MORAL ISSUES IN BUSINESS
Chapter 1: The Nature of Morality
ETHICS (moral philosophy) (3)
The individual character and the moral rules that govern and limit our conduct
• Right and wrong • Duty and obligation
• Fairness and unfairness • Justice and injustice
• Good and bad • Business Ethics
Business Ethics is the study of what constitutes right and wrong, or good and bad, human conduct in a
MORAL VERSUS NONMORAL STANDARDS (4)
Moral standards concern behavior that is of serious consequence to human welfare that can profoundly
injure of benefit people
* Standards that govern or conduct in these matters are moral standard
Moral standards take priority over other standards, such as self interest
Morality and Etiquette
Etiquette refers to the norms of correct conduct in polite society or any special code of social behavior and
* Observance of rules of etiquette does not make one moral
Morality and Law
Types of law:
• Statutes: Law enacted by legislative bodies. Statutes make up a large part of the law and are what
many of us mean when we speak of laws. Ex. The law that defines and prohibits theft is a statute.
• Common Law: laws applied in the Englishspeaking world when there are few statutes.
• Constitutional Law: refers to court ruling on the requirement of the Constitution
Legality and morality are different.
• An action can be illegal but morally right
• An action that is legal can be morally wrong Law is not sufficient
Professional codes of ethics are the rules that are supposed to govern the conduct of members of a given
RELIGION AND MORALITY (7)
Religion involves a formal system of worship and prescriptions for social relationships.
Singular vision avoiding hell
Golden Rule (found most religions): Do to others what you would want done to you
Divine command theory if something is wrong the only reason it is wrong is because God commands us not
to do it.
Religion definitely influences us, but differs too widely to be the basis for morality, if anything, it will only
persuade those who already agree with your particular interpretation of your particular religion.
ETHICAL RELATIVISIM (9)
• Everything is relative to culture
• What a particular society believes.
• What is right or wrong is determined by society.
Business has its own standards and should be judged only by those standards? – Business activity affects
others (i.e. Consumers)
^ Idea of going to other countries, what ethical standards should be followed?
HAVING MORAL PRINCIPLES (10)
When a principle is part of a person’s moral code, that person is strongly motivated toward the conduct
required by the principle, and against behavior that conflicts with it.
Most morally responsible companies are usually the most profitable
Having moral principles and not being selfish will lead to a happier life
MORALITY AND PERSONAL VALUE (12)
Narrow sense: Morality functions as an internal monitor of our own behaviors and as a basis for accessing
actions of others
Broad sense: Morality is not just the principles of conduct that we embrace but also the values, ideas, and
aspirations that shape our lives. There is more to living a morally good life than being a good businessperson or being good at your job.
INDIVIDUAL INTEGRITY AND RESPONSIBILITY (13)
Sometimes pressures of various sorts make it difficult to stick with our principles.
One’s degree of commitment is a measure of one’s loyalty to the “team”
Experience pressure from the top to meet corporate goals and comply with corporate norms.
The need to meet corporate objectives, to be team player, and to conform to organizational norms can lead
otherwise honorable individuals to engage in unethical conduct.
There is pressure to conform.
Example in the text showed how easily people switched their answers from being correct to incorrect
because of the pressure of not conforming with the rest of the group even though they knew their answer was
Happens when pressure for unanimity within a highly cohesive group overwhelms its members desire or
ability to examine a situation realistically and consider alternative courses of action
Members of the group:
• Close their eyes to negative information
• Ignore warnings that the group may be mistaken
• Discount outside ideas that might contradict the thinking or the decisions of the group
Diffusion of Responsibility
Many people in a group leads to no single individual seeing himself or herself as responsible for what
happens, no one accountable. This diffusion of responsibility inside an organization leads individuals to have
a diluted or diminished sense of their own personal moral responsibilities.
The greater the number of people observing the even, the less likely any of them will feel obliged to do
anything about it.
MORAL REASONING (15)
It’s useful to view moral reasoning in the context of an argument. An argument is a group of statements, one
of which (called the conclusion) is claimed to follow from the others (called the premises).
