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Summary Ethics, responsibility, and sustainability (MBA - KUL)
- Établissement
- Katholieke Universiteit Leuven (KU Leuven)
- Book
- Business Ethics
Lectures notes and good answers to essay questions, as well as sample exam questions.
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Ethics, Responsibility, and SustainabilityCh.1 – Ethics and business ............................................................................................................................................... 2
Ch.2 – Ethical decision making: personal and professional contexts ............................................................................... 8
Ch.3 – Philosophical ethics and business ....................................................................................................................... 13
Ch.4 – The corporate culture – impact and implications ............................................................................................... 20
Ch.5 – Corporate social responsibility ............................................................................................................................ 28
*Ch.6- Ethical decision making: employer responsibilities and employee rights .......................................................... 35
Ch.7 – Ethical decision making: technology and privacy in the workplace .................................................................... 36
*Ch.8 – Ethics and marketing ......................................................................................................................................... 44
Ch. 9 – Business and environmental sustainability ........................................................................................................ 58
*Ch.10 – Ethical decision making: corporate governance, accounting & finance.......................................................... 68
Good answers to essay questions……………………………………………………………………………………………………………………………69
Sample exam questions…………………………………………………………………………………………………………………………………………..77
,Exam
- 7 core chapters: ch. 1-2-3-4-5-7-9
- 3 optional chapters: choose 1 of these 3: ch. 6-8-10
- Open book exam
- Exam duration: 2h: keep track of the time: take approx. 40 minutes per question.
- Three open questions: essay questions: well-structured, plain text, no bullet points
- Last question is always about the decision making model
- Exam will have exactly the same format as the previous exams
- The same approach every exam period
- Exam questions might refer to a text from the handbook (and to questions asked there), or might come
from ‘Decision point’ text boxes, or from “Readings” at the end of each chapter, or from elsewhere.
Questions might also ask you to explain the quotes on the slides (in reference to the course). Most likely
questions will require answers based on different parts of the course and/or personal experiences or
decisions. Take a helicopter view of the course! While studying ask yourself:
§ What would I do (as a person, as a manager, …)?
§ How would I defend my decision?
§ What is missing in this chapter? What is the most important? What have I learned?
§ How is this related to other chapters?
§ Have I been in a similar situation in my personal life? How did I react? Would I react differently now
and how and why?
- Examples of exam questions will appear on the slides (= homework) and a list with old exam questions will
appear on Toledo: you are invited to answer the questions on your own. No obligation: you are the master
of your own education!
- Good answers to the most important exercises (with additional lots of tips) will also be provided on Toledo.
- Reading all texts in the handbook will give you fuel (arguments, perspectives, examples and
counterexamples, good practices, critical views, …) to power your ethical imagination (to see more angles
or aspects of a problem, to identify the ethical issues and stakeholders involved, to point out the
consequences, to come up with more or better alternatives, to see ways forward, to devise and perform
good actions, …). Read and review a lot. Get really acquainted with the topic … for the good of you and the
world!
- Reproduction of the text of the handbook is not what is expected (even a 100% correct but from the
handbook reproduced answer, might result in a fail - possibly even a zero). Required is that you apply
insights from the course to decision making; that you defend the proposed choice in a reasonable and
accountable manner; that you build your own reasonable position.
- Specifically, when grading your exam, the following factors are taken into account: the extent to which your
answer:
§ is factually correct,
§ demonstrates a thorough and in-depth processing of the exam material,
§ bears witness to synthetic ability (spotting connections, making distinctions
between main issues and side issues).
- Attention is also paid to:
§ the degree of personal processing and the quality of the position determination and
§ the extent to which the personal point of view is substantiated and developed with
reference to the course material.
- This means, among other things, that …:
§ you refer to the concepts and theories discussed in the handbook (although simple “name
dropping” – using concepts without showing that you understand what it means – is detrimental
for your grades);
§ you show that you have learned something from the course, e.g. by illustrating the concepts and
theories with own correct / relevant / adequate examples or by adding critical remarks;
§ you spot links across the handbook (e.g. a question referring to Chapter 1 does not mean that you
should only use information from Chapter 1; if possible and relevant also use information from
other parts of the handbook; some questions need information from different parts of the
handbook anyway).
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, Ch.1 – Ethics and business
Opening decision point
§ Zika Virus and Olympic Sponsors (p.2-3)
- How much responsibility do sponsor corporations bear for the outcomes of things like the Olympic
Games? All the sponsors are doing is paying money to have their logos featured at Olympic venues
and the right to use the Olympic logo in their advertising. The Rio sponsors wouldn’t be directly
spreading Zika. Does that indirectness matter, ethically?
- One danger is that the decision would not be based on ethics at all, and that the organizations
involved would fall prey to a general “the Olympics must go on!” attitude (= a “can-do” attitude,
Challenger 1986).
