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Summary Business Ethics (ethics, sustainability, responsibility)
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Summary of the course 'ethics, sustainability and responsibility'. Master year course at the KuL, taught by Kurt Devooght.
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Ethics, Responsibility and SustainabilityChapter 1: Ethics and business
• Opening decision point: Zika virus and Olympic sponsors
• Possible postponement due to zika virus
• Responsibility of corporations sponsoring Olympics – ethical to sponsor
Olympics despite danger of zika spreading?
• Scientists lacked full agreement about whether to cancel Olympics or not
• Fair for sponsors to say ‘we didn’t know for sure if there would be a
problem…’ after the Olympics??
• Sponsors are simply paying money but are they responsible for indirect
spreading of the zika virus??
• Warren Buffet “It takes 20 years to build a reputation and 5 minutes to ruin it.”
Making the case for business ethics
• Business ethics = process of responsible decision making
• Scandals = ethical failure
• HW: Cases
• Enron/Arthur Andersen
• Madoff
• BP Deep Water Horizon
• VW
• In the past -> should ethics play a role in decision making
• Now -> How to effectively use ethics in business
• Shift caused by serious consequences of unethical behaviour
• Financial fraud does not only hurt rich people!
• Responsible decision making must consider all stakeholders
• Stakeholder = Anyone who affects or is affected by decisions made within the
firm
• Why business ethics?
• May affect a wide range of people
• Can cause bad companies to lose in the marketplace or even jail time for
employees.
• Ex: Nike – products made by children in Pakistan (turnover = -25%)
• Easy to communicate scandals (social media)
• Can cause good companies to have a comparative advantage
• As future managers – we will have to manage ethical behaviour + be a role
model
• (Prince Bandar Bin Sultan – corruption – arms contract)
• AIG insurance – 2008 crisis – bailed out of debt and used debt for a
work-related luxury resort weekend + bonusses (bailed out with
taxpayer money)
, • Making the case for business ethics
• Legal requirements
• Legal, financial and marketing risks
• Maintaining ethical advantage aids success
• Competitive edge to ethics
• Ethical management = more structured + efficiency
• Important field of study
• Ethics assumes that rational decision-making process can and will result in behaviour
that is more reasonable, accountable, ethical
• Studying it is not enough! Put into practice
Business ethics as personal integrity and social responsibility
• Ethical business leadership: to create circumstances where good people can do good
and bad people are prevented from doing bad
• Philosophers => ethics is normative (how and why people act in a certain way)
• Social sciences => ethics is descriptive
• How should we live???
• Individual perspective = personal integrity and morality (ex: liberal in
mind will influence how you want to live)
• Collective perspective = social ethics – how does society look -> social
responsibility – how should companies be in line with what society
thinks
• Managerial decision involves both personal integrity and social
responsibilities!!
• Ex: person against animal testing working a medical company (animal
testing needed) – social responsibility to test on animals to find vaccine
• Ex: help illegal immigrants as a personal conviction – but not socially
responsible
• HW: Read ‘ethics after an oil spill’ answer Q4 – page 24
• Ethics is a normative discipline
• Those standards of appropriate or proper behaviour
• Ex: don’t hurt anyone
• Ex: work hard
• Not all norms are ethical: ex: greet colleagues in the morning
(etiquette)
• Norms appeal to certain values
• Ex: respect for other and his property
• Ex: respect for teacher and students
Distinction between values and ethics
• Values: Are the underlying beliefs that cause us to act or decide one way rather than
another
• Many different values (what one values) can be recognized
• Individuals have personal values, but businesses also have values (company
culture)
, • But may lead to ethical/unethical results
• What ends to ethical values serve?
• Ethical values serve the ends of human well-being
• Ethical values are those values and decision guiding beliefs that impartially
promote human well-being!!!
• Ethical values – impartially promote human well-being
• Human well-being? => Happiness, respect, dignity, integrity, life, health
• Ex: Don’t kill (norm) protecting life (value) life (human well-being)
• Impartially = ethical acts should be acceptable and reasonable from all points
of view
• Universal (look at it from all parties involved) and anthropocentric approach
Ethics and the Law (ethics ≠ law)
• Ethics is not the same as following the law
• Parts do overlap but not always the same
• Ethics goes beyond the law
• Ex: in some countries a company can fire an employee for no reason…
it’s allowed BUT not ethical
• NOT enough to follow the law!!!!!! You must do more than that to be
ethical
• Ex: unethical law – apartheid, sexual orientation (is the law
ethical)
• Law can do harm – does the law harm others
• Don’t lie in daily life! Law cannot control this
Ethics as practical reason
• Ethics is a vital element of practical reasoning
• Reasoning about what we should do
• Ethics is distinguished from theoretical reasoning
• Reasoning about what we should believe
• Theoretical reason is the pursuit of truth
• There is no single methodology!
Chapter 2: Ethical decision-making
• Opening decision point
• Suppose you arrive first in the classroom, and you find an iPod (you are alone)
• What would you do in this situation?
• Is this an ethical issue??
• Are you a thief for taking it?
• What should you consider as the finder of the iPod or a friend of the
finder?
• Who else is involved? Who has a stake in the outcome?
• Person to whom the iPod belongs
• Impact on university
• What alternatives are available? And what are the consequences for
each alternative? Also, for the stakeholders?
• Keep it
, • Bring to lost and found
• Where should you look for guidance in making this decision??
• EXAM= last question on exam is always about the decision-making model!!!!
• Case is given – then apply the decision- making model
A decision-making process for ethics
• Sketch of an ethical decision-making process (7 step process) – iPod dilemma
• 1. Determine the facts of the situation
• Suppose you already own an iPod
• Suppose you found the iPod discarded in a wastebasket
• Suppose you know who has lost the iPod
• See it falling from a bag and keep it – theft
• FACTS – can change our decision
• Perceptual differences – can explain ethical disagreements: we interpret and
understand the world through our own understanding
• Unpacking our own and others’ conceptual schemata plays and important role
in making ethically responsible decisions.
• Imagine an ethical disagreement where the disagreement turns out to be about
facts (ex: Brent Spar – oil platform of Shell) Shell wanted to sink platform –
Greenpeace against sinking – environmental disaster. Shell thought it would
be a haven for fish and plants) => bad for environment?? Disagreement about
facts
• Shell gave in = dismantled in open air
• Dismantling turned out to be bad for the environment
• Greenpeace admitted it would have been better to sink it
• There is a role for (social) sciences (and critical thinking) in ethics (ex: zika
virus)
• Come up with the right conceptual information
• If we agree about the facts = decision-making is often a lot easier
• 2. Ability to recognize an ethical decision or issue – then identify the ethical
issues involved: to the degree that the decision affects the well-being
(happiness, health, love, dignity, integrity, freedom…) of the people
(environment, animals, future generations) involved, it is a decision with
ethical implications.
• What is at stake??
• Keep iPod – person who lost it will be unhappy (impact of decision on
happiness of others
• Attitude of recognizing ethical issue
• Recognize fact that you are stealing?
• First and second step may be reversed sometimes
• Difference between finding and stealing the lost iPod?
• Business and ethics often intersect – ex: relocation of Adidas from
Indonesia to Germany (production with robots)
• Ex: Indonesia loses jobs – ethical dilemma
• Well-being of people affected
• Inability to recognize ethical issues = normative myopia
• Not seeing that human issues are at stake
• Inattentional blindness = inability to focus
• When you are too focused on one thing, so you miss other
things
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