Photo by matthew Feeney on Unsplash
Lecture 3
BUSINESS ENVIRONMENT October, 20th 2021
Int Business & Erasmus
Topic: Business ethics prof. dr. Mateja Drnovšek
Business as a
context for ethical
decisions
Sources of ethics
Process to
ethical decision-
making
BUSINESS ETHICS
PRINCIPLES:
categorical imperative,
utilitarian
Today’s activities
• Guest speaker: Tosama - Ga. Mojca Šimnic Šolinc
• Work in groups
• Business ethics-trailer
• origins
• principles
• process
Why do we need ethics in our lives?
• Challenges:
Practical exercise-part 1
• Prelude: developing a moral awareness
• https://www.youtube.com/watch?v=snm01IG_PHU
Instructions
1.Watch the video (individually, 7 min)
2.Work in teams of 3-4. Zoom participants in break out rooms (10
min). Discuss:
• What are moral vs. immoral decisions (your subjective view). Share in the
group.
• As a group develop a simple rule towards bringing more morality to your
everyday’s life.
• Each group shares in the Discussion (Canvas LMS)
What is business ethics?
• Ethics - study of what is good and evil; right and
wrong; just and unjust.
• Business ethics - applied to the domain of business
environment
• Why do we need business ethics if we have law?
Why do we need business ethics?
frequent overlap
Ethics Law
Why is ethics important in business?
• Business ethics help rms decide what actions are right or
wrong in under circumstances.
• Businesses face more complicated ethical questions than
individuals.
• Businesses need to balance pro t goals with the needs of
society:
• Should a rm release a “life-saving” drug after limited clinical
trials?
• Should a rm relocate to a country with lower labour costs?
• Should a rm get involved in production of ….(weapon..)?
fi
fi
fi
fi
fi
Major sources of ethical values in business
• Religion
Culture
• ideas that form basic building blocks in any society
• reciprocity (encapsulated in golden rule, buddhism…)Religion Law
• Philosophical systems
Philosophy
• 2000 yrs of tradition, no uniform conduct
• the roles in society clearly de ned (warrior, shepherd etc)
• Cultural experience
• stages of development: hunting, agriculture, industrial,
• Legal systems
• codify expectations, government authority; dynamic in nature,
fi
Factors (micro) that in uence ethics of decision making
Leadership
Corporate culture Ethical decision Individual characteristics
Strategy &
performance
Source: Cavusgil et al. 2017, International business
fl
Principles of ethical decision-making
(-) provide structure for reasoning & decision making process
when facing ethical dilemma / improves argumentation
(-) compendium of principles that guide behaviours, ideals vs.
situational
Ethical principles (broad) include:
• respect for human dignity
• fairness
• transparency
• honesty
• non-discrimination
• accountability
Ethical principles - overview
• Categorical imperative
• The utilitarian ethics
• The disclosure rule
• The golden rule
• The ends-mean ethic
EP 1: Categorical imperative-1
• I Kant (1785): “Act only according to that maxim by
which you can at the same time will that it should
become a universal law”
• CI addressees ethical issues in a mathematical way
• exmp: If you want to achieve sth., you need to…
• The imperative supports principles of actions that can be
applied to everyone
EP 1: Categorical imperative - 2
• 4 formulations of CI:
• test of universality: “Could this act be turned into a universal
code of behaviour?”
• command that has no exception
• humanity
• autonomous help
• Criticism:
• dogmatic & in exible
• rule out practices: lying, stealing, promises
• Kant in personal life
fl
EP 2: Utilitarian ethics -1
• Authors: Bentham (1789), Mill (1861) - calculus of pain and
pleasure,
• normative - consequences are important, not the intent
• hedonistic moral philosophy (why do we want sth.?)