- Does the lack of full agreement between experts absolve Olympic sponsors of blame if the Rio
Olympics ended up contributing to the spread of the Zika virus? Would it be ethically correct of the
sponsors to say, after the fact, “We didn’t know for sure there would be a problem.”?
Chapter objectives
After reading this chapter, you will be able to:
1. Explain why ethics is important in the business environment.
2. Explain the nature of business ethics as an academic discipline.
3. Distinguish the ethics of personal integrity from the ethics of social responsibility.
4. Distinguish ethical norms and values from other business-related norms and values.
5. Distinguish legal responsibilities from ethical responsibilities.
6. Explain why ethical responsibilities go beyond legal compliance.
7. Describe ethical decision making as a form of practical reasoning.
Ethics and business
“It takes 20 years to build a reputation and five minutes to ruin it. If you think about that you’ll do things differently.”
– Warren Buffet
Making the case for ethics and business ethics
§ Business ethics is a process of responsible decision making.
- Scandals are brought about by ethical failures.
- Homework: familiarize yourself with the following cases:
® Enron/Arthur Andersen: mislead the public about the financial health of the company by
creating smaller companies in which they hid the losses.
® Madoff: an investor who set up a financial pyramid system offering huge amounts of
interests to people. Of course, he could not pay those interests, so he used new incoming
capital to pay to those interests.
® BP Deep Water Horizon: drilling for oil in the Mexican gulf. In the fall of 2011, a Canadian
organization called EthicalOil.org started a public relations campaign aimed at countering
criticism of commercial development of Canada’s oil sands, a set of oil-extraction sites that
require the use of hot water and steam to extract very heavy crude oil from sands buried
deep beneath the earth’s surface. Critics have aimed harsh criticism at the oil sands
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, development, claiming that this method of extracting oil does immense environmental
damage along with posing risks to human health.
® Volkswagen: was seen as one of the best companies in terms of sustainability and CSR, as
well as on the head of the list of most ethical companies for years. But a couple of years ago
it was revealed that they were tempering with the emission data of their cars. They were
lying about how clean their cars were from an ethical point of view.
§ This text provides a decision-making model that can help avoid future ethical failures.
§ As an introduction to this model, this chapter reflects on the intersection of ethics and business (e.g. the
Adam Smith problem).
- This relationship between ethics and business has always been problematic.
- Adam Smith problem: in the 18th century, book: “the wealth of nations”, which is considered one of
the first books in economics. He said “we should all follow our own self-interest, we should all be
egoistic, and that will create the best overall economic output”. But, on the other hand he wrote a
book on morality, named “the theory of moral sentiments”, and there he was focusing on sympathy
and benevolence, and on how we all have to care for each other. That is what created the Adam
Smith problem: on the one hand he is writing very business-like economic handbook about
selfishness, and on the other hand he is claiming to be ethical and to look after people and have
sympathy. Thus, how can we possibly combine the views of a harsh economic handbook and an
ethical handbook.
§ There has been a shift from whether ethics should play a role in business decisions to how to most effectively
do so.
§ Which values and principles should guide business decisions.
§ Origins of this shift: the serious consequences of unethical behavior for many people and organizations (e.g.
Madoff).
§ Responsible decision making must move beyond concern for stockholders to consider the impact on all
stakeholders.
- Anyone who affects or is affected by decisions made within the firm, for better or worse.
§ The case for (studying) Business Ethics:
- Unethical behavior might affect a wide range of people including ourselves (as managers involved,
or as employees, consumers, citizens, …).
- ‘Bad’ companies can lose in the marketplace (e.g. customer boycotts) or even go out of business and
employees might end up in jail.
- ‘Good’ companies might create an ethical competitive advantage through a good reputation,
attracting and holding good employees, values like trust …
- As future managers/leaders we will have to manage the ethical behavior of others and will be seen
as role models. Examples:
® Prince Bandar Bin Sultan: crown prince of Saudi Arabia was accused of receiving secret
personal commissions of approximately $240M over a period of 10 years in connexion with
a defense contract. He is defending himself by saying corruption is everywhere since the
beginning of times. He says it’s human nature and he is not as bad as we might think. He is
not being a good role model.
® AIG: American International Group: worldwide insurance company, also the sponsor of
Manchester United around the financial crisis of 2008. During that financial crisis they were
on the edge of bankruptcy. And then the US government stepped in and bailed them out for
approximately $150B. A few weeks later the heads of the company headed to California for
a retreat to a very luxurious hotel on which they spent half a million dollars taken from the
bailout money. 6 months after being saved by the US government they rewarded themselves
with extremely high bonuses. All of this created a huge uproar in the media and among
citizens, because we are talking about taxpayer money. That’s not role model behavior.
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