different virtues. For example, Greek society at the time of Aristotle valued wisdom, courage, and justice. By contrast, Christian 9  Ch1 –Introduction to Business Understanding Business Ethics societies value faith, hope, and charity. So, if the virtues you hope to achieve aren’t a direct reflection of the values of the society in which you live, there is a real danger of value conflict. 1.2.2 Ethics for The Greater Good As the name implies, ethics for the greater good is more focused on the outcome of your actions rather than the apparent virtue of the actions themselves— that is, a focus on the greatest good for the greatest number of people. Originally proposed by a Scottish philosopher named David Hume, this approach to ethics is also referred to as utilitarianism. The problem with this approach to ethics is the idea that the ends justify the means. If all you focus on is doing the greatest good for the greatest number of people, no one is accountable for the actions that are taken to achieve that outcome. The 20th century witnessed one of the most extreme examples of this when Adolf Hitler and his Nazi party launched a national genocide against Jews and “defective” people on the utilitarian grounds of restoring the Aryan race. 1.2.3 Universal Ethics Originally attributed to a German philosopher named Immanuel Kant, universal ethics argues that there are certain and universal principles that should apply to all ethical judgments. Actions are taken out of duty and obligation to a purely moral ideal rather than based on the needs of the situation since the universal principles are seen to apply to everyone, everywhere, all the time. The problem with this approach is the reverse of the weakness in ethics for the greater good. If all you focus on is abiding 10  Ch1 –Introduction to Business Understanding Business Ethics by a universal principle, no one is accountable for the consequences of the actions taken to abide by those principles. 1.3 Ethical Relativism When the limitations of each of these theories are reviewed, it becomes clear that there is no truly comprehensive theory of ethics, only a choice that is made based on your personal value system. In this context, it is easier to understand why, when faced with the requirement to select a model of how we ought to live our lives, many people choose the idea of ethical relativism, whereby the traditions of their society, their personal opinions, and the circumstances of the present moment defi ne their ethical principles. The idea of relativism implies some degree of flexibility as opposed to strict black-and-white rules. It also offers the comfort of being a part of the ethical majority in your community or society instead of standing by your individual beliefs as an outsider from the group. In our current society, when we talk about peer pressure among groups, we are acknowledging that the expectations of this majority can sometimes have negative consequences. 1.4 Ethical Dilemmas Up to now we have been concerned with the notion of ethical theory— how we conduct ourselves as individuals and as a community in order to live a good and moral life. However, this ethical theory represents only half of the school of philosophy we recognize as ethics. At some point, these theories have to be put into practice, and we then move into the area of applied ethics. The basic assumption of ethical theory is that you as an individual or community are in control of all the factors that influence the 11  Ch1 –Introduction to Business Understanding Business Ethics choices that you make. In reality, your ethical principles are most likely to be tested when you face a situation in which there is no obvious right or wrong decision but rather a right or right answer. Such situations are referred to as ethical dilemmas. As we saw earlier in our review of value systems and value conflicts, any idealized set of principles or standards inevitably faces some form of challenge. For ethical theories, that challenge takes the form of a dilemma in which the decision you must make re quires you to make a right choice knowing full well that you are: Leaving an equally right choice undone. Likely to suff er something bad as a result of that choice. Contradicting a personal ethical principle in making that choice. Abandoning an ethical value of your community or society in making that choice. 1.5 Resolving Ethical Dilemmas Consider this three-step process for solving an ethical problem: Step 1. Analyze the consequences. Who will be helped by what you do? Who will be harmed? What kind of benefits and harm are we talking about? (Some are more valuable or more harmful than others: good health, someone’s trust, and a clean environment are very valuable benefits, more so than a faster remote-control device.) How does all of this look over the long run as well as the short run? Step 2. Analyze the actions. Consider all the options from a different perspective, without thinking about the consequences. How do actions measure up against moral principles like honesty, fairness, equality, respecting the dignity of others, and people’s rights? (Consider the common good.) Are any of the actions at odds with those standards? If 12  Ch1 –Introduction to Business Understanding Business Ethics there’s a conflict between principles or between the rights of different people involved, is there a way to see one principle as more important than the others? Which option offers the least problematic actions? Step 3. Make a decision. Take both parts of your analysis into account and make a decision. This strategy at least gives you some basic steps you can follow. Arthur Dobrin identified eight questions you should consider when resolving an ethical dilemma. 1. What are the facts? Know the facts as best you can. If your facts are wrong, you’re liable to make a bad choice. 2. What can you guess about the facts you don’t know? Since it is impossible to know all the facts, make reasonable assumptions about the missing pieces of information. 3. What do the facts mean? Facts by themselves have no meaning. You need to interpret the information in light of the values that are important to you. 4. What does the problem look like in the eyes of the people involved? The ability to walk in another’s shoes is essential. Understanding the problem through a variety of perspectives increases the possibility that you will choose wisely. 5. What will happen if you choose one thing rather than another? All actions have consequences. Make a reasonable guess as to what will happen if you follow a particular course of action. Decide whether you think more good or harm will come of your action. 13  Ch1 –Introduction to Business Understanding Business Ethics 6. What do your feelings tell you? Feelings are facts too. Your feelings about ethical issues may give you a clue as to parts of your decision that your rational mind may overlook. 7. What will you think of yourself if you decide one thing or another? Some call this your conscience. It is a form of self-appraisal. It helps you decide whether you are the kind of person you would like to be. It helps you live with yourself. 8. Can you explain and justify your decision to others? Your behavior shouldn’t be based on a whim. Neither should it be self-centered. Ethics involves you in the life of the world around you. For this reason, you must be able to justify your moral decisions in ways that seem reasonable to reasonable people. Ethical reasons can’t be private reasons. 14  Ch1 –Introduction to Business Understanding Business Ethics References – Ghillyer, A. (2018) Business Ethics Now. 5th ed. McGraw Hill. – Ferrell, O. C., Frederick, J. Ferrell, L.: (2018), Business Ethics, 12th edition, Published by: South-Western College 15