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 an act is considered morally right or acceptable
if it produces some desired result, i.e.,
pleasure, knowledge, career growth, a self-
interest, or utility
 assessing the moral worth of a behavior by
looking at its consequences (consequentialism)

Two Teleological
 Egoism: right or acceptable behavior in terms of
consequences for the individual
 maximize your self-interest, concerned with the
consequences, seeking alternative that contributes the
most to self-interests
 Utilitarianism: concern with consequences in
terms of seeking the greatest good for the greatest
number of people
 looking for the greatest benefit for all those affected by
a decision

 An action is right if and only if it achieves the
greatest good for the greatest number.

 Utilitarianism makes moral judgments based

on the consequences of actions, or
consequences of rules of actions

(Greek: deon-duty; logos-science)

 An action is right if it is an action of a certain

kind; if it is your duty to perform. An action is
wrong if it is your duty not to perform.

 For example, always wrong to torture, rape,

enslave someone, no matter what the
consequences are.


 focuses on the rights of the individual and on

the intentions associated with behavior not on
the consequences
 believe there are some things we should not
do regardless of the utility

An analytical approach to ethical problems
Step 1

Utility Are benefits
Are human
Do benefits and costs
exceed costs? fairly

Yes No Yes No Yes No

Step 2

Compare results

If yes is the answer to all If no is the answer to all

three questions, it is three questions, it is
probably ethical probably unethical

If the answers are

mixed, it could be either
ethical or unethical

Step 3

Assign priorities to

Utility Rights Justice



Business Ethics: What Does It
Really Mean?
 Ethics involves a discipline that examines
good or bad practices within the context of a
moral duty
 Moral conduct is behavior that is right or
 Business ethics include practices and
behaviors that are good or bad

Business Ethics: What Does It Really

Business Ethics:Today vs. Earlier Period

Expected and Actual Levels

of Business
of Business Ethics



Ethical Problem Business

1950s Time Early 2000s

Why ethical problems occur in business
Nature of
Reason ethical Typical Attitude
problem approach
Personal gain Selfish interest Egoistical "I want it!"
and selfish versus others' mentality
interest interests
Competitive Firm's interest Bottom-line "W e have to
pressures on versus others' mentality beat the
profits interests others at all
Business goals Boss's interests Authoritarian "Do as I say,
versus personal versus mentality or else!"
values subordinates
Cross-cultural Company's Ethnocentric "Foreigners
contradictions interests versus mentality have a funny
diverse cultural notion of
traditions and what's right
values and wrong."

Ethics and the Law

 Law often represents an ethical minimum
 Ethics often represents a standard that exceeds
the legal minimum
Frequent Overlap

Ethics Law

Why should business be ethical?

Fulfill public expectation for business.

Prevent harming others.
Seek profitability.
Improve business relations and employee productivity.
Reduce penalties under U.S. Corporate Sentencing Guidelines.
Protect business from others.
Protect employees from their employers.
Promote personal morality.

Factors Influencing Ethical Behavior

Have an
ethical day!

Leadership Strategy and Performance

Corporate Individual
Culture Characteristics

Sources of Ethical Norms

Regions of
Fellow Workers Fellow Workers

Family Profession
The Individual
Friends Employer

The Law Religious

Society at Large

Developing Moral Judgment


A ge g ro u p D e ve lop m en t sta ge a n d B asis of eth ic s
Stages of m amoral
jo r eth ic s development
referen t r ea soand
n in g
M ature ad u lth oo d S tagethical
e 6 U n iv ersa reasoning
l p rin ciples: P rin cip le -c entered
Ju stice, fairne ss, u n iv ersal re aso n ing
hu m an rig h ts
M ature ad u lth oo d S tag e 5 M o ral be liefs a bo v e P rin cip le -c entered
an d b ey on d sp ecific so cial re aso n ing
cu stom : H u m an rig h ts, social
co ntract, bro ad co nstitu tio nal
prin cip les
A d ulth oo d S tag e 4 S o cie ty at larg e: S oc iety -an d -la w
C ustom s, trad itio ns, law s cen te red rea so ning
E a rly a du lth oo d , S tag e 3 S o cia l gro up s: F rien ds, G rou p -ce ntered
ad o le scen ce sch o ol, co w o rk ers, fa m ily re aso n ing

A d o le sce nce , S tag e 2 R e w a rd se ek ing : E go -ce ntered

y o uth S elf-interest, o w n n ee ds, re aso n ing
recip rocity
C h ild h oo d S tag e 1 P u n ishm en t a vo idan ce: E go -ce ntered
P un ish m en t av o id an ce, re aso n ing
ob ed ience to p ow e r

Source: Adapted from Lawrence Kohlberg, The Philosophy of Moral Development (New York: Harper & Row, 1981).

