Course 2

Introduction to Business
Ethics
Class 2 :
Laurence Labey
Sources :
Simone de Colle IESEG, BESR 2020
T.Donaldson, P. Werhane, M.cording ( Ethical issues in Business )
A.Wicks, E.Freeman,P.Werhane, K.Martin ( Business Ethics, a managerial approach)
CLASS 2
• Business Ethics
• CSR concepts and stakeholder theory
• Ethical dilemmas
• Definition
• Dilemmas in business
• Teamwork
AGENDA
2
CLASS 1 : the Ethical
decision
Ethics & Normative

ethical theories CLASS 2
Ethical Dilemmas and
Deontology organizational culture
CLASS 3
Utilitarianism Why do we become
Virtue Ethics - Key concepts : BE
- Organizational culture unethical ?
(shareholder, CLASS 4
Examples - Psychological biases &
stakeholder ) Ethical leadership
- Dilemmas in business examples How to be a responsible
- Organizational biases leader – moral
(examples)
- Teamwork imagination concept
- Teamwork : how to take
a good decision
Group project
presentation
COURSES OVERVIEW
3
1. BUSINESS ETHICS , CSR and key concepts of stakeholder theory
WHAT IS BUSINESS ETHICS ?

4
1. WHAT IS BUSINESS ETHICS : What do you think ?

5
BUSINESS ETHICS : AN ACADEMIC DEFINITION
Business Ethics is philosophical analysis applied to economic institutions at:
•macro (the market);
•meso (the corporation); and
•micro (individual decisions) level
aiming at evaluating the moral justification of these economic institutions.
In other words:
• Business Ethics is a tool to reach an agreement around the
moral legitimacy of actions, decisions, policies
• The goal is to apply moral thinking to find reasonable solutions to practical
problems which, in this sense, are ‘objective’ insofar they are “more
reasonable” solutions
WHAT IS BUSINESS ETHICS

6
SOME QUOTES

7
BUSINESS ETHICS : SOME PRACTICAL DEFINITIONS
(M. Hoffman, 2000):
Ethics is the thought process that comes into play when we
are deciding between right and wrong, or more typically,
about weighting two rights.
It’s establishing the process of using appropriate principles of

decision-making, when different values come into conflict with
each other.
In other words:
Business Ethics is a process to translate values into actions and decisions

8
BUSINESS ETHICS : SOME PRACTICAL DEFINITIONS
Business ethics is the application of ethical values to business behavior.
Business ethics is relevant both to the conduct of individuals and to the

conduct of the organisation as a whole.
It applies to any and all aspects of business conduct, from boardroom

strategies and how companies treat their employees and suppliers, to sales
techniques and accounting practices.
( definition of Institute of Business Ethics, UK)

9
ETHICS / BUSINESS ETHICS : applies at different levels in order to
avoid :
At company level :
In human relations : discrimination, harassment
Business bribery
Theft
Accounting issues
At society level :
Misuse of social media
Ethics in Research…….

10
BUSINESS ETHICS : DOES IT MATTER ?
First answer: yes, the absence of ethics can

be very costly for business…

11
EXAMPLES OF CORPORATE ETHICAL FAILURES : harming society
and destroying shareholder value
ENRON :
The energy company's bankruptcy in
2001 after allegations of massive
accounting fraud wiped out $78
billion in stock market value and led
to the collapse of Arthur Andersen
and the passage of the Sarbanes-
Oxley Act of 2002. A class action
settlement of $7.185 billion was the
largest of all time.

12
SHAREHOLDER CAPITALISM : could lead to questionable excess
THE SHAREHOLDER THEORY

13

14
In July 2017, Chinese authorities accused
GlaxoSmithKline (GSK) of using a network of
travel agencies to channel around $489
million in bribes to health officials. The former
head of GSK China, Mark Reilly, was also
charged with corruption in June. Today,
China fined the company a record 3 billion
yuan ($489 million), the largest corporate fine
ever in China. They also sentenced Reilly to
between two and four years in jail. Reuters
reports that Riley will be deported from
China and will not face jail time in the
country.

