Session 5

Ethical Dilemma
(Chapters 2/3)
Arguments Against Business Ethics
§ In perfectly competitive free markets, the
pursuit of profit is sufficient to serve
members of society
§ "Loyal Agent" - duty to serve employer in
whatever ways that will advance the
employer's self-interest
§ Business ethics is essentially obeying the
law.
The Case For Ethics in Business

§ Simple Argument
§ Ethics should govern all human activities.
§ Business is a human activity.
§ Therefore, ethics should govern business too.
The Case For Ethics in Business

§ Argument from Businesses Need for Ethics

§ Businesses can't survive without ethics
business requires at least a minimal adherence to
ethics on the part of those involved in the business:
e.g., the honoring of contracts by customers,
managers, & employees
business requires a stable society in which to carry on
its dealings: morality is a stabilizing force in society.
§ Therefore it is in the best interests of businesses
to promote ethical behavior (and practicing it is
the best way to promote it).
The Case For Ethics in Business

§ Argument from the Consistency of Ethical

Considerations with Business Pursuits (of
profit)
§ Observed evidence
example of Merck, Inc. and others shows business can
have exemplary ethics & still be very profitable
no studies have found a negative correlation between
socially responsible behavior and profits.
The Case For Ethics in Business

§ Argument from the Consistency of Ethical

Considerations with Business Pursuits (of profit)
§ Reasons behind the profitability of ethical behavior (cited
earlier in connection with the Merck example): ethical
behavior cultivates good will & loyalty
among customers
among employees

§ Unethical businesses become targets of moral

outrage which works to their detriment.
Common Unethical Acts...

§ lying to supervisors
§ falsifying records
§ alcohol and drug abuse
§ conflict of interest
§ stealing
§ gift/entertainment receipt in violation of
company policy
1997 Society for Human Resource Management/
Ethics Resource Center, Business Ethics Survey.
 Key Influences On Ethical Behavior...

§ personal values
§ supervisor influence
§ senior management influence
§ internal drive to succeed
§ performance pressures
§ lack of punishment
§ friends/coworker influence
1997 Society for Human Resource Management/ Ethics Resource Center, Business Ethics
Survey.
Why Misconduct Is Not Reported...

§ fear of not being considered a team player

§ did not think corrective action would be taken
§ fear of retribution (from management)
§ no one else cares, why should I
§ did not trust the organization to keep report
confidential
1997 Society for Human Resource Management/ Ethics Resource Center, Business Ethics
Survey.
Managers care about Ethics

§ It is a managerial problem because:

§ Over $40 billion of employee theft occurs each year
§ Restructuring reduces managerial layers, leaving
fewer managers to supervise more workers
§ Fierce business competition may tempt employees
to cross the ethical/unethical line
§ Managers know that an organization’s positive
reputation is the most important asset it has
Government Regulation of Business
§ Is a way that society shows that it cares about responsible
conduct in business
§ Regulation may be necessary in a capitalistic system –
monopolies and public purposes
§ Regulation of some industries such as
§ Medical
§ Food
§ Financial
§ Others?
Another Reason to Believe in Good Ethics &
Social Responsibility

§ Business people are people

first
§ Business people have to
live in their community
with their family,
neighbors, and friends
Another Reason to Believe in Good Ethics &
Social Responsibility

§ They are usually guided by a moral

compass that points them in an ethical
direction as well as a financial compass
§ Goal is to create so much value that
customers will want a long relationship
The Moral Compass: The Dynamics of
Ethical Principles
Individual Rights (Karapatanngtao)

Virtue
Justice Care
(Kabutihan ng
(Katarungan) (Kalinga)
kalooban)

