Business & Social Responsibilities. Ethics and Business

Transcription

1 Business & Social Responsibilities Ethics and Business 1

2 About Myself Nattawoot Krongkajonsook Homepage : Mobile: Office: Department of Finance, 4 th Floor of Faculty of Business Administration, Kasetsart University Tel: Ext. 356 Office Hours: Monday and Wednesday น น. 2

3 New Scheme of Assessment Attendance 10% Project 30% Report 20% Presentation 10% Final Exam 60% T/F questions Short essay questions 3

4 Merch and Company The company attempted to develop a cure for River Blindness disease, which attacked Africa, from its animal drugs called Ivermectin. Question: Is this development worthwhile? It might be too costly. It might have bad business effects to the company After some considerations, the company decided to go ahead and successfully produced this cure called Mectizan. A lot of victims have been relieved from the cure and such ethical action benefits the company in long term. 4

5 Issues from M&C case Whether ethical actions are profitable? In the long run, perhaps! Unethical behaviors may cause problems to the company in long term. Loss of customers Dishonesty of employees Unfortunately, being ethical is always costly. Being ethical is not always rewarded. Not being ethical is not always punished. 5

6 Issues from M&C case (cont.) The company s manager faces a conflict. Whether such action is ethical to public? Whether such action is ethical to the company s shareholders? Which view is more reasonable? 6

7 Business Ethics and Its Issues Moral Ethics Business Ethics Applying Ethics to Corporate Organizations Globalization, Multinationals, and Business Ethics Business Ethics and Cultural Differences Technology and Business Ethics 7

8 Introduction Ethical is very subjective to a personal point of view. One definition: the principles of conduct governing an individual or a group Ethics is NOT the same as morality. Ethics is an investigation of morality. 8

9 Morality Definition: the standards that an individual has about what is right and wrong, or good and bad. These standards are absorbed in a person since his/her childhood via family, friends, social influences, etc. These standards can change as a person matures. A person may not always act according to what he/she believe to be morally right. 9

10 Morality (cont.) Non-moral standards VS moral standards People sometimes choose to follow non moral standards (e.g. standards of the law, language, etiquette, aesthetics, athletics standards etc.) instead of the moral ones. Moral standards are (1) standards that deal with matters that we think are of serious consequence, are (2) based on good reasons and not on authority, (3) override self-interest, are (4) based on impartial considerations, and that are (5) associated with feelings of guilt and shame and with a special moral vocabulary 10

11 Ethics Definition: the discipline that examines one s moral standards or the moral standards of a society. Ethics asks how moral standards can be applied in real life. A person starts to do ethics when he/she asks questions like What moral standards imply in such events? Whether it is reasonable to pursue moral course of actions? 11

12 Ethics (cont.) Ethics is a normative study. It aims to reach conclusions about what actions are right or wrong. Social science (e.g. anthropology, sociology, and psychology) is a descriptive study. An investigation that attempts to describe or explain the world without reaching any conclusions about whether the world is as it should be. 12

13 Business Ethics Members of a society achieve common ends by establishing the relatively fixed patterns of activity called Institutions (e.g. family, economy, politics, educations) Economic institutions has 2 ends that are to produce and to distribute good and services. Business organizations are the primary economic institutions that: provide the fundamental structures in production processes (e.g. land, labor, capital, and technology). Provide the channels in distribution processes (e.g. in the form of consumer products, salaries, return, taxes). 13

14 Business Ethics (cont.) Corporations are the most significant kinds of modern business organizations Organizations that the law endows with special legal rights and powers Characteristics of modern corporations: Are immortal fictitious persons, Have the right to sue and to be sued, Own and sell property and enter into contracts, All in their own name Modern corporations consist of (1) stockholdrs, (2) directors and officers, and (3) employees. 14

15 Business Ethics (cont.) Business ethics is a study of moral standards and how these apply to the social systems and organizations through which modern societies produce and distribute goods and services and to the behaviors of the people who work within these organizations 15