15
CORPORATE ETHICAL FAILURES : examples of frauds

16
CORPORATE ETHICAL FAILURES : COSTFUL FOR COMPANIES
 Government fines and penalties, disgorgment of profits
 Civil penalties
 Law suits
 Loss of reputation and impact on stockprice
 Legal and investigation costs
 Costs of taking remediation actions
 Loss of tenders opportunities , customers, markets
 Closing of factories
 Loss of jobs
 Loss of trust…..

17
BUSINESS ETHICS : does it matter ?

18
Second answer: yes, the presence of ethics

can be a resource for value creation… (and
managers cannot escape the ethical
dimension of their decisions)

19
OECD Trust in Business Initiative
 is a platform for leaders to catalyse good corporate conduct, examine market
incentives for business decision-making and respond to the expectations of
society in meeting current and future challenges.
 The initiative promotes coordinated action to strengthen trust in the business

ecosystem through:
• Capacity building solutions
• Research and knowledge creation
• Ensuring implementation of guidelines and standards
• Promoting partnerships
• A forum for co-operation and collaboration

20
CSR – a definition
 Unido – united nations industrial development organization
« Corporate Social Responsibility is a management concept whereby

companies integrate social and environmental concerns in their business
operations and interactions with their stakeholders.
CSR is generally understood as being the way through which a company

achieves a balance of economic, environmental and social imperatives
(“Triple-Bottom-Line- Approach”), while at the same time addressing the
expectations of shareholders and stakeholders. »
CSR
21
CSR – a definition
It is not :
 Charity
 Sponsorships
 Philanthropy ( although some theories may include it )
3 basic principles :
 Sustainability : impact of present actions on society’s future at large
 Accountability : assume responsibility for effects of actions both internally and externally
 Transparency : all actions should be apparent to all thanks to the use of the information provided by the organization’s repor
mechanisms.
 Key CSR issues: environmental management, eco-efficiency, responsible sourcing, stakeholder engagement, labor standards and
working conditions, employee and community relations, social equity, gender balance, human rights, good governance, and anti-
corruption measures.
CSR
22
The model has four levels:
CSR – some approaches Economic Responsibilities : they are the foundations on which all other
rests. All organisations try to be profitable. But they are required to find the
ways for generating the profit which can be morally, ethically and legally
allowed and accepted.
Legal Responsibilities : In that respect, all firms are required to play by the
rules of the game and obey what is stated in law of the host country and
follow all relevant rules and regulations set.
Ethical Responsibilities : Firms are obliged to do what is assumed right and

just. They should act ethically towards the concerning issue surrounding the
area of operation and try to avoid harm to the community and general public.
Philanthropic Responsibilities : All firms should contribute resources to the

community and improve the quality of the life of the people connecting to
them and act as a good corporate citizen. All the companies operating around
the world are trying to maximise their profits should be well aware that there
are some responsibilities which should be fulfilled,
CSR
23
Triple Bottom Line :
CSR – some approaches  Works on the assumption that the corporation is a
member of the moral community, and this gives it social
responsibilities. This theory focuses on sustainability,
and requires that any company weigh its actions on
three independent scales
economic sustainability : must focus on the long term

because this is the nature of a persistent company.
social sustainability : company’s commitment to

practice environmental and social sustainability
and environmental sustainability : mmembers of the

moral community ought not cause undue harm to the
people around them and the people who will come
later
CSR
24
BUSINESS ETHICS AS A CORPORATE STRATEGY : THE
STAKEHOLDER THEORY
THE DOMINANT VIEW ABOUT BUSINESS / THE MANAGERIAL VIEW

(OR SHAREHOLDER CAPITALISM )
THE STAKEHOLDER THEORY

25
THE DOMINANT VIEW ABOUT BUSINESS / THE MANAGERIAL VIEW
(OR SHAREHOLDER CAPITALISM )
•Key traits: putting shareholders at the centre
•Problems: Separation Fallacy; focus on trade-offs; counterproductive

•The Shareholder Value Myth (L. Stout, 2012)

26
27
The dominant view about business:

The Managerial View (or Shareholder Capitalism )

28
SHAREHOLDER CAPITALISM
According to this theory, businesses are merely

arrangements by which one group of people, the
stockholders, advance capital to another group,
the managers, to be used to realize specified ends
and for which the stockholders receive an ownership
interest in the venture

