The False Choice Between Business And Ethics By Freeman & Parmar At the undergraduate-level university experience, there have been few activities that can be more
beneficial to reading and individual reflection to determine student success. It is so important that
you keep up with readings and employ strong reading skills. At two points within the course, you
will be expected to pair a reading with a relevant example in the mass media and connect this to
what you have learned about a theory, subject/topic discussed in the course. Each writing reflection
should be written in a personal journal style and posted to the discussion forum on Brightspace. It
should include hyperlinks to the article you are reflecting on and a proper APA reference to the
chapter in the text that you are referencing. These articles should not exceed approximately 500 words. The goal of this exercise will be to ensure you are getting the most from your reading and
for you to begin appreciating the media while thinking critically about current issues and events. The relationship between
business and society
Chapter 1
MGMT 3480
Nicholous Deal, MBA
Outline
• Complexity of business and society
• Integrity in business
• Main approaches to ethical thinking
• The Canadian business system
• The corporation and the business system
• Society’s permission for business
• Society’s attitudes toward business
Complexity of business and society
• Ethical implications are present in all facets of life, and
business and society is no exception.
• Canadian society comprises many institutions and
groups that interact, including: governments, labour
unions, minority groups, environmentalists, consumers,
media, business, and a variety of interest groups or
non-governmental organizations.
• Important to consider all viewpoints that contribute to
what business’s role will/should be in society.
Integrity in business
• In the business environment, integrity refers to the
appropriateness of a corporation’s behaviour and
its adherence to moral guidelines acceptable to
society such as honesty, fairness, and justice.
• ‘Integrity’ is the same as acting ethically, but without
the negative connotation or moralizing tone.
• ‘Business ethics’ = The ethics that apply to business
practice.
Say/Think
Integrity
Believe/Feel
Do/Act
Integrity in business: key terminology
Ethics of business: The rules, standards, codes, or principles
that provide guidance for morally appropriate behaviour in
managerial decision making…
Stakeholder: An individual or group who can influence and/or is
influenced by the achievement of an organization’s purpose.
Corporate social responsibility (CSR): Way a corporation
achieves a balance among its economic, social, and
environmental responsibilities.
Integrity in business: key terminology
Corporate sustainability (CS): Corporate activities
demonstrating the inclusion of social and environmental as well
as economic responsibilities in business operations as they
impact all stakeholders to ensure long-term survival of the
corporation.
Triple-bottom line: Evaluation of a corporation’s performance
based on economic, social or ethic, and environmental value (3P
= people, planet, profits).
Corporate citizenship: Corporation that takes into account its
role in and impact on society and environment.
“Integrity is doing the
right thing, even when
no one is watching,”
– C.S. Lewis
Main approaches to ethical thinking
• Many decisions are made ‘automatically’ without thinking yet
we must consider ethical decision making in terms of
cultures, religions, and country-of-origin (to name a few
examples).
A bat and ball together cost $1.10. The bat costs $1 more than
the ball. How much does the ball cost?
a.
b.
c.
d.
e.
$0.05
$0.10
$1.00
$1.10
$0.55
The Canadian business system
• Canadian business system produces,
markets, distributes, and exchanges
goods and services to satisfy society’s
needs and wants (economic argument).
• Majority of goods and services
demanded by Canadians are provided by
a private-sector economic system;
many changes over time from a relatively
“free” system to one where government
involvement is highly regarded.
• Business system is founded on principles
of individualism, economic freedom, right
to private property and importance of
competition = capitalism.
The corporation and the business system
• Canadian business system comprises:
– Sole proprietorships
– Partnerships
– Incorporated entities
• Few legal requirements to establish a
business
• Two doctrines of incorporation
– Concession doctrine: incorporation was
conferred by public act and could not be made
by private agreements among several persons
to associate together for business purposes.
– Freedom of association: The association of
individuals coming together for some purpose is
fundamental to forming a corporation.
Society’s permission for business
•
The business system, and corporations, do not function in isolation
to society, and must receive some form of permission to operate.
– Legitimacy: is the belief in the rightness of an institution, in this
case the appropriateness of our business system to supply the
goods and services wanted by Canadian society.
– Social license: is the privilege of operating in society with
minimal formalized restrictions – that is, legislation, regulation,
or market requirements – based on maintaining public trust by
doing what is acceptable to stakeholders in the business and
society relationship.
