Business Ethics - Lecture 1
This course focus on the ethical perspectives and theories of business science.
Business Science and Business Ethics
Business Science focuses on organizations:
o Organizations can be studies as agents.
o Organizations can also be taken as environments.
Both perspectives elicit fundamental ethical questions, e.g.:
o If organizations are agents, their behaviour can be evaluated on ethical grounds: which of their actions
and decisions are ethically justifiable?
o If organizations are environments (i.e. structured groups of agents), then how does the organizational
structure affect the behaviour of the individual agents within the organization and outside the
organization from an ethical perspective?
The first perspective, organizations as agents: agency is in essence a subject to ethical evaluation. So the behavior
of organizations as agents can be evaluated from an ethical perspective. Which actions or decisions of organizations
as agents can be understood as ethical or ethically justifiable. On the same time, we can also look at what happens
if organizations are seen as environments. Inside organizations, people act and their decisions and their actions,
affect other people. But business science also deals with markets. Again, there are two different markets studied in
business science.
Business Science focuses on markets:
o Markets as environments in which organizations operate.
o Markets as coordination systems alternative to organizations.
Again, both perspectives elicit fundamental ethical questions, e.g.:
o If markets are environments in which organizations operate, how do organizations balance their need
to be competitive with their ethical standing? And how should markets be regulated in a way that
makes it possible for organizations to find a balance? How do organizations evaluate the ethical
consequences of their behavior in the market?
o If markets are alternative to organizations, then in which ways this difference affects the forms of
evaluations (including ethical evaluations) practiced within and outside organizations?
If we want to establish again this kind of perspectives, we can think both about the fact that we have markets in
society and the impact that society has on markets.
Business Science focuses on markets in society:
o The impact of markets on society.
o The impact of society on markets.
Both perspectives elicit fundamental ethical questions, e.g.:
o To which extent current societal values are affected (or should be affected) by “what is good for the
markets”? How much should the society accommodate what is good for the markets. How far should
the society go from an ethical perspective. Society puts a certain kind of expectations to each of the
regulating markets.
o To which extent should regulations on markets reflect societal values?
So this are some broad things that this course definitely explores.
Theoretical Base for Business Ethics
Sandel, M. (2010) Justice: What’s the Right Thing to Do?
o Aristotle’s virtue ethics (Chapter 8, HC2)
, o Kantian deontology (Chapter 5, HC3)
o Utilitarianism & Libertarianism (Chapters 2 and 3, HC4)
o Social contract theory & Rawls (Chapter 6, HC5)
o Communitarianism (Chapter 9, HC 6)
The course lectures (HC) aim at introducing and discussing these ethical theories, how they stand vis-à-vis each
other, and their limits.
HC’s are complementary to book chapters and presuppose that you have read the chapters already.
The work groups aim at applying these theories and principles to decision-making problems involving
organizations, markets, and society.
Ethical Decision-Making
The process of evaluating and choosing among alternatives in a way that is consistent with ethical principles.
This entails:
o Recognizing alternatives;
o Recognizing stakeholders;
o Recognizing consequences.
Decision-making processes are typically multi-dimensional;
Hence, decisions involve clashes of legitimate rights or values or different principles and notions of what is
good;
Core to ethical decision-making is the ability to balance clashing values;
No clash of values ➝ no ethical problem’.
Later as we are in the business world, we will be a decision maker and our decisions will have an impact on other
people. Therefore any decision that you will take, will have an ethical dimension. This course trains you to become
a decision maker. Decision making is something that requires a lot of critical and analytical thinking. The basic of
decision making is necessary, for instance the process of recognizing the possible alternatives to your decision
making. This is sometimes a tricky business; sometimes alternatives are overlooked, and alternatives which are
overlooked are in essence a critical part to decision making, because you are making an explicit decision without
recognizing it. Connected to this particular perspective, recognizing the stakeholders is just as important. If you
don’t’ recognize that your decision affect the stakeholders, you are not able to make a right decision. Connected to
this is recognizing consequences. If you don’t do this, you don’t have the full picture of the consequences of your
decisions. These three aspects are tightly interconnected to critical and analytical thinking, which is necessary to do
this well. At this stage, it is clear that decision making and especially the decision making, which is relevant for
business ethics, are multi-dimensional: lots of alternatives, stakeholders, and consequences to take into account.
What Ethical Behaviour is NOT
Not the same as acting according to one’s feelings/emotions
Not the same as acting according to religious beliefs
Not the same as abiding by the law
Not the same as following social conventions /culturally accepted norms
Not the same as acting on the basis of scientific knowledge ➝ provides you certain facts and you can use this
to decide what to do, but ethics can’t be reduced to this. Ethical decision making is really something that has to
be thought out.
Thus, although feelings, beliefs, legal and social norms, and true facts and evidence might provide valuable input to
consider, they often are not enough, ethics cannot be reduced to any of these aspects.
What is Hard about Ethical Decision-Making
Is there an unquestionable basis on which we can ground our ethical principles? No there is not, that’s the
,problem. There is no automatic way to figure out an ethical decision process. There are different answer of
different philosophers:
Aristotle: Do what brings you closer to virtue.
Kant: do what respects human fundamental dignity and self-determination.
Utilitarianism: do what provides the best and the least harm.
Rawls: do what is necessary to “share one another’s fate”.
These general ethical principles might clash with each other when we try to apply them to concrete situations.
They Make You Swear and Swear…
“Catelyn Stark: You are no knight. You have forsaken every vow you ever took.
Jaime Lannister: So many vows. They make you swear and swear. Defend the King, obey the King, obey your father,
protect the innocent, defend the weak. But what if your father despises the King? What if the King massacres the
innocent? It's too much. No matter what you do, you're forsaking one vow or another.”
