Chapter 4 Ethics and Business Decision Making Copyright

Section 1 – Business Ethics

Ethics in the News • After the recent bank and corporate failures and government takeovers, ethics continues to be in the news Jeffrey Pittman - Legal Environment of Business 3

Ethics • Ethics pertains to the study of good versus evil, and to moral behavior • Western philosophy regarding ethics was shaped by ancient Greek philosophers, and by Christianity Jeffrey Pittman - Legal Environment of Business 4

Greek Philosophers • Leading Greek philosophers include: • • • Socrates Plato Aristotle The Cynics The Epicureans The Stoics Plato (c. 428 B. C. - c. 347 B. C. ) Jeffrey Pittman - Legal Environment of Business 5

Why is Business Ethics Important? • Note the difference between the textbook examples of “illegal” behavior versus “unethical” behavior • What does the large number of convicted business executives tell you? Jeffrey Pittman - Legal Environment of Business 6

Ethical versus Legal Standards of Behavior • Laws are promulgated by the government – the law is a mandatory system of rules from an external source • Ethical principles are voluntary, except to the extent the principles are duplicated by the law – ethical principles are shaped by external sources (e. g. , religion), but are ultimately defined by internal decisions • A majority of the material in Chapter 4 is legal – for example, all court cases analyze law only, not ethics Jeffrey Pittman - Legal Environment of Business 7

Section 2 – Approaches to Ethical Reasoning

Duty-Based Ethics • Deontology – Following absolute standards of moral behavior, such standards generally coming from religious sources • Kantian Ethics - Kant’s categorical imperative • The Principle of Rights – Application of rights corresponding to duties of others Jeffrey Pittman - Legal Environment of Business 9

Outcome-Based Ethics • Utilitarianism – Ethical behavior as identified through analyzing the consequences of such behavior • “The greatest good for the greatest number” summarizes this ethical theory • Jeremy Bentham and John Stuart Mill are philosophers associated with utilitarianism Jeffrey Pittman - Legal Environment of Business 10

Lifeboat Example • Compare duty-based ethics to outcome-based ethics in analyzing a lifeboat example discussed in class – the Nineteenth Century British case, Regina v. Dudley and Stephens (14 Q. B. D. 273 (1884)) Jeffrey Pittman - Legal Environment of Business 11

Regina v. Dudley and Stephens • On July 25, 1884, Captain Dudley, seamen Stephens and Brooks, and cabin boy Parker were in a lifeboat 1000 miles from land • After their ship sunk, the men had been 20 days in the lifeboat, 8 without food • Dudley killed Parker food; murder charges later followed Jeffrey Pittman - Legal Environment of Business 12

Miscellaneous

Strategy for Ethical Decision Making • Facts – Gather all necessary facts • Stakeholders – Which stakeholder groups will be affected by the company decision in question • Values – What are your personal values and the company values • Alternative actions – What alternatives actions are possible • Choose and prioritize – Make a decision based on values and impact on stakeholders • Decision and implementation strategy Jeffrey Pittman - Legal Environment of Business 14

Stakeholder Analysis Investors Community Employees Management Government Supply Chain Jeffrey Pittman - Legal Environment of Business 15