CHAPTER 2 BUSINESS ETHICS

1. CHAPTER 2 BUSINESS ETHICS DAVIDSON, KNOWLES & FORSYTHE Business Law: Cases and Principles in the Legal Environment (8th Ed.)

2. ETHICS AND MORALITY • The Law of Business must consider ethics and morality. • Ethics: guiding philosophy of a group, societal values concerning right and wrong. • Morals: principles of right and wrong measured by an individual’s conscience. • Ethics vary from society to society whereas individual morals remain fairly constant.

3. ETHICAL THEORIES • Consequential and Non-consequential Principles. • Consequential: evaluate action by examining the consequences produced by the action. • Non-consequential: focus of the concept of “duty” rather than what is right or wrong.

4. ETHICAL THEORIES • Consequential Ethics. • Egoism: rightness determined by consequences the act produces for person performing the action. Holds one will act in a manner which produces greatest balance of good over bad for oneself. • Utilitarianism: rightness determined by consequences the act produces for one’s group. Holds one should act in such a manner which will, over time, produce most good over bad for one’s group. • Feminism: emphasizes attention be paid to the effect of decisions on individuals. Focuses on character traits.

5. ETHICAL THEORIES • Non-Consequential Ethical Theories. • Kant and the Categorical Imperative: suggests certain universal moral truths every person must follow in order to act morally and ethically. Imperative that one follow certain perfect truths. • Rawls and the Veil of Ignorance: theory suggesting that rules of ethical behavior be created by persons who ignore their own characteristics and circumstances including gender, race, ethnicity, and/or religion.

6. ETHICAL THEORIES • Other Theories: • Relativism: states that two people or two societies may hold opposed ethical views to one another, and yet both may be correct. • The Golden Rule: advises each person to “do onto others as you would have others do unto you.”

7. A SYNTHESIS FOR ETHICAL DECISION MAKING • Individual and business factors to consider when charting an ethical protocol: • Short and long term impact on of the decision on society and the organization. • Who will be affected and to what degree by the decision. • Whether the decision and subsequent ethical protocol is compatible with the law.

8. A SYNTHESIS FOR ETHICAL DECISION MAKING • Factors considered when making a decision: • The obligations that arise from organizational relationships. • The ideals involved in any decisions that are made. • The effects or consequences of alternative actions.

9. GAME THEORY OF BUSINESS ETHICS • Business is an Amoral Institution: originally held business to be amoral meaning they could not act morally or immorally as they were not natural persons. • The “Game Theory”: operating a business is like playing a game. No longer practical as government now establish the rules (legal regulations) for business.

10. SOCIAL CONTRACT THEORY • Holds that businesses owe duties to society as society allows business to exist. Social Contract Theory considers: • The Changing Social Environment. • Problems with Business Ethics: no fixed guidelines to follow and no formal code of ethics that a business should follow. • The Human Factor. • The Legal Aspect.

11. MULTINATIONAL ETHICS • Global Competition and Marketing Opportunities. • Demand business consider social values in other countries where firms do business.

12. RECOMMENDATION FOR BUSINESS • Create framework for business ethics: • Adopt synthesis approach to resolve ethical issues. • Consider public image and consequences of actions. • Adapt ethical standards as rapid change is constant in business. • Work with government rather than against • Will not be easy but alternative is increased regulation and public mistrust.