Ethics and International Business – Book Summary
Chapter 1: The Nature of Morality
1.1 Ethics
Ethics or moral philosophy deals with individual character and the moral rules that govern and limit our
conduct. It investigates questions of right and wrong, duty and obligation, and moral responsibility.
Studying ethics means that you think seriously about the nature of morality, the meaning of its basic
concepts, the characteristics of good moral reasoning, how moral judgements are justified, and, of course,
the principles or properties that distinguish right actions from wrong actions.
Business ethics is the study of what constitutes right and wrong, or good and bad, human conduct in a
business context. Businesses are organisations whose objective is to provide goods or services for profit.
Businesspeople are those who participate in planning, organising, or directing the work of business. An
organisation is a group of people working together to achieve a common purpose. This book aims to
address organisational as well as business ethics.
1.2 Moral Versos Nonmoral Standards
Whether a computer can copy a pirated DVD is a factual question, but whether you should copy that DVD
is a moral question. When answering moral questions or making moral judgements, we rely on moral
standards. Moral standards concern behaviour that is of serious consequence to human welfare, that can
profoundly injure or benefit people. They also take priority over other standards, including self-interest.
Furthermore, their soundness depends on the adequacy of the reasons that support or justify them. Moral
standards are namely not made by officials, but they depend on the quality of the arguments, or the
reasoning that supports them. Morality differs from etiquette, law, and professional code of ethics.
1.2.1 Morality and Etiquette
Etiquette refers to the norms of correct conduct in polite society, or, more generally, to any special code of
social behaviour or courtesy. Good, bad, right, and wrong in etiquette refer to socially appropriate or
socially inappropriate. Rules of etiquette are thus prescriptions for socially acceptable behaviour. These
rules are nonmoral of nature, but they may have moral implications. Namely, rude or impolite conduct can
be offensive, and it can sometimes fail to show the respect for other persons that morality requires of us.
However, completely obeying to the rules of etiquette does not necessarily make a person moral.
1.2.2 Morality and Law
There are four kinds of law. Statutes are laws enacted by legislative bodies. Congress and state legislatures
enact statutes. They are what we usually mean when we speak of laws. Administrative regulations are
detailed regulations covering certain kinds of conduct. Common law refers to the body of judge-made law
that first developed in the English-speaking world centuries ago when there were few statutes, also known
as precedents (rulings of previous similar cases). Constitutional law refers to court rulings on the
requirements of the Constitutions and the constitutionality of legislation.
Legality should not be confused with morality: breaking the law isn’t always or necessarily immoral, and
the legality of an action does not guarantee its morality.
- An action can be illegal or morally right.
- An action that is legal can be morally wrong.
Law codifies a society’s customs, ideals, norms, and moral values. However, the law cannot cover all
possible human conduct, and in many situations it is too blunt an instrument to provide adequate moral
guidance.
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,1.2.3 Morality and Professional Codes
Between the law and etiquette lie the professional codes of ethics, which are the rules that are supposed
to govern the conduct of members of a given profession. Thus, adhering to these rules is a required part of
membership in that profession. The codes can be unwritten and part of an understanding between
members of the profession, or they can be written down by an authoritative body and taught. The codes
are neither a complete nor a completely reliable guide to one’s moral obligations. Therefore, while taking
them into account seriously, you have the responsibility to assess the rules for yourself.
1.2.4 Where Do Moral Standards Come From?
Moral standards are influenced by moral principles which we accept, relating to our upbringing, behaviour,
standards of our culture, and experiences and reflections on them. These principles are either explicitly or
implicitly accepted by people, and they overlap with different people in the same society. Therefore, we
can speak of a moral code of a society, meaning the moral standards shared by its members.
1.3 Religion and Morality
Any religion provides its believers with a worldview, part of which involves certain moral instructions,
values, and commitments. Religious bodies occasionally articulate positions on more specific political,
educational, economic, and medical issues, which help mould public opinion on diverse matters.
1.3.1 Morality Needn’t Rest on Religion
There are three different ways in which the idea that morality must be based on religion can be
interpreted, however, neither are plausible.
- Without religion people would have no incentive to be moral. Religion is not the only reason or
even the most common reason that people behave morally: often we act morally out of habit or
just because that is the kind of person we are.
- Only religion can provide moral guidance. The moral instructions of the world’s great religions are
general and imprecise. They do thus allow us to engage in moral reasoning ourselves.
- Morality is based on the commands of God: divine command theory (if something is wrong, the
only reason for it to be wrong is that God commands us not to do it). The fact that something is
wrong, however, is not dependent on God’s decrees.
Religion undoubtedly influences moral standards and values of many; however, you cannot justify a moral
judgement simply by appealing to religion.
1.4 Ethical Relativism
Ethical relativism is the theory that what is right is determined by what a culture or society says is right.
Namely, what is right in one place may be wrong in another, because the only criterion in distinguishing
right from wrong is the moral system of the society in which the act occurs. Thus, what is moral is relative
to society. The diversity of human values and the multiformity of moral codes supports this theory.
Disagreement in ethical matters does thus not imply that all opinions are equally incorrect, as none of the
conflicting societal moral beliefs is superior to others. There are several unclarities in the theory.
- It undermines any moral criticism of the practices of other societies as long as their actions conform
to their own standards.
- For the relativist, there is no such things as ethical progress.
- From the relativists point of view, it makes no sense for people to criticise principles or practices
accepted by their own society.
