CHAPTER 3



chapter 3

ETHICAL PRINCIPLES, QUICK TESTS, AND DECISION-MAKING GUIDELINES

|TOPICS COVERED |

3.1 Ethical Dilemmas, Decision Criteria, Moral Creativity, and Ethical Reasoning

3.2 LEVELS AND TYPES OF ETHICAL ISSUES AND DILEMMAS

3.3 UTILITARIANISM: A CONSEQUENTIALIST (RESULTS-BASED) APPROACH

3.4 UNIVERSALISM: A DEONTOLOGICAL (DUTY-BASED) APPROACH

3.5 RIGHTS: A MORAL AND LEGAL ENTITLEMENT-BASED APPROACH

3.6 JUSTICE: PROCEDURES, COMPENSATION, AND RETRIBUTION

3.7 VIRTUE ETHICS: CHARACTER-BASED VIRTUES

3.8 THE COMMON GOOD

3.9 ETHICAL RELATIVISM: A SELF-INTEREST APPROACH

3.10 IMMORAL, AMORAL, AND MORAL MANAGEMENT

3.11 FOUR SOCIAL RESPONSIBILITY ROLES

3.12 INDIVIDUAL ETHICAL DECISION-MAKING STYLES

3.13 QUICK ETHICAL TESTS

3.14 CONCLUDING COMMENTS

|lecture outline |

3.1 Ethical Dilemmas, Decision Criteria, Moral Creativity, and Ethical Reasoning

Ethical dilemmas in business usually involve tough choices that must be made between competing interests. Although ethical reasoning has been defined, in part, by acting on “principled thinking,” it is also true that moral creativity, negotiating skills, and knowing your values also help solve tough “real world” situations.

3.2 Levels and Types of Ethical Issues and Dilemmas

Ethical issues and dilemmas result from pressures that are experienced at four levels. Potential dilemmas can occur at any or all of the four levels: (1) the individual level, (2) the company or organizational level, (3) the industry level, and (4) the societal, international, and global level. At the individual level a person experiences pressures from conflicting demands or circumstances that require a decision. Firms that engage in questionable practices and activities face possible dilemmas with their stakeholders and/or stockholders at the company level. At the industry level, company officers, managers, and professionals may be influenced by and contribute to specific business practices in the industry. Finally at the societal level, industry, organizational, professional, and personal ethics may clash at the societal level.

A. Moral Creativity

1. What begins as a business-as-usual decision can evolve into a dilemma or even a

“defining moment” in one’s life. Joseph Badaracco at Harvard University offers

three questions with creative probes for individuals, work group managers, and

company executives to address before acting in one of these moments or dilemmas.

a. Who am I?

• identifies feelings and intuitions emphasized in the situation

• identifies deepest values in conflict brought up by the situation

• identifies best course of action to understand the right thing to do

b. Who are we?

• What strong views and understanding of the situation do others have?

• Which position or view would most likely win over others?

• Can I coordinate a process that will reveal the values I care about in this organization?

c. Who is the company?

• Have I strengthened my position and the organization to the best of my ability?

• Have I considered my organization’s role vis-à-vis society and shareholders boldly and creatively?

• How can I transform my vision into action, combining creativity, courage, and shrewdness?

B. 12 Questions to Get Started

1. A first step in addressing ethical dilemmas is to identify the problem(s) and related

issues. Laura Nash presents 12 questions to ask during the decision-making period

to help clarify ethical problems:

a. Have you defined the problem accurately?

b. How would you define the problem if you stood on the other side of the fence?

c. How did the situation occur?

d. To whom and to what do you give your loyalty as a person and as a member of the corporation?

e. What is your intention in making this decision?

f. How does this intention compare with the probable results?

g. Whom could your decision injure?

h. Can you discuss the problem with the affected parties before you make your decision?

i. Are you confident that your decision will be valid over a long period?

j. Could you disclose, without qualm, your decision?

k. What is the symbolic potential of your action if understood? If misunderstood?

l. Under what conditions would you allow exceptions?

2. Sharing these questions can facilitate group discussions, build cohesiveness and

consensus around shared points, serve as an information source, uncover ethical

inconsistencies in a company’s values, help a CEO see how senior managers think,

and increase the nature and range of choices.

C. Three Criteria in Ethical Reasoning

1. The following criteria can be used in ethical reasoning to help systematize and

structure arguments:

a. Moral reasoning must be logical. Assumptions and premises, both factual and inferred, used to make judgments should be known and made explicit.

b. Factual evidence cited to support a person’s judgment should be accurate, relevant, and complete.

c. Ethical standards used in reasoning should be consistent. When inconsistencies are discovered in a person’s ethical standards in a decision, one or more of the standards must be modified.

