Slides on Ethics

7/21/2019 Slides on Ethics

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BL252/BU9302:

Ethics and SocialRes onsibilit in the

Harry SK TanAssoc Prof, NanyangBusiness School

© Copyright Reserved, 2012

Information Age

Seminar Objectives

1. Define business ethics and their relationship topersonal ethics.

2. Explain the relationship between the law andethics.

-

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.utilitarian ethics.

4. Discuss the questions that are typicallyconsidered in the ethical decision-makingprocess.

5. Identify the various groups to whomcorporations are perceived to owe duties.

The Nature Of Business Ethics

• Ethics can be defined as the study of whatconstitutes right or wrong behavior.

• Business ethics focuses on how moral and ethicalprinciples are applied in the business context.

• The law reflects society’s convictions on what

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constitutes right or wrong behavior.

– The law has its limits, though, and some actions may belegal yet not be ethical.

• “Exercising your rights vs.Doing the right thing”



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What is Ethics?

Ethics gives us standards of behavior thattell us what human beings ought to do inthe many situations in which we findourselves – as friends, parents, children,

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citizens, businesspeople, teachers,professionals, and so on.

What is NOT Ethics?

• Ethics is not our feelings.

• Ethics is not religion.

• Ethics is not law.

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norms.

Identifying Ethical Standards

• Two fundamental questions that we face inidentifying the ethical standards we are tofollow:

• On what do we base our ethical

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standards?

• How do these standards get applied tospecific situations that we face?



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Sources of Ethical Standards

Duty-based ethics:

• Ethics based onreligious beliefs andphilosophicalreasoning, such as

Outcome-based ethics:

• Ethics based onphilosophical reasoning,such as that of JohnStuart Mill.

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that of ImmanuelKant.

• Example: TenCommandments

• Example: utilitarianism

Immanuel Kant

• Kant maintained that each of us has a worth or a dignitythat must be respected. This dignity makes it wrong forothers to abuse us or to use us against our will.

• Kant expressed this idea in a moral principle: humanitymust alwa s be treated as an end not merel as a

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means.

• To treat a person as a mere means is to use a person toadvance one's own interest. But to treat a person as anend is to respect that person's dignity by allowing eachthe freedom to choose for himself or herself.

Six different sources of ethical standards

1. The Rights Approach - ethical action is the one whichbest protects and respects the moral rights of thoseaffected.

2. The Fairness or Justice Approach: treat all humanbeings equally – or if unequally, then fairly based on some

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nequa y a s e ens e.

3. The Utilitarian Approach: the greatest good for thegreatest number, or produces the most good or does theleast harm.

"the good of the many outweighs the good of the few,or the one"Spock – Star Trek - The Wrath of Khan



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Six different sources of ethical standards

4. The Common Good Approach: every society needs “common conditions” which are important to the goodnessof everyone. This may be a system of laws, effective policeand fire departments, guaranteed health care, a publiceducational system, or even public recreational areas.

5. The Virtue Approach:virtues are dispositions and

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character traits that enable us to be and to act with ourhighest potential, traits that are commonly admired bysociety. Honesty, courage, compassion, generosity,fidelity, integrity, fairness, self-control, and prudence areall examples of virtues.

6. The Compassion Approach: relationships are the basis ofall human society and that compassion and concern forothers – especially the vulnerable -- are essential torelationships and to the functioning of society.

Selling Banned Drugs Overseas

• U.S. drug laws are among the toughest in the world.Therefore, companies with products banned fromsale in the U.S. will naturally look elsewhere forpotential customers—particularly in developingcountries that do not have such extensive restrictionson consumer products.

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• Is it unethical of U.S. companies to sell banned drugsoverseas?

• Would your answer be different if the drugssignificantly benefited the health of consumers inoverseas markets?

Obstacles To Ethical Business Behavior

The corporate structure:

• Collective decisionmaking tends to deterindividual ethicalassertiveness.

The Management:

• Uncertainty on the part ofemployees as to whatkind of behavior isexpected of them makes

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• The corporate structuretends to shieldcorporate actors frompersonal responsibilityand accountability.

cu or em obehave ethically.

• Unethical conduct bymanagement showsemployees that ethicalbehavior is not a priority.



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The Corporate Balancing Act

• Today’s corporate decision

makers must balanceprofitability against ethicalresponsibility when makingtheir decisions.

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• Instead of maximum profits,corporations increasingly aimfor optimum profits—profitsthat can be realized by the firmwhile pursuing actions that arenot only legal and profitablebut also ethical.