The Common Good – Utilitarianism

(Kapakanan ng lipunan)
WHY DO “GOOD” PEOPLE ENGAGE IN
“BAD” ACTS?
§ There are many ways in which responsible decision
making can go wrong:
§ People can simply choose to do something
unethical.
§ Well-intentioned people fail to choose ethically.
§ Stumbling blocks to responsible decision-making and
behavior
§ Cognitive or intellectual.
EXPLAINING “BAD” ACTS?
§ According to the model of ethical decision making, a
certain type of ignorance can account for bad ethical
choices.
§ Ignorance can be willful and intentional.
§ After you discover a lost I-Pod, you might rationalize to yourself
that no one will ever know, that no one is really going to be hurt,
that if the owner was so careless, they deserve to lose their I-Pod.
§ You might try to justify the decision by telling yourself that you are
only doing what anyone else would do in this circumstance.
§ You might choose not to think about it and try to put any guilty
feelings out of your mind.
EXPLAINING “BAD” ACTS?
§ Cognitive barrier: Considering only limited alternatives.
§ Responsible decision making would require that we discipline
ourselves to explore additional methods of resolution.
§ Simplified decision rules are most comfortable to us.
§ Having a simple rule to follow can be reassuring to many
decisions-makers; even if it may not be the best possible decision.
§ We often select the alternative that satisfies minimum decision
criteria: Satisficing.
§ Other stumbling blocks
§ Motivation
§ Willpower
DECISION POINT:
IF GRISHAM IS RIGHT . . . .

§ If Grisham is correct, and we are destined to unintentionally

cross lines, perhaps it is critical to begin to make our lines more
clearly drawn.
§ Try this exercise – in your head, consider your response to the
following questions:
§ What values are most important to you? What are you
willing to sacrifice to maintain your own values? What is
important? What are your priorities?
§ What do you stand for, personally and professionally?
§ Are there any values that would make you quit a job over?
§ What would you be willing to die for?
USUAL SUSPECTS FOR EXPLAINING
UNETHICAL CONDUCT

§ Enormous amounts of corporate executive

compensation.
§ Lack of oversight of corporate executive
decisions.
§ Significant distance between decision makers and
those they impact.
§ Financial challenges.
§ Set of ethical values that has not yet caught up to
technological advances.
The most serious challenge we
all face…..

Making ethically responsible

decisions throughout one’s
life.
ETHICAL DECISION-MAKING IN
MANAGERIAL ROLES
§ Social circumstances can make it easier or more difficult
to act in accordance with one’s own judgment.
§ Within business, an organization’s context sometimes
make it difficult for even the best-intentioned person to act
ethically, or it can make it difficult for a dishonest person to
act unethically.
§ Responsibility for the circumstances that can encourage
ethical behavior and discourage unethical behavior falls to
the business management and executive team.
MANAGERIAL ROLES
§ The decision-making model introduced in this
chapter develops from the point of view of an
individual who finds herself/himself in a
particular situation.
§ Personal integrity lies at the heart of such
individual decision-making:
§ What kind of person am I?
§ What are my values?
§ What do I stand for?
MANAGERIAL ROLES
§ Within a business setting, individuals must consider the
ethical implications of both personal and professional
decision making.
§ Every individual fills a variety of social roles and these
roles carry with them a range of expectations,
responsibilities, and duties.
§ Some of our roles are social: friend, son\daughter, spouse,
citizen, neighbor.
§ Some are institutional: manager, teacher, student body
president.
§ Some are professional: attorneys, accountants, auditors,
financial analysts.
Roles & Responsibilities

Decision-making in these contexts

raises broader questions of social
responsibilities and social justice.
ROLES & RESPONSIBILITIES:
APPLICATION
§ Consider how different roles might impact
your judgment about the discovery of the
iPod.
§ Your judgment about the iPod might differ
greatly if:
§ You knew that your friend had lost it.
§ You were a teacher in the class.
§ You were a member of the student government.
ROLES & RESPONSIBILITIES IN
BUSINESS
§ In a business context, individuals fill roles of
employees, managers, senior executives, board
members.
§ Managers, executives, board members have the
ability to create and shape the organizational
context in which all employees make decisions.
§ Hence, they have a responsibility to promote
organizational arrangement that encourage ethical
behavior and discourage unethical behavior.
*Key principles and questions about the ethics of an act
HUMAN DIGNITY &
JUSTICE
Will the act lead to a fair
distribution of benefits
and burdens? If it will
cause inequality, will it
improve the situation of
the least advantaged
persons?
RIGHTS
Does the act respect the
moral rights of everyone
concerned? Does it
treat everyone as
persons and not merely
as things?
VIRTUE Will the act help me
develop my
character? Will it
make me a better
person?
COMMON GOOD GENERAL WELFARE
Utilitarianism
Does the act
promote dignity
and allow total Who benefits from
human the act? Who are
burdened? Does the
development for
act maximize the
everyone?
total net benefit to
everyone concerned
(stakeholders)?
CARE
Does the act show
proper care to people
we have special
relationships with?
Will it earn the trust
of people we value?
Adapted by B. Teehankee from
Business Ethics by Manuel Velasqu
Ethical Frameworks

§ Utilitarian: Directs us to decide based on

overall consequences of our acts.

