MGMT 3480 Mid-term Material: Business, Ethics, and Capitalism - PDF

MGMT 3480 Mid-term material **The Relationship between Business and Society -- PowerPoint One** Ethics is often based on religious, philosophical, or cultural grounds. The aspect of ethics that we refer to as your "moral compass" is personal integrity. There is an emphasis on 4 elements of the Ca...

MGMT 3480 Mid-term material **The Relationship between Business and Society -- PowerPoint One** Ethics is often based on religious, philosophical, or cultural grounds. The aspect of ethics that we refer to as your "moral compass" is personal integrity. There is an emphasis on 4 elements of the Canadian business system: 1. Increase awareness of the system by describing Canadian capitalism, the stakeholders involved, and society's attitudes. 2. Identify the business' response to its role in society 3. Learn how business operations have responded to many challenges in their environment. 4. Address each of the above from the perspective of the manager or owner to emphasize the dynamic nature of the environment. There is currently a shift in what society believes business responsibilities should be. Therefore corporations must consider: - Meeting humanities needs without harming future generations (i.e., practicing sustainability) - Social responsibility and corporate sustainability reports should move beyond being a PR exercise. - Demanding accountability beyond economics - Responses to social, ethical, and environmental responsibilities constitute a valuable intangible asset - Executives must have the skills and competencies to manage these additional responsibilities successfully - Responses to these responsibilities will determine the corporations that survive Integrity -- appropriateness of a corporation's behavior and its adherence to moral guidelines acceptable to society Managing with integrity -- business leaders behave in a manner consistent with their own highest values and norms of behavior. Responsible corporation -- business undertaking that responds to social, ethical and environmental responsibilities in addition to economic obligations. [Ket terms relating to integrity in business] - Stakeholder - Corporate social responsibility (CSR) - Corporate Sustainability (CS) - Corporate Citizenship Main approaches to ethical thinking Three dominant approaches to normative theories of ethics - Deontological (rule-based) ethics: - Actions are ethical if done for sake of what is good without regard for the consequences of the act - Decisions are based upon duty and adherence to universal principals - In rules-based ethics, individuals have duty to do the right thing even if the consequences of another action are preferable - e.g. the Ten Commandments & The Charter of Rights and Freedoms - Teleological or consequential theories - Focuses on outcomes or results of actions - Utilitarianism -- individuals make decisions based on the consequences of the action - If the consequences are good, then the action is right (either morally permissible or obligatory) - If the consequences are bad, then the action is wrong (impermissible) - Decisions should result in the greatest good for the greatest number. \*\*Utilitarianism -- if you\'re a train operator and notice someone on a train track however you cannot alert someone soon enough. If you divert the train, it will hit many people, however, if you keep going it will only hit one. In this case, what is the best option? Most people would chose the second option. - Virtue ethics - An approach to ethics that emphasizes the individual's moral character (traits or virtues) and focuses on being a good person - Morality is based on the development of good character traits. - Absolute rules unlikely to apply in all situations - Virtues that make a good businessperson or leader include: courage, integrity, humility, compassion, passion, wisdom, and humor. Business as an Economic System Key terms: Capitalism -- an economic system based on private ownership of the means of production Free Enterprise System -- an economic system where few restrictions are placed on business activities and ownership; a competitive market system / limited government. Laissez-faire ("allow to do") Capitalism An economic system in which transactions between private parties are free from intrusive government (only provide essential services) restrictions, tariffs, and subsidies, **absolute minimum interference by government** Responsible Enterprise System -- Free enterprise but with accountability Society\'s Permission for Business Legitimacy -- belief in the rightness of an institution, in the case of the appropriateness of our business system to supply the goods and services wanted by Canadian society. Businesses MUST adapt Social License -- the privilege of operating in a society with minimal formalized restrictions **Ethics and Capitalism -- PowerPoint Two** The majority of the goods and services wanted by Canadians are provided by the market system, which coordinates/organizes economic activities Canadian economic system is largely composed of business enterprises operating in a market system The theory of Capitalism examines 8 elements: 1. Right of Private Property -- the legal right to own and use economic goods. Some ethical implications include uneven distribution of wealth, government control of property, and ownership of natural resources. 2. Individualism & Economic Freedom -- individualism is the view that the individual, and not the society or a collective, is the paramount decision maker in society; assumes that the individual is inherently decent and rational; and behaves in their own self-interest with little authority being exercised over them. Economic freedom exists when the business system operates with few restrictions on its activities. Some ethical implications may include the desirability of individual vs. collective action, and the desirability of individual vs. collective action, and the extent to which economic freedoms should exist. 