Study of ethical dilemmas, values, and decision-making in the world of commerce…

1. Business Ethics
Study of ethical dilemmas,
values, and decision-making in
the world of commerce…

2. ACCOUNTING SCANDAL #1

3. ACCOUNTING SCANDAL #2

4. ACCOUNTING SCANDAL #3

5. CEO GREED #1

6. CEO GREED #2

7. INSIDER TRADING

8. Is “business
ethics” just
corporate
rhetoric?

9. Today’s Plan
 Profit-motive and greed
 Wall Street
 Philosophy of Ethics
 Why ethics is particularly challenging in
business
 Class Exercise – Selling Cigarettes

10. Is “business ethics” just
corporate rhetoric?
 profit-motive / self-interest /
greed
 some say “no difference”
 business inherently wrong
 “greed is good”

11. Is “business ethics” just
corporate rhetoric?
 Milton Friedman
 moral obligation:
 make as much money as
possible
 obey the law
 “the business of business is
business”
 government’s responsibility
 race to the bottom

12. Is “business ethics” just
corporate rhetoric?
 Critique Milton Friedman’s view. What are
the problems with the view that “the business
of business is business?”
 After considering a summary of Friedman’s
position and some critiques of it, what do you
think? Does a business have any obligation
beyond making money and obeying the law?
If so, give some examples.

13. Philosophy of Ethics
 Two most commonly held schools of thought:
 Consequentialism
 Deontology
 (There are others)
 No wide spread agreement on which
approach to ethics is most valid

14. Consequentialism
 “the belief that what ultimately
matters in evaluating actions or
policies of action are the
consequences that result from
choosing one action or policy
rather than the alternative.”
 consequences of all affected
persons
 e.g. why should Enron have
disclosed its true liabilities?
 e.g. lying to Nazi prison guards

15. Questions for
Consequentialism
 What is a good consequence and
what is a bad consequence?
Pleasure and pain?
 Experience machine?
 How should we rank good
consequences and bad
consequences when we face a
trade-off?
 e.g. forestry practices
 Is morality determined by actual
consequences or expected
consequences?
 e.g. drunk driving

16. Questions for
Consequentialism (cont’d)
 What about personal rights?
 Is it right to kill one person if that killing saves
4 other people?
 Consequences to whom?
 How heavily should one consider the
consequences to oneself, or to one’s friends?
 What about animals, the environment, fetuses,
etc.

17. Consequentialism (cont’d)
 Utilitarianism
 One form of consequentialism
 “greatest good for the greatest number”

18. Consequentialism (cont’d)
 Some people have
criticized
consequentialism
because it implies that
child labour practices in
extremely poor countries
might be a good thing.
What do you think about
this criticism?

19. Deontology
 Ethical rules
 “don’t lie”
 “do for others as you would have them do for you”
 Ends don’t justify the means
 Nazi prison guard example
 Holding on to political power
 Keeping company alive and thus saving jobs

20. Deontology - Kant
 Kantian theory
 Duty to treat people with respect
 Duty to not treat people as a means to your own ends
 Implies people have rights
 Problems:
 What are those rights? (What are some rights that
people claim that are open to question?)
 Which rights over-ride others? (e.g. nurses’ right to
strike versus people’s right to healthcare)

21. Deontology – Kant (cont’d)
 Kant criticizes consequentialism by arguing
that only our own actions are under our
control; the consequences of our actions are
often out of our control. What do you think of
this criticism?

22. Ethics and Religion
 Many people get at least some of their ethics
from religious teachings
 Problem: Can’t persuade a non-believer with
“God says so”.

23. Ethics in Business
 Problem #1: Competing Demands
 Opposing interests
 E.g. shareholder interests versus employee
interests
 Are primary obligations towards those who hired
you?
 E.g. Coke managers

24. Ethics in Business (cont’d)
 Problem #2: Strong Temptation
 Primarily evaluated based on
financial results
 Great results – great rewards
 Poor results – tough consequences
 E.g. Kenneth Lay – positive image
kept share value up for him
 E.g. Andersen partner in charge of
Enron account (David Duncan)

25. Ethics in Business (cont’d)
 Problem #3: Group Ethics
 Business activities involves numerous people
 People differ in
 Approaches to ethics
 Views on what is ethical and what is not
 Level of commitment to ethical behaviour
 Hard to get adherence
 Need to be able to persuade

26. Ethics in Business (cont’d)
 Problem #4: Employer Authority
 employee acts on employer’s behalf
 when disagreement arises, employer may expect
employee to defer to the employer
Some Advice from Don’s
Soapbox:
Don’t ever let a boss or anyone
else presume to have the
authority to make your moral
decisions for you.

27. Selling cigarettes
 Is it ethical to sell cigarettes? Why or why not?
Try to come up with as many arguments as you
can for both sides of the issue. But formulate a
conclusion.
 What types of arguments did you use? Did you
use either consequentialist or deontological
arguments? Or perhaps other types of
arguments? What arguments do you think would
be most persuasive if you were a middle manager
trying to change your supervisor’s mind?

28. Is “business
ethics” just
corporate
rhetoric?
NO!

29. Thank You!
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