§ Rights: An individual’s entitlement to

something

§ Justice and Fairness: Comparative

treatment given to members of a group
Ethical Frameworks

§ The Ethics of Care: Obligation to exercise

special care toward those person with
whom we have close relationships

§ Virtue Ethics: Directs us to consider the

moral character of individuals and how
various character traits can contribute to, or
obstruct, a happy and meaningful human
life.
*UTILITARIANISM: MAKING DECISIONS
BASED ON ETHICAL CONSEQUENCES

§ Utilitarianism has been called a consequentialist

approach to ethics and social policy.
§ We should act in ways that produce better
consequences than the alternatives we are
considering.
*UTILITARIANISM: MAKING DECISIONS
BASED ON ETHICAL CONSEQUENCES

§ What is meant by “better consequences”?

§ Better consequences are those that promote
human well-being: the happiness, health,
dignity, integrity, freedom, respect of all the
people affected.
§ A decision that promotes the greatest amount of
these values for the greatest number of people is
the most reasonable decision from an ethical
point of view.
* UTILITARIANISM: MAKING
DECISIONS BASED ON ETHICAL
CONSEQUENCES
§ Utilitarianism is identified with the principle of:
§ “Maximize the overall good.”
OR
§ “The greatest good for the greatest number.”
§ The economy and economic institutions are utilitarian:
§ They exist to provide the highest standard of living for
the greatest number of people.
§ They do not exist to create wealth for a privileged few.
Utilitarianism
§ An action is right if it produces the
greatest total amount of good (i.e.,
maximum profits) for all persons
affected by the action and wrong if it
fails to maximize utility.

http://www.phgfoundation.org/t
utorials/moral.theories/2.html
*UTILITARIANISM: EXAMPLES

§ Child labor
§ Compare the problematic consequences of child
labor to the consequences of alternative decisions.
§ Consider also the consequences to the entire
society.
§ Thus, one might argue on utilitarian grounds that
child labor practices are ethically permissible
because they produce better overall consequences
than the alternatives.
*UTILITARIANISM: LESSONS FROM
EXAMPLES

§ Utilitarians tend to be very pragmatic thinkers:

§ They decide on the basis of consequences.
§ The consequences of our actions will depend
on the specific facts of each situation.
§ No act is ever absolutely right or wrong in all
cases in every situation; it will always depend on
the consequences.
Ethical Dilema
§ You run an orphanage and have had a hard time making ends meet. A car
dealership offers you a new van worth $15,000 for free if you will falsely
report to the government that the dealership donated a van worth $30,000.
You really need the van and it will give you an opportunity to make the
children happy. Do you agree to take the van?

1-36
*DEONTOLOGY: AN ETHICS OF RIGHTS
AND DUTIES

§ Deontological ethical theories are principle-based.

§ It supplements the utilitarian approach.
§ It tells us that there are some rules that we ought to follow
even if doing so prevents good consequences from
happening or even if it results in some bad consequences.
* DEONTOLOGY: AN ETHICS OF
RIGHTS AND DUTIES
§ What rules should we follow?
§ Legal rules
§ Rules which are derived from various institutions in
which we participate, or from various social roles that
we fill.
§ Role-based rules (Business)
§ Professional rules
§ The above mentioned roles are described as
gatekeeper functions, which insure the
integrity and proper functioning of the
economic, legal, or financial system.
Rights and Duties

§ Devices used to enable individuals to

choose freely whether to pursue
certain interests or activities, and to
protect those choices (e.g., right to
worship)
Rights and Duties

§ According to Immanuel Kant, German

philosopher, there is essentially one
fundamental ethical principle that we should
follow:
§ Respect the dignity of each individual
human being.
Rights and Duties

§ Kant’s Categorical Imperative

§ Act so as your action can be universal
§ Act so that you treat humanity not as a
means but as an end in itself

http://www.phgfoundation.o
rg/tutorials/moral.theories/4
.html
Positive Rights

Duty of providing holder of right with

whatever is needed to pursue interests

Shelter

Food
Health
Care
Employment
Education
Negative Rights
Duties others have not no interfere in
certain activities of the person who holds
a given right