2. A simple but powerful question can be used throughout the decision-making

process in solving ethical dilemmas: “What is my motivation for choosing a course

of action?”

D. Moral Responsibility

1. A major aim of ethical reasoning is to gain a clear focus on problems to facilitate

acting in morally responsible ways.

2. Individuals are morally responsible for the harmful effects of their actions when:

a. They knowingly and freely acted or caused the act to happen and knew that the act was morally wrong or hurtful to others.

b. They knowingly and freely failed to act or prevent a harmful act and they knew it would be morally wrong for a person to do this.

3. Two conditions that eliminate a person’s moral responsibility for causing injury or

harm are ignorance and inability.

4. Mitigating circumstances, such as those listed below, can excuse or lessen a

person’s moral responsibility in a situation.

a. A low level of or lack of seriousness to cause harm.

b. Uncertainty about knowledge of wrongdoing.

c. The degree to which a harmful injury was caused or averted.

3.3 Utilitarianism: A Consequentialist (Results-Based) Approach

Jeremy Bentham (1748-1832) and John Stuart Mill (1806-1873) are acknowledged as founders of the concept of utilitarianism. The basic utilitarian view holds that an action is judged as right, good, or wrong on the basis of its consequences. The ends of an action justify the means taken to reach those ends.

Utilitarianism includes the following tenets:

1. An action is morally right if it produces the greatest good for the greatest number of people affected by it.

2. An action is morally right if the net benefits over costs are greatest for all affected, as compared to the net benefits of all other possible choices considered.

3. An action is morally right if its immediate and future direct and indirect benefits are greatest for each individual and if these benefits outweigh the costs of the other alternatives.

Rule-based utilitarianism argues that general principles are to be used as criteria for deciding the greatest benefit to be achieved from acting a certain way. Actions will be based on whichever principle provides for the greatest good in a certain situation. Act-based utilitarianism argues that actions are to be used as criteria for determining whether the greatest good can be achieved.

Problems with utilitarianism include:

1. No agreement exists about the definition of “good” for all concerned.

2. No agreement exists about who decides what is good for whom.

3. Actions are not judged, but rather their consequences.

4. How are the costs and benefits of nonmonetary stakes, such as health, safety, and public welfare, measured?

5. Utilitarianism as a principle does not consider the individual. It is the collective for whom the greatest good is estimated.

6. The principles of justice and rights are ignored in utilitarianism.

A. Utilitarianism and Stakeholder Analysis

1. Because businesses use utilitarian principles when conducting a stakeholder

analysis, decision makers should:

a. Define how costs and benefits will be measured in selecting one course of action over another. Include social, economic, and monetary costs and benefits as well as long-term and short-term costs and benefits.

b. Define what information you will need to determine the costs and benefits for comparisons.

c. Identify the procedures and policies you will use to explain and justify your cost-benefit analysis.

d. State your assumptions when defining and justifying your analysis and conclusions.

e. Ask yourself what moral obligations you have toward each of your stakeholders, after the costs and benefits have been estimated.

3.4 Universalism: A Deontological (Duty-Based) Approach

Immanuel Kant (1724-1804) is considered one of the leading founders of the principles of universalism. Universalism, which is also referred to as “deontological ethics” or “nonconsequentialist ethics,” holds that the right thing must always be done, even if doing the wrong thing would do the most good for the most people.

Kant’s principle of the categorical imperative, unlike utilitarianism, places the moral authority for taking action on an individual’s duty toward other individuals and humanity. The categorical imperative consists of two parts:

1. A person should choose to act if and only if she or he would be willing to have every person on earth, in that same situation, act exactly that same way.

2. A person should act in a way that respects and treats all others involved as ends as well as means to an end.

Kant’s categorical imperative forces decision makers to take into account their duty to act responsibly and respectfully toward all individuals in a situation. The major weaknesses of universalism and Kant’s categorical imperative include these criticisms:

1. The principles are imprecise and lack practical utility.

2. It is hard to resolve conflicts of interest when using a criterion that states that all individuals must be treated equally.

3. The categorical imperative does not allow for prioritizing one’s duties.

A. Universalism and Stakeholder Analysis

1. Even though we may not be able to employ Kant’s principles absolutely, we can

consider the following as guidelines for using his ethics.

a. Identify individuals as well as groups and their welfare and risks when considering policy decisions and outcomes.

b. Identify the needs of individuals involved in a decision, the choices they have, and the information they need to protect their own welfare.

c. Identify any manipulation, force, coercion, or deceit that might harm individuals involved in a decision.

d. Recognize the duties of respecting and responding to individuals affected by particular decisions before adopting policies and actions that affect them.

e. Ask if the desired action or policy would be acceptable to the individuals involved. Under what conditions would they accept the decision?

f. Ask if individuals in a similar situation would repeat the designated action or policy as a principle. If not, why not? And would they continue to employ the designated action?

