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Business Ethics, Summary
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Business Ethics – Summary of the book, articles, lectures, andtutorials.
Brenda Giethoorn
24-10-2022
WEEK 1
Chapter 1: An overview of Business Ethics
The normative response is what we should do. Philosophical inquiry is vital to any considered
discussion, since it can help us understand the nature of business and arrive at moral judgements.
Philosophy has two primary functions:
1. The examination of concepts;
2. The study of arguments.
One common way to critically asses an argument is to look for counterexamples that refute the claims
being made. Another method of assessment is to abstract the principles at work and then see if they
apply in other settings.
Metaethics is concerned with the various theories that promote ideas of what constitutes the good.
Normative ethics applies standards and norms and reaches conclusions about what we ought to do.
Business ethics is the area within normative ethics that is concerned with the special moral issues and
concerns that arise in business.
We can think about morality in terms of intrinsic and instrumental motivation (instrumental or
prudential approaches). Those holding intrinsic views believe good should be done for its own sake,
whereas instrumentalists would look for some form of payoff. Another view is that following the law
(rule-based approaches) fulfils the moral requirements of businesses. The rationale suggests that
business is out to make a profit, and it should do everything, except anything illegal. One of the chief
difficulties with a rule-based approach is that it does not deal well with new or difficult issues where it
is unclear which standard should apply. An alternative is to move to a more principle-based approach,
where moral considerations are thought of n more general and abstract terms. This requires a degree of
interpretation. Absolutists believe that there are moral truths that hold throughout space and time.
Relativists or coherentists need contexts to make moral judgements, they would allow that the
acceptability of acts depends on the individual facts and the prevailing norms. One version of relativism
says that we only generate norms within a cultural context. The other major challenge is to developing
an ethics of business is posed by ethical egoism. An egoist would say that one should put its own
interests and concerns above those of others.
Game theory is the term mathematicians and social scientists apply to competitive scenarios where
individual parties are seeking to maximize their own outcomes. The theories are useful in many
disciplines because they can provide quantitative data about rational choices under varying conditions.
The magic ring theory suggests that, left to our own device and without any accountability, no one
could resist the temptation to do whatever it took to increase personal wealth (response to egoism).
Lecture 1
Business ethics is the applied ethics discipline that addresses the moral features of commercial activity.
It has two components:
- Theoretical component – concepts and principles;
- Application - How to think about issues and what to do about them.
1
, Morality is concerned with the norms, values and beliefs embedded in social processes which define
right and wrong for an individual or a community (changing moral: see next slide). Ethics is concerned
with the study of morality and the application of reason to elucidate specific rules and principles that
determine right and wrong for any given situation. These rules and principles are called ethical theories.
Ethical theories are the rules and principles that determine right and wrong for any given situation:
- Normative ethics prescribes morally correct way of acting;
- Descriptive ethics describes how ethics decisions are actually made in business.
Scope of Business Ethics:
1. Systemic ethical issues concern the social, political, legal or economic systems within which
companies operate. For example public policy or broader.
2. Corporate ethical issues concerning corporations and their policies, culture, climate, impact or
actions. For example the size and influence makes them special, employees and customers can have
opinions.
3. Individual ethical issues concern a particular individual’s decisions, behaviour or character. For
example organizational ethics, conflicts with morality as usual, and autonomy.
Corporate Social Responsibility (CSR) refers to a corporation’s responsibilities or obligations toward
society. Business ethics is both a part of corporate social responsibility and part of the justification for
corporate social responsibility. Two main accounts: Shareholders vs. Stakeholders. Turns around what
corporations are – private or public institutions.
Some challenges to the idea of business ethics:
1. Moral relativism, according to moral relativism there are no ethical standards that are absolutely true
and that apply to people and companies of all societies.
2. Egoism, all that matters is to advance your own interests.
3. The market will take care of everything, market actors are rational (‘prudent’). Customers, suppliers
etc. will only do business with companies with a reputation for integrity. Thus, corporations that do not
act morally will suffer economically.
4. Ethics and the law, political obligation’ to obey the law even if it seems unreasonable. Sanctions are to
reinforce that moral obligation, don’t define it. You may have other moral obligations too. Generally:
correct response to bad law is acting as a citizen – in extreme cases civil disobedience.
According to Integrative Social Contracts Theory, there are two kinds of moral standards:
- Hypernorms are moral standards that should be applied to people in all societies;
- Microsocial norms are norms that differ from one community to another and that should be applied
to people only if their community accepts those particular norms.
2
, Moral behavior in ethical decision making →
Tutorial 1
A general system for analysis:
1. What are the relevant facts?
a. Who does What to/for Whom When Where and How?
• Identify the relevant Action. Focus on one event/action
• Identify the relevant Actors. Focus on a small number of main actors
• Determine relevant Context. E.g. different norms in different cultures/times
2. What are the relevant motives?
a. Why?
• Motive: what causes someone to act. Can include irrational emotions. Usually a mental
state.
• Reason: what speaks in favour of someone’s actions. Cannot include irrational
emotions. Need not be apparent to the agent herself.
3. What ethical principles/reasons are/could be used?
a. Put yourself in the shoes of the actors!
• Ethical principles are rules that morally support certain kinds of action.
• In this step, you determine not just what the actual principles are, but what the best
principles are that can be used to support the relevant action.
4. Which verdict would you give?
a. Evaluate different principles
• Ethical principles can conflict
b. What is your own ethical principle?
• To determine who/what action is right, you need to provide an argument • Two main
strategies:
1. Deontology: looking at which principles are ultimately more consistent;
2. Consequentialism: looking at the consequences.
WEEK 2
Chapter 2: Insights from ethical theory
Reflection of an ethical issue on an abstract level can help us work out how we should react – whether
we approve of an act, tolerate it, or should intervene to change what is going on, the value of theory.
A theory of justice seeks to establish what is right and fair at a somewhat abstract level, and then suggest
appropriate remedial action. Thus in civil issues the central questions will involve the distribution of
rights and goods within society. Two main theories will concern us in dealing with business:
libertarianism and egalitarianism.
A libertarian view suggests that the paramount virtue is personal choice in a context of maximum
liberty. That is, everyone should be free to decide their own fate, and we are only responsible for others
as far as we choose to be. In contrast, an egalitarian view starts from the premise that we all share in
one another’s fate, and we should not be unduly rewarded for attributes that are, after all, a function of
genetic luck. Consequently it would actively promote redistribution of rights and property to give
everyone equal opportunities.
A well-known phrase is that ‘‘All is well that ends well,” a motto associated with utilitarianism, one
of a family of theories that take the paramount gauge of morality to be the consequences of an action.
Utility is a measure of welfare, which is often interpreted as human welfare. An act utilitarian would
be more likely to make snapshot decisions, based on the circumstances of the moment, whereas a rule
utilitarian would be more concerned with general application of the principle. A further concern in
3
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