Chapter 1 Discussion Ethics Business Paul L Schumann

Introduction ¨ What did Merck do to deal with the disease “river blindness”? § Why did Merck invest so much money and effort into a drug that made no money? 2

Nature of Business Ethics ¨ What does “ethical” mean to you? ¨ How does Velasquez define “morality”? ¨ What are the five characteristics that distinguish moral standards from other standards? ¨ How does Velasquez define “ethics”? ¨ How does Velasquez define “business ethics”? 3

Nature of Business Ethics ¨ To whom should moral standards apply: § Should a company be morally responsible for its actions? Why? § Should the managers involved be morally responsible for the actions they take in the name of a company? Why? § Should both a company and its managers be morally responsible? Why? 4

Nature of Business Ethics ¨ In what ways do the following issues involving multinational companies raise ethical issues? § Shift operations to a country with cheaper labor and less government regulation. § Transfer materials and money between countries to escape paying taxes. § Transfer products to countries that aren’t ready for the technology. § Different nations have different standards. 5

Nature of Business Ethics ¨ What is theory of “ethical relativism”? § Are there some moral standards that a society must accept if it is to survive? Examples? § Do apparent differences in moral standards across different societies sometimes disappear on closer examination? Examples? § If two people disagree on moral standards, does that mean they both have to be right? Explain? § What are some examples of incoherent consequences of theory of ethical relativism? 6

Nature of Business Ethics ¨ Is it ethical for someone who believes in ethical relativism to impose their ethical relativism morality on others who disagree with ethical relativism? Explain? 7

Moral Development ¨ According to Kohlberg, what is Stage One of moral development? § “The only crime is getting caught. ” How is this an example of Stage One thinking? § Give an example of Stage One thinking. § Give an example of employee behavior in a business that illustrates Stage One thinking. § As managers, how can we motivate a Stage One employee to act ethically? 8

Moral Development ¨ According to Kohlberg, what is Stage Two of moral development? § “You scratch my back and I’ll scratch yours. ” How is this an example of Stage Two thinking? § Give an example of Stage Two thinking. § Give an example of employee behavior in a business that illustrates Stage Two thinking. § As managers, how can we motivate a Stage Two employee to act ethically? 9

Moral Development ¨ According to Kohlberg, what is Stage Three of moral development? § Give an example of Stage Three thinking. § Give an example of employee behavior in a business that illustrates Stage Three thinking. § As managers, how can we motivate a Stage Three employee to act ethically? 10

Moral Development ¨ According to Kohlberg, what is Stage Four of moral development? § Give an example of Stage Four thinking. § Give an example of employee behavior in a business that illustrates Stage Four thinking. § As managers, how can we motivate a Stage Four employee to act ethically? 11

Moral Development ¨ According to Kohlberg, what is Stage Five of moral development? § Give an example of Stage Five thinking. § Give an example of employee behavior in a business that illustrates Stage Five thinking. § As managers, how can we motivate a Stage Five employee to act ethically? 12

Moral Development ¨ According to Kohlberg, what is Stage Six of moral development? § Give an example of Stage Six thinking. § Give an example of employee behavior in a business that illustrates Stage Six thinking. § As managers, how can we motivate a Stage Six employee to act ethically? 13

Moral Development ¨ According to research by Kohlberg and others, does everyone progress through all the stages? Explain. ¨ In what ways are higher stages “better” than lower stages? ¨ How has Carol Gilligan criticized Kohlberg? § What does the research show about Gilligan’s ideas? 14

For & Against Business Ethics ¨ Velasquez argues that “…ethical behavior is the best long-term business strategy for a company…” (p. 5). Do you agree or disagree? Why? Examples? 15

Moral Responsibility ¨ What are the two excusing conditions that can completely eliminate a person’s moral responsibility? § Why is ignorance an excusing condition? • What if a person chooses to be ignorant? • What if the person is ignorant because of negligence? § Why is inability an excusing condition? 16

Moral Responsibility ¨ Your boss orders you to do something unethical. Should you be able to reduce your moral responsibility because you were just “following orders”? § Murder a competitor? § Do you have a moral obligation as an employee to obey the immoral orders of your boss? 17

Case: The Air Force Brake ¨ Cast of characters: § John Warren: engineer who designed brake, short-tempered when challenged § Searle Lawson: 26, engineer grad 1 year ago § Kermit Vandivier: lab asst, 42, married, 7 kids § Robert Sink: Warren’s boss, project manager, not engineer, HS degree, started as draftsman § Richard Gloor: test engineer § Russell Van Horn: Sink’s boss § Russell Line: senior executive 18

Case: The Air Force Brake ¨ What were the 2 key reasons why Goodrich won the bid to make the A 7 D brakes? § Why did Goodrich make an “absurdly low” bid? ¨ How was the brake design to be tested? ¨ Why did the brake design fail the tests? ¨ What happened when the brakes repeatedly failed the tests? 19

Case: The Air Force Brake ¨ Who might be affected by what happens? ¨ What moral issues did Kermit Vandivier face? ¨ What choices did Kermit Vandivier have when he was ordered to write a false report? § What are the pros and cons of each choice? 20

Case: The Air Force Brake ¨ Is it morally right for a person in Vandivier’s situation to write a false report? Why? § What moral standards can we develop to guide our moral judgment? § What is the consistency requirement for moral standards? § Do the moral standards meet the consistency requirement? 21

Case: The Air Force Brake ¨ In terms of Kohlberg’s stages of moral development, at which stage is: § Searle Lawson? Why? § Kermit Vandivier? Why? 22

Case: The Air Force Brake ¨ Additional facts: § After Goodrich submitted the false report, the Air Force began flight tests. § Several near crashes during landings: • When the brakes were applied on landing, the wheels would lock, causing the plane to skid 1500 feet down the runway. 23

Case: The Air Force Brake ¨ Who should be morally responsible for any “accidents” caused by the brakes? § Kermit Vandivier? Why? § Searle Lawson? Why? § John Warren? Why? § Robert Sink? Why? § Russell Line? Why? § Goodrich as a company? Why? 24

Case: The Air Force Brake ¨ Should anyone’s moral responsibility be reduced due to the ignorance or inability excuses? § Kermit Vandivier? Why? § Searle Lawson? Why? § John Warren? Why? § Robert Sink? Why? § Russell Line? Why? § Goodrich as a company? Why? 25

Case: The Air Force Brake ¨ Additional facts: § Vandivier went to a lawyer, then FBI. § Lawson went to a lawyer, then FBI. § Air Force began investigation. § Vandivier resigned from Goodrich. 26

Case: The Air Force Brake ¨ Additional facts: § US Senate held hearings. • • • Vandivier testified. Lawson’s testimony supported Vandivier’s. Sink and others denied wrongdoing. – Vandivier dismissed as a high school grad with no technical training. – Lawson dismissed as young and inexperienced. 27

Case: The Air Force Brake ¨ Additional facts: § Vandivier became a newspaper reporter. § Lawson became an engineer for LTV. § Warren kept his job. § Line was promoted. § Sink was promoted to Line’s job. ¨ What lessons can be learned from this case? 28