3.5 Rights: A Moral and Legal Entitlement-Based Approach

Rights are based on several sources of authority. Legal rights are entitlements that are limited to a particular legal system and jurisdiction (e.g., freedom of speech in America). Moral rights are universal and based on norms in every society (e.g., the right not to be enslaved). Contractual rights arise from mutually binding duties that are based on a legal system with defined transactions and boundaries. Negative rights refer to the duty others have to not interfere with actions related to a person’s rights. Positive rights impose a duty on others to provide for your needs to achieve your goals, not just protect your right to pursue them.

The limitations of the principle of rights include:

1. The justification that individuals are entitled to rights can be used to disguise and manipulate selfish, unjust political claims and interests.

2. Protection of rights can exaggerate certain entitlements in society at the expense of others.

3. The limits of rights come into question.

A. Rights and Stakeholder Analysis

1. The following are guidelines for observing this principle.

a. Identify the individuals whose rights may be violated.

b. Determine the legal and moral bases of these individuals’ rights. Does the decision violate these rights on such bases?

c. Determine to what extent the action has moral justification from utilitarian or other principles if individual rights may be violated.

3.6 Justice: Procedures, Compensation, and Retribution

The principle of justice deals with fairness and equality. John Rawls (1971) offers two principles of fairness widely recognized as representative of the principle of justice.

1. Each person has an equal right to the most extensive basic liberties that are compatible with similar liberties for others.

2. Social and economic inequalities are arranged so that they are both (a) reasonably expected to be to everyone’s advantage and (b) attached to positions and offices open to all.

Richard DeGeorge identifies four types of justice.

1. Compensatory justice concerns compensating someone for a past harm or injustice.

2. Retributive justice means serving punishment to someone who has inflicted harm on another.

3. Distributive justice refers to the fair distribution of benefits and burdens.

4. Procedural justice designates fair decision practices, procedures, and agreements among parties.

The practical problems of using the principle of justice include the following:

1. Outside the jurisdiction of the state and its judicial systems, where ethical dilemmas are solved by procedure and law, who decides who is right and who is wrong?

2. Who has the moral authority to punish whom?

3. Can opportunities and burdens be fairly distributed to all when it is not in the interest of those in power to do so?

A. Rights, Power, and “Transforming Justice”

1. Justice, rights, and power are really intertwined. Rights plus power equals

“transforming justice.” Power generally is defined and exercised through

inheritance, authority, contracts, competition, manipulation, and force. The two

steps in exercising “transforming justice” are:

a. Be aware of your rights and power.

b. Establish legitimate power as a means for obtaining and establishing rights.

c. Interrelationship of rights, justice and power

B. Justice and Stakeholder Analysis

1. In a stakeholder analysis, the principle of justice can be applied with these

questions:

a. How equitable will the distribution of benefits and costs, pleasure and pain, and reward and punishment be among stakeholders if you pursue a particular course of action? Would all stakeholders’ self-respect be acknowledged?

b. How clearly have the procedures for distributing the costs and benefits of a course of action or policy been defined and communicated? How fair are these procedures to all affected?

c. What provisions can be made to compensate those who will be unfairly affected by the costs of the decision? What provisions can we make to redistribute benefits among those who have been unfairly or overly compensated by the decision?

3.7 Virtue Ethics: Character-Based Ethics

Virtue ethics emphasizes moral character in contrast to moral rules or consequences. Virtue ethics is grounded in “character traits.” To possess a virtue is to be a certain sort of person with a certain complex mindset. The concepts of virtue ethics include: virtue, practical wisdom, and eudaimonia (happiness and well-being). Virtue ethics focuses on the type of person we ought to be, not on specific actions that should be taken. Critics suggest that: (1) virtue ethics fails to address dilemmas which arise in applied ethics, (2) virtue theory cannot correctly assess the occasional tragic actions of virtuous people, (3) some acts are so intolerable that we must devise a typical list of offenses which are prohibited, (4) character traits change, and (5) there is the problem of moral backsliding.

A. Virtue Ethics and Stakeholder Analysis

1. Examining the motives and character of stakeholders can be helpful in discovering underlying motivations of strategies, decisions, and actions.