Society’s attitudes toward business
• Factors influencing attitudes toward business:
–
–
–
–
–
–
–
–
–
–
–
–
Standard of living
Decentralized decision making
Allocation of resources
Self-interest
Inequities in society
Business cycle
Business wrongdoing
Globalization
Unemployment
Innovation
The media
Government(s)
Case prelude: Business and academic integrity
• The integrity of future business entrepreneurs, managers, and
employees must also be examined while they are in academic
programs.
• A Maclean’s article provides some statistics that are of concern:
– 53% of students admit to cheating in written assignments;
– 56% of business students admit to cheating;
– 44% of professors said they didn’t report students caught cheating
• At issue here is whether the lack of academic integrity will have an
influence on business integrity. Thoughts?
• Faking the grade: https://www.youtube.com/watch?v=LZVxi5FmUKY
Group case
Ethics of business:
virtue ethics and giving voice to values
Chapter 5.2
MGMT 3480
Nicholous Deal, MBA
Outline
• Virtue ethics and 3 basic questions
• Elements of virtues (character)
• The approach: giving voice to values
Virtue ethics: 3 basic questions
• “…virtues are acknowledged as human
qualities that allow individuals to act with
responsibility while procuring goodness to
one-self, to others, and to the environment”
(Davila-Gomez et al., 2010: 71).
• Virtue ethics are concerned with three
questions:
1. Who am I? (Identity)
2. Who am I called to become? (Character)
3. How do I get there? (Means)
The theoretical basis for ethical conduct
• Interest in virtue ethics dates at least as far back as ancient
philosophers such as Plato, Aristotle, and Confucius.
• The premise of virtue ethics is simple: Good people (those of high
moral character) make good moral choices.
• Virtues have 4 important points:
1. They are woven into the inner lives of individuals; they are
not easily developed or discarded but persist over time.
2. Virtues shape the way individuals see and behave.
3. Virtues operate independent of the situation or context
4. Virtues help individuals live better (more satisfying and
fulfilled) lives.
• Important virtues include: courage, temperance, wisdom,
optimism, integrity, and compassion.
1. Courage
“Of all the virtues, courage is no doubt the most universally admired.”
– Philosopher Andre Comte-Sponville
•
•
•
•
Courage is overcoming fear in order to do “the right thing.”
Move forward despite the risks and costs.
Must have courage to fulfill the two components of ethical
leadership:
– Acting morally.
– Exerting moral influence.
Also need for ‘courageous followership.’
Stunning New York Times op-ed: courageous?
2. Temperance
“To use things, therefore, and take pleasure in them as far as possible
– not, of course, to the point where we are disgusted with them, for
these is no pleasure in that – this is the part of a wise man.”
– Dutch Philosopher Baruch Spinoza
•
•
•
•
Ability to control emotions and pleasure.
Moderation is key to practicing temperance.
Knowing one’s limits and living within one’s means.
Unfortunately, many great leaders are intemperate; unable to control
their anger and rail at subordinates.
3. Wisdom and prudence
“…The goal of human life is to be good. Prudence
assists us in getting there.”
– Baldwin-Wallace College Professors Ala Kolp and Peter Rea
• Draws upon knowledge and experience to promote the common
good over the short and long term.
• Prudence is a form of wisdom that enables individuals to discern or
select the best course of action in a given situation.
• Prudent leaders keep in mind the long-term consequences of their
choices; as a result, they are cautious, trying not to overextend their
organizations or take unnecessary risks.
4. Optimism
“Hope is not the conviction that something will turn out well, but the
certainty that some thing makes sense, regardless of how it turns out.”
– Former Czech Republic President Vaclav Havel
• Optimists expect positive outcomes in the future even if they are
currently experiencing disappointments and difficulties.
• More confident than pessimists.
• Acknowledge the reality of situations and take steps for
improvement.
5. Integrity
“Integrity lies at the very heart of understanding
what ethical leadership is.”
– Business Professors Joseph Badaracco and Richard Ellsworth
• Integrity is defined as ‘wholeness’ or ‘completeness.’
• Leaders’ espoused values consistent with enacted values
(i.e. ‘walk the talk’); practice what is preached.
• Also honest in their dealings with others.
• Common ‘trust busters’ include: inconsistent messages and
behaviour, inconsistent rules and procedures, dishonesty, secrecy,
and unjust rewards.
6. Compassion
“All happiness in the world comes from serving others; all sorrow in the
world comes from acting selfishly.”
