Examen: chapter 1-5, 9 + hoofdstuk eigen keuze (Marketing) in HB
Ethics, Responsibility and Sustainability
1. Introduction
1.1. About the context
The course “Ethics, Responsibility and Sustainability” deals with topics of business ethics, corporate
social responsibility and sustainability.
➔ There are at least three ways to approach such course:
1. A value-based perspective: approach based on values, principles, rights, applied
ethical theories.
▪ is often criticized for being too general, too theoretical, too vague to be
applied to business (‘Businesses should be more honest’, ‘Corporations should
respect all human beings and mother nature’). Question is how?
2. A transformative perspective: approach aiming at a fundamental paradigm shift (e.g.
from a neo-liberal paradigm towards an eco-centric paradigm or an outcome-
egalitarian paradigm or …).
▪ Studying this approach might be intellectually satisfying (examining all the
consequences of a paradigm shift, designing a new paradigm, evaluating
paradigms, …) but one can not expect to have a paradigm shift in the short
run. Might have been discussed in courses like ethics, philosophy, CSR (sharing
economy, donut economy, purpose economy, …).
3. A neo-classical perspective: approach aiming at introducing elements of ethics,
responsibility and sustainability within the logic of the free market paradigm.
▪ This approach aims at introducing elements from approach 1 and 2 in day-to-
day business decisions. Pragmatism requires that we start now, within our
current context, with making the right ethical and sustainable choices now.
This approach has guided us in choosing a suitable handbook.
Not a philosophical approach. It is about decision making → how can we manage issues to sustainability topics,
climate change etc. → you can use this approach from 3 perspectives.
▪ Approach 1 (value-based): you should respect the plant, you should do good → is more a philosophical
approach.
We will not use this approach is too vague. How do we do that at corporations, what does this mean?
▪ Approach 2: e.g we need a new system, we can’t live anymore with the free market system, so we need
a new paradigm about how to satisfy or needs. → approach about things have to change dramatically
Outcome-egalitarian: everyone needs to have the same amount of money.
Interesting paradigm, it is creative too think about it, but it is not likely that we have a new paradigm/
system on the short run
▪ Approach 3: it starts from what we have now, so it starts from a free market (that’s how things work),
but we see that some things go wrong, so we need to change that by introducing e.g. values
We are using this approach, it includes elements from approach 1&2. It starts from how the economy is
working now
Recall that a paradigm is a system of concepts and theories that forms the conceptual framework from
which reality is described, analyzed and transformed.)
We aim at training the managers and civilians of tomorrow (you!) in making reasonable and
accountable decisions with fundamental respect for human well-being, the planet and the culture
wherein they operate.
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,. Aim: “to provide a comprehensive yet accessible introduction to the ethical issues arising in business”.
(HDM, viii)
. “The questions today are less about whether ethics should be a part of business strategy and, by
necessity, the business school curriculum, than about which values and principles should guide business
decisions and how ethics should be integrated within business and business education.” (HDM, viii)
. Distinctive features of this handbook: “We emphasize a decision-making approach to ethics, and we
provide strong pedagogical support for both teachers and students throughout the entire book.” (HDM,
viii)
. The authors approach business ethics as a form of practical reasoning, as a process for decision making
in business, which helps to make one’s decision more reasonable, accountable and responsible.
. “Other approaches to ethically responsible decision making are possible, and this approach will not
guarantee one single and absolute answer to every decision. But it is a helpful beginning in the
development of responsible and ethical decision making.” (HDM, p. 49)
. “Discussion of ethical ‘frameworks’ often seems to be too theoretical to be of much relevance to
business. Throughout this chapter, we hope to suggest a more accessible and pragmatic understanding
of ethics, one that will shed some light on the practical and pragmatic application of these frameworks
to actual problems faced by businesspeople.” (HDM p. 68)
1.2. About the methodology, exam
• 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 an own reasonable
opinion.
• 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 “Questions, Projects, and Exercises” 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).
• 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 …
• Grading your exam, the following factors are taken into account: the extent to which the
answer:
a) is factually correct
b) demonstrates a thorough and in-depth processing of the exam material
c) bears witness to synthetic ability (spotting connections, making distinctions between
main issues and side issues).
d) Attention is also paid to (d) the degree of personal processing and the quality of the
position determination
e) The extent to which the personal point of view is substantiated and developed with
reference to the course material.