2. Virtue ethics also adds a practical perspective.

3.8 The Common Good

The common good includes the broader interdependent institutions, social systems, environments, and services and goods. Examples of the common good include the health care system, legislative and judicial systems, political, economic, and legal systems, and the physical environment. The common good must be created and maintained in societies. Cooperative and collaborative efforts are required. There are four major constraining factors and arguments on the notion of the common: (1) A unitary notion of the common good is not viable in a pluralistic society; (2) In an individualistic society, people are rewarded for providing and succeeding by themselves; (3) Free riders abuse the provisions of the common good; and (4) helping create and sustain common goods means unequal sharing of burdens and sacrifices by some groups.

3.9 Ethical Relativism: A Self-Interest Approach

Ethical relativism holds that no universal standards or rules can be used to guide or evaluate the morality of an act. This view argues that people set their own moral standards for judging their actions. The logic of ethical relativism extends to culture. Cultural relativism argues, “When in Rome, do as the Romans do.” Moral standards vary from one culture to another. The benefit of ethical and cultural relativism is that they recognize the distinction between individual and social values and customs. Relativism lead to several problems.

1. This view implies an underlying laziness and can be used as an excuse for not having or developing moral standards.

2. This view contradicts everyday experience. Moral reasoning is developed from conversation, interaction, and argument.

3. Ethical relativists can become absolutists. That is, individuals who claim their moral standards are right, regardless of whether others view the standards as right or wrong, can become closed to outside influence and accept only their own beliefs as true.

This does not suggest that flexibility, sensitivity, and awareness of individual and cultural moral differences are not necessary. It does mean that upholding principles of rights, justice, and freedom in some situations may conflict with the other person’s or culture’s belief systems. It could be argued that cultural relativism provides an argument against cultural imperialism.

A. Ethical Relativism and Stakeholder Analysis

1. When considering the principles of relativism in a stakeholder analysis, ask the

following questions:

a. What are the major moral beliefs and principles at issue for each stakeholder affected by this decision?

b. What are my moral beliefs and principles in this decision?

c. To what extent will my ethical principles clash if a particular course of action is taken? Why?

d. How can conflicting moral beliefs and principles be avoided or resolved in seeking a desirable outcome?

3.10 Immoral, Amoral, and Moral Management

Immoral treatment of constituencies signifies a minimally ethical or unethical approach. Managing immorally means intentionally going against ethical principles of justice and fair and equitable treatment of other stakeholders.

Amoral management happens when owners, supervisors, and managers treat shareholders, outside stakeholders, and employees without concern or care for the consequences of their actions.

Moral management places value on fair treatment of shareholders, employees, customers, and other stakeholders.

3.11 Four Social Responsibility Roles

Four ethical interpretations of the social roles and modes of decision making are discussed and illustrated in Figure 3.3. The four social responsibility modes reflect business roles toward stockholders and a wider audience of stakeholders.

Two distinct social responsibility orientations of businesses and managers toward society are the stockholder model in which the primary responsibility of a corporation is to its economic stockholders (motivated by self-interest), and the stakeholder model in which the responsibility of a corporation is to its social stakeholders outside the corporation (motivated by moral duty).

The two social responsibility modes in the stockholder model are:

1. Productivists, who hold a free market ethic, and view the corporation’s social responsibility in terms of rational self-interest and the direct fulfillment of stockholder interests. They believe the major mission of business is to obtain profit.

2. Philanthropists, who hold that social responsibility is justified in terms of a moral duty toward helping less-advantaged members of society through organized, tax-deductible charity and stewardship.

The two social responsibility modes in the stakeholder model are:

1. Progressivists, who believe corporate behavior is justified from a motive of self-interest, but also hold that corporations should take a broader view of responsibility toward social change. Enlightened self-interest is a value that characterizes progressivists.

2. Ethical idealists, who believe social responsibility is justified when corporate behavior directly supports stakeholder interests. Ethical idealists hold that, to be fully responsible, corporate activity should help transform businesses into institutions where workers can realize their full potential.

3.12 Individual Ethical Decision-Making Styles

Stanley Krolick developed a survey that interprets individual primary and secondary ethical decision-making styles. The four styles he found are (1) individualism, (2) altruism, (3) pragmatism, and (4) idealism.

1. Individualists are driven by natural reason, personal survival, and preservation. The self is the source and justification of all actions and decisions. The moral authority of individualists is their own reasoning process, based on self-interest. Individualism is related to the principle of naïve ethical relativism and to productivism.

2. Altruists are concerned primarily with other people. Altruists will relinquish their own personal security for the good of others. The altruist’s moral authority and motivation is to produce the greatest good for the largest number of people. Altruists are akin to universalists and philanthropists.

