Ethics is a study of Morality

Morality: codes that govern the

behavior of a person or a group of
people regarding what is right and
wrong.
Ethics then is a normative study of
morality.
“[Ethics] is a study of what are good and
bad ends to pursue in life and what it is
right and wrong to do in the conduct of
life. It is therefore, above all, a practical
discipline. Its primary aim is to determine
how one ought to live and what actions
one ought to do in the conduct of one’s
life.” (Deigh, 2010).

• How is ethics different from social sciences that study

morality?

• E.g., Anthropology, sociology, psychology

• Normative Study: Investigations that attempts to reach conclusions about what things are
good or bad and what actions are right and wrong.

• Descriptive study: does not try to reach a conclusion about good/bad, right/wrong. It attempts to
describe or explain without reaching any conclusion.
 Principles or standards of conduct-focused on action
Deontological Ethical System: based on rules or
principles that govern decisions.
Immanuel Kant (1724-1804): A moral person is one of
goodwill and makes ethical decisions based on what is
right, regardless of the consequence of the decision.
Standards of Conduct- provide directives for action.
They specify which actions are acceptable (or
obligatory) and which are condemned or prohibited.
1. For any society to function effectively there
must be moral standards that are widely shared
and observed.
2. Universalism
3. Perspective of Religion
Weakness
1. standards of conduct (SOC) can foster a
detached and legalistic approach in which the
rules are mechanically applied and turn a
complex case with powerful emotional
dynamics into a math problem.
Character of the person or company-focused on the agent 2. undue focus on adherence to a given standard as
the sole or primary reason for an action, and
 Addresses issues of character—the traits and qualities may tend to crowd out other considerations.
that define us and shape how others see us. 3. downplay the importance of outcomes,
 A person of good character is someone who possesses especially in cases where the results of
many important virtues (forms of human excellence), following a given standard may be dire.
while someone with bad character has significant
failings or vices (expressions of corruption or a lack of
excellence).
 Virtue Ethics: What is the best sort of life for a human
being to live?
 Character is also something that takes great striving and Consequences of a particular action-focused on the
hard work. outcome
 Virtue and context
 From the virtue ethics perspective, individuals and  Teleological Ethical System: The moral
worth of actions should be determined by the
firms have to “walk the talk” and find ways of doing likely consequences they would generate.
business that enable them to embody the traits to which  Utilitarianism: Directs to make decisions
based on greatest “good” for the greatest
they aspire. numbers as the end result.
Importance of Character Traits  It simply asks that you look at the interests of
the various groups and make decisions
 less concerned with the rules (actions) or the results of bearing that information in mind.
what we do (outcomes). Our concern is how our actions  An end is selected as the ultimate or highest
reveal who we are. good in life, and actions are then evaluated as
Weakness moral or immoral depending on whether they
 Character may lead us to make too much of ourselves help or hinder one in achieving that end.
(and our reputation) in a given situation, rather than  Teleological theories of ethics include
egoism (which identifies the ultimate end as
thinking about what we need to do and what we owe to happiness or pleasure), eudaimonism (which
others. identifies the ultimate end as well-being),
 our own assessments of our character may vary and utilitarianism (which identifies the
significantly from how others look at us. ultimate end as the general good, or welfare,
 character is something that takes time and effort to gain, of humankind).
yet it can be easily lost in moments of weakness. Weaknesses:
 A focus on consequences can constrain our
view of a problem and lead to short-term and
problematic choices that can’t be sustained
over time.
 Consequences are often hard to predict, yet
managers too often put undue weight on
outcomes in their decision making,
particularly since outcomes often appear
more concrete and practical.
 Focusing on consequences may lead us to
disregard or downplay standards of conduct
and the symbolic importance of our actions
(i.e., character).
 Levels of business ethics
Care extended within relationships-focused on relationships
Much of our moral responsibility in life is tied to how we • Individual level
interact with others, live out relational responsibilities, and • Organizational level
create a healthy relational ecosystem both for ourselves and for • Association level
other people. • Societal level
• International level
Carol Gilligan
• E.g. Drug RU 486
an alternative approach to thinking about ethics not as
abstract reasoning about principles and rules in a
detached manner but as emotionally engaged ways of Business Ethics
expressing care or concern for others (including the
self).
 Living well and being a good person is about the • Business ethics comprises principles, values and
capacity to extend care in relationships with others. standards that guide behavior in the world of
 Care is the capacity to provide support and business.
connection to others within a healthy network of
relationships. • Business ethics draws from moral philosophy
 Heinz’s dilemma and from political philosophy (deals with laws
Weaknesses:
and policies).
 Different firms (and strategies) require different kinds
of relationships with various stakeholders, making it • Business ethics investigates 3 issues
challenging to understand what a healthy relationship
involves • Systemic issues- ethical questions
 Maintaining a healthy relationship may entail a about economic, legal and other social
variety of costs that can easily drain organizational sys.
resources and invite forms of “cronyism”—even
corruption—if not carefully monitored and limited. • Corporate issues- e.g. morality of
 Relationships and attachment to others can impede practices, activities, policies, org.
one’s ability to see other competing priorities and
strategies. structure