– Leadership expert Margaret Wheatley
• Compassion and related concepts such as concern, care, kindness,
generosity, and love all refer to an orientation that puts others
ahead of the self.
• Value others regardless of whether or not they get anything in
return.
• Ethical leaders recognize that they serve the purposes of the
group; they seek power and exercise influence on behalf of
followers.
The Giving voice to values approach
•
•
•
The Giving Voice to Values (GVV)
approach is designed to help
individuals learn to recognize,
clarify, speak and act on their
values when those conflicts arise.
The focus here is POST-decision
making.
It is NOT about deciding what the
‘right’ thing is; rather, it is about
how a manager/leader raises
these issues in an effective
manner; what he/she needs to do
and say in order to be heard; and
how to try to correct an existing
course of action when necessary.
The approach
• The GVV approach is presented as a thought experiment;
That is, it invites individuals to answer the questions:
• “What If I were to act on my values in a particular situation?”
• “What assumptions would make it easier for me to do so?”
• “What strategies and tactics would enable me to be more
effective?”
• The following assumptions are suggested as premises that can
empower us to be more likely to voice and enact our values
effectively.
• These 12 assumptions form the story line behind the GVV
approach to values-driven action.
12 assumptions
1. I want to do this (voice and act on my values).
2. I have done this (voice my values at some point in the past).
3. I can do this more and better (can voice my values more often
and more effectively).
4. It is easier for me to do this (voice my values) in some contexts
than others.
5. I am more likely to do this if I have practiced how to respond
to frequently encountered conflicts
6. My example is powerful.
7. Mastering and delivering responses to frequently-heard
rationalizations can empower others who share my views to
act, but I cannot assume I know who those individuals are.
12 assumptions
8. The better I know myself, the more I can prepare to play to my
strengths and be protected from my weaknesses.
9. I am not alone.
10. Although I may not always succeed, voicing and acting on my
values is worth doing.
11. Voicing my values leads to better decisions.
12. The more I believe it’s possible to voice and act on my values,
the more likely I will be to do this.
Group case
Ethics of business:
the theoretical basis
Chapter 5.3
MGMT 3480
Nicholous Deal, MBA
Outline
• The theoretical basis for ethical conduct
• Ethics in business: some challenges
The theoretical basis for ethical conduct
• Businesspeople incorporate morality into decision making, but
it is commonly based on value judgments and moral
standards.
– Formal ethics principles exist, but they are often describe in very
theoretical, abstract, and complex language (boring lecture!).
– Hosmer (1994) claims that it is no longer necessary to recognize
all the distinctions in ethical theories to be useful; instead, moral
problems should be defined as resulting in harms to some
and benefits to others… this introduces more realism (‘the real
world’ as I see it) in the business context.
• In theory, ethical principles are applied the same way in any
context.
– Not subjective measures, rather, objective statements.
The theoretical basis for ethical conduct
• To enable businesspeople to apply ethical principles, the
seven most cited principles of ethical analysis are described
as:
1. Self-interest
2. Personal virtues
3. Caring
4. Utilitarian benefits
5. Universal rules
6. Individual rights
7. Justice
Interactive group exercise
In groups of 6 or 7 people, analyze the following:
You are interviewing a candidate for a position in your company. During
the interview, the candidate volunteers a confidential document from
his/her present employer, a direct competitor of yours. What do you do?
Apply assigned ethical principle to your analysis and eventual decision.
Group 1: Self-interest (ethical egoism)
Group 2: Personal virtues ethic
Group 3: Ethic of caring
Group 4: Utilitarian ethic
Group 5: Universal rules ethic
Group 6: Individual rights ethic
Group 7: Ethic of justice
1. Self-interest ethic (ethical egoism)
• Individuals or corporations set their own standards for judging the
ethical implications of their actions; only the individual’s values and
standards are the basis for actions.
• Self-interest not necessarily the same as: selfishness, greed,
disregard for the rights and interests of others, hedonism, or
materialism.
• Example:
1. Baker bakes bread for profit.
2. Hungry consumer buys from baker.
3. Both have self-interest met and benefits from each other.
1. Self-interest ethic (ethical egoism)
Do ‘selfless’ good deeds exist?
2. Personal virtues ethics
• An individual’s or corporation’s behaviour is based upon being
a good person or corporate citizen with traits such as
courage, honesty, wisdom, temperance, and generosity.
