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Ethics lecture notes in B&M
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Notes from the first two lectures of the Ethics in Business and Management course.
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MSc UvA Business Administration - Ethics and the Future of Business (6314M0507Y) [LECTURES]
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Lecture notes - Descriptive ethical theory
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Summary ethics in business management
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Ethics in Business ManagementWeek 1
de centrale vraag in ethiek: what is the right thing to do?
Morality is concerned with the norms, values and beliefs embedded in social processes
which define right and wrong for an individual or a community.
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.
Types of ethical theory
Ethical theories provide the rules, principles and other concepts that help us to determine
what we should do (or not do) in a 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
- Systemic ethical issues concern the social, political, legal or economic systems within
which companies operate
- Corporate ethical issues concerning corporations and their policies, culture, climate,
impact or actions
- Individual ethical issues concern a particular individual’s decisions, behavior or
character
Corporations
- Size and influence make them special
- As an employee you can contribute to
- Corporate culture and values
- Corporate decision-making procedures (e.g. The triple bottom line)
- As a consumer, social activist, investor, citizen, politician, you can also experience
the consequences of corporate behavior
Some challenges to idea of business ethics
1. moral relativism
2. egoism
3. market will take care of everything
4. ethics and law
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
- Point of moral relativism:
- Accept social obligations that are not unethical
- Tolerance of difference
- Take opportunity for self-scrutiny
1
, objections
- Some moral standards are found in all societies
- Moral differences do not logically imply relativism
- Relativism has incoherent consequences
- Relativism privileges whatever moral standards are widely accepted in a society
2. egoism
- All that matters is to advance your own interests
- Some Objections
- Doesn’t work: no one trusts a pure opportunist
- What interests should you maximize? (Is the good life about money or
virtue?)
3. 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
- Companies can see this for themselves so they have an incentive to act
morally
Failures of Smithian prudence
- Ignorance, especially about long-term indirect consequences via reputation
- Failure of self-command – unable to resist short-term gains, weakness of will
- Corporate agent incoherence – e.g. Giving incentives to sales staff to do ‘whatever it
takes’
- Solution: Good corporate management in line with market forces
4. ethics and law
- ‘Political obligation’ to obey the law even if it seems unreasonable
- Sanctions are to reinforce 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
Ethics is more than the law
- Lots of things are legal but that doesn’t make them morally right
- Consider (and judge yourself):
- hunting rhino’s,
- advertising junk food to children
- export waste to developing countries
Why is business ethics so important?
- Business has a huge power in society
- Business can potentially provide major contribution to society
- Business malpractice can inflict enormous harm
- Demands placed on business are becoming more complex and challenging
- Employees may face pressure to compromise ethical standards
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