• Individual issues- e.g. morality of

decision, action or character

 Is morality objective?

 How can we know what is right and wrong?

 Meta Ethics: Concerned with nature of ethical statement and not with prescribing how one should act.

 Those who deny that moral judgements can be true or false adhere to the position called moral or ethical
subjectivism.
o moral judgements are expressions of preference or personal opinion

 Those who believe, on the other hand, that moral judgments can be true or false, and are made so by objective
feature of the world, are called moral realists or moral objectivists.

Hume’s Law / ought, or an ought not paradox

“In every system of morality, which I have hitherto met with, I have always remarked, that the author proceeds for
some time in the ordinary ways of reasoning, and establishes the being of a God, or makes observations concerning
human affairs; when all of a sudden, I am surprised to find, that instead of the usual copulations of propositions, is, and
is not, I meet with no proposition that is not connected with an ought, or an ought not. . . For as this ought, or ought
not, expresses some new relation or affirmation, ’tis necessary that it should be observed and explained; and at the
same time that a reason should be given; for what seems altogether inconceivable, how this new relation can be a
deduction from others, which are entirely different from it.” (Hume, 2012).

Basically the “is-ought problem” concerns whether one can derive a statement of what ought to be the case from what
is the case (or in other words can one derive a normative statement from descriptive statements about the world).
• Moral reasoning refers to the reasoning process by which human behavior, institutions, or policies are judged to be
in accordance with or in violation of moral standards.

• Involves understanding of what moral standards requires, prohibit, value or condemn.

• Evidence or information that shows that a particular person, behavior, institutions, or policies has the
kind of features that these moral standards require, prohibit, value or condemn.

• Moral reasoning must be logical.

• Factual evidence cited in support of a person’s judgment must be accurate, relevant and complete.

• Moral standards must be consistent with each other and with other standards and beliefs the person
holds.

• Moral Authority: Accepting a moral authority that dictates what is right or wrong and what is good or bad. Eg.
Ideology, Religion, culture, peer group or family member.

• Moral Relativism: There are no ethical standards that are absolutely true and that applies or should be applied to
the companies or people of all societies.

• Morality is relative to each culture, individual, country.

• Ethics encourages us to use our ethical reasoning to make judgments about what is right and wrong, good or bad in
any given situation

• Can ethics be effective at transforming individuals into virtuous and good human beings?

• Immanuel Kant, for example, understood that within the discipline of ethics there is a vast gulf which exists
between theoretical speculation and practical implementation. He wrote: “The point is not always to speculate, but
also ultimately to think about applying our knowledge. Today, however, he who lives in conformity with what he
teaches is taken for a dreamer.”

• Arthur Schopenhauer “Virtue cannot be taught, no more than genius…We would thus be just as foolish to expect
that our moral systems and ethics might awaken the virtuous, noble, and saintly as that our aesthetics might
awaken poets, sculptors, and musicians.”

• “The question “what is good?” Is certainly the most important question you can ask. . . For it comes to this: each
of us has one life to live, and that life can be, as it commonly is, wasted in the pursuit of specious goals, things that
turn out worthless the moment they are possessed, or it can be made a deliberate and thoughtful art, wherein what
was sought and, let us hope, in some measure gained, was something all the while worth striving for. Or we can
put it this way: there will come a day for each of us to die, and on that day, if we have failed, we shall have failed
irrevocably.” (Taylor, 2000).