Corporate Social Responsibility

• Corporate social responsibility rests onthe assumption that corporations shouldconduct their affairs in a sociallyresponsible manner

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• But there is disagreement as to whatconstitutes socially responsible behavior

Corporate Social Responsibility

Corporations are perceived to hold duties to thefollowing groups, duties that often come intoconflict:

ConsumersConsumers

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EmployeesEmployees CommunityCommunity

SocietySociety



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Measuring CorporateSocial Responsibility

• It is difficult to measure corporate social

responsibility because different yardsticks areused.

• Traditionally, corporate philanthropy has beenused as a means of measurin cor orate social

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responsibility.

• Increasingly, corporate process, or how acorporation conducts its business on a day-to-daybasis, is a key factor in determining whether acorporation is socially responsible.

Duty to Shareholders

• Because the shareholders are theowners of the corporation, directors andofficers have a duty to act in theshareholders’ interest (sometimes

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understood as maximize profits).

• This is a LEGAL DUTY

Duty to Employees

• Employers have numerous legal duties toemployees, including providing employees with asafe workplace and refraining from discriminatingagainst employees on the basis of race, color,national origin, gender, religion, age, ordisability.

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• These duties often come into conflict.

• Many believe that employers hold ethical dutiesto their employees that go beyond thoseprescribed by law.



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Duty to Consumers

• Corporate directors and officers have a legal

duty to the users of their products – productliability.

• Most feel that corporations also have an

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requires.

• Controversy exists over the point at whichcorporate responsibility for consumer safetyends and consumer responsibility begins.

Duty to Society

• Most people hold that a corporation has a duty tosociety in general, but they differ in their ideas onhow corporations can best fulfill this duty.

• One view is that corporations serve society’s needsmost effectively by maximizing profits because

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welfare.

• Another view holds that corporations, because theycontrol so much of the country’s wealth and power,should use their own wealth and power in sociallybeneficial ways and not engage in actions thatsociety deems unethical.

Ethical Responsibilities of Firms

• Do firms have a duty to prevent criminal misuses oftheir products?

• In a recent Colorado case, a man bought a cupful ofgasoline at a gas station, threw it on a woman, andset her on fire. The woman argued that the gasstation was negligent for selling him the gasoline.

• The Colorado Appellate Court stated that knowing acustomer buying gasoline was going to intentionallythrow it on a victim and set the victim on fire was notreasonably foreseeable.



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Duty to the Community

• Most people believe a corporation has aduty to the community in which itoperates.

• The corporation should consider the

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needs of the community when makingdecisions that substantially affect thewelfare of the community.

Ethics In The Global Context

Despite the cultural andreligious differencesamong nations, the

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most important ethicalprecepts are common tovirtually all countries.

Ethics In The Global Context

• Engaging in an international business deal canrequire different cultural courtesies

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conflicts between foreign businesspersons?



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Ethics in the Global Context

• Two notable differences relate to:

– The role of women in society.

– The practice of giving side payments toforeign officials to secure favorable

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.

T e Ever-C angingEthical Landscape

What is considered ethical in societymay change over time as social customschange and new developments alter oursocial and business environment.

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Framework forthinking Ethically



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Framework for Thinking Ethically

• Recognize an ethical issue.• Get the facts.

• Evaluate alternative actions from various

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.

• Make a decision.

• Act, then reflect on the decision later.

Recognize an ethical issue

1. Is there something wrong personally,interpersonally, or socially? Could theconflict, the situation or the decision bedamaging to people or to the community?

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2. Does the issue go deeper than legal or

institutional concerns? What does it do topeople as persons who have dignity, rights,and hopes for a better life together?

Get the facts

3. What are the relevant facts of the case?

4. What individuals and groups have an importantstake in the outcome? Do some have a greaterstake because they have a special need or because

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5. What are the options for acting? Have all therelevant persons and groups been consulted? Ifyou showed your list of options to someone yourespect, what would that person say?



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Evaluate alternative actions

6. Which option will produce the most good and dothe least harm?

7. Which option is fair to all the stakeholders? Even ifnot everyone gets all they want, will everyone’s

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8. Which option would help all participate more fullyin the life we share as a family, community,society?

9. Would you want to become the sort of person whoacts this way?

Make a decision

10. Considering these perspectives, which ofthe options is the right or best thing to do?

11. If you told someone you respect why youchose this o tion what would that erson

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say?

Act, then reflect

12. How did it turn out for all concerned? Ifyou have to do it over again, what wouldyou do differently?

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For Review

1. What are ethics? What are business ethics?

2. What are some sources of ethical standards?

3. What questions are considered in ethicalbusiness decision making?

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.duties? Why do these duties sometimes comeinto conflict?