3. Equality of opportunity -- the assumption that all individuals or groups have an even chance at responding to some condition in society. Income inequity is an important issue in business, because, if Canadians are better off financially, there will be higher consumer spending of the goods and services provided by Canadian businesses. Additionally, if income inequity is deducted, the government would devote fewer resources to it in turn, reducing the demand for higher corporate taxation. Income inequity could also lead to social and economic instability, or at least, demands by lower-income earners for fairer wages or social assistance. 4. Competition -- the condition in a market system in which many rival sellers seek to provide goods and services to many buyers. 5. Profits -- the excess of revenues over expenses, closely associated with competition, a measure of effectiveness, and they can be used as businesses wish 6. The work ethic -- a code of values, or a body of moral principles, claiming that work is desirable, a natural activity, and good in and of itself. 7. Consumer Sovereignty -- consumers have and exercise power over producers through the decisions they make in purchasing the goods and services provided by corporations. Consumers dictate the types, styles, and quality of goods and services provided by business. 8. The role of government is kept to a minimum, with a laissez-faire approach, and it shifts over time. However, the government provides, national security, internal law and order, system of currency and measures, and body of law relating to contracts between individuals. Capitalism -- economic system that allows for private ownership of the means of production. Common forms of capitalism: Consumer capitalism: government involvement is limited, open borders and profit mentality exists Producer capitalism: emphasizes production, employment and statist policies. Family capitalism: extended clans dominate business activities and control capital flows Frontier capitalism: fundamentals of business being introduced; capitalism in its beginning stages State capitalism: economic system in which governments manipulate market outcomes for political and social purposes The Ethics of Capitalism: The challenges: - Greed - Economic downturns - Business failures - Income and wealth inequality - Corporate crime and wrongdoing - Stagnant incomes vs. increasing CEO salaries - Damage to the environment - Reliance on a market system that seldom works perfectly Capitalism as an ethical system Pros for capitalism: - System that provides wealth, promotes prosperity and provides greater human well-being than other economic systems - Allows creative and productive forces to operate - Cooperation is encouraged despite the competitive market - Respect freedoms, including the right for individuals to pursue happiness. **Identifying Stakeholders and Issues -- PowerPoint Three** Business in Canada operates in a pluralistic social system where a variety of groups and institutions use power or influence to represent the interests of particular groups of citizens. - A pluralistic social system is one where influence or power is decentralized by dispersing it among a variety of institutions Stakeholders: an individual, or group, who can influence and/or is influenced by the achievement of an organization's purpose. Managers' Responsibilities: - Identify stakeholders - Understand how a corporation currently views stakeholders - Examine how each stakeholder will or might influence the firm - Assess opportunities and threats - Rank stakeholders by influence - Prepare programs or policies detailing how to cope with stakeholders Arguments against the Stakeholder Concept - Problems of categorizations - Challenges in meeting the expectations of all stakeholders - Dilution of top management focus - Impracticality of shared governance/does not accommodate shared governance Arguments for the Stakeholder Concept - Simply good business as you don't want a miffed stakeholder adversely impacting the bottom line - Ignoring stakeholder interests can have substantial economic consequences - Provides a more systematic approach to recognizing stakeholder expectations and deciding how to respond Civil society -- compromises the voluntary, community, and social organizations or institutions that contribute to the functioning of society but are not related to or supported by the government. Non-Governmental Organizations (NGOs) Any group that holds shared values or attitudes about an issue confronting society and advocates for changes relating to the issue (e.g. MADD). They are not new to society and are usually but not always non-profit. NGO societal issues most relevant to business: - Animal rights - Technology - Economic: often opposed to capitalism - Social development: gap between rich and poor - Workers'/human rights: working conditions - Environment: one of the most common causes of NGO activity - Religious activism: very prevalent in the U.S. The case for NGOs: Benefits from Partnership - Identifying opportunities and risks - Influence on public opinion - Innovation possibilities - Reputation and trust by the public - Expertise on specific issues - Employee engagement Strategies for relationships with NGOs - Proactively engaged NGO - Do not underestimate NGO's influence - Reversing a decision from a project shouldn't be viewed as a defeat - Sometimes selective concessions are sufficient - Sometimes better to deal with "realist" NGOs, not the "radical" and "idealistic" ones - A pre-emptive strategy may be feasible Four key ingredients to a successful partnership with NGO's - Corporate and NGO leaders must show leadership - The corporation must be open to change - Must be a commitment to being committed - Partners must have a shared