• • Prisoner B co-operates • Prisoner B defects

• Prisoner A co- • A gets 1 year • A gets 3 years

operates
• B gets 1 year • B goes free

• Prisoner A defects • A goes free • A gets 2 years

• B gets 3 years • B gats 2 years

1) Ethics consists of rules and norms that each of us can choose to follow or not follow, hence ethics creates a
prisoner’s dilemma.
2) Repeated interactions/exchanges among the parties makes it more rational to co-operate for mutually advantageous
interactions.
3) The consequences of businesses trying to take advantage of employees, customers, suppliers, or creditors may lead
to retaliation.
4) Customers may lower their willingness to buy products
5) Employees may exhibit higher absenteeism, higher turnover, lower-productivity, demanding high wages.
6) When employees believe that the organization is just, they will be more willing to follow the management, and see
managers’ leadership as legitimate.
7) Ethics is key component of effective management

• Moral disengagement is a process that enables people to engage in negative behaviors, from small misdeeds to
great atrocities, without believing that they are causing harm or doing wrong.

• Psychologist Albert Bandura

• Articulated eight different mechanisms through which it operates.

• Am I using the “greater good” as an excuse to do something wrong? (moral justification)

 • Does my language “sugar-coat” an ethically problematic act? (euphemistic labeling)

• Am I using false or exaggerated comparisons to make my action seem less wrong? (advantageous comparison)

• Am I minimizing the effects of my action to feel better about it? (distortion of consequences)

• Am I denying the essential humanity of those whom my action effects? (dehumanization)

• Am I blaming my actions on my superiors? (displacement of responsibility)

• Am I spreading the blame for my action to others, or assuming that others would also do what I am doing?
(diffusion of responsibility)

• Am I blaming the victims of my actions for what I have done? (attribution of blame)

• What are the various kinds of executive

management decisions? Where do ethical dilemmas arise?

• What dilemmas did Tim Cook face?

• What were Cook’s primary responsibilities, which would have influenced his decision to refuse to succumb to U.S.
government pressure to build a backdoor to the iPhone? Examine the contradiction in these responsibilities, if any.

• Assess the ways in which Tim Cook may have resolved these dilemmas.

• What should Cook have done?

i. A subpoena is a court order to appear at a specific time and place to provide relevant testimony, documents, or
information that the person possesses (or could possess).
ii. A warrant is a court order that authorizes a legal representative (usually law enforcement) to search or seize
property. A warrant will be issued only if there is already reasonable evidence that a crime has been committed and
the search or seizure will provide information relevant to the crime. A warrant cannot be used to determine whether
relevant information exists or be used for a fishing expedition with the hope that something relevant will be
discovered that will prove a crime has taken place.
2. The Commitments of Economic Agents

These commitments are those Cook owed to the company’s shareholders.

• At this specific time, when iPhone sales are slowing down and Apple’s stock prices are declining, what can we say
about Cook’s ability to serve the shareholders of Apple?

• Is Cook in a strong position with the shareholders and

investors, given Apple’s current financial results?

• Are these commitments conflicting with his

responsibility as company leader or with
commitments beyond the firm’s boundaries?”

3. The Commitments as Company Leaders

These commitments pertain to the lives and welfare of

company employees.

• What is Apple’s culture?

• What values do Apple employees embody?

• Is Cook aligned or in conflict with this culture?

• Does Cook’s public stance on various societal

issues find an echo in the organization?

• Would Apple employees support Cook’s stance

against the FBI request?
2. Rights: Which alternative best serves others’ rights, including shareholders’ rights?

• The right to lead a safe and secure life:

• The right to national security:

• The right to digital privacy and security:

3. Integrity/Conscience and Values: What plan can I live with that is consistent with the basic values and commitments of my
company?

4. Pragmatism/Reality: Which course of action is feasible in the world as it is?

Some leaders are out-and-out crooks, and they direct the maleficence from the top. But that is rare. Much more often
employees bend or break ethics rules because those in charge are blind to unethical behavior and may even unknowingly
encourage it.

Companies have poured time and money into ethics training and compliance programs, but unethical behavior in business is
nevertheless widespread. That’s because cognitive biases and organizational systems blind managers to unethical behavior,
whether their own or that of others.

Five Barriers to an Ethical Organisation

Ill-Conceived Goals

When employees behave in undesirable ways, it’s a good idea to look at what you’re encouraging them to do.
E.g. Sears
Case of law firms:
 Research shows that as the uncertainty involved in completing a task increases, the guesswork becomes more unconsciously
self-serving.
 A system designed to promote ethical behavior backfires.
Managerial behavior- providing specifically, moderately difficult goals is more effective than vague exhortations to “do your
best.”

But research also shows that rewarding employees for achieving narrow goals such as exact production quantities may encourage
them to neglect other areas, take undesirable “ends justify the means” risks, or engage in more unethical behavior than they
would otherwise.

