OBE 117 BUSINESS AND SOCIETY
CRITICAL QUESTIONS? • What Is Ethical Behavior? • How Do We Measure It? • How Do We Learn How to Do It?
CATEGORIZATION OF ETHICAL THEORIES • CONSEQUENTIALISM • DEONTOLOGICAL • HUMAN NATURE
CRITICAL QUESTIONS? • WHAT IS HAPPINESS? • CAN ATTRIBUTES OF HAPPINESS BE RANKED? IF SO RANK THEM
CONSEQUENTIALISM • Jeremy Bentham, John Stuart Mill (Greatest balance of pleasure and unhappiness • ETHICAL EGOISM • Maximizes My Good, Harms Me Least • UTILITARIANISM • Greatest Good To The Greatest Number • Act - Each Person Benefit Community By Their Action • Rule - Create General Rule
CRITICAL QUESTIONS? • WHAT IS DUTY? • ARE PEOPLE INHERENTLY GOOD? • DO HUMANS HAVE NATURAL RIGHTS?
DEONTOLOGICAL • KANTIAN • Good Will - Action freely motivated for right reason • Duty - Reason Guides Will. Duty is an act done simply for the sake of what is right. • Knowledge of Duty - Determined not from local law or custom, but from respect for all rational beings and from universal principles
KANT’S CATEGORICAL IMPERATIVE • UNIVERSAL PRINCIPLE • A person should act that the principle of one’s act could become a universal law of human action in a world in which one would hope to live. • A person should treat other people as having intrinsic value, and not merely as a means to achieve one’s end.
CONTRACTARIAN DEONTOLOGY • John Locke • Each individual has inalienable natural rights. The purpose of society is to protect these rights • Rawls (Veil of Ignorance) • Social Justice is created when rational people would formulate rights if they did not know whether or not these principles would apply to them.
CRITICAL QUESTIONS? • DO ALL HUMANS HAVE POTENTIAL FOR GREATNESS? • WHAT ARE SOME OF THESE POTENTIALITIES? • ARE PEOPLE SOCIAL BY NATURE?
HUMAN NATURE ETHICS • ARISTOTLE • All humans share innate capacities and desires. All Humans are social creatures and therefore have the capacity to become excellent members of society. This is done by studying, becoming wise and participating in politics. • Negative behavior is a result of not being allowed to reach full potential
BUSINESS ETHICS AND ECONOMIC SENSE • Adam Smith • The Wealth of Nations • It is not from the benevolence of the butcher, the brewer,or the baker that we expect out dinner, but from their own interest. We address not heir humanity but their self-love
ADAM SMITH INThe Theory of Moral Sentiments • There is a need to go beyond profit maximization to: humanity, justice, generosity, and public spirit.
ECONOMIC INSTITUTION’SFOUNDATIONS • Common Behavior Patterns • Shared Trusts • Mutual Confidence
OTHER FORMS OF CAPITALISM • Japanese Ethos • Honor • Duty • Confucian • Hard Work • Thrift • Family
Public Good • All Benefit • Non-Competitive • One’s Consumption does not exclude another • EXTERNALITIES • Public Ownership • Public Regulation • Public Concern in Private Decisions
CRITICAL QUESTIONS? • WHAT IS TRUTH? • WHAT IS A LIE?
TRUTHFULNESSEmmanuel Kant 1771 • TRUTH TELLING LEADS TO • DISCOURSE WHICH LEADS TO • FELLOWSHIP WHICH LEADS TO • FORMATION OF A SOCIETY
GENERALLY TO LIE IS EVIL AND TO BE A LIAR IS TO BE A COWARD • SILENCE • Not an option because it is view as unsocial • SECRETS • Telling secrets is like giving presents and a nature inclination. Strength is in keeping them. • TRUTH • Important because one of two way to gain knowledge. The other is experience.
LIE • When giving impression that you are telling the truth • FALSE STATEMENTS OK WHEN • Other person does not have the right to demand the truth • Other person may make wrong use of the truth • Other person may harm you • FLATTERY • Can be act of kindness (weakness) or treachery • FAULT FINDING • OK for someone in authority when used with love, goodwill, or sweetness • SPYING • We have no right to spy on others • ANY ACT THAT WORKS AGAINST FRANKNESS LOWERS THE DIGNITY OF HUMAN KIND
CRITICAL QUESTIONS? • IS IT APPROPRIATE FOR BUSINESS TO HAVE ITS OWN ETHICAL RULES?
Is Business Bluffing Ethical?Albert Carr (1968) • BUSINESS IS A GAME WITH ITS OWN ETHICS • FALSEHOOD IS NOT FALSHOOD WHEN TRUTH IS NOT EXPECTED BY THE OTHER SIDE • THE GAME PRESSURES PEOPLE TO DECEIVE. DECEPTION MUST BE WITHIN LIMITS OF THE RULES OF THE GAME (LAW)
ETHICS ARE OF VALUE WHEN THEY ADD VALUE TO THE BUSINESS • TO WIN ONE MUST PLAY TO WIN • THERE ARE BOUNDARIES TO BEHAVIORS AND DEFINITIONS OF HONESTY, INTEGRITY AND DECENCY WITH THE GAME.