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,2. Chapter: Ethics and Business
2.1. Opening Decision Point: Zika Virus and Olympic Sponsors
Zika Virus and Olympic Sponsors
Weeks away from start of the Summer Olympics in Rio De Janeiro, a group of scientists, physicians,
and ethicists signed a letter to move or postponing the Games. The Zika Virus epidemic was
spreading through parts of Brazil and other countries. Experts said that the Rio Games will spread the
virus globally because of all the worldwide olympic tourists and athletes. Letter was corresponded to
IOC, but not to large corporations sponsoring the Games. These sponsors make the Olympic
effectively happen. Further, many experts weren’t, they published that the Olympics would not be a
factor in spreading the Zika virus.
→ What should the Olympic sponsors have done? Should they have encouraged the IOC to
move or postpone the Games? But this would cost them money (i.e. each sponsor spent
already millions on marketing activities). But then, what about the social responsibility to
help control an epidemic?
1. How much responsibility do sponsoring 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?
2. 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.
3. 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”?
2.2. 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.
2.3. Introduction: Making the Case for Business Ethics
“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 Buffett
e.g. think about me too → good actions, who’s reputation is ruined
Quote is true for people and organizations
Business ethics is a process of responsible decision making.
• Scandals by institutions and individuals are brought about by ethical failures.
Enron: Enron gaf meer uit dan er binnenkwam en hield verliezen uit de boeken, door schimmige
constructies met honderden dochterondernemingen. Toen het bedrijf uiteindelijk over de kop
ging, bleek dat managers miljoenen in hun zak stopten, accountants bewijsmateriaal vernietigd
hadden, etc. Subsidiaries werden dus opgezet om publiek, overheid te misleiden
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, Madoff: bediende zich van een piramidespel-achtig soort bedrog, waarbij oude "investeerders"
hun rendement krijgen uitgekeerd uit de inleg van nieuwe "investeerders".
BP Deep Horizon: Waterplatform van BP in Golf van Mexico ontplofte, leidde tot veel
milieuschade. BP had niet alle nodige safety rules nageleefd
Volkswagen: gebruikte software die gebruikt werd om testresultaten te beïnvloeden.
Why is there business ethics, where you able to defend it toward other parties?
It is necessary due to the many scandals. E.g corruption, fraude → people are trying to do something unethical
Persons (e.g Madoff) and organizations (e.g Enron) can perform unethical things.
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
• Adam Smith is known for promoting self-interest in The Wealth of Nations (handbook of
capitalism, is a good thing that you maximize your personal profits) in another book, The Theory
of Moral Sentiments, he suggests that sympathy and benevolence are fundamental human
values → issue of the relationship between economic and moral values is addressed in study
of business ethics
→ The Adam Smith problem: how to reconcile these two books
• Until 1950 controversy about business ethics → business and ethics are 2 separate things.
Many students believed the term business ethics was a contradiction. Many also viewed ethics
as a mixture of sentimentality and personal opinion that would interfere with the efficient
functioning of business. Afterall, who is to identify right and wrong, and, if no law is broken,
who will ‘punish’ the ‘wrongdoers’. → so there was opposition between the link of ethics and
business
There has been a shift from whether ethics should play a role in business decisions to how to most
effectively do so.
• Question today about which values and principles should guide business decisions.
→ Not every decision can be covered by economic/legal or company rules and
regulations → more often, responsible decision making must rely on personal values
and principles of people involved
• Origins of this shift: the serious consequences of unethical behavior for many people
E.g. Madoff: even non-profit organizations such as hospitals, universities lost a lost of money.
So it was affecting us all, because hospitals couldn’t invest in new technology because they
lost a lot of money. It was a huge society problem
Shift is now more about the content.
Why the shift? → we have now more information over the impact of scandals → consequences of unethical
behavior and unethical business institutions are too serious for too many people to be ignored.
Responsible decision making must move beyond concern for stockholders to consider the impact that
decisions will have over all stakeholders.
• Stakeholders → consider them, otherwise impact on LT survival of the firm
Anyone who affects or is affected by decisions made within the firm, for better or
worse
We are looking for the impact on all stakeholders (e.g. employees, clients, non-profit organizations, all people
going to hospitals) → so in business ethics, you are not looking at only 1 party
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,4 reasons to study business ethics:
1. Unethical behavior might affect a wide range of people including ourselves (as managers
involved, or as employees, consumers, citizens, …).
