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Chapter 12
A.ETHICAL THEORIES
1. Relativism and Absolutism
Ethical and moral belief systems of society
Relativism
- Many sets of moral rules
- Rules and beliefs change over time and type of
society (e.g. public execution)
- What is right depends on conditions of the time
- Not one moral truth
- Allows different beliefs e.g. different stances on
abortion
Absolutism
- One set of rules that always true
- Do not change over time or society
- Now tend to believe that one truth per society but
basic morals always be same whatever the culture
(e.g. not killing children)
In business context legislators try to impose a set of
absolute rules, but relevant parties chose to interpret those in
light of relativism (e.g. Money Laundering correct when
individual not harmed)
2
CMD Level
1.1 Preconventional obedience and
punishment
1.2 Pre
conventional
instrumental
purpose and
exchange
2.1
Conventional-
Explanation
Example in
business
Right & wrong
Unethical
defined based go decision taken
expected
because
rewards or
employee
punishment
believes either
from figures of
they will be
authority
rewarded or Co
will not punish
them (e.g. fraud)
Right defined
One employee
according to
covers another
whether there is on understanding
fairness in
that other will
exchanges
cover them next
self interests
time
benefit!
Actions defined
by what
Employee
justifies going on
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expected by
their peers
(those close to
them)
2.2 Conventional Same as above
social accord
but broadened
and system
to social accord
maintenance
not just
immediate peers
interpersonal
accord and
conformity
3.1 Post
conventional
Social contract
and individual
rights
3.2 Post
conventional
universal ethical
principles
Managers
Based on basic
human rights,
values and
contracts of
society
Self-chosen
ethical principles
facebook cause
everyone else
does it
Salaries raised
above average
based to
standard
expected by
pressure groups
in society
Full disclosure of
ingredients even
if no law or no
pressure groups
Stop purchasing
products tested
on animals
level 2
Teleological
- Right/wrong depends on the outcome of
decisions
- Two theories: egoism and utilitarianism
- Egoism: what is right for me?
- Utilitarianism: what is right for the greatest
number
Deontological Approach
Maxim
Explanation Application
to business
1 Act only according to
Principle of Child labour
that maxim by which you consistency managers in
can at the same time will
Europe do
that it should become a The action is not want this
universal law
right if
to become a
everyone
universal law
can follow
i.e. being
the same
applied to
underlying
their children
principle
as well
2 Act so that you treat
Principle of Child labour
humanity always as an
human
dignity of
end and never as a
dignity
child may be
means only
ignored
Other
goods
humans
produced
needs and
cheaply but
expectations their right to
must be
safe and
taken into
accident free
consideratio upbringing
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may be
ignored
3 Act only so that the will Principle of Child labour
through its maxims could Universality would the
regard itself at the same
European
time as universally law
Action
manager like
giving
deemed
the fact that
suitable
his Co was
when
using child
viewed by
labour to be
others not
published in
by person
the
taking it (e.g. newspapers?
when put
action in the
press
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Teleological Approach
Teleological 1: egoism
Egoism in practice
Action morally right if
decision maker freely
decides in order to pursue
either their short term or
long term interests. Pursuit
of self interest will also
ensure society benefits
because outcomes morally
desirable for society
Egoist will do what appears
to be right in society
because it makes them feel
better
Egoism not always work
because actions of all
members of society cannot
be determined
Teleological 2:
utilitarianism
Utilitarianism in practice
Example
Production of poor quality
goods- Bad!
Manufacturer will not sell
thus no profit thus not
pursue his self interest
Society will get poor quality
goods
Exhaustion of resources
means future generations
will not benefit from those
resources
Example
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Principle of Greatest
Happiness
Action ok if good effects
outweigh the bad effects
Effect on collective welfare
is important
Good/bad utility a cost
benefit analysis of decisions
thus making decisions
quantifiable
Difficult to assign benefits
and costs to actions. Also
value placed on those
benefits and actions
depend on the viewpoint of
the person making those
estimates.
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Position
Pristine Capitalist
Underpinning value is shareholder wealth
maximization
Anything that reduces shareholder wealth (such
as acting in a socially responsible way) is theft
from the shareholders
Expedients
Recognize some social responsibility expenditure
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Cultural differences:
- The extent of ethics and CSR varies according to
culture
- The 4 responsibilities have different
connotations in Europe and US
- The European context focuses on ethics and
philanthropic actions being enforced legally
while the US system tends to focus on the
discretionary actions of companies and
individuals.
Cultural differences: CSR and Europe and US
Responsibility
Economic
US
Focused on
profitability and
interests of SH
Legal
Role of
government
Europe
Additional focus
on actions of
organisation e.g.
supporting loss
making Cos in
periods of
recession as
closing it socially
unacceptable
Government and
laws are
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regarded as
minimal and as
interference with
private liberty
Ethical
Philanthropic
Organisations are
normally seen to
be acting ethically
and there is
greater public
trust companies
here than in
Europe
High focus on
philanthropic acts
of individuals and
corporations (e.g.
Angelina Jolie, Bill
Gates) rather
than on any
compulsory legal
framework
necessary to
regulate the
organisations.
Government seen
as law enforcer
Ethical
responsibility is
seen as very
important and
organisations
need to be aware
of the ethics of
their actions
High focus on
regulatory
systems to
provide
appropriate
education,
recreation,
cultural
opportunities
(e.g. museums)
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Corporate stance
-Must provide
adequate return to its
SH
Multiple
-Identify stakeholders
Stakeholder with high power and
obligations influence over the
organisation and
Personal stance
- Small SH
require annual
return on
investment
-Large SH have
little short term
interest in Co
-Concerned
about security
of investment
-Require capital
growth
-Each
stakeholder
group expects
their interests
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-Change society, by
applying its own
positional power either
for corporate or social
benefit
e.g. Mac Donalds
assisted poor eating
habits v. Toyotas
research for pollution
free transport
-Individually
little can be
done to shape
society
-As a group
individuals can
affect
organisations by
the choices that
are made
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