3. Pragmatists are concerned primarily with the situation at hand, not with the self or the other. The pragmatist’s bases of moral authority and motivation are the perceived needs of the moment and the potential consequences of a decision in a specific context. Pragmatists are closest philosophically to utilitarians.

4. Idealists are driven by principles and rules. Duties are absolute. Idealists’ moral authority and motivation are commitment to principles and consistency. This style is related to the social responsibility mode of ethical idealism and to the principle of universalism.

A. Communicating and Negotiating Across Ethical Styles

1. The following guidelines can help when communicating, negotiating, or working

with one of the four ethical styles.

a. Individualist: Point out the benefits of the other person’s self-interest.

b. Altruist: Focus on the benefits for the various constituencies involved.

c. Pragmatist: Emphasize the facts and potential consequences of an action.

d. Idealist: Concentrate on the principles or duties at stake.

3.13 Quick Ethical Tests

The Center for Business Ethics at Bentley College articulated six simple questions for the “practical philosopher.” Before making a decision or acting, ask the following:

□ Is it right?

□ Is it fair?

□ Who gets hurt?

□ Would you be comfortable if the details of your decision were reported on the front page of your local newspaper?

□ What would you tell your child to do?

□ How does it smell? (How does it feel?)

Other quick ethical tests, some of which are classical, include:

□ The Golden Rule: “Do unto others as you would have them do unto you.”

□ The Intuition Ethic: We know apart from reason what is right. We should follow our “gut feeling” about what is right.

□ The Means-Ends Ethic: We may choose unscrupulous but efficient means to reach an end if the ends are really worthwhile and significant.

□ The Test of Common Sense: “Does the action I am getting ready to take really make sense?” Think before acting.

□ The Test of One’s Best Self: “Is this action or decision I’m getting ready to take compatible with my concept of myself at my best?”

□ The Test of Ventilation: Get others’ feedback before acting or deciding.

□ The Test of the Purified Idea: An action may not be right just because someone in a position of power or authority says it is right. You may still be held responsible for taking the action.

3.14 Concluding Comments

Individual stakeholders have a wide range of ethical principles, orientations, and “quick tests” to draw on before solving an ethical dilemma. Using moral reflection and creativity is also important when deciding between two “right” or “wrong” choices. Reflecting on one’s core values combined with a sense of moral courage and shrewdness are also a recommended part of this decision-making process.

|questions |

1. Do you believe ethical dilemmas can be prevented and solved morally without the use of principles? Explain. Offer an example from a dilemma you recently experienced or are currently experiencing. Characterize the logic you used to principles and quick tests in this chapter. What similarities and differences did you discover? Can you include any of the principles and ethical reasoning in this chapter in dilemmas you may or expect to face? Explain.

Answer: Students’ responses will vary depending on the examples they decide to analyze.

2. Why are creativity and moral imagination oftentimes necessary in preventing and resolving ethical dilemmas and “defining moments” of conflict in one’s workplace? Offer an example of an ethically questionable situation in which you had to creatively improvise to “do the right thing.”

Answer: Students’ responses will vary depending on the examples they decide to analyze.

3. What is a first step for addressing ethical dilemmas?

Answer: The first step in addressing ethical dilemmas is to identify the problem(s) and related issues.

4. Read one of the cases at the end of this chapter, then describe the type of reasoning the leaders or a major stakeholder in the case used in his/her/their decision(s). Now refer to the three criteria that can be used in ethical reasoning in this chapter. If the individuals or groups you just studied in this case had used the three criteria of ethical reasoning in this chapter, what if any differences would you have expected to observe in the case results? Explain.

Answer: Students’ responses will vary depending on the case they decide to analyze. Their answers may include some of the following decision criteria for ethical reasoning. Laura Nash (1981, 78-90) presents 12 questions to ask yourself during the decision-making period to help clarify ethical problems:

a) Have you defined the problem accurately?

b) How would you define the problem if you stood on the other side of the fence?

c) How did this situation occur in the first place?

d) To whom and to what do you give your loyalty as a person and as a member of the corporation?

e) What is your intention in making this decision?

f) How does this intention compare with the probable results?

g) Whom could your decision or action injure?

h) Can you discuss the problem with the affected parties before you make your decision?

i) Are you confident that your decision will be as valid over a long period as it seems now?

j) Could you disclose without qualm your decision or action to your boss, your chief executive officer, the board of directors, your family, or society as a whole?

k) What is the symbolic potential of your action if understood? If misunderstood?

l) Under what conditions would you allow exceptions to your stand?