• Ask: ‘How would I feel if my actions were explained on
television?’
– Also commonly referred to as the ‘TV test’ or ‘light of day
test.’
3. Ethics of caring
• Gives attention to specific individuals or stakeholders harmed
or disadvantaged and their particular circumstances.
– The advantage of this ethic is that it is responsive to immediate
suffering or harm.
– It allows for flexibility, enabling the manager to respond quickly to
changing circumstances, and precedents are not a concern.
• Golden rule: Do unto others as you would want done to
you.
4. Utilitarian ethics
• Focuses on the distribution of benefits and harms to all
stakeholders with the view to maximizing benefits
– ‘The greatest good for the greatest number.’
• While noble in theory, this particular ethic does not account for
what is ‘just.’
5. Universal rules ethic
• Ensures that managers or corporations have the same moral
obligations in morally similar situations.
• Treat people as means in themselves (i.e., with respect) and
never as a means to one’s own ends.
• Ethic indicates there should be rules and morals in society
that should be fair to everyone, that they should universally
apply, and that they should apply over time.
– Also referred to as ‘categorical imperative ethics’ – that is, it is
complete in itself without reference to any other ends.
– Manager acts only if he/she were willing to have the decision
become a universal law.
6. Individual rights ethic
• Relies on a list of agreed-upon rights for everyone that will be
upheld by everyone and that becomes the basis for deciding
what is right, just, or fair.
• Examples include the rights and responsibilities afforded in
the Canadian Charter of Rights and Freedoms, guarantees
against arbitrary actions of government, reinforcement of
freedom of speech and religion, security against seizure of
property, access to due process, and protection of privacy;
also rights to safety, information, privacy, property ownership.
7. Ethic of justice
• Considers that moral decisions are based on the primacy of a
single value: justice.
• Ethicist identify different types of justice:
– Procedural justice: impartial application of rules and
procedures.
– Corrective justice: stakeholders compensated appropriately
for wrongs that are suffered.
– Retributive justice: punishment should fit the offence but will
be just and fair.
– Distributive justice: treatment of all stakeholders. Benefits
and harms are distributed in a way that is just and fair. Often
applicable in business situations.
Ethics in business: some challenges
• Indicating ‘just do the right thing’ is insufficient (i.e., too open
ended).
• It’s not easy to be ethical.
• Unethical behaviour not just due to a few bad apples.
• People always have been (and always will be) unethical.
• Most believe (due to implicit bias) that they behave ethically
towards others.
Group case
Ethics and capitalism
Chapter 2
MGMT 3480
Nicholous Deal, MBA
Outline
• Eight fundamentals of capitalism
• Canadian and other forms of capitalism
• Ethics of capitalism
• Capitalism as an ethical system
Introduction to fundamentals of capitalism
• Assumption made is that the Canadian economic system has
been, and still is, largely composed of business enterprises
operating in a market system.
• What is capitalism?
– An economic system that allows for private ownership of the
means of production (land, labour, and capital) and assumes that
economic decision making is in the hands of individuals or
enterprises that make decisions expecting to earn a profit.
Introduction to fundamentals of capitalism
• It is argued that the ‘private system’ is less cumbersome and
less costly to run than a centralized ‘public system’ (vis-à-vis
government).
• The ‘ideal’ application of capitalism is based on the
philosophical underpinnings of the American system; has
this style ever been applicable in Canada?
• There are eight fundamentals of capitalism; requiring a strong
system of ethical behaviour whose issues confront managers
even today.
Eight fundamentals of capitalism
1.
2.
3.
4.
5.
6.
7.
8.
Right of private property;
Individualism and economic freedom;
Equality of opportunity;
Competition;
Profits;
Existence of work ethic;
Consumer sovereignty;
Minimalist role for government.
1. The right of private property
The fundamental:
The legal right to own and use economic goods, for example,
land and buildings. Property is not owned by the state, and
individuals may own property and use it as they see fit.
Individuals are allowed to accumulate property and thus, wealth,
without restriction.
Ethical implications:
– Uneven distribution of wealth;
– Infringement of copyright rights;
– Membership rights (e.g., labour unions) are sometimes
preferred over individual rights.
2. Individualism and economic freedom
The fundamental:
The view that the individual, and not society or a collective, is
the paramount decision maker in society and assumes that the
individual is inherently decent and rational. Individuals have the
privilege of determining thei…
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