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6-page summary of Ethics in Business and Management (EBB100A05)
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Real short, 6-page summary for the exam of Ethics in Business and Management (EBB100A05) 2018/19
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Lecture 1 – Chapter 1 & 2: Introduction and framing Business Ethics Lecture 2 – Chapter 3: Normative theories (part I)Business Ethics is the study of business situations, activities and decisions where issues of Normative ethics: Prescribes morally correct way of acting.
(morally) right and wrong are addressed
Ethical absolutism: Claims there are eternal, universally applicable moral principles.
Not everything of ethics is covered in the law (e.g. cheating Consequentialist ethics = Outcomes
on your partner) 1. Utilitarianism: Greatest Happiness Principle (Consequences, Happiness and Equality), 5 is
more than 1.
Globalization = deterritorialization. Arguments against:
Issues: o Are consequences all that matter? Groningen gas, more people benefit than
Cultural: moral differences between countries harmed by.
Legal: which legal framework to abide to o Is pleasure all that matters?
Accountability: more globalization = less government control o Do we equally concern for everyone? Family > strangers?
It allows a race to the bottom, choose developing country with most preferable conditions o Measurement problems
Sustainability: meeting present needs without compromising ability of future generations. Non-consequentialist ethics = Motivation/principles
Triple Bottom Line (Elkington): 2. Ethics of duty (Kant): Respect the right of an individual.
Social (People) Categorical Imperative: A tool to get universal laws, which apply to all of us.
Environmental (Planet) Two versions:
Economic (Profit). 1. ‘What if everyone…?’
2. Respect for autonomy (treat humanity always as an end and never as a means only)
‘The social responsibility of business is to increase its profits’ (Friedman), arguments: Arguments against: Acting upon duties can have bad consequences. Lying to save a life?
1. Only human beings have a moral responsibility for their actions
2. It is managers’ responsibility to act solely in the interests of shareholders Ethical relativism: Claims that morality is context-dependent and subjective.
3. Social issues and problems are the proper province of the state rather than corporate Arguments against: We cannot judge behaviour even if we think it to be wrong.
managers
Lecture 3 – Chapter 3: Normative theories (part II)
Corporate Social Responsibility:
Business reasons (enlightened self-interest) 3. Ethical egoism: every person ought to pursue their own self-interest exclusively. (Similar to
Moral reasons enlightened self-interest).
4. Ethics of Rights.
Carroll’s four-part model of Corporate Social 5. Justice: fair and equal treatment
Responsibility (CSR) o Fair procedures (procedural justice) - non-egalitarianism
o Fair outcomes (distributive justice) - egalitarianism
Stakeholder Theory of the Firm (Freeman) o Past injustices have to be ‘paid for’ (retributive justice)
A stakeholder of an organisation is any group or individual who can affect, or is affected by, the 6. Virtue Ethics (Aristotle) : morality depends on the character of the decision-maker. Good
achievement of the organisation’s objectives. actions come from good persons.
7. Feminist Ethics: Decisions in context of human interrelations, empathy, harmony, care,
Corporate Citizenship: the corporate role in governing citizenship rights for individuals. avoidance of harm.
Corporate Accountability: whether a corporation is answerable for the consequences of its actions. 8. Discourse Ethics: Norm generation by rational reflection on the real-life experiences of all
relevant participants.
, 9. Postmodern Ethics: gut feeling about what is right and wrong. Conflict of interest: ownership (shareholders (principal)) vs. control (managers (agent)). A possible
solution: pay executives in shares and dividends as well.
Lecture 4 – Chapter 4 & 5: Making decisions in Business Ethics and Managing Business Ethics
Insider trading: A market financial transaction based on information that is not publicly available to
Descriptive ethics: Describe how ethical decisions are actually made in business. all market participants (illegal!).
An ethical decision: Rating and Accounting has the function to bridge the asymmetric information. But… problematic
- has a significant effect on others because of power and influence in markets and conflict of interest.
- is characterized by freedom of choice
- is perceived as ethically relevant by one or more parties Socially responsible investment is the use of ethical, social and environmental criteria in the
selection and management of investment portfolios.
Ethical decision making process: Positive criteria: Environmental protection, green technologies, equal opportunities.
Recognition Judgement Intention Behaviour Negative criteria: Child labour, weapons, etc.
Individual factors Situational factors Stakeholder Activism: The attempt to use shareholder rights to actively change the practices and
For example: For example: policies of a corporation.
Age & gender (mixed) Moral framing, making a unethical action
National & culture (significant) look more acceptable (significant) Employee Rights, examples: Employee Duties, examples:
Rewards (significant) Freedom from discrimination Comply with labour contract
Privacy Comply with law
Cognitive moral development (CMD): different levels of reasoning that an individual can apply to Safe working conditions Respect employer’s property
ethical issues and problems: (Kohlberg): Fair wages
1. Pre-conventional level, self-interest and external rewards.
2. Conventional level, expectations of others. Lecture 6 – Chapter 8 & 9: Consumers, Suppliers & Competitors
3. Post-conventional level, autonomy and universal ethical principles.
Consumer Rights:
Code of Ethics: Are voluntary statements that commit organisations, industries or professions to In the past: Caveat Emptor = Buyer beware, it is their own responsibility. Buyers should
specific beliefs, values and actions and/or set out appropriate ethical behaviour for employees. take care themselves.
Right to safe products
Social Accounting: A voluntary process concerned with assessing and communicating organisational Right to fair prices
activities and impacts on social, ethical and environmental issues relevant to stakeholders. Right to fair treatment
Incentives, such as internal and external pressure or improved stakeholder management Privacy
Disincentives, such as perceived high costs or unwillingness to disclose sensitive or
confidential data. Product policy:
1. Safe, but… to what extent? economic costs, consumers’ choice (paternalism)
Lecture 5 – Chapter 6 & 7: Shareholders & Employees 2. Efficacious
3. Fit for purpose
Corporate Governance: The rules through which corporations are directed and controlled in the
interests of shareholders and other stakeholders. Advertisement issues: Informing consumers vs. persuading consumers?
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