The following criteria can be used in ethical reasoning. They help systematize and structure our arguments.

a) Moral reasoning must be logical. Assumptions and premises, both factual and inferred, used to make judgments should be known and made explicit.

b) Factual evidence cited to support a person’s judgment should be accurate, relevant, and complete.

c) Ethical standards used in a person’s reasoning should be consistent. When inconsistencies among/between one’s ethical standards in an argument or decision are discovered, one or more of the standards must be modified.

5. What single focal question is often most powerful in solving ethical dilemmas?

Answer: A simple but powerful question can be used throughout your decision-making process of solving ethical dilemmas: “What is my motivation for choosing a course of action?”

6. What are two conditions that eliminate a person’s moral responsibility?

Answer: Two conditions that eliminate a person’s moral responsibility for causing injury or harm are ignorance and inability (Velasquez 1988).

7. Return to the case you selected in question 4 above. Briefly explain which of the chapter’s five fundamental principles of ethical reasoning the leaders and/or major stakeholders you identified used and did not use in the case. Which ethical principle(s) would you recommend that they should have used? Why?

Answer: Students’ responses will vary depending on the case they decide to analyze. Their answers may include the following discussion. Five fundamental ethical principles that can be used in our ethical reasoning for choosing particular alternatives and justifying difficult decisions and actions are: (1) relativism, (2) utilitarianism, (3) universalism, (4) rights, and (5) justice. Ethical relativism holds that no universal standards or rules can be used to guide or evaluate the morality of an act. The logic of ethical relativism also extends to cultures. Basically the utilitarian view holds that an action is judged as right, good, or wrong depending on its consequences. The ends of an action justify the means taken to reach those ends. Universalism, also referred to as “deontological ethics,” holds that the means justify the ends of an action, not the consequences. The moral authority that drives the ethics of rights is entitlement. The principle of rights is one of the most powerful concepts enabling and protecting individual freedom, dignity, and choice. The principle of justice deals with fairness and equality. Here the moral authority decides what is right and wrong concerns the fair and equitable distribution of opportunities, as well as of hardships, to all.

8. What are some of the problems characteristic of the principle of cultural relativism? Offer an example in the news of a company that has acted unethically according to the perspective of cultural relativism.

Answer: Students’ responses will vary depending on the news article they decide to analyze. Their answers may include the following discussion. The benefits of ethical and cultural relativism are that these principles recognize the distinctiveness of individual and social values, customs and moral standards. These views take seriously the conscientiousness and unique belief systems of individuals and societies. Social norms and mores are seen in a cultural context. However, ethical and cultural relativism lead to several problems. First, these views indicate an underlying laziness (Steiner and Steiner 1988). Individuals who justify their morality only from their personal beliefs without taking into consideration other ethical principles may use the logic of relativism as an excuse for not having or developing moral standards that can be argued and tested against other claims, opinions, and standards. Second, this view contradicts everyday experience. Moral reasoning is developed from conversation, interaction, and argument. Third, ethical relativists can become absolutists. That is individuals who claim their moral standards are right(regardless of whether other view the standards as right or wrong(can be closed to outside influence and accept only their beliefs as true. In practice, ethical relativism does not effectively or efficiently solve complicated conflicts involving many parties. These require tolerating doubts and permitting our observations and beliefs to be informed.

9. Why is utilitarianism useful for conducting a stakeholder analysis? What are some of the problems with using this principle? Give an example of when you used utilitarianism to justify an ethically questionable act.

Answer: Students’ responses will vary depending on their personal example. Their answers may include the following discussion. Utilitarianism is a useful principle for conducting a stakeholder analysis, since it forces decision-makers to (1) consider collective as well as particular interests, (2) formulate alternatives based on the greatest good for all parties involved in a decision, and (3) estimate the costs and benefits of alternatives for the affected groups (Delong 1981). Problems with utilitarianism include the following:

a) No agreement exists about what the “good” to be maximized for all concerned in different situations is.

b) Utilitarianism does not judge the rightness or wrongness of the actions themselves but, rather, of their consequences.

c) How are the costs and benefits of non-monetary stakes such as health, safety, and public welfare measured? Should a monetary value be assigned to non-marketed benefits and costs such as safety, health, and the environment?

d) Utilitarianism as a principle does not consider the individual. It is the collective, the aggregate, for whom the greatest good is estimated.

e) The principles of justice and rights are ignored in utilitarianism. The principle of justice is concerned with the distribution of good, not the amount of total good in a decision. The principle of rights is concerned with individual entitlements, regardless of the collective calculated benefits.