How to Study: ACTIVE LEARNING
Ask yourself questions, make your own examples /counterexamples:
o Which statement is an example of an a priori truth? Of a non a priori truth? Can two people have
different intentions but same motive? Examples? Same intention but different motives? Examples?…
Practice arguments and philosophical views on anything that strikes your attention (movies, books,
conversations with friends):
o Which philosophical views apply to the finale of Parasite? Which ones are compatible to Thanos’
argument in Avengers: Endgame? If the coronavirus crisis can be understood as a social experiment,
which are its ethical ramifications? What would have Bentham said about closing off entire
towns/cities?...
o Use the workgroup sessions for further practice!
You need to recognize the definitions from concrete and abstract situations. Put the abstract knowledge into
practice, recognizing abstract ideas into concrete situations. Practice this everyday with books, films, colleagues to
get used to it.
Even Better: ACTIVE LEARNING IN GROUPS
“Both Amos and I were critical and argumentative, he even more than I, but during the years of our collaboration
neither of us ever rejected out of hand anything the other said. […] We developed a routine in which we spent
much of our working days together […] We quickly adopted a practice that we maintained for many years. Our
research was a conversation, in which we invented questions and jointly examined our intuitive answers. Each
question was a small experiment, and we carried out many experiments in a single day.”
Daniel Kahneman, Thinking, Fast and Slow.
Finally: PRACTICE ACTIVE LEARNING CONSISTENTLY
Some of you already practice these suggestions at least sometimes.
All of you should practice these suggestions every day!
If in doubt, send us your questions, answers, arguments, and examples.
Next class will focus on Aristotle:
Aristotle describes ethical virtue as a tendency or disposition, induced by our habits.
To develop virtue, we need to train it!
This is not just important for the sake of this course, but to build your skills as a decision-maker
, Book Notes Chapter 1 – Doing the Right Thing
The price increase debate revolves around three ideas: maximizing well-being, respecting freedom, and
promoting virtue. Each of these ideas indicates a different way of thinking about justice. The standard case for
unfettered markets rests on two claims: prosperity & freedom. First, markets promote the well-being of society as a
whole by incentivizing people to work hard by providing the goods that other people want. Second, markets
respect individual freedom; instead of imposing any value on goods and services, markets allow people to choose
what value they place on the things they exchange. How do defenders of price gouging laws react? First, they argue
that the well-being of society as a whole is not really served by the exorbitant prices charged in difficult times. Any
estimate of general well-being should include the pain and suffering of those who can be priced out of basic
necessities during an emergency. Second, they argue that under certain conditions the free market is not really
free: buyers under duress have no freedom. But we also have to consider another argument. Much public support
for price increase laws comes from something more visceral than welfare or freedom. People are outraged by
"vultures" who prey on the despair of others and want them to be punished. This outrage at price takers is more
than silly rage. It gestures to a moral argument worth taking seriously. Outrage is the special kind of anger you feel
when you believe people are getting things they don't deserve, this is anger at injustice. But who should judge what
is virtue and what is vice? This dilemma points to one of the big questions of political philosophy: is a just society
trying to promote the virtue of its citizens? Or should the law be neutral to competing beliefs about virtue, so that
citizens can be free to choose the best way of life for themselves?
-> Aristotle teaches that justice means that people get what they deserve. And to determine who deserves what, we
must determine which virtues deserve honor and reward. Aristotle argues that we cannot find out what a just
constitution is without first thinking about the most desirable way of life. For him, the law cannot be neutral on
matters of the good life. In contrast, modern political philosophers - from Immanuel Kant in the eighteenth century
to John Rawls in the twentieth century - argue that the principles of justice that define our rights should not rest on
any particular conception of virtue or of the best way of life. Instead, a just society respects the freedom of each
person to choose his or her own view of the good life.
Three Approaches to Justice
To ask if a society is only asking how we distribute the things we value - income and wealth, duties and rights,
powers and opportunities, offices, and awards. A just society distributes these goods properly; it gives each person
their due. The difficult questions begin when we ask what is due to people and why. Three ways of approaching the
distribution of goods have been identified: welfare, freedom, and virtue. Each of these ideals suggests a different
way of thinking about justice. This book examines the strengths and weaknesses of these three ways of thinking
about justice. We start with the idea of maximizing prosperity: for market societies like ours, it provides a natural
starting point. Why do we care about prosperity and economic growth? We think prosperity makes us better off
than we would otherwise be - as individuals and as society. To explore this idea, we turn to utilitarianism, the most
influential account of how and why we should maximize prosperity or seek the greatest happiness for the greatest
number. Most of these theories emphasize respect for individual rights, although they disagree among themselves
on which rights are most important. The idea that justice involves respect for freedom and individual rights is at
least as well known in contemporary politics as the utilitarian idea of maximizing wealth.
The approach to justice that starts with freedom is a broad school. In fact, some of the most hard-fought political
arguments of our time take place between two rival camps - the laissez faire camp and the fairness camp. Leader of
the laissez-faire camp are free-market libertarians who believe that justice consists of respecting and enforcing the
voluntary choices made by consenting adults. The fairness camp contains theoreticians with a more egalitarian
streak. They argue that unfettered markets are neither fair nor free. In their view, justice requires policies that
overcome social and economic disadvantages and give everyone a fair chance of success.
Moral dilemmas
Even if we manage to align our moral intuitions and principled obligations throughout our lives, what confidence
can we have that the result is more than a self-consistent rigor of prejudice? The answer is that moral reflection is
not a solitary pursuit, but a public effort. It requires an interlocutor - a friend, a neighbor, a comrade, a fellow
citizen. Sometimes the interlocutor may be introduced instead of real, such as when we argue with ourselves.