Lecture 1: Introduction to Business Ethics (Newcastle University)

Corporate Social Responsibility & Ethics BUS3017 Lecture 1: Introduction to business ethics What is business ethics? “Business ethics is the study of business situations, activities, and decisions where issues of right and wrong are addressed” (Crane et al., 20...

Corporate Social Responsibility & Ethics BUS3017 Lecture 1: Introduction to business ethics What is business ethics? “Business ethics is the study of business situations, activities, and decisions where issues of right and wrong are addressed” (Crane et al., 2019, p.5) Decisions made by business leaders affect in profound ways parties who are not included in the decision making process  Everyday Moral Issues “Everyday Moral Issues Experienced by Managers”, JBE, 1986, p.373-384 Interviewed 33 managers from 10 organizations All reported everyday moral issues, and reported on 4 to 8 issues each E.g. state of the toilets, drinking, employee appraisals, honesty in negotiations, honesty with customers, bribery, toilets, legal loopholes, compromising quality  Managers tend to recognize moral situations when they feel they have the power to effect them They did not engage with the bigger issues of Corporate Responsibility E.g. environment, community programmes Responsibility and Rationalization 64% managers discussed moral norms that they believed in and upheld “I” 52% managers discussed moral norms that either themselves or their colleagues had violated. “We” About 20% gave reasons for violating moral norms at work  Immorality and Ambiguity 48.2% reported cases involved Immoral behaviour, or Morally ambiguous behaviour, or Morally uncertain behaviour The dilemma of Jeffrey Wigand…. Traditional ethical theories Motivation/ Principles Action Outcomes Non-consequentialist Ethics Consequentialist Ethics Crane & Matten (2016) Ethical theory: Utilitarianism Concerned with consequences Jeremy Bentham & John Stuart Mill According to utilitarianism, an action is morally right if it results in the greatest amount of good for the greatest number of people affected by the action Utilitarianism and business ethics Utilitarianism instructs managers to do what will result in the greatest good for the greatest number Questions: – Good for whom? consumers, shareholders, employees, …? – Omission or Commission? How far can one go? Ethical theory: Ethics of Duty (Deontology) Concerned with duties to others Immanuel Kant Some acts are universally right or wrong (regardless of their consequences) Humans are independent moral actors who make their own rational decisions regarding right and wrong Deontology and business ethics Deontology instructs managers to respect individuals (build trust) Example: treatment of employees and human dignity – Treat others always as an end and never as a means only Question – What are corporations’ obligations? Newcastle United and Human Rights https://www.ft.com/content/e4817563-bc7d-4581-a12d-574e833f6e9a https://www.amnesty.org.uk/press-releases/uk-saudi-backed-bid-newcastle-un ited-must-prompt-football-ownership-rule-changes What is an ethical dilemma? A complex situation that will often involve a mental conflict between ethical imperatives or principles, in which to obey one principle would result in breaking another principle. Kohlberg’s scenario In Europe, a woman was near death from a very bad disease, a special kind of cancer. There was one drug that the doctors thought might save her. It was a form of radium for which the pharmacist was charging ten times what the drug cost him to make. The sick woman’s husband, Heinz, went to everyone he knew to borrow the money, but he could get together only about half of what the drug cost. He told the pharmacist that his wife was dying, and asked him to sell it cheaper or let him pay later. But the pharmacist said, “No, I discovered the drug and I am going to make money from it.” So Heinz got desperate and broke into the man’s store to steal the drug for his wife. Should the husband have done that? Why or why not? (Kohlberg, 1971) Sustainablity: A Moral Awakening Ray Anderson, CEO of Interface: https://www.youtube.com/watch?v=lzOwP0phUis  The United Nations and Sustainable Development The Bruntland Report – “Our Common Future” (1987, OUP, Oxford) "Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs." – Attempt to Refocus Strategic Issues “on the areas of population, food security, the loss of species and genetic resources, energy, industry, and human settlements” The Triple Bottom Line  Sustainable Development Measurement – Vague – Ecological risks are inherently immeasurable – Triple Bottom Line Economic, Environmental, Social costs – E.g. General Electric, Unilever, Proctor and Gamble, 3M... – But variable measurement criteria The UN SDGs and the Global Compact  Sustainable development goals (SDGs) GOAL 1: No Poverty GOAL 2: Zero Hunger GOAL 3: Good Health and Well-being GOAL 4: Quality Education GOAL 5: Gender Equality GOAL 6: Clean Water and Sanitation GOAL 7: Affordable and Clean Energy GOAL 8: Decent Work and Economic Growth GOAL 9: Industry, Innovation and Infrastructure UN Global Compact, July 2000 References Brenner, S.N. and Molander, E.A.(1977), “Is the ethics of business executives changing?”, Harvard Business Review, Vol. 55, January-February, pp. 57-71. The Bruntland Report, (1987) “Our Common Future”, OUP, Oxford Crane, A. & Matten, D., Glozer, S. & Spence, L. (2019) Business Ethics: Managing corporate citizenship and sustainability in the age of globalization (5th edition). Oxford: Oxford University Press. James A. Waters, Frederick Bird, Peter D. Chant (1986) “Everyday Moral Issues Experienced by Managers”, Journal of Business Ethics, 5(5): 373-384