29
Milton Friedman
(1912 – 2006) was
SHAREHOLDER CAPITALISM an American economist
and statistician who
received the 1976 Nobel
The Social Responsibility Of Business Is to Increase Its Profits ( Article by MF Memorial Prize in
Sept 1970) Economic Sciences for his
research on consumption
analysis, monetary history
“What does it mean social responsibility of business ? To get the answer you have to look
and theory and the
and ask precisely what it implies for whom. complexity of stabilization
policy.
The key point is that, in his capacity as a corporate executive, the manager is the agent of
the individuals who own the corporation or establish the institution, and his primary
responsibility is to them.”
-> His responsibility is to conduct the business in accordance with their desires
-> he cannot spend the money or expend business resources that have not been
authorizedby the stockholders regardless of any societal benefits that could be accrued by
doing so.

30
3. BUSINESS ETHICS AS A CORPORATE STRATEGY : THE MANAGERIAL VIEW
GOVERNMENT
Source: Wicks,
Freeman, Werhane &
Martin (2010),
SHAREHOLDERS
Business Ethics. A
ACTIVISTS MEDIA Managerial Approach,
Prentice Hall, page 72.
CORPORATE BOARD
MANAGEMENT
EMPLOYEES
COMMUNITY CUSTOMERS
BUSINESS ETHICS AS A CORPORATE STRATEGY

31
SHAREHOLDER CAPITALISM
• Friedman supports ethics and believes that a business should not at one point be
free of ethics but should ensure that at all times the business makes maximum
profits just as long as ‘it stays within the rule of the game’.
• But at the same time he argues that it is not appropriate for a corporate executive
or director to embark on socially responsible programs because there is little
incentive for prudent expenditure, mainly when one is spending money owed to
the shareholders through dividends.
-> moral responsibility of directors is to meet shareholders expectations

32
SHAREHOLDER CAPITALISM : introduction to following video
Enron was created in 1986 by Ken Lay to capitalise on the opportunity he saw arising out of the
deregulation of the natural gas industry in the USA. What started as a pipelines company was
transformed by the vision of a McKinsey consultant, Jeff Skilling, who had the idea of applying models
used in the financial services industry to the deregulated gas industry.
Skilling’s vision : to transform Enron into a giant, asset-light operation, trading power generally and his
next target was trading electricity. Lay was lobbying Washington hard to deregulate electricity supply
and in anticipation he and Skilling took Enron into California, buying a power plant on the west
coast……
…. Finally the experiment in deregulation in California didn’t work well and in due course was reversed
with recriminations all round. Moreover, the international business expansion wasn’t underpinned by
adequate administration and many of the contracts later turned bad.

33
…Enron then took the decision to build on its international presence by becoming a global leader in the water industry and
bought a big water company in the UK, following it up with a big deal in Argentina.
At this point, around 2000, Enron’s reputation was still riding high
However, the rapid expansion had run well ahead of Enron’s ability to fund it, and to address the problem, it had secretly created
a complex web of off-balance sheet financing vehicles. These, unwisely, were ultimately secured, and hence dependent, on
Enron’s rapidly rising share price.
Also, its hard driving culture was underpinned by incentive schemes which promised, and delivered, huge rewards in
compensation packages to outstanding performers… to achieve results, aggressive accounting policies were introduced from an
early stage. In particular, the use of mark to market valuation on contracts produced artificially large earnings, disguising for some
years underlying poor profitability in major parts of the business.
Suspicions grew that Enron’s earnings had been manipulated and in late summer 2001 it emerged that its Chief Finance Officer
had privately made himself rich at Enron’s expense through the off-balance sheet vehicles.
About this time the international power business went radically wrong, the broadband business having to be shut down, the
water business collapsed and the electricity services business got into serious trouble in California. Enron’s share price started to
slide and Skilling, appointed Chief Executive Officer in January 2001, resigned in August….

34
What essentially occurred with the Enron scandal was that there was a high degree of
information asymmetry between the management team and investors in the company.
It likely occurred due to the personal incentives that the management team received. For example,
many C-suite executives are compensated in company stock, as well as collect bonuses when the
shares hit certain predetermined price levels.
Thus, Skilling and his team became determined to boost the stock price of Enron in hopes that their
management incentives would translate in bigger compensation for them. Following the Enron
scandal, companies are now much warier of agency issues and the misalignment of corporate
objectives versus management incentives.