16 Issues That Business Ethics Investigates Systematic: Ethical questions raised about the economic, political, legal, and other social systems or institutions within which businesses operate. E.g. morality of capitalism, or of the laws, regulations, industrial structures, and social practices. Solutions for dealing with this issue might involve many different social groups. 16

17 Issues That Business Ethics Investigates (cont.) Corporate: Ethical questions raised about a particular organization. E.g. morality of the activities, policies, practices, or organizational structure of an individual company taken as a whole. Corporate ethical issues can be solved only through corporate or company solutions. This might involve a lot of individuals that constitute the company. 17

18 Issues That Business Ethics Investigates (cont.) Individual: Ethical questions raised about a particular individual or particular individuals within a company and their behaviors and decisions. Morality of the decisions, actions, or character of an individual. Individual ethical issues need to be solved through individual decisions and, perhaps, individual reform. 18

19 Applying Ethics to Corporate Organizations Question: can we really say that the acts of organizations are moral or immoral in the same sense that the actions of human individuals are? No, because organizations are fictitious persons. Yes, being fictitious or not does not matter, they are still persons according to the law. 19

20 Applying Ethics to Corporate Organizations (cont.) The book s view: Corporate organizations and their acts depend on a qualified group of individuals. It is these individuals who must be seen as the primary bearers of moral duties and moral responsibilities. Corporate organizations have moral duties and are morally responsible in a secondary sense. A corporation is morally responsible for something only if some of its members are morally responsible for what happened. 20

21 Globalization, Multinationals, and Business Ethics Globalization: worldwide process by which the economic and social systems of nations have become connected together so that goods, services, capital, knowledge, and cultural artifacts are traded and moved across national borders at an increasing rate. Multinational corporation is the heart of this process. 21

22 Globalization, Multinationals, and Business Ethics (cont.) Globalization brings economic benefits. Jobs, skills, income, and technology are brought to underdeveloped regions. Allow nations to export and produce goods and services that they can produce efficiently, and trade for goods that they are not skilled at producing. Threats associated with globalization: Income gap between countries is widened. Quick shift of operations from one country to another might be problematic. Multinationals transfer technologies or product into developing countries that are not ready to exploit them Multinationals may not act according to norms set by the country they are operating at. 22

23 Business Ethics and Cultural Differences Ethical relativism When in Rome, do as the Romans do. Criticisms on ethical relativism There must be some moral standards that any society must accept to survive. Philosophers point out that when two people have different beliefs, at least one view is wrong. If ethical relativism were correct, it would make no sense to criticize the practieces of our own or other societies so long as such practices conformed to our own or their own standards. 23

24 Technology and Business Ethics Several major changes of technologies: Agricultural Revolution Farming technologies Surplus of foods grows trade, commerce, and the first businesses. Industrial Revolution Electromechanical machines powered by fossil fuels Results in a birth of large corporations Ethical issues: possibilities of exploiting the workers, manipulating financial markets, and producing damage to the environment. 24

25 Technology and Business Ethics (cont.) Several major changes of technologies: Revolutions in biotechnology called Information Technology Ethical issues: privacy, right to property Nanotechnology: a new field that encompasses the development of tiny artificial structures only nanometers Ethical issues: nanoparticles could be harmful to humans Biotechnology especially genetic engineering Ethical issues: copyright, hazards from engineered species to natural species. 25

26 Moral Development Kohlberg s theory Preconventional level: right and wrong are defined in terms of avoiding punishment and doing what powerful authority figures say. Justifications are persuasive only to the person. Conventional level: right and wrong are defined in terms of the conventional norms of their social groups or the laws of their nation or society. Justifications are persuasive only to the group to which the person belongs. Postconventional level: right and wrong are defined in terms of moral principles they have chosen for themselves as more reasonable and adequate. Justifications can appeal to any reasonable person. 26

27 Moral Development (cont.) Males tend to deal with moral issues in terms of impersonal, impartial, and abstract moral rules, whilst females are concerned with sustaining relationships between themselves and those they care. Gilligan s female approach Preconventional level: caring only for herself Conventional level: caring for others, and sometimes neglecting themselves Postconventional level: a balance between caring for others and caring for oneself 27