Precaution

Leaders setting goals should take the perspective of those whose behavior they are trying to influence and think through their
potential responses.
Motivated Blindness
 ~ people see what they want to see and easily miss contradictory information when it’s in their interest to
remain ignorant
 powerful conflicts of interest that helped blind them to their own unethical behavior and that of the
companies they rated.
Case of credit rating agencies

 The largest agencies, Standard & Poor’s, Moody’s, and Fitch, were—and still are—paid by the companies
they rate.
 These agencies made their profits by staying in the good graces of rated companies, not by providing the
most accurate assessments of them, and the agency that was perceived to have the laxest rating standards
had the best shot at winning new clients.
 Furthermore, the agencies provide consulting services to the same firms whose securities they rate.
 Eg. Hiring Manager
 Eg. Lance Armstrong’s case
 Awareness may not reduce the impact of “conflict of interest” on decision making
 Integrity alone will not prevent them from spurring unethical behavior, because honest people can suffer
from motivated blindness.
 Precaution
Executives should be mindful that conflicts of interest are often not readily visible and should
work to remove them from the organization entirely, looking particularly at existing incentive
systems.

Indirect Blindness

 Why managers and consumers tend not to hold people and organizations accountable for unethical
behavior carried out through third parties, even when the intent is clear.
Eg. Merck
 Participants judging on the basis of just one scenario rated actors more harshly when they carried out an
ethically questionable action themselves (directly) than when they used an intermediary (indirectly). But
participants who compared a direct and an indirect action based their assessment on the outcome.
 These experiments suggest that we are instinctively more lenient in our judgment of a person or an
organization when an unethical action has been delegated to a third party—particularly when we have
incomplete information about the effects of the outsourcing.
 Managers delegate unethical behaviors to others, and not always consciously. They may tell subordinates,
or agents such as lawyers and accountants, to “do whatever it takes” to achieve some goal, all but inviting
questionable tactics.
Eg. Outsourcing
Precaution

 When an executive hands-off work to anyone else, it is that executive’s responsibility to take ownership
of the assignment’s ethical implications and be alert to the indirect blindness that can obscure unethical
behavior.
 Executives should ask, “When other people or organizations do work for me, am I creating an
environment that increases the likelihood of unethical actions?”
The Slippery Slope

 If we find minor infractions acceptable, research suggests, we are likely to accept increasingly major infractions as
long as each violation is only incrementally more serious than the preceding one.
 E.g. Frog in a boiling water
 E.g. Auditors
Precaution

 To avoid the slow emergence of unethical behavior, managers should be on heightened alert for even trivial-seeming
infractions and address them immediately.
 They should investigate whether there has been a change in behavior over time. And if something seems amiss, they
should consider inviting a colleague to take a look at all the relevant data and evidence together—in effect creating an
“abrupt” experience, and therefore a clearer analysis, of the ethics infraction.

Overvaluing Outcomes

 Many managers are guilty of rewarding results rather than high-quality decisions. An employee may make a poor
decision that turns out well and be rewarded for it, or a good decision that turns out poorly and be punished.
 Rewarding unethical decisions because they have good outcomes is a recipe for disaster over the long term.
 people’s inclination to judge actions on the basis of whether harm follows rather than on their actual ethicality.
Precaution

• Manager’s should beware this bias, examine the behaviors that drive good outcomes, and reward quality decisions, not
just results.

Managers Challenges

 Companies are putting a great deal of energy into efforts to improve their ethicality—installing codes of ethics, ethics
training, compliance programs, and in-house watchdogs.
 Survey of 217 large companies indicated that for every billion dollars of revenue, a company spends, on average, $1
million on compliance initiatives.
 Despite all the time and money that have gone toward these efforts, and all the laws and regulations that have been
enacted, observed unethical behavior is on the rise.
 Even the best-intentioned ethics programs will fail if they don’t take into account the biases that can blind us to
unethical behavior, whether ours or that of others.
 What can you do to head off rather than exacerbate unethical behavior in your organization?
 Avoid “forcing” ethics through surveillance and sanctioning systems. Instead ensure that managers and employees
are aware of the biases that can lead to unethical behavior.
 Encourage staff to ask this important question when considering various options: “What ethical implications might
arise from this decision?”
 Above all, be aware as a leader of your own blind spots, which may permit, or even encourage, the unethical
behaviors you are trying to extinguish.