35
SHAREHOLDER CAPITALISM : could lead to questionable excess

36
3. Criticising the Shareholder Value Ideology: Lynn Stout (2012)
“‘Maximize shareholder value’ is an
incoherent and counterproductive
business objective”
(Stout, 2012: vi.)

37
DAMAGING EFFECTS OF SHAREHOLDER VALUE
THINKING
“Shareholder value thinking causes
- corporate managers to focus myopically on short-term at
the expenses of long-term performance;
- discourages investments and innovation;
- harms employees, customers, communities; and causes
companies to indulge in reckless, sociopathic and
socially irresponsible behaviors.
- It threatens the welfare of consumers, employees, commu
nities and investors alike”
(Source: L. Stout, (2012), The Shareholder Value Myth

38
CONCLUSION: WEE NEED A NEW PARADIGM
•Maximizing shareholder value is not a
managerial obligation: it is a managerial choice
•Corporations are real - the shareholders of
the Principal/Agent model
are fictional (homogeneous, short-termist, self-interested
and less prosocial)
•Shareholder primacy can hurt shareholders themselves,
both individually in the short-term and collectively in the
long-term
(Source: L. Stout, (2012), The Shareholder Value Myth

39
ED FREEMAN : THE STAKEHOLDER THEORY

40
Definition of stakeholder
“In a narrow sense, the stakeholders are all those identifiable groups or
individuals on which the organization depends for its survival, sometimes
referred to as primary stakeholders: stockholders, employees, customers, suppliers
and communities.
On a broader level, however, a stakeholder is any identifiable groups or
individual who can affect or is affected by organizational performance in terms
of its products, policies and work processes. In this sense, public interests groups,
protest groups, local communities, government agencies, trade associations,
competitors, unions, and the press are organizational stakeholders”.
(Source: R.E. Freeman (1984): Strategic Management - A Stakeholder Approach.

41

42
IN THE STAKEHOLDER VIEW,
WHAT IS THE PURPOSE OF THE CORPORATION?
•The primary responsibility of the executive is to create as much
value as possible for stakeholders.

•Trying to maximize profits is counterproductive because it takes
attention away from the fundamental drivers of
value: stakeholder relationships.
Source: R E
Freeman, A. Wicks, •If tradeoffs have to be made, as often happens in the real world, then
J. Harrison,
B. Parmar and S. de
the executive must figure out how to make them and immediately begin
Colle (2010), Stakeho improving the tradeoffs for all sides.
lder Theory. The State
of The Art.
•Stakeholder theory focuses on how this can be done…

43
SUMMARY : WHAT STAKEHOLDER THEORY IS
• Stakeholder theory is a theory of organizational management and ethics
• All management theories have some moral content, often implicit; ST has an explicit moral
content:
Managers should take care of the interests and wellbeing of the organization’s primary
stakeholders
• Stakeholder theory is a theory about how business actually does and can work at its best.
• It is about creating as much value as possible for Stakeholders without resorting to trade-offs
Source: Phillips, Freeman and Wicks (2003), “What Stakeholder Theory Is Not”, Business Ethics Quarterly 13(4):479-502.

44
STAKEHOLDER THEORY
• The separation fallacy : claim that the statement "x is a business
decision" has not ethical content.
• According to Freeman :
• Ethics and business are inextricably intertwined. To assert otherwise is
to fall into the separation fallacy.
• It makes no sense to talk about business without talking about ethics.
• It makes no sense to talk about ethics without talking about business.
• It makes no sense to talk about either business or ethics without talking
about human beings.

45
WHAT STAKEHOLDER THEORY IS NOT
• The Stakeholder Approach is Not Anti-Shareholders
• Shareholders are one important group of stakeholders, as well as any other !
• Stakeholder theory is not against profit or against shareholders: it actually states that the
best way to create value (including profit) is to put in place the stakeholder framework
• Balancing stakeholder interests does not mean to treat all equally! Paying attention to
stakeholder concerns does not mean to accept any claim/request
• Managers must prioritize stakeholder concerns based on the strategic purpose and the
values the firm.
Source: Wicks, Freeman, Werhane & Martin (2010), Business Ethics. A Managerial Approach, Prentice Hall, Chapter 3.