2. ‘Bad’ companies can lose in the marketplace (e.g. customer boycotts) or even go out of
business and employees might end up in jail
E.g. boycott Nike: Nike made footballs in Pakistan by young children → when this came out,
many people stopped with buying footballs from Nike → Nike made large amount of losses
3. ‘Good’ companies might create an ethical competitive advantage through a good reputation,
attracting and holding good employees, …
• Third reason, is a positive approach. If you have an image that you are ethical in doing business,
then it gives you financial benefits.
E.g. ‘Alpro is organic, that is why I buy the product’
• If you have a good image, you can attract good employees.
E.g. Nobody likes to work in organization where there is not a good ethical culture
• Number of values may flourish in an ethical environment such as trust, creativity, commitment.
E.g. if nobody runs away with your idea, it create creativity
4. As future managers/leaders we will have to manage the ethical behavior of others and will
be seen as role models (e.g. Prince Bandar Bin Sultan, AIG).
• Familiarity with business ethics is crucial for everyone, and not just for business workers,
because also consumers, citizens are affected by the choices made within business institutions
• As leaders/managers we need to explore how to manage the ethical behavior of others so
that we can improve their decisions and encourage them to make (more) ethical decisions
• If you want to create an ethical culture and business than you need to be a good role model
otherwise less likely that employees will follow
E.g. Prince Bandar Bin Sultan → powerful person, received $240 mill. commissions as
a reward for all the contracts between UK and Saudi Arabia. He minimized corruption
by saying ‘scandals are everywhere, it has always been the case look at Adam and
Eva’ → he is definitely not a role model.
E.g. AIG → in 2008, they collapsed → begged for money. US government bailed out
AIG by giving them money. But after they received the first amount of money, AIG
executives went on a luxurious weekend. Further, were bonuses given to the
executives while other employees lost their job due to the cost-cutting → not a role
model
“Ethics is the new competitive environment.” - Peter Robinson, CEO, Mountain Equipment Co-op (2000
– 2007).
→ Quote relate to the fact that good companies might create a competitive environment (= third reason
for why studying business ethic)
Recap:
• Legal requirements • For business students, ethics is an important
• Unethical behavior creates legal, financial field of study.
and marketing risks. • Leaders need to know how to manage ethical
• Maintaining an ethical advantage aids behavior of others.
success. • Business must take ethics into account and
• Ethical reputations provide a competitive integrate ethics into its organizational
edge. structure.
• Ethical management may aid organizational • But what is ethics?
structure and efficiency.
→ Is about the values. If there is trust →
more creativity → people work harder,
this will aid efficiency and structure
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, 2.4. Business Ethics as Ethical Decision Making
Our approach to business ethics focuses on ethical decision making, not just on information and
knowledge about ethics.
→ Responsible decision making and deliberation will result in more responsible behavior.
Ethics refers to how human beings should properly live their lives.
→ Ethics is all about how we act and how we live our lives ‘what should we do’
Even if an ethics course does not change your capacity to think, we believe that it could stimulate
your choices of what to think about.
→ With the capacity that you have, you will have a broader field about how to think → broader panorama
of options.
Caution: no manipulation but reasoning to attempt to produce more ethical behavior among the
students who enroll
→ Do not replicate what professor tell you or the handbook → there is no ethical truth.
Who is right or wrong? → we don’t know → does it mean that everything is right? → no, some
arguments are better than others. Some are more towards an ethical truth → truth is out there, but we
don’t have intellectual tools to get it. So we believe that there is an ethical truth, but we can’t proof it.
e.g. we are not going to tell you if child labor is good or wrong → helping in weekends on the
farm of your parents, is that good or wrong?
Influencing, manipulation, threats, guilt, pressure, bullying, intimidation, … do not belong in an ethical
classroom. Persuading through reasoning however does!
→ Teacher should remain value-neutral in the classroom, and should not motivate/manipulate students
into a narrow view
The authors’ fundamental assumption is that a process of rational decision making can and will result
in behavior that is more reasonable, accountable, and ethical.
Our role [as teachers] should not be to preach our own ethical beliefs to a passive audience, but instead
to treat students as active learners and to engage them in an active process of thinking, questioning,
and deliberating.
→ Teaching ethics must challenge students to think for themselves!
(students will get tools/ a way to think about it, but answers will come from students itself)
2.5. Business Ethics and Personal Integrity and Social Responsibility
Ethical business leadership is precisely this skill: to create the circumstances within which good
people are able to do good, and bad people are prevented from doing bad.