Life
Participation
Free
Due Speech Physical
Process Security
Utilitarianism vs. Kantian Duty
Utilitarianism Kantian Duty
Rightness or
wrongness of an Golden Rule:
action is Do unto others what you
want others to do unto
determined by you.
looking at the
consequences of
the action Close relationship to legal
analysis
Close relationship to
economics as a
moral view Because it is my duty, I
have a stringent
requirement which I am
The end justifies the bound to obey even if
means consequences are not
best for me.
Justice and Fairness
§ Justice and fairness are concerned with the
comparative treatment given to the members
of a group
§ when benefits and burdens are distributed
§ when rules and laws are administered, and
§ when people are punished for the wrongs
they have done or compensated for the
wrongs they have suffered.
 Justice and Fairness Categories

§ Distributive Justice - Allocating scare

benefits and undesirable burdens in
ways that are just and that resolves the
conflict in a fair way.
§ Treat equals equally and unequals,
unequally.
§ Egalitarianism - Every person should be
given exactly equal shares of a society’s
benefits and burdens.
 Justice and Fairness Categories

§ Capitalist Justice - Workers paid in

proportion to the work they have
contributed
§ Socialism - From each according to his
ability, to each according to his needs.
§ Justice as Freedom: Libertarianism -
From each as they choose, to each as
they are chosen.
Justice and Fairness Categories

§ Retributive Justice - Justice of

blaming or punishing persons for
doing wrong
§ Compensatory Justice - Justice of
restoring to a person what the person
lost when he or she was wronged by
someone else.
Ethical Dilema
§ A man has been sentenced to prison for armed robbery, and admits guilt for
the deed. "But", he argues, "I'll never do anything of the kind again. I'm not
insane or a danger to society. I would be happier out of jail than in. My wife
depends on me for support and she and the children would be far happier if
I were able to be the family breadwinner again. As to the influence on
others, almost no one would ever know about it; you can keep the matter
out of the newspapers and no one except you will ever know that the crime
was committed. Therefore, you should release me" Assuming he is correct,
what would you do?

1-49
Ethics of Care
§ We exist in relationships, and should
preserve and nurture relationships we have,
with specific persons.
§ We cannot exist in isolation from caring
relationships with others.
Ethics of Care

§ We each should exercise special care for

those with whom we are concretely related by
attending to their particular needs, values,
desires, and by responding positively to these
needs, particularly of those who are
vulnerable and dependent on our care.
Integrating Utilitarianism, Rights,
Justice, and the Ethics of Care
No single framework captures all factors for
making judgments.

Utilitarian standards Moral rights consider the

consider only aggregate individual, but not
social welfare, not the aggregate well-being and
individual’s welfare. distributive considerations.

Standards of justice Standards of caring

consider distributive consider the individuals
issues, but ignore social close to us but ignores the
welfare and the individual. demands of impartiality.
Virtue Ethics

§ "Virtues" are attitudes,

dispositions, or character traits
that enable us to be and to act in
ways that develop this potential.
§ They enable us to pursue the
ideals we have adopted.
http://www.scu.edu/ethics/practici
ng/decision/ethicsandvirtue.html
Virtue Ethics

§ There are certain ideals, such as excellence or

dedication to the common good, toward which
we should strive and which allow the full
development of our humanity.
§ These ideals are discovered through thoughtful
reflection on what we as human beings have
the potential to become.
§ Once they are acquired, they become
characteristic of a person.
§ A person who has developed virtues will be
naturally disposed to act in ways that are
consistent with moral principles.
§ The virtuous person is the ethical person.

