Pluralist test: A situation should be looked at from many different perspectives.!

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1 Lecture 1: Ethical decision-making Differences between legal and ethical decisions Normative ethics: the area of philosophy that is concerned with standards for right conduct and moral evaluation. What we ought to do Normative ethical theories: give an account of right action and try to give some idea of what makes that action right. An ethical dilemma is a problem that arises when a reason to act in a certain way is offset by a reason not to act that way. Pluralist test: A situation should be looked at from many different perspectives. Normative Ethical Theories Teleogical (outcome based) Focus is on the consequences (outcome) of a decision Egoism, utilitarianism Deontological (duty based) Rightness of an action does not depend on its consequences but on the nature of the action itself. Kantian ethics Virtue Ethics (character-based) Virtues is the central focus moral conduct is something that emanates from a person s virtues. Ethical Egoism A theory that justifies action in terms of the agent s self interest The normative view that holds that all action ought to be motivated by self interest Therefore, a consequentialist theory A criticism of egoism: it seems to be counterintuitive as a moral theory Utilitarianism A theory that holds that we ought to do what has the best consequences A consequentialist theory Unlike egoism, utilitarianism counts the well-being of all persons According to Bentham, the morally right action was the action which produced the best balance of happiness over unhappiness for all concerned (the total outcome). o Choose the action that generates the most happiness o Intensity: the strength of happiness o Duration: the length of time happiness lasts o Certainty: the probability of happiness resulting o Extent: the number of people affected o Closeness: is the pleasure now or later in time? o Richness: will the act lead to further pleasure? o Purity: is it all pleasure, or mixed w`ith some pain? A criticism: the rights of a minority group can be easily sacrificed for the benefit of the majority. Kantian ethics

2 A deontological approach to ethics where actions are morally right or wrong, independent of their consequences. Moral rightness does not depend on how much good is produced, it focuses on one s duty to do what is morally right and to avoid what is morally wrong, regardless of the consequences. Immanuel Kant According to Kant, whether a contemplated course of action is morally permissible will depend on whether or not it conforms to what he terms the moral law, the categorical imperative. > Formulation One: Universal acceptability Act only according to that maxim whereby you can at the same time will that it should become a universal law > Formulation Two: Respect Act in such a way that you treat humanity, whether in your own person or in the person of another, always at the same time as an end and never simply as a means. Virtue Ethics The cultivation of a virtuous character is seen as morality s primary function. Virtues are the means ; they are a set of personal characteristics that will ensure that the individual is likely to make the right choice in any ethically complex situation (Fischer). Aristotle Aristotle s four key virtues: wisdom, courage, self-control, and justice. > Virtuous qualities Liberality (the virtuous attitude towards money) Patience (the virtuous response to minor provocation) Amiability (the virtue of personal persona) Truthfulness Indifference (in relation to the seeking of public recognition of achievement) Self-control (knowing when and where to enjoy oneself) Courage Magnificence (knowing when to spend, how much and on what) Wittiness

3 Kohlberg s theory of moral development Influences a person s answer to ethical dilemmas Cognitive moral reasoning and development, in which he mapped out various stages in which individuals pass through on their way to moral maturity.

4 Lecture 2: Corporate Social Responsibility and Corporate Governance Company: An artificial entity recognised by the law as a legal person with its own rights and liabilities (or corporation). > Two characteristics Limited liability: The shareholders of the company are liable only to the extent of any amounts unpaid on their shares in the winding up of the company. Any creditors who are still owed money cannot claim from the shareholders personal assets. Separate legal entity: The company is legally a different person to the shareholders, the people who control the company (directors) and the employees. o A company has the legal powers of a natural person eg. own property, can enter into contracts, the right to sue other parties etc. Companies make moral decisions through corporate social responsibility. Corporate governance The system by which business corporations are directed and controlled. The importance of those people running the corporations to run them properly and to make the right decisions. Directors of a company using company resources to benefit themselves, often involves fraud. The corporate governance structure specifies the distribution of rights and responsibilities among the different participants in the organisation and lays down the rules and procedures for decision making. ASX Principles of Corporate Governance (CG model) 1. Lay solid foundations for management and oversight 2. Structure the board to add value 3. Promote ethical and responsible decision making 4. Safeguard security in financial reporting 5. Make timely and balanced disclosure 6. Respect the rights of shareholders 7. Recognise and manage risk 8. Renumerate fairly and responsibly > General model ideas 1. Controlling and directing the directors Focus on ensuring that directors make appropriate decisions, they don t act in their own interests to benefit themselves against the interest of shareholders and other stakeholders. 2. Role of shareholders and other stakeholders Focus on ensuring that shareholders can protect their interests in the company. 3. Transparency and accountability Focus on ensuring that stakeholders are informed about the activities of the company and its management. Companies must detail whether they comply with each principle, and if not, explain why. In a well-governed company: The risks of fraud and corporate collapses are reduced It can increase the creation of wealth by improving the performance of honestly managed and financially sound companies

5 > Corporate failure Indicators: Deficiencies in the audit process Independence of the audit committee Lack of independent directors so that the board was dominated by the founders of the company Corporate Social Responsibility The voluntary assumption of responsibilities that go beyond the purely economic and legal responsibilities of business firms. Companies are motivated to engage in CSR to: Improve public relations and market share Due to pressure to change bad behaviour by the public, rather than demonstrating a genuine commitment to change > Rival reviews Narrow profit maximisation: (Freidman) Corporations are seen as essentially a private activity for the purpose and benefit of those private citizens who own them (shareholders); therefore, Friedman argued that business has no social responsibilities other than to maximise profits. Broad view social purpose: (Freeman) Corporations have other responsibilities in addition to making profits responsibilities to other stakeholders that affect or are affected by its behaviour eg. consumers, employees, suppliers, communities. Types of CSR Actions (Garriga) 1. Instrumental approach 2. Apolitical approach (Political theories) 3. Integrative approach 4. Ethical approach 1. Instrumental approach CSR is seen as a strategic tool to achieve economic objectives & ultimately wealth creation. Instrumental theories: a. Maximisation of shareholder value, measured by share price Main criterion to evaluate specific corporate social activity If social demands impose a cost on the company they should be rejected b. Strategies for achieving competitive advantages which would produce long term profits How to allocate resources to achieve long term social objectives and create a competitive advantage c. Cause-related marketing Where business makes contributions to a charity/social cause based on sales of products To enhance company revenues and sales or customer relationship by building the brand through the association with the social responsibility/ethical dimension 2. Political theories Focuses on interactions and connections between business and society and on the power and position of business and its inherent responsibility. a. Corporate Constitutionalism The role of power that business has in society and the social impact of this power