→ It is telling us how we should think, in order to find what is good/bad. The environment can
strongly (dis)courage ethical behavior
Ethics is concerned about how should we live? What is good or bad?
• Philosophers emphasize that ethics is normative → which means that it is dealing with our
reasoning about how we should act (choose, behave and do things).
▪ As a normative discipline, ethics seeks an account of how and why people should act
a certain way, rather than how they do act.
• Social sciences also examine human decision making/actions but these sciences are descriptive
rather than normative → they provide an account of how and why people do act the way they
do – they describe.
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,Philosophical ethics merely asks us to step back from implicit everyday decisions to examine and
evaluate them. More than 2,000 years ago Socrates gave the philosophical answer to why you should
study ethics: “The unexamined life is not worth living.”
→ Because the actions each one of us takes and the lives we lead give very practical and unavoidable
answer to fundamental ethical questions → if you live on, but never stops on reflecting what you are
doing, than life is not worth living
How should we live → fundamental question of ethics, than can be interpreted in 2 ways
→ “We” can means each of us individually, or mean all of us collectively
• If defining “We” individually
▪ Question abut how I should live my life, how I should act, what should I do,
what kid of person I should be
▪ Here, ethics is based on our value structures, defined by our moral systems;
and, referred to as morality; or “personal integrity”.
▪ If morals refer to the underlying values on which decisions are based, ethics
refers to the application of those morals to the decisions themselves.
e.g. individual could have a moral value of honesty, when applied to her
decisions, it results in a refusal to lie on an expense report
• If defining “We” collectively
▪ Here, how should we live refers to how we live together in a community
▪ This area is sometimes referred to as social ethics.
→ Raise questions of justice, law, organization structure, etc.
▪ Here, we judge companies from a social perspective; for their social
responsibility.
➔ Managerial decisions involve both aspects of ethics; personal integrity, and social
responsibilities
e.g. manager in company and you have been in contact with an illegal immigrant. Manager is
going to hire him because he want to be a good person. From a personal integrity point of
view, it is a nice thing to do. But social responsibility is not good, if everything is going to do it,
it is bad for legal immigrants that want to work. So from a society point of view we don’t want
it.
How should we live can mean 2 things → how should I live (from personal view)/individual perspective. But you
can also look from ‘we perspective’ → look from society perspective. Every society has a perspective on how we
should work as a collective.
e.g. nowadays we as a society don’t want too much plastique for packaging → It is not a law, is ethics → we feel
that there should not be too much plastics. Organizations should response to it, they should need to do what
society is aiming at → social responsibility.
‘we’ from individual → e.g. if you come home and you have a big bag of dirty clothes and mom needs to wash it
because he is not home al the weekend. Mom can react as ‘this is not how I see my weekend’.
Either you start from individual freedom, or other parties that say ‘we should create a societal justice, we should
do it together’. In political debates it starts from I or we.
The normative approach to business is at the center of business ethics. Step back from the facts to
ask:
• What should I do?
• What rights and responsibilities are involved?
• What good will come from this situation?
• Am I being fair, just, virtuous, kind, loyal, trustworthy, honest?
(!) examine situation of Oil Spill pg. 15 based on above facts in order to do it from a perspective of ethics
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,Ethics is a normative discipline as it deals with norms;
Those standards of appropriate and proper (or “normal”) behavior
• Norms establish the guidelines/standards for determining what we should do, how
we should act, and what type of person we should be
• Norms appeal to certain values
▪ All normative disciplines presuppose some underlying values (norms to be a
good accountant, banker, economist, …).
▪ To say that ethics is a normative discipline is not to say that all normative
disciplines involve the study or discipline of ethics (e.g. normative
economics).
Distinction between values and ethics
Values are the underlying beliefs that cause us to act or to decide one way rather than another.
• Many different types of values (what one values) can be recognized: financial,
religious, legal, historical, political, aesthetic, scientific, ...
• Individuals have their own personal values and businesses also have values – shown
in the company’s culture.
→ However, an individual’s or a corporation’s set of values may lead to either
ethical or unethical results.
E.g. Enron and its financial values. Values? Yes. Ethical results? No.
• One way to distinguish values is in terms of the ends or goals they serve: monetary
ends, spiritual ends, ends of beauty; legal values serve law, order and justice …
Ethical values serve the ends of human well-being.
➔ Ethical values are those values – those decision-guiding beliefs – that impartially promote human
well-being.
But what is human well-being?
