Business Ethics Lecture Notes

Introduction

• Martin Luther King Jr. emphasized that the moral universe bends toward justice, similar to American business morality.
• Ethical behavior is crucial as unethical actions undermine trust, essential for prosperity.
• Employers reward ethical behavior, and companies benefit from ethical reputations.

Processing Ethical Dilemmas

1. Utilitarianism

   • Promotes "the greatest good for the greatest number."
   • Challenges in calculating benefits and defining societal benefits.
   • Example: Organ harvesting from an innocent person is generally unacceptable.

2. Deontological Ethics

   • Rule-based analysis, associated with Immanuel Kant.
   • Actions should be universally justifiable.
   • Example: Lying is generally wrong, but exceptions exist (e.g., protecting someone from harm).

3. Virtue Ethics

   • Focuses on developing virtues like honesty and integrity.
   • Ethical decisions stem from being virtuous.
   • Example: Batman's dilemma in "The Dark Knight" about killing the Joker.

The Moral Minimum

• Honesty: Essential for maintaining relationships and economic well-being.
• Loyalty: Based on trust and confidence in voluntary relationships.
• Keeping Commitments: Necessary for social and commercial relationships.
• Doing No Harm: Avoiding actions that harm others' legitimate interests.
• These principles form the ethical minimum necessary for civilization.

Roadblocks to Ethical Decision Making

1. Self-Serving Bias

   • Tendency to align information with self-interest.
   • Examples: Andy Fastow at Enron, Bernie Ebbers at WorldCom.

2. Framing

   • The context of a question influences decisions.
   • Example: Preference for "90% fat-free" over "10% fat."

3. Role Morality

   • Different moral standards for different roles.
   • Example: A doctor not informing a patient about a condition due to company representation in a lawsuit.

4. Cognitive Dissonance

   • Rejecting information that contradicts beliefs to avoid discomfort.
   • Example: Auditors struggle to recognize clients' wrongdoing.

5. Incrementalism

   • Small changes in behavior lead to ethical violations over time.
   • Example: German doctors' gradual acceptance of unethical practices during the Nazi era.

Behavioral Ethics

• Studies how people make ethical and unethical decisions.
• Draws from behavioral psychology, cognitive science, and other disciplines.

Key Points

1. Individual Moral Responsibility

   • Individuals in organizations have moral obligations not negated by group association.
   • Values should not be neglected in the workplace.

2. Corporations as Moral Agents

   • Debate on whether corporations can be moral agents.
   • Legal entities but act through humans.

3. Corporate Social Responsibility (CSR)

   • Debate on whether corporations should address societal needs beyond legal obligations.
   • Arguments exist for both corporate social contracts and shareholder focus.

Strategies for Ethical Corporate Culture

1. Hiring Ethical People

   • Hire individuals with integrity, intelligence, and energy.

2. Treating Employees Well

   • Fair treatment and respect foster compliance with ethical standards.

3. Codes of Ethics

   • Signal importance of ethical conduct and guide employees.

4. Effective Ethics Training

   • Training should relate to real ethical concerns and emphasize ethics as part of the job.

5. Structuring Compensation

   • Incentivize ethical behavior, avoid aggressive goals that promote unethical conduct.

6. Vigilance

   • Constant attention required to maintain ethical behavior.

Legal Aspects

• Civil vs. Criminal Law:

  • Civil law adjusts rights between individuals; criminal law targets societal wrongs.

• Purpose of Punishment:

  • Rehabilitation, restraint, retribution, deterrence.

• Constitutional Protections:

  • Fourth, Fifth, Sixth, and Eighth Amendments provide various legal protections.

Torts and Negligence

• Negligence:

  • Involves duty, breach, causation, proximate cause, and injury.

• Intentional Torts:

  • Require intentional harm, involve assault, battery, defamation, false imprisonment.

• Defenses in Negligence Cases:

  • Comparative negligence, statute of limitations, no-fault systems.

Intellectual Property

• Types of IP Protections:

  • Trademarks, trade secrets, patents, copyrights.

• Trademark Infringement:

  • Likelihood of confusion, anti-dilution statutes.

• Trade Secrets:

  • Protection through reasonable security measures.

• Patents:

  • Provide exclusive rights for inventions.

• Copyrights:

  • Protect literary, musical, dramatic, and artistic works.

This comprehensive summary captures the essential elements of business ethics, legal principles, and corporate responsibility as discussed in the lecture.