46
WHAT STAKEHOLDER THEORY IS NOT
The Stakeholder Approach is not Corporate Social Responsibility (CSR)
• Both stakeholder theory and CSR stress the importance of incorporating societal interests into
business operations.
• But Stakeholder Theory asks managers to coordinate the long-term interests of their organization’s
stakeholders rather than trying to solve social problems as a whole (the two things may coincide
sometimes, but the approach is different) -> the key responsibilities of the business overall, i.e.
corporate responsibilities is a very important but only one part among other corporate
responsibilities.
• CSR prioritizes one aspect of business – its orientation toward the society at large, i.e. its social
orientation – over the other business responsibilities.
• 2017.1.02freeman.dmytriyev (unicusano.it)

47
2. ETHICAL DILEMMAS
ETHICAL DILEMMAS
48
2. ETHICAL DILEMMAS : how would you define them ?
ETHICAL DILEMMAS
49
2. ETHICAL DILEMMAS
Descriptive business ethics theories seek to describe how ethics
decisions are actually made in business, and what influences the process
and outcomes of those decisions.
Descriptive business ethics

• provide an important addition to the normative theories; rather than telling us what
people should do, they seek to tell us what business people actually do.
• Provide a practical understanding of how the ethical theories can be applied
( source Crane and Matten, Business Ethics, Oxford University Press, 2010 (3rd Edition), Chapter 4)
WHAT IS ETHICS ?
50
2. ETHICAL DILEMMAS : The different stages in ethical decision-making
? I KNOW
Wait a minute, we what is the right thing I WANT to I WILL DO
have a choice… to do! (Apply do the right thing! the right thing!
STAGES There is a Normative ethical (Moral Motivation) (Moral Action)
DILEMMA! theories)
WHAT IS ETHICS ?
51
2. ETHICAL DILEMMAS : The different stages in ethical decision-making
Altough one might reach one stage in

the model this does not mean that this
person will move to the next stage
The model distinguishes between

knowing what is the right thing to do
and actually doing something about it.
Or between wanting to do the right

thing and actually knowing what the
best course of action is
WHAT IS ETHICS ?
52
WHICH ETHICAL PRINCIPLE IS MORE
IMPORTANT ?
• try to save everyone’s life?

(but it looks like everyone might die)
• cut the rope and let your father fall (as he
asks you to do) and save yourself and your
Vertical Limit (2000), sister?
Directed by Martin Campbell
DEONTOLOGY
53
DILEMNA PARADIGMS : two different
categories of ethical dilemmas
Right versus Wrong
=> Do the right thing
(Moral Temptation)
Right versus Right

=> Which value is more important?
(Real dilemma)
DEONTOLOGY – DILEMNA PARADIGMS

54
WHAT IS AN ETHICAL DILEMMA
ETHICS AND DILEMMAS

55
FOUR RIGHT V. RIGHT
DILEMMA PARADIGMS (R. KIDDER, 1995)
• Truth vs. Loyalty ( you know the truth about a contingency plan that may
affect your team members but you have given your word to keep the info confidential )
• Individual vs. Community ( in some cases what to do : honour

the individual and privacy rights or protect the community )
• Short-term vs. Long-term

• Justice vs. Mercy ( want to see justice done or want to be merciful because of
a specific situation - example of journalism in KIDDER article )
DEONTOLOGY – DILEMNA PARADIGMS

56
Yet, if we want do the right thing, we need to (try to) apply the analytical tools
offered by Business Ethics
ETHIC
S
LO GY VIRT
ON TO UE E
DE T HICS
UTILITARIANISM
57
HOW TO DEAL WITH AN ETHICAL DILEMMA
The biggest challenge of an ethical dilemma is that it does not offer an obvious solution that
would comply with ethical norms.
-> as we have seen philosophers tried to find solutions to the question “ what should I do ?
There are some approaches to solve an ethical dilemma such as:
•Refute the paradox (dilemma): The situation must be carefully analyzed. In some cases, the
existence of the dilemma can be logically refuted.
•Value theory approach: Choose the alternative that offers the greater good or the lesser
evil.
•Find alternative solutions: In some cases, the problem can be reconsidered, and new
alternative solutions may arise.
ETHICS AND DILEMMAS