5. What is the difference between maximumprofits and optimum profits?

Hypothetical Retail Case

A hypothetical case

• In the atomic world, many of us go to stores, makeour purchases and go home to make use of orenjoy the products. Let us imagine that:

• A store owner - took our photograph once weentered the store, arranged the photographs in a

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,other vendors

• Told an employee to place a homing device on yourcar, and copy down the license plate number

• Assume that the homing device is tied to software thatprovides a track of everyplace the your car visits so thatwhen you return to the store, the owner already knows yourreligion, many of your friends and other stores you visited.



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A hypothetical case

• Suppose that the store owner kept a file of yourtravels and sold the information to othervendors that call use the data for theirtelemarketing campaigns

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travel files to private detectives who were hiredby attorneys representing your spouse in adivorce proceeding.

A hypothetical case

• Suppose when you return home your discoverthat - there are additional contract terms thatapply to your purchase of the product:

• If you do not make every purchase on time,the store owner is entitled to ush a button

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and the product stops functioning

• There is a clause in the contract whichentitles the store owner to disable yourproduct if you criticize their product to thepress or Consumer Reports

A hypothetical case

• Suppose that using your license plate, the storeowner was able to get your NRIC number

– With your NRIC the vendor could run a creditcheck on you

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– ,your cell phone number

– Suppose that every time you wanted to usethe cell phone, you had to listen to acommercial from the store owner



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Reality of Online Purchases

• Are these activities illegal?

• If not, are they unethical?

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– ,described are illegal and most wouldagree these acts ought to be illegal

–Basically all of these acts in modifiedform take place everyday on theInternet


• In order to become “members”, many web sitesrequire visitors to register by revealing all kindsof information

– Sometimes games and contests are used forthat ur ose also

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– In order to find out what happens thatinformation, you have to dig deep into theweb site’s Privacy Statement

• A number of firms have been prosecutedfor lying in their Privacy Statements


• Cookies are exactly analogous to homingdevices on cars

– Web site are very interested in identifying “target” markets, which they can do with

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– Cookies reveal clickstreams of browsers inbetween visits

– There is other software, sometimes calledSpyware, that reports to vendors, uses madeof the software, unknown to the user



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• The terms of online sales contracts are not

apparent to buyers when they offer their creditcard to pay for the goods

– Clickwrap, shrinkwrap, and boxtop licenses arenow common place

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– Unless you object and return the goods withinthe time frame required in X-wrap “agreement”,you are bound by those terms

– Common terms include forum selection clauses,arbitration agreements, restrictions on use

– There are vendors who have authority, via theX-wrap license, to disable software purchased(really, licensed) by customers


• The government, at various levels, keeps allkinds of files and information that is accessiblefor many questionable purposes

– Criminal records are now available online

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– he FBI has developed something calledCarnivore, that can process millions of emails

transmitted by ISPs – The govt. continues to maintain huge files on

health care


• Computerized healthcare files continue toproliferate

– In order to be treated, patients must divulgetheir healthcare records

• When they divulge that information they do

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no c ec o see w e er e oc or anHMO

–Reserve the right to sell that informationof others including: Vendors of MedicalProducts, Employers, and MedicalResearchers, Law Enforcement

• Genetic tracking is already here and willbecome more prevalent



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Legal and Ethical Issues

• Does a web site have an ethical obligation to

obtain consent before attaching a cookie to aweb browser?

– Does a web site have an ethical obligation tohave a rivac olic ?

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– What about sales of clickstream informationand the results of registration in games andcontests to third parties?

Legal and Ethical Issues

• What about targeting groups whose sophisticationlevels are known to be low?

– Elderly, children, disabled, unemployed?

• What about web sites that have Privacy Policies,

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u reserve e r g o c ange

– What if the customer or member claims that

information about them in a file is incorrect?• Do members have a right to be informed a

file is being kept about them?

• Do members have a right to examine files foraccuracy?

Future Legal and Ethical Issues

– Computerized medical databases will havegenetic information

• Should that information be marketable?

• Doesn’t it enhance medical treatment

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– Global Positioning Devices (GPDs)

• With cell phones and GPDs in cars, someonewill know where you are virtually all the time

• Already GPD’s are being used in divorce cases

• Should that data be available for criminalprosecutions?



Future Legal and Ethical Issues

• Next time you watch an action thriller and thegood guys use mobile computers to track downthe bad guys, that you could be the target ofthese probes

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records?

– Who should have access to your educationalrecords?

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