• Happiness - Health
• Respect - Companionship/love
• Dignity - Freedom
• Integrity -…
But what is meant by impartially? Ethical acts and choices should be acceptable and
reasonable from all relevant point of views, not only from my personal and selfish well-being
point of view.
→ From the perspective of ethics, no one person’s welfare is more worthy than any
other’s → ethical acts and choices should be acceptable and reasonable from all
relevant points of view!
“If moral behavior were simply following rules, we could program a computer to be moral.”
- Samuel P. Ginder
Do not kill, because we value life → there is a value behind a norm
Companies values can be different from values of employees working there.
* E.g. value of the company Alpro ‘products that are not genetically modified’. Executives say ‘I don’t have
a problem with genetically modified products.
Do values lead to ethical results?
* E.g. Enron value was showing off that you are a good company by showing ‘high profits’ were not
ethical values, because it was leading to an unethical outcome
Ethical values = values that guarantee us that we are ethical. There is no fundamental behind, ethical values = is
fundamental in life
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,Happiness → fundamental values, there is no explanation behind it, because they are so valuable without
reference to something else. Happiness and health are most important in life.
All together are called human well-being. Everything that promotes happiness, respects, etc. is called good in
ethics. Is a broad understanding of what ethics is all about.
If you want to qualify a certain act, look at the fundamental values in life.
* E.g. health → for that reason it is forbidden to kill. Freedom → not allowed to have people as a slave.
Truth → we find it important to know how things are running
Impartially → second fundamental in ethics. We look at different parties. If we don’t have impartially, than we
promote our own well-being. I think then from my own happiness, health, etc.
E.g. I hate my mother. From my own persona view it is ethical to kill her for that reason is the word impartially
important
Very important slide.
Remark: very anthropologic → is only about humans, but nowadays also animals, the nature, etc. are important
(we will add these aspects later)
2.6. Ethics and the law
Deciding what one should do in business situation often requires reflection on what the law requires,
expects, or permits → thus law provide an important guide to ethical decision making
But legal norms and ethical norms are not identical.
* e.g. some ethical requirements such as treating one employees with respect are not legally required,
though they may be ethically justified
* e.g. legally permitted to fire an employee for no reason, would fail many ethical standards
Is compliance with the law enough to behave ethically?
→ because nowadays people still hold the view that business fulfils its social responsibility simply
by obeying the law → ethically responsible business decision is merely one that complies with
the law, no responsibility further
5 reasons why not:
1. Is the law itself ethical?
2. The law may prevent harm, but does it promote “good”?
3. Only complying with the law may lead to more regulation.
4. Laws may not be in place for new situations.
5. Laws may be ambiguous.
* e.g. law requires American employers to make reasonable accommodations for
employees with disabilities, but what is “reasonable accommodation”, and what are
the relevant disabilities does it include anorexia?
• Laws offer general rules clarified by legal precedent.
• There is no unambiguous answer for those wishing only to obey the law.
• Risk assessment is a process to identify potential events, and manage risk while still obtaining
objectives.
* e.g. In the Enron case, corporate accountants were encouraged to “push the envelope” of what
was legal. Thus, risk assessment involves how far the manager can reasonable go before it
would obviously be illegal
• Even following the law, managers often face decisions that challenge their ethical judgments.
* Even businesspeople who are strictly committed to obeying the law will be confronted with
fundamental ethical questions: “what should I do, how should I live”
Lot of overlap between legal and ethical norms → but overlap is not complete
Compliance with laws is NOT enough to behave ethically and that is for 5 reasons.
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, 2.7. Ethics as practical reason
Ethics is a vital element of practical reasoning, which involves reasoning about what one ought to do,
thus what we should do/act
And is distinguished from theoretical reasoning, which is reasoning about what we should “believe”
/ accept as truth.
• Theoretical reason is the pursuit of truth.
There is no single methodology that works in all situations, but there are guidelines that provide
direction and criteria for decisions that are more or less reasonable and responsible.
• Ethical theories explain and defend various norms, standards, values, and principles used in
ethical decision making (chp 3). → ethical theories are patterns of thinking/methodologies to help
us decide what to do
The next chapter introduces a model for making ethically responsible decisions (chp 2).
→ If you walk through the steps in making a decision about what to do, you would be aking a
decision grounded in sound reasoning. However, approach does not guarantee one single and
absolute answer. But: beginning in the development of responsible, reasonable, and ethical
decision making!
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