58
ETHICAL DILEMMA IN BUSINESS
In business : how can we reach good decision making ?
In order to avoid rationalization ( process of convincing yourself that a decision
is fair and defensible, whereas in fact it serves your self interest ) , there are 3
methods :
1. The Publicity test : this test asks you to scrutinize your reasoning
for a decision by answering to : « could you defend your choice
if it were made public » ?
Example : could you defend your choice if it appeared on the
cover of the Wall street Journal ?
Having to face publicity makes people more critical of their
assumptions and reasoning !
Source Wicks, Freeman , Werhane, Martin : Business Ethics, a managerial approach
ETHICS AND DILEMMAS

59
2. The Reversibility test : this test asks you to put yourself in the position of the person
who would suffer the primary negative consequences of your decision
Example : consider having to fire an employee. Could you defend your reasoning if
you were the one being fired ?
The reversibility test asks whether someone adversely affected could endorse the
reasons for the decision
ETHICS AND DILEMMAS

60
In order to avoid rationalization ( process of convincing yourself that a decision is fair and
defensible, whereas in fact it serves your self interest ), there are 3 methods :
3. The Generalizability test: this test raises the issue of consistency by asking whether you could
defend your decision using the same reasoning in similar cases.
Is the action you are contemplating, and the rationale behind it, something you wish others
would adopt in similar circumstances ?
Example : receiving gifts in business -> would you like it to become a standard whereas this
is currently banned as it creates situations of conflict of interest or situations where you feel
indebted ?
ETHICS AND DILEMMAS

61
ETHIC DILEMNA N°1 :Tatiana’s Tattoo
You are the Head of Personnel in a hotel in touristic city. The Managing Director convenes a
meeting with you to point out that he is deeply bothered as he noticed that morning that
Tatiana, one of the receptionists who has been working for already five years in the hotel, had
a “garish tattoo on her neck, of a very bad taste indeed”. The MD reminds you that among
your responsibility as the head of Personnel, you have to ensure that all employees have a
polished appearance, appropriate to the hotel’s image.
What do you do?
1. I meet with Tatiana and ask her to remove the tattoo, if possible, otherwise to cover
it anytime while on service.
2. I tell the MD that we need to respect individual freedom of expression and
therefore accept Tatiana’s tattoo as part of it.
3. I move Tatiana to a different, less representative job in the hotel (non client-facing)
4. I meet with Tatiana and openly discuss the issue with her, mentioning the MD’s
concerns - hopefully she can suggest a solution.
Simone de Colle
IESEG, BESR 2020
DEONTOLOGY - TEAMWORK
62
ETHICS AND DILEMMAS
63
ETHICS DILEMMA #1
Tatiana’s Tattoo (B)
You have met with Tatiana trying to seek a solution with her…BUT:
She tells you that she feels harassed and refuses to do anything about her Tattoo!
No corporate policy mentions the presence of tattoos on employees body. What do you do?
RIGHT answer for
DEONTOLOGY: Respect
individual freedom of
expression
2
3
UNETHICAL: You are punishing Tatiana
but she did not violate any rule and the tattoo
4 …? (you can write a different choice and explain why) is not offending clients (as far as you know)
GOOD Managerial idea: Let’s write a new
POLICY which will clarify whether Tattoos
are or are not allowed!
ETHICS AND DILEMMAS
64
DILEMMA
British Airways
said its uniform
policy was
changed in 2007
to allow Miss
Eweida and others
to "wear symbols
of faith"
Simone de Colle
IESEG, BESR 2020
ETHICS AND DILEMMAS

65
CLASS DISCUSSION
• Was it a Right vs. Right
or
a Right vs. Wrong dilemma?
• What values were at stakes?
Dilemma Paradigm Values at stake

• Freedom of expression
• Tatiana’s • Individual vs. • Respect local norms
• Keep your word
Tattoo community Simone de Colle
• Respect human dignity IESEG, BESR 2020
• …
ETHICS AND DILEMMAS