Virtues are habits

Person vs. Action Based

§ Virtue ethics is person rather than

action based: it looks at the virtue
or moral character of the person
carrying out an action, rather than
at ethical duties and rules, or the
consequences of particular
actions.
Cardinal Virtues

§ Prudence - able to judge between actions with

regard to appropriate actions at a given time
§ Justice - proper moderation between self-interest
and the rights and needs of others
§ Restraint or Temperance - practicing self-control,
abstention, and moderation
§ Courage or Fortitude - forbearance, endurance,
and ability to confront fear and uncertainty, or
intimidation
Examples of Virtues

§ Honesty § Integrity
§ Courage § Fairness
§ Compassion § Self-control
§ Generosity § Excellence
§ Fidelity http://www.virtuesproject.co
m/virtuesdef.html
Good points of virtue ethics

§ It centers ethics on the person

and what it means to be
human. It includes the whole
of a person's life.
Bad points of virtue ethics

§ It doesn't provide clear guidance on what to do in

moral dilemmas

§ although it does provide general guidance on how to be a

good person

§ presumably a totally virtuous person would know what to do

and we could consider them a suitable role model to guide us

§ No general agreement on what the virtues are and

it may be that any list of virtues will be relative to
the culture in which it is being drawn up.
*How did I live today?
1. Did I practice any virtues (e.g.,
integrity, honesty,
compassion)?
2. Did I do more good than
harm?
3. Did I treat others with dignity
and respect?
4. Was I fair and just?
5. Was my community better
because I was in it? Was I
better because I was in my
community?

Thomas Shanks, S.J., Ph.D., Markkula Center for

*A DECISION-MAKING MODEL FOR
BUSINESS ETHICS REVISITED

1. Determine the facts

i. What are the relevant facts of the case?
ii. What facts are not known?
iii. Can I learn more about the situation?
iv. Do I know enough to make a decision?
*A DECISION-MAKING MODEL FOR
BUSINESS ETHICS REVISITED

2. Identify the ethical issues involved

i. Is there something wrong personally,
interpersonally, or socially?
ii. Is there conflict that could be damaging to people?
to animals or the environment? to institutions? to
society?
iii. Does the issue go deeper than legal or institutional
concerns? What does it do to people as persons who have
dignity, rights, and hopes for a better life together?
*A DECISION-MAKING MODEL FOR
BUSINESS ETHICS REVISITED

3. Identify stakeholders
i. What individuals and groups have an important
stake in the outcome? What is at stake for each?
ii. Do some have a greater stake because they
have a special need (e.g., those who are poor or
excluded) or because we have special obligations
to them?
iii. Are there other important stakeholders in addition
to those directly involved?
*A DECISION-MAKING MODEL FOR
BUSINESS ETHICS REVISITED

4. Consider the available alternatives

i. Present at least three alternative courses
of action (ACAs)
*A DECISION-MAKING MODEL FOR
BUSINESS ETHICS REVISITED
5. Consider how a decision affects stakeholders
a. Consequences
i. Which option will produce the most good and do the least harm?
b. Duties, rights, principles
i. What does the law say?
ii. Are there professional duties involved?
iii. Which principles are most obligatory?
iv. How are people being treated?
c. Justice and Fairness
a. Will the stakeholders be treated fairly?
*A DECISION-MAKING MODEL FOR
BUSINESS ETHICS REVISITED
5. Consider how a decision affects stakeholders
d. Ethics of Care
i. Am I exhibiting proper care to those I am in relationships
with?

e. Implications for personal integrity and

character
i. What type of person am I becoming through this decision?
ii. What are my own principles and purposes?
iii. Can I live with public disclosure of this decision?
* A DECISION-MAKING MODEL FOR
BUSINESS ETHICS REVISITED
6. Make a Decision
* A DECISION-MAKING MODEL FOR
BUSINESS ETHICS REVISITED

7. Monitor and Learn from the Outcomes

i. How can my decision be implemented with
the greatest care and attention to the
concerns of all stakeholders?
ii. How did my decision turn out and what
have I learned from this specific situation?
Ethical Dilema
§ In Dostoyevsky's novel Crime and Punishment the main character plots and
carries out the murder of an old woman who has a considerable amount of
money in her apartment. After killing her, he steals the money. He argues
that 1) she is a malicious old woman, petty, cantankerous and scheming,
useless to herself and to society (which happens to be true), and her life
causes no happiness to herself or to others; and 2) her money if found after
her death would only fall into the hands of chisellers anyway. Whereas he
would use it for his education. Is this action justified?

1-70
Ethical Dilema
§ It is 1923 and the sheriff in a Central Florida town is protecting a a suspect
of a violent crime against an angry mob who wish to capture him. If the mob
is frustrated, many buildings may be destroyed and people may be killed in
the ensuing riot. Should the sheriff deliver the individual to the mob?
(Please note, this is based on actual events in Rosewood Florida, January
1st, 1923).

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