10. Briefly explain the categorical imperative. What does it force you, as a decision maker, to do when choosing an action in a moral dilemma?

Answer: Kant’s principle of categorical imperative, unlike utilitarianism, places the moral authority for taking an action on an individual’s duty toward other individuals and humanity. Kant’s categorical imperative forces decision makers to take into account their duty to act responsibly and respectfully toward all individuals in a situation. Individual human welfare is a primary stake in any decision. Decision makers also must consider formulating their justifications and reasons as principles to be applied to everyone.

11. Explain the difference between the principles of rights and justice. What are some of the strengths and weaknesses of each principle?

Answer: The principle of justice adds an essential and unique contribution to the other ethical principles discussed so far. Beyond the utilitarian’s calculation of moral responsibility based on consequences, beyond the universalist’s absolute duty to threat everyone as a means and not an end, and beyond the principle of rights, which values unquestionable claims, the principle of justice forces us to ask how fairly benefits and costs are distributed to everyone, regardless of power, position, wealth, and station in life. The principle of rights is one of the most powerful concepts enabling and protecting individual freedom, dignity, and choice. This principle is the cornerstone of American democracy. Moral rights are based on legal rights and on the principle of duties. My moral right implies that you have certain duties toward aiding(or at least not obstructing(my rights. Moral rights are also based on and viewed from an individual perspective, not a societal or group point of view. Individual freedom, welfare, safety, health, and happiness are the essential core values of moral rights. John Rawls (1971), a contemporary philosopher, offers two principles of fairness widely recognized as representative of the principle of justice:

a) Each person has an equal right to the most extensive basic liberties compatible with similar liberties for others(all individuals should be treated equally.

b) Social and economic inequalities are arranged so that they are both (1) reasonably expected to be to everyone’s advantage, and (2) attached to positions and offices open to all(justice is served when all persons have equal opportunities and advantages through their positions and offices to society’s opportunities and burdens.

The limitations of the principle of rights include the following:

a) The entitlement justification of individual rights can be used by certain individuals and groups to disguise and manipulate selfish, unjust political claims and interests.

b) Protection of rights can exaggerate certain entitlements in society at the expense of others. Fairness and equity issues may be raised when rights of certain individuals and groups take precedence over the rights of others in similar situations. Issues of reverse discrimination, for example, have arisen from this reasoning.

c) Also, the limits of rights come into question. To what extent should industrial and governmental practices that may benefit the entire society but threaten certain individual or group rights be permitted to occur?

The obvious practical problems of using the principle of justice include the following: Outside the jurisdiction of the state and its legal judicial systems where ethical dilemmas are solved by procedure and law, who decides who is right and who is wrong? Who has the moral authority to punish whom? Can opportunities and burdens be fairly distributed to all when it is not in the interest of those in power to do so?

12. Which of the four social responsibility modes most accurately characterizes your college/university and place of work? Explain. Do your ethics and moral values agree with these organizations? Explain.

Answer: Students’ responses will vary depending on their personal example. Their answers may include the following discussion. The four social responsibility modes reflect the business roles toward stockholders and a wider audience of stakeholders. They are (1) productivism, (2) progressivism, (3) philanthropy, and (4) ethical idealism.

13. Briefly explain your ethical decision-making style as presented in the chapter.

Answer: Students’ responses will vary depending on their personal example. Their answers may include the following discussion. Stanley Krolick (1987) developed a survey that interprets individual primary and secondary ethical decision-making styles. The four styles he found are (1) individualism, (2) altruism, (3) pragmatism, and (4) idealism. Individualists are driven by natural reason, personal survival, and preservation. Altruists are concerned primarily with other people. Altruists will relinquish their own personal security for the good of others. Pragmatists are concerned primarily with the situation at hand, not with the self or the other. Idealists are driven by principles, rules regulations, and values. Reason, relationships, or the desired consequences of an action will not substitute for the idealist’s adherence to principles.

14. Explain what ethical logic and actions people generally take to persuade you to do something that is ethically questionable .Refer to the ethical decision styles in this chapter.

Answer: Students’ responses will vary depending on their personal example. Their answers may include the following discussion. Stanley Krolick (1987) developed a survey that interprets individual primary and secondary ethical decision-making styles. The four styles he found are (1) individualism, (2) altruism, (3) pragmatism, and (4) idealism. Individualists are driven by natural reason, personal survival, and preservation. Altruists are concerned primarily with other people. Altruists will relinquish their own personal security for the good of others. Pragmatists are concerned primarily with the situation at hand, not with the self or the other. Idealists are driven by principles, rules regulations, and values. Reason, relationships, or the desired consequences of an action will not substitute for the idealist’s adherence to principles.