CRITICAL QUESTIONS? • WHAT ARE THE BASIC “SETTLED” ETHICS IN BUSINESS DEALINGS? • WHAT ROLE SHOULD GOVERNMENT (POLITICS PLAY)?
LIMITS OF BUSINESS ETHICSJoseph Betz (1999) • INFORMAL • You may do unto others what experience teaches us they might do to us. • FORMAL • Law
BUSINESS AND LAW • SINCE THE ETHICAL BAR IS SO LOW, SOCIETY MUST CONSTANTLY WRITE LAWS REGULATING BUSINESS.
CRITICAL QUESTIONS? • How much should you trust another in business negotiation? • Is the market place established as a place to deceive others?
Promoting Honesty in NegotiationsCramton & Dees • Foundation Theory • Most people place a high value on their own welfare • There is weakness in all of us • Others will behave ethically only if they expect others to do the same
NEGOTIATION • FALSE IMPRESSIONS • PRIVILEDGED ACCESS TO INFORMATION • USE OF THREATS AND PROMISES • UNDISCLOSED SETTLEMENT PREFERENCES
Asymmetry of Information Verification is Difficult Intention to Deceive is difficult to establish Insufficient resources Interaction is infrequent Ex Post redress is costly Reputation information not available Unique circumstances To much to lose to be honest Factors Affecting Honesty
LIMITING DECEPTION • VERIFY CLAIMS • DEVELOP CONTRACTS (Warranties/ Bonds/ \Escrow) • PRESERVATION OF REPUTATION • LIMIT MORAL HAZARDS (Shirking Responsibilities)
REAL WORLD LIMITS • Legal and Regulatory Protection • Institutional Verification Available • Standard Contracts • Third Party Negotiators • Credentials Individuals Available
PREPARING FOR NEGOTIATIONS • Determine incentives for deception • Determine character of other side • Determine your attitudes toward issues and others
BUILDING TRUST • Face to Face Contact • Create opportunities to display trust • Demonstrate your trustworthiness • Place negotiations in long term context • Bring in trusted intermediaries • Self Protection
CRITICAL QUESTION • HOW DO WE DEFINE WHO WE ARE?
Corporate Roles, Personal Virtues: An Aristotelian Approach to Business EthicsSolomon • Trade in home is appropriate • Trade for profit is not • One has to think of oneself as a member of a larger community • Our sense of self as a virtuous person is defined by that larger community
Six Dimensions of Virtue • COMMUNITY • We are members of a community and our self interest lies in community • When we work we make the organization our community. • EXCELLENCE • Excellence is more than following rules and not doing harm to others. It is constantly raising the bar. It exhibits itself in our thoughts, ideas, feelings, action and how we construct our community.
ROLE IDENTITY • Our ethical standard is partially defined by the role we play in society. • INTEGRITY • Provides an anchor against disintegration. It integrates our roles and responsibilities and the virtues that define them. MORAL COURAGE • JUDGEMENT • Good judgement is the product of upbringing and education. It requires balancing concerns and principles as well as justice and fairness.
TOUGHNESS • It is the willingness to do what is necessary to keep organization viable. This is done knowing it will cause pain and suffering. It is done with compassion. • HOLISM • The process of separation of work, family and community causes alienation. This separation causes narrowness of focus in business activity, education and organizational.
Moral Mazes: Bureaucracy and Managerial WorkJackall • PROTESTANT WORK ETHIC • Control of human impulses by work. The greater the work the greater the accumulation of wealth. Shifted to mean rugged individualism to financial success
BUREAUCRACY • Started as a small collection of clerks. Grew into major portion of most organizations. • Administrative hierarchies • Standardized work procedures • Regularized time tables • Uniform policies • Centralized control
Bureaucracy and Morality • Pyramid of Politics • Power Centralized, allocated, decentralized • Never achieve higher status than boss • Who Gets Credit • Senior Management escapes responsibility by • Avoiding decisions • Delegate • Involve large groups of people
PLEASE THE KING • CEO throw back to medieval times • ORGANIZATIONS ARE UNSTABLE • Mergers, sales, low performance create power changes • SUCCESS AND FAILURE • Socially defined • Luck is necessary but capricious
TIPS FOR FUTURE • APPEARANCE AND DRESS • SELF CONTROL • Be human but not emotional • STYLE • Fast, Decisive, Knowledgeable, Reflect Organization’s Standards • PATRON POWER • Godfathers, Mentors necessary • KNOW HOW TO PLAY THE GAME
DOWNSIDE TO SYSTEM ORGANIZATIONS CAN REMOVE THE PERSON AND REPLACE THEM WITH A REPRESENTATION OF A PERSON (EMPTY SUIT)
CRITICAL QUESTION • WHERE DOES OWNERSHIP OF PROPERTY START?
The Justification of Private PropertyJohn Locke • Base World View • A Cartesian Thinker (Search for Rationality) • Man is Superior and Earth is There to Support Man • Man has an Obligation to Subdue the Earth
PROPERTY RIGHTS • Man has property in his person • Man uses his body to remove from the state of nature • Once his body is jointed with land it becomes his • Value of land is in its improvement
ROBBERY • If taken with permission of all commoners not robbery • Take only what is needed • Take advantage before it spoils • Nothing was made by God for man to spoil or destroy