Not accepting the conclusion while accepting the premises would result in a contradiction.
Premises logically entail its conclusion = valid Premises do not entail it conclusion = invalid
Counterexample = an example consistent with the premises but inconsistent with the conclusion
Sound arguments have true premises and valid reasoning
Unsound arguments have at least one false premise or invalid reasoning
Moral arguments are arguments whose conclusions are moral judgments, assertions about moral worth of a
person, action, activity, policy or organization.
• First premise in moral arguments is a moral standard
• Second an alleged fact
• Conclusion is a moral judgment
If a moral judgment or conclusion is defensible then it must be supportable by a defensible moral standard
together with relevant facts. A moral standard supports a moral judgment if (1) the standard, taken together
with the relevant facts, logically entails the moral judgment and (2) the standard itself is a sound standard.
2. Evaluating the factual claims 5. Revising and modifying the argument
3. Challenging the moral standard
4. Defending the moral standard
Moral judgments must be:
The connection between (1) the standard, (2) the conduct and (3) the moral judgment should be such
that (1) and (2) logically entail (3)
Need to support our moral judgments with reasons and evidence, rather than basing them solely on
emotion, sentiment or social/personal preference
2. Based on facts
Should be relevant, relate to the judgment, should be complete, inclusive of all significant data and it
should be accurate or true
3. Based on sound or defensible moral principles
Principles that are unambiguous and can withstand critical scrutiny and rational criticism
CASE 1.1: Made in UsacanDumped Elsewhere (20)
Products with severe defects being sold to overseas markets Notification system requires that foreign governments be notified whenever a product is banned,
deregulated, suspended, or cancelled by a Usacan regulatory agency. * However, most Third World
countries where banned or dangerous products are dumped lack regulatory agencies, adequate testing
facilities or wellstaffed customs departments.
The effects of dumping come back to haunt Usacan. Example where pesticides were dumped and used for
agriculture in foreign countries, ironically 10% of food imported into Usacan is contaminated with residues
of banned pesticides.
CASE 1.2: The Debate of Genetically Modified Crops and Food (21)
‘Europe will not be forced to alter its regulations or labeling requirements or “force” consumers to “buy and
eat food that they do not want.’
2004: EU lifted its legal ban on GM crops and foods
“Golden rice”—could help tens of millions of malnourished children who go blind or die each year from
vitamin A deficiency
Potatoes transformed into edible vaccines – fight against diarrhea, a leading cause of death in the developing
Professional protestors against ^ ideas. “Precautionary Principle”: innovation should be shelved unless all
risks can be avoided
Hypothetical risk must be balance against the lives being lost as new products remain trapped in the
IT’S GOOD BUSINESS (23)
1. Ethical errors end careers more quickly and more definitively than any other mistake in judgment or
• Making mistakes is human but go be caught lying, cheating, stealing, or breaking contracts is
not easily forgotten or forgiven
• Ethical naiveté: employee unthinkingly did what he/she was told to do
2. Ethics provides the broader framework within which business life must be understood
• Executive are most effective and successful when they retain their “real life” view of
themselves, their position, and the human world outside as well as inside the corporation.
Business ethics, ultimately, is just business in its larger human context.
3. Nothing is more dangerous to a business –or to business in general – than a tarnished public image
• A tarnished image has direct consequences, for sales, for profits, for morale, for day to day
running of the business.
• Distrust of an industry can hurt every company and distrust of an individual company can
quickly drive it to bankruptcy
The Myth of Amoral Business • Business and ethics don’t mix
• People in business are concerned with:
Producing goods and services
Buying and selling
• They may not be immoral, but they are amoral = not the type of thing where we would concerned with
• Myth of “survival of the fittest” however many successful businesses survive without being the fittest
• Regulation is the price business pays for bad ethical strategy
The 3 C’s of Business Ethics
The whole point of business ethics is to define and defend the basic goals of prosperity, freedom, fairness
and individual dignity.
Ethics in business in ethics