Elements of Moral Judgment

Amoral Managers Moral Managers

Moral Imagination
Moral Identification
Moral Evaluation
Tolerance of Moral Disagreement
and Ambiguity
Integration of Managerial and Moral
A Senses of Moral Obligation

The components of ethical climates
Focus of ethical concern
Individual Company Society
Egoism Self- Company Economic
(self-centered interest interest efficiency
Ethical criteria

Benevolence Friendship Team Social
(concern-for- interest responsibility
others approach)
Principle Personal Company Laws and
(integrity morality rules and professional
approach) procedures codes

Source: Adapted from Bart Victor and John B. Cullen, The Organizational Bases of Ethical Work Climates,
Administrative Sciences Quarterly 33(1988), p. 104.

How to Build in Ethics


Codes of Conduct
 Must provide clear direction about ethical
behavior when temptation to behave
unethically is strongest.
 But, also must leave room for a manager to use
his or her judgment in situations requiring
cultural sensitivity.
 Intl. managers who are not prepared to grapple
with moral ambiguity and tension should pack
their bags and come home

How to support ethical decision

making in the organization?
 culture, values & programs
 compliance & leadership
 recognition of the role of co-workers &
 balancing stakeholder interests
 management of situational pressures
 rewards beyond short-term performance

Creating an Ethical Corporate
 Core values are not specific enough to guide managers through
actual ethical dilemnas.
 Managers should be guided by precise statements that spell out
the behavior and operating practices that the company
 90% of all Fortune 500 companies have codes of conduct.
 70% have statements of vision and values.
 In Europe and the Far East, the percentages are lower but are
rising rapidly.

Business Ethics: It Begins with


As Leaders, we must do a better job at creating

and sustaining organizational cultures that
support ethical behavior.

Guidelines for Ethical Leadership
 Treat corporte values and formal standards of
conduct as absolutes.
 Design and implement conditions of
engagement for suppliers afnd customers.
 Allow forwign business units to help
forlmulate ethical standards and interpret
ethical issues.
 In host countries, support efforts to decrease
institutional corruptions.
 Exercise moral imagination.

Two approaches to ethics programs

and their effectiveness
Compliance-based programs
Rooted in avoiding legal sanctions.

Companies will establish rules and guidelines for employees to follow.

Emphasizes threat of detection and punishment.

Assumes employees are driven by self-interest.

Research evidence shows that employees do care about moral

correctness of their actions.

Sources: Lynn Sharp Paine, Managing for Organizational Integrity, Harvard Business Review, March/April 1994, pp. 106-117
and Gary Weaver and Linda Klebe Trevino, Compliance and Values Oriented Ethics Programs: Influences on
Employees Attitudes and Behavior, Business Ethics Quarterly, 9(1999), pp. 315-335.

Two approaches to ethics programs
and their effectiveness
Integrity-based ethics programs
Combine a concern for the law with an emphasis on employee
responsibility for ethical conduct.

Establish a climate of self-governance for employees based on

general principles as guidelines.

Employees told to act with integrity and conduct business dealings

in an environment of honesty and fairness.

Employees are thought of as social beings, concerned for the

well-being of others.

Researchers found that these programs fostered lower

observed unethical conduct.
Sources: Lynn Sharp Paine, Managing for Organizational Integrity, Harvard Business Review, March/April 1994, pp. 106-117
and Gary Weaver and Linda Klebe Trevino, Compliance and Values Oriented Ethics Programs: Influences on
Employees Attitudes and Behavior, Business Ethics Quarterly, 9(1999), pp. 315-335.