66
2. WHAT IS ETHICS (do you remember this question in class 1 ?)
You are in the company Spare Parts Ltd. You are working in the maintenance
department and your manager , who has recruited you, and to whom you deserve
much loyalty, has very brilliant perspectives in front of him. Which is good, as he
recently had difficult days recently in his family, loosing his mother while his wife
has been unemployed since the past few weeks
One day, as you are looking for some piece of information regarding the stock of
spare parts, you discover that your manager, who is the only one to have access to
the computer, apart from you, has sold a few items to an unknown company.
Trying to understand what happens you realize that this company is held by your
manager’swife. What do you do ?
WHAT IS ETHICS ?
67
Some questions managers can consider when looking for benchmarks to test their decision
making :
1. Did I use the decision guides(*) to help frame the cases and highlight the moral dimensions ?
2. Did I think through and address the ethical challenges that were raised ?
3. Did I gather the right information, check the facts, and include all the right people ?
4. Did I use a faire process to make my decision ?
5. Is my decision consistent with the law and the expressed values of my firm and the
community in which the firm operates ?
6. Does my decision pass the publicity test ? The reversibility test ? The generalizability test ?
(*) : for example code of ethics of the company
ETHICS AND DILEMMAS

68
ETHICS AND DILEMMAS

69
END
Laurence LABEY
l.labey@ieseg.fr

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Course 2

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Introduction to Business

Ethics & Normative

WHAT IS BUSINESS ETHICS ?

WHAT IS BUSINESS ETHICS ?

WHAT IS BUSINESS ETHICS

WHAT IS BUSINESS ETHICS ?

It’s establishing the process of using appropriate principles of

WHAT IS BUSINESS ETHICS

Business ethics is relevant both to the conduct of individuals and to the

It applies to any and all aspects of business conduct, from boardroom

( definition of Institute of Business Ethics, UK)

WHAT IS BUSINESS ETHICS

WHAT IS BUSINESS ETHICS

First answer: yes, the absence of ethics can

WHAT IS BUSINESS ETHICS

WHAT IS BUSINESS ETHICS

THE SHAREHOLDER THEORY

WHAT IS BUSINESS ETHICS

WHAT IS BUSINESS ETHICS

WHAT IS BUSINESS ETHICS

WHAT IS BUSINESS ETHICS

WHAT IS BUSINESS ETHICS

Second answer: yes, the presence of ethics

WHAT IS BUSINESS ETHICS

 The initiative promotes coordinated action to strengthen trust in the business

WHAT IS BUSINESS ETHICS

« Corporate Social Responsibility is a management concept whereby

CSR is generally understood as being the way through which a company

 Sustainability : impact of present actions on society’s future at large

Ethical Responsibilities : Firms are obliged to do what is assumed right and

Philanthropic Responsibilities : All firms should contribute resources to the

economic sustainability : must focus on the long term

social sustainability : company’s commitment to

and environmental sustainability : mmembers of the

THE DOMINANT VIEW ABOUT BUSINESS / THE MANAGERIAL VIEW

THE STAKEHOLDER THEORY

•Key traits: putting shareholders at the centre​

•Problems: Separation Fallacy; focus on trade-offs; counterproductive

THE STAKEHOLDER THEORY

The Managerial View ​(or Shareholder Capitalism )

THE SHAREHOLDER THEORY

According to this theory, businesses are merely

THE SHAREHOLDER THEORY

THE SHAREHOLDER THEORY

BUSINESS ETHICS AS A CORPORATE STRATEGY

-> moral responsibility of directors is to meet shareholders expectations

THE SHAREHOLDER THEORY

THE SHAREHOLDER THEORY

THE SHAREHOLDER THEORY

THE SHAREHOLDER THEORY

THE SHAREHOLDER THEORY

THE SHAREHOLDER THEORY

THE SHAREHOLDER THEORY

THE STAKEHOLDER THEORY

THE STAKEHOLDER THEORY

THE STAKEHOLDER THEORY

THE STAKEHOLDER THEORY

THE STAKEHOLDER THEORY

• Stakeholder theory is a theory of organizational management and ethics

THE STAKEHOLDER THEORY

THE STAKEHOLDER THEORY

• Shareholders are one important group of stakeholders, as well as any other !

THE STAKEHOLDER THEORY

•Key traits: putting shareholders at the centre

The Managerial View (or Shareholder Capitalism )