• actions should be measured in terms of the happiness or
pleasure they produce
• all individuals are equal (exmp. of a restaurant)
Exmp: Utilitarian ethics-2
• consequences are evaluated in terms of the preferences of
individuals
• preferences are aggregated (“greater good”)
• does not focus on the number of people
who are better off
• social welfare function Alternatives
Individual A B
1 3 3
• Criticism
2 3 5
• quantifying utility
3-decision 3 2
• not all have same maker
• subjective concept of interests & 4 2 4
• aggregation of interests problem Sum 11 14
EP 3: Disclosure ethics
• when in ethical dilemma, a manger should ask:
“how would you feel to explain the decision to a
wider audience?””
• test of public scrutiny: “when in doubt, the test is
whether or not it would survive disclosure in public”
• useful in corporations
• rules out motivations, such as: greed, jealousy
• BUT: not so useful in dilemmas with several
alternatives
EP 4: The ends-means ethics
• Maxim: existus acta probat
• “the ends justi es the means” (N. Machiavelli, 1532, The
Prince)
• opens space for unethical behaviours (use of
unscrupulous means)
• Critique: means often as important as ends (can an
overall good come for an action?)
• exmp: Oracle
fi
EP 5: Golden rule (virtue ethics)
• ideal found in great religions and work of philosophy
• “do unto others as you would have them unto you”
• not knowingly doing harm to others
• Critique:
• ethical values differ & mistaken assumption that
preferences coincide?
• close to it: practical imperative (I. Kant) - “act as to treat
humanity whether in your own person”
• corporate world: test of reversibility (would you change a
place with the person that is affected by your decision)
Implications - ethical systems
• many paths
• try to think using ideas: universalisability, reversibility,
utility, proportionality
• consult others
• cultivate sympathy towards others
• discuss ethical issues in your community
Implications - “how to..” (avoid self-serving bias)
ethically correct approach
Identify decision alternatives Identify decision alternatives
Evaluate alternatives in terms of Managerial decision - choosing
ethics systems best alternative
Search among ethics systems to
Managerial decision making
justify
evaluated alternatives chosen alternative
ACTION RATIONALIZATION
Source: Baron, 2002: Business and its environment
Why are ethical decisions dif cult?
• managers confront distinction between facts and values
• good and evil exist simultaneously
• knowledge of nal consequences is limited
• existence of multiple stakeholders
• antagonistic interests
• ethical standards vary
• the rise of technology
• exmp. of AI
fi
fi
Practical exercise-part 2
• Action: Moral decision making
• https://www.youtube.com/watch?v=WZ2l89wEIwM
Instructions
1.Watch the video
2.Work groups. Discuss:
• Think of a situation (recent) which requested a moral judgment from you.
Share in the group - de ne the situation
• What makes an ethical decision (in terms of elements, processes, other)
(according to your group)
• Think of potential threats regarding this decision!
• Each group shares in the Discussion (Canvas)
fi
Homework 3 (due 27.10.2021)
• Should Batman kill Joker?
(a) Discuss you response using utilitarian ethical principle!
(b) Find another ethical principle and discuss your response!
Questions for re ection
• Why do we need ethics if we have laws and regulations
(in business for example)?
• Which determinants in the organization impact (extent of)
ethical decision-making?
• List at least 5 ethical principles!
• Discuss: categorical imperative, utilitarian ethics, golden
tule, the ends-mean ethics!
• What decision-making process would you use in
reaching an ethical decision?
fl
Extended learning (short videos)
• Motivation to be honest
• https://www.ted.com/talks/
alexander_wagner_what_really_motivates_people_to_be_honest_in_business?language=en
• Becoming as ethical as we think we are (Ted Talk)
• https://www.youtube.com/watch?v=iLRJ4KNxp4Y
• Ethical leadership
• https://www.youtube.com/watch?v=Nmsl1xVx7Ec
• Being your best self (Part 1&2&3) - partially included in group work during the lecture
• https://www.youtube.com/watch?v=snm01IG_PHU
• https://www.youtube.com/watch?v=WZ2l89wEIwM
• https://www.youtube.com/watch?v=c0kJjyZZE7c
•
Readings
• Steiner & Steiner: Business, government and society,
p. 202-282.
• Baron, D. 2002: Business and its environment, p. 682 -
795
• Cavusgil, T., Knight, G., Riesenberger, J. 2017:
International business, p. 114-142