goal The media stakeholder Can influence the views held by the public about business Most media operations are owned by private-sector enterprises Divided into traditional media (mainly print and broadcast) and social media. The influence of traditional media: Comprises written and broadcast approaches including newspapers, periodicals, books, television, film documentaries, movies, and internet websites. Issues in the business and media relationship: Managers sometimes attempt to manage relationships with media to suit their purposes - Libel chill -- a business threatens legal action id a particular article or book is published - Media spin -- corporations have access to the services of public relations experts who can put a particular "spin", or interpretation, on corporate events or information. Challenges of Social Media: - Social media -- online technologies and practices that people use to share opinions, insights experiences, and perspectives - Allow business and society stakeholders to share opinions, insights, experiences, and perspectives through networking platforms - Exchanges of information are instant, often interactive, cover all topics, and require minimum knowledge of technology - Costs to participants are low or even non-existent, allowing large numbers to publish and receive information - Can build, or destroy, a corporation\'s reputation Policy Development Institutions (Think Tanks): - Policy development institution -- an organization that researches and analyzes important social, economic, and political issues confronting business and society - Critics claim a lack of transparency; think tanks are public relations front and advocate for industry sponsors Spirituality: Individuals sense of peace or purpose with themselves and the connection to others and even nature that provides meaning to life and a sense of oneself. **Ethics of Business: The Theoretical Basis -- PowerPoint Four** Business ethics -- rules, standards, codes, or principles that provide guidelines for morally right behavior and truthfulness in specific situations Assessment of Ethical Implications in Business Decisions: - Value Judgements -- subjective evaluations of what is considered important - Based on how managers intuitively feel about the goodness or rightness of various goals - Moral standards -- how individuals judge their actions and the actions of others Influence on Ethical Behavior: Influences become the basis for an individual's value judgments and moral standards - Influence on Individuals -- Family, home, religion, education - Corporate or organizational influences -- superiors, colleagues, corporate mission statements, codes of conduct, business/industry organizations like the Better Business Bureau (BBB) - Government and Legal System Influences -- enacts legislation and regulations i.e. a code of laws, i.e. competition act, - Ethical Relativism -- the belief that ethical answers depend on the situation and there are no universal standards or rules to guide or evaluate morality. Ethics are relative and people set their standards for judging their behavior. It is lazy; rigor; contradicts everyday behavior where individuals seek differing views and opinions - Cultural relativism -- where various societies have different customs and belief systems. What is considered morally appropriate in one society may not be so in another. Outsiders should be careful about condemning behaviors within a society. **The theoretical basis for ethical conduct** Self-interest Ethic (Ethical Egoism): - Individuals or corporations set their own standards for judging the ethical implications of their actions; only the individual\'s values and standards are the basis for actions - Motives of self-interest are not necessarily the same as: selfishness, greed, disregard for the rights and interests of others, hedonism, materialism Personal Virtues Ethic: - An individual\'s or corporation\'s behavior is based upon being a good person or corporate citizen, with traits such as courage, honesty, wisdom, temperance, and generosity. Action = honor, pride, and self-worth Ethic of Caring - Gives attention to specific individuals or stakeholders harmed or disadvantaged and their particular circumstances. - Golden Rule: "Do unto others as you would have them do unto you" - In business organizations, the ethic of caring is demonstrated by: - Developing people - Recognizing effort - Considering family responsibilities - Responding to community problems Utilitarian Ethic - Focuses on the distribution of the benefits and harms to all stakeholders with the view to maximizing benefits. - The greatest good for the greatest number. - Attempting to understand Universal Rules Ethic: - Ensures that managers or corporations have the same moral obligations in morally similar situations Individual Rights Ethic: - Relies on a list of agreed-upon rights for everyone that will be upheld by everyone and that becomes the basis for deciding what is right, just, or fair - What rights do we enjoy as Canadians? - Canadian Charter of Rights and Freedoms; United Nations Universal Declaration of Human Rights Ethic of Justice: - Considers that moral decisions are based on the primary of a single value: justice - Different types of justice: - Impartial application of rules or procedures - Free from bias - Based on accurate Ethical Dilemmas: - Situation or problem where a person has to make a difficult choice between two alternatives, neither of which resolves an issue or problem in an ethically acceptable fashion. - Many types, the result of a variety or circumstances and are quite common - e.g., work, personal relationships, societal issues, career. - Approach to handling - Identify the ethical principals involves - Review or analyze the problem using one of the ethical principals outlines above - Examine the problem from an ethical perspective different from the ones used initially.