28 Moral Development (cont.) Ethics begins when one move from the earlier stages to the higher stages The latter stages of moral development are better not because they come at a later stage, but because moral principles are supported by better and stronger reasons. 28

29 Moral Reasoning Definition: the reasoning process by which human behaviors, institutions, or policies are judged to be in accordance with or in violation of moral standards Components of moral reasoning Understanding of what moral standards require, prohibit, value, or condemn Evidence or information to support the decisions 29

30 Moral Reasoning (cont.) Figure 1.1: 3 components of moral reasoning Moral standards: a society is unjust if it does not treat minorities equal to whites. Fact: In American society, 41% of Negroes fall below the poverty line as compared with 12% of Whites. Moral judgment: American society is unjust. Unfortunately, moral standards are often not made explicit because they are generally presumed to be obvious. 30

31 Analyzing Moral Reasoning Moral reasoning is adequate when it is logical, and the arguments can be displayed and subject to criticisms, the factual evidence must be accurate, relevant, and complete, and the moral standards involved in a person s moral reasoning must be consistent. Example: I believe that (1) it is wrong to disobey my boss, and (2) it is wrong to kill others My boss orders me to kill one of his enemies. Inconsistency arises, so my moral standards must be modified. 31

32 Arguments Against Business Ethics In a free market economy, the pursuit of profit will ensure maximum social benefit. Are industrial markets really perfectly competitive? Several ways of maximizing profits really injure society. A manager s most important obligation is to the company. this moral standard is acceptable? There are limits to the manager s duties (laws). Business ethics is limited to obeying the law Unethical = illegal? 32

33 Arguments For Business Ethics Ethics applies to all human activities. Business cannot survive without ethics. Think about a situation when all business parties are dishonest to each other. Ethics is consistent with profit seeking. Take MC case for an example Customers and employees care about ethics. Prisoner s dilemma 33

34 Prisoner s Dilemma B Confess Don t Confess A Confess 2 3 Don t Confess

35 Prisoner s Dilemma (cont.) To follow or not to follow the rules of ethics situations create prisoner s dilemma incentives not to cooperate or not to be ethical. But this example is based on one night stand relationship However, business interactions with other parties are repetitive and on-going. Cooperation or being ethical seems to be a rational choice in the long run 35

36 Moral Responsibility and Blame A person is to be blamed for his/her immoral acts when He/she caused or helped cause it, or failed to prevent it when he/she could and should have; and You could save starving people s life by donating. But if you don t, you wouldn t be held responsible. He/she did so knowing what he/she was doing; and Deliberately staying ignorant to escape responsibility is an exception. A person may be ignorant of either the relevant facts or the relevant moral standards. 36

37 Moral Responsibility and Blame (cont.) He/she did so of his/her own free will. Acts deliberately or purposefully Not the result of some uncontrollable mental impulse or external force the absence of any of these will completely eliminate a person s responsibility for an injury. 37

38 Moral Responsibility and Blame (cont.) A person s responsibility can be lessened in circumstances that Minimize but do not completely remove a person s involvement; and Leave a person uncertain but not altogether unsure about what he or she is doing; and Make it difficult but not impossible for the person to avoid doing it. How much a person s responsibility can be lessened depends on the seriousness of the wrong. 38

39 Corporate Responsibility Situations in which a person needs the actions of others to bring about a wrongful corporate act are no different in principle from situations in which a person needs certain external circumstances to commit a wrong. Guns don t kill people, people kill people. Not just the corporate group but also individuals who knowingly and freely joins his actions together with those of others, intending thereby to bring about a certain corporate act, will be morally responsible for that act. Mitigating factors can also be applied in this case. 39

40 Subordinates Responsibility Subordinates have no obligation to obey an order to do what is immoral. When a superior orders an employee to carry out an act that both of them know is wrong, then the employee is morally responsible The superior is also morally responsible because the superior is knowingly and freely bringing about the wrongful act through the instrumentality of the employee. Pressures from the superior can lessen the employee s responsibility, but they do not totally eliminate it. 40

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