ADMS 3660 – week 1 “what is business ethics”, look at the individual
Good managers are both efficient and ethical. This course will teach you to be efficient.
You must decide to be ethical.
Costs of unethical business conduct monetary costs are $billions
Lawsuits No work life balance
Investor losses Environment
Unemployment Sexual harassment
Increased Regulations Slavery
War Mal nutrition
Social Impact Careers
Corporations Public sector or NGO’s Consulting firms
Ethics/Compliance officer Independent foundations CSR strategy
Product design (clean Operating foundation Stakeholder engagement
Where to look ? Corporate foundation Environmental management
Dow jones sustainability Community foundation
Perspectives on ethics
There are both advantages and constraints for business when acting ethically. As well
they can have a high impact on the world or a low impact.
Ethics pays and has a high impact: green business, being a “great” place to work
Ethics pays and has a low impact: strategic philanthropy
Ethics costs and high impact: using alternative fuels, fighting obesity
Ethics costs and low impact: maternity policies, high quality health care
Ethics creates trust, “in business and life, trust is not everything but without it you have
Ethics: the study of morality.
Morality: the standards that an individual or group has about what is right or wrong,
good or evil.
Review mountain terrorist exercise, slide 17. 2
Elements of Ethics
1) Agent is presented with a circumstance
2) Agent considers what goal he wants and how to act
Act (object means) + Goal (intention end) = Consequence (could be unforeseen)
Some means (acts) are moral absolutes which means no matter what it is wrong and
cannot be justified as good. Lying, theft, slander, deception, fraud.
The principle of integrity states that a good end does not justify a morally bad means.
Universal Business Community Values
UN Global Compact: enlists the world business community to safeguard sustainable
growth by promoting a core set of universal values which are fundamental to meeting the
socioeconomic needs of the world.
10 principles of the UN Global Compact
• Principle : Businesses should support and respect the protection of
internationally proclaimed human rights; and
• Principle make sure that they are not complicit in human rights abuses.
• Principle : Businesses should uphold the freedom of association and the effective
recognition of the right to collective bargaining;
• Principle : the elimination of all forms of forced and compulsory labour;
• Principle : the effective abolition of child labour; and
• Principle : the elimination of discrimination in respect of employment and
• Principle : Businesses should support a precautionary approach to environmental
• Principle : undertake initiatives to promote greater environmental responsibility;
• Principle : encourage the development and diffusion of environmentally friendly
• Principle 1 : Businesses should work against all forms of corruption, including
extortion and bribery.
Descriptive statement: makes a claim about what is the case (what are the facts)
Normative statement: makes a claim about what ought to be the case. 3
Ex. Marijuana is illegal vs marijuana ought to be illegal
Do not slip from “is” to “ought”
7 different types of moral standards which people use to determine what is
Morality is determined by whatever the majority believes is right or wrong.
Critism: moral judgement can change based on time, circumstance, culture. The
consequences or individual moral rights can be ignored.
Psychological egoism: People act according to their own perceived selfinterest.
Ethical egoism: People should only act according to their own perceived selfinterest.
Critism: altruism or selfsacrifice is unacceptable
Do the greatest good for the greatest number. (mountain terrorist exercise)
1) identify alternatives
2) Determine costs and benefits for each stakeholder under each alternative
3) Select alternative that produces the greatest net good (most utility)
Critism: difficult to measure value of life, health etc. Doesn’t address individual rights
An action is considered moral if the sum of benefits vs sum of costs for a specific action
are greater than all other alternatives.
An action is considered moral only if the all being affected benefit, not just one person.
Must act based on moral duty and not merely due to concern over consequences
Moral duty includes: 4
Universalizability: If everyone did it, would it be selfdefeating? (driving on shoulder of a
Reversibility: put yourself in the other person’s shoes
Respect: don’t treat people as a means to an end (don’t exploit them)
5) Moral Rights
Right: individual’s entitilement to something.
An action is morally right or wrong if it respects the rights of individual affected by the
action. Legal rights are granted by social institutions. Moral right is not granted by
society but exist because you are a human being.
Negative rights: creates a duty on others not to interfere
Ex. Consumer rights to health, life and safety creates a duty of companies to disclose
dangers regarding products.
Positive rights: creates duty on others to provide
Ex. Employment, housing, food, education
1) determine moral rights for each stakeholder
2) determine relative significance of rights and duties of stakeholders
3) choose alternative that best respects rights and duties of stakeholders
Criticism: difficult to resolve conflicting rights
6) Justice (fairness) – 5 types of justice
Retributive justice (punishment): just imposition of punishments and penalties to those
who do wrong. Ignorance is not a defense, punishments must be consistent and
proportional to the wrong.
Compensatory justice (restitution): just way of compensating people for what they have
lost when wronged by others.
Procedural justice (process): Fairness in the process (ex. Having bidders for a
government contract.) Procedure must be impartial, unbiased, transparent
Societal justice (basic principles): Rawlsianism, named after john rawls.
What principles would you like to establish for your society. 2 principles: 5
1) Everyone has equal right to basic liberties (freedom of speech, personal property,
2) Inequalities are arranged so that they are to the greatest benefit of the least advantaged
and remain under conditions of fair equality of opportunity
Distributive justice (outcome): Equitable or fair distribution of benefits (ex. Wages) and
burdens (ex. Firings) imposed by an action or policy.
Similar individuals should get same benefits and suffer similar burdens.
Treat people the same except when they differ in relevant ways.
How to decide if individuals are similar or different?
Criteria of similarity or difference
1) level of contribution or productivity
2) amount of effort
3) based on merit or seniority
4) based on needs and abilities
7) Core (universal) ethical values
Trustworthiness: honesty, integrity, transparency, loyalty
Responsibility: accountable for actions, don’t blame others
Caring: avoid unnecessary harm, sensitive to others’ feelings
Citizenship: obey laws, assist community, protect the environment
Other Moral Standards – include reiligon, moral virtue (your character), intuition (gut
The Milgram Experiments
The subject of the experiment was known as “the teacher,” he met with an experimenter
and Mr. X known as “the learner” (played by an actor). The subject or “teacher” would
ask the learner a question. For each question the learner got wrong, the teacher was told
by the experimenter to electrically shock the learner. As more and more questions were 6
wrong, the teacher had to increase the level of pain felt by the learner. When the learner
pleaded with the teacher to stop, the teacher said he could not stop because the
experimenter told him to shock the learner.
An individual is morally responsible for wrongful acts which he performed (or wrongly
omitted) and for those injurious effects he brought about (or wrongfully failed to prevent)
when this was done knowingly and freely.
Moral responsibility is excused by: ignorance and inability
Moral responsibility is mitigated by: uncertainty, difficulty, degree of involvement, non
seriousness of the wrong.
Elements of Ethics
when a person faces an ethical dilemma,
1) You go through a moral reasoning process. Based on the 7 moral standards, you
determine what is right and wrong
2) You act by some means with the intention of a goal.
3) The consequence can be internal/external and be foreseeable or unforeseeable
Common rationalizations for unethical behavior
Feelings Good for me What others Depends on I’m doing it