15. Which of the ethical “quick tests” do you prefer for yourself? Why?

Answer: Ethical “quick test” are:

a) Is it right?

b) Is it fair?

c) Who gets hurt?

d) Would you be comfortable if the details of your decision were reported on the front page of your local newspaper?

e) What would you tell your child to do?

f) How does it smell? (How does it feel?)

Other quick ethical tests, some of which are classical, include the following:

• The Golden Rule: “Do unto others as you would have them do unto you.”

• The Intuition Ethic: We know apart from reason what is right.

• The Means-End Ethic: We may choose unscrupulous but efficient means to reach an end if the ends are really worthwhile and significant.

• The Test of One’s Best Self: “To this action or decision I’m getting ready to take compatible with my concept of myself at my best?”

• The Test of Ventilation: Do not isolate yourself with your dilemma. Get other’s feedback before acting or deciding.

• The Test of the Purified Idea: An action may not be right because someone in a position of power or authority states it is right.

|exercises |

(Responses to the following exercises will vary with students’ experiences and views.

However, sample responses are provided as suggestions where possible.)

1. Describe a serious ethical dilemma that you have experienced. Use the 12 questions developed by Laura Nash to offer a resolution to the problem, even if your resolution is different from the first time. Did you use any of the questions in your original experience? Would any of these questions have helped you? How? What would you have done differently? Why?

Answer: Current events examples of serious ethical dilemmas include:

• Police Chief of Washington, DC resigns due to association with another officer who is being investigated for embezzlement, and blackmail of married men patronizing a Washington gay bar.

• Teamsters’ elections and charges of campaign financing irregularities. Mr. Carey has since been disqualified for reelection as Teamsters President.

• Multiple births due to fertilization techniques. Should “Fetal Reduction” take place?

• Cloning(what are the implications and is there a right reason for human cloning?

2. Identify an instance when you thought ignorance absolved a person or group from moral responsibility. Then identify an example of a person or group failing to become fully informed about a moral situation. Under what conditions do you think individuals are morally responsible for the effects of their action? Why?

Answer: An example of ignorance absolving a person from moral responsibility would be the improperly trained coastguardsman on the deck of the Blackthorn. This person was unfamiliar with the proper signals when two ships are passing each other and caused them to collide, sinking the Blackthorn and the resulting deaths of members of its crew. An example of an organization simply failing to become fully informed is Intel’s crisis with the Pentium chip. Intel acted irresponsibly to its customers by treating them in a negative manner. Individuals are morally responsible for their actions when they involve other people. An action should not be taken if all information is not available or analyzed.

3. With which of the four social responsibility business modes in the chapter do you most identify with? Why? Name a company that reflects this orientation. Would you want to work for this company? Would you want to be part of the management team? Explain.

Answer: The four social responsibility modes are (1) productivists, (2) philanthropists, (3) progressivists, and (4) ethical idealists. Assuming a student identifies with philanthropists mode, a company example would be Merck, who gave away more than $100 million in free medicine to people/country in a disadvantaged environment. Student responses to the rest of this exercise would depend on their modes.

4. Select a corporate leader in the news who acted legally but immorally and one who acted illegally but morally. Explain the differences of the actions and behaviors in each of the two examples. What lessons do you take from your examples?

Answer: Student answers will vary depending on which corporate leaders they choose to analyze.

5. Select two organizations in the same industry that you are familiar with or that are in the media or online news, such as McDonald’s and Burger King, Toyota and General Motors, Virgin Airlines and American Airlines. Research some of the latest news items and activities about each company and its officers over the same time period. Now, using ethical principles and quick tests from this chapter, compare and contrast each. Evaluate how “ethical” each is compared to the other.

Answer: Student answers will vary depending on which organizations they choose to analyze and which ethical principles and quick tests they use to compare and contrast.

Real-time Ethical Dilemma (p. 128)

Now What Should I Do?

This case scenario explores a hypothetical ethical situation as it could occur within an accounting firm.

Cases

Case 6. Samuel Waksal and ImClone (pp. 129-131)

Case 7. Aaron Feuerstein and Malden Mills: How Values Guided Actions in a Post-Crisis Situation (pp. 132-135)

Case 8. Jerome Kerviel: Rogue Trader or Misguided Employee: What Really Happened at the French Bank, Societe Generale? (pp. 136-142)

Case 9. Seeking Two Kinds of Green: Richard Branson’s Venture into Biofuels (pp. 143-145)

Case 10. Ford’s Pinto Fires: The Retrospective View of Ford’s Field Recall Coordinator (pp. 146-150)

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