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,1.4.1 Relativism and Game of Business
According to Carr and his ‘Is Business Bluffing Ethical?’ essay, business has the impersonal character of a
game, with its own norms and rules. Thus, things we normally think of as wrong are really permissible in a
business context. He compares business to poker and defends ethical relativism: Business has its own
moral standards, and business actions should be evaluate only by those standards. However, do ordinary
moral standards really not apply to business? Furthermore, the poker analogy is weak, as the business
game can impact others (customers) who have not chosen to play the game, and business is not really a
game. Thus, Carr misrepresents business and morality by separating them: he treats business as if it has
nothing to do with morality, and morality as something that rarely has influence on our lives.
1.5 Having Moral Principles
Richard Brandt emphasized that when someone accepts a moral principle and it becomes part of their
moral code, the person will be strongly motivated to act as the principle requires and avoids acting in ways
which conflict that principle. Other philosophers have reinforced his point: to accept a moral principle is
not a purely intellectual act, namely, it involves a desire to follow that principle for its own sake, and
feeling guilty when not doing so, and evaluating others according to that principle.
1.5.1 Conscience
Our conscience evolved as we internalised the moral instructions of the parents or other authority figures
who raised us as children. Thus, the pangs of guilt we occasionally feel still stem form that early
internalisation of parental demands.
1.5.2 The Limits of Conscience
How reliable is conscience? Telling someone to follow their conscience is not good advice, because
- We try to figure out what our conscience is ought to be saying to us
- It may not always be good to follow your conscience, as it depends on what it says.
Thus, the voice of conscience itself should always be critically examined.
1.5.3 Moral Principles and Self-Interest
Sometimes, doing what is morally right and doing what would best satisfy your own interests are two
different things. Some argue that moral action and self-interest can never really conflict, but this is almost
certainly a mistake. Philosophers that try to prove this argue that ‘what goes around comes around’ and if
you do the wrong thing, you will be caught, making your conscience bother you. Morality serves to restrain
our purely self-interested desires so we can all live together: if there was never any conflict in our interests,
there would be little need for morality. A society’s moral standards namely allow conflicts to be resolved
by an appeal to shared principles of justification.
Recently, it has been argued that the most morally responsible companies earn the most profits. However,
if you do the right thing only because you think you will profit from it, you are not motivated by moral
concerns. Also, there is no guarantee that moral behaviour will always benefit a person in strictly selfish
terms. Sometimes, what you choose to do depends entirely on the strength of self-interested or self-
regarding desires as compared to your other-regarding desires, thus it will depend on the kind of person
you are.
It is also not one’s overall self-interest to be a selfish person, because of the paradox of hedonism (or the
paradox of selfishness). This states that people who are exclusively concerned with their own interests,
tend to have a less happy and less satisfying life.
1.6 Morality and Personal Values
You can distinguish between morality in a broad and in a narrow sense.
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, - Morality in the narrow sense concerns the principles that do or should regulate people’s conduct
and relations with others. It is the moral code of an individual or a society. The principles are
internal monitors of our own behaviour and assess other’s actions.
- Morality in the broad sense concerns not only the principles of conduct that we embrace, but also
the values, ideals, and aspirations that shape our lives.
Your morality involves your understanding of human nature, tradition, and society; of one’s proper
relationship to the natural environment; of one’s place in the cosmos.
There is more to living a morally good life, of course, than being a good businessperson or being good at
your job, according to Aristotle. He believed that when we would excel as human beings, we will live lives
blessed with happiness. He also emphasised the importance of character and of being a person whose life
displays the various virtues that human beings are capable of achieving. Virtues are traits or settled
dispositions, such as a courageous person is someone who acts in ways that are courageous. He thus
argued that we develop our character based on the way that we act: if we act courageous, we become
courageous.
1.7 Individual Integrity and Responsibility
Social pressures of various sorts affect us and can potentially damage individual integrity and responsibility.
Main forms are organisational norms, conformity, and diffusion of responsibility.
1.7.1 Organisational Norms
The shared acceptance of organisational norms and rules can be either conscious or unconscious, explicit
or implicit, but it is almost always present, as the organisation only survives when members are held
together. There is thus always a certain degree of commitment to the organisation. However, there is
nothing in these norms or rules that encourages moral behaviour, and it may thus discourage it.
Unrealistic deadlines can also be a leading cause of unethical business conduct. Managers thus experience
role conflict between what is expected of them as efficient managers, and what is expected of them as
ethical persons.
People can overlook the ethical implications of their decisions just because they are busy working on
organisational goals and not looking at things from a broader perspective.
1.7.2 Conformity
Organisations exert pressure on their members to conform to norms and goals. Individuals are easily
induced to behave as those around them do, which becomes clear in Solomon Asch’s experiment. He asks
groups of 7-9 college students to match the length of the line on one card, to the length of one of tree lines
on the other card (see p. 22). Of these students, one has no clue about the experiment, and the others are
asked to express an incorrect answer in some of the cases. According to the results, when not pressured,
the individual answered correctly, however, when the individual heard many other answers, there was a
pressure to conform. It can also be argued that men and women in an organisation are under much greater
pressure to conform than Asch’s students (position, authority symbols, financial investments).
1.7.2.1 Groupthink
Pressure to conform sometimes leads to groupthink. Groupthink happens when pressure for unanimity
within a highly cohesive group overwhelms its members’ desire or ability to appraise the situation
realistically and consider alternative courses of action. Groupthink leads to irrational decisions, and has
enormous potential for doing moral damage.
1.7.3 Diffusion of Responsibility
Pressure to conform to the group and adhere to its norms and beliefs can lead to the surrender of
individual moral autonomy. Furthermore, responsibility for what happens in an organisation does can
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