Business Ethics

Lomonosov MSU BS, Spring 2015/16

Session 1 (April 2, 2016)

Bukhshtaber Natalia,
bukhshtaber@mgubs.ru
Pressure to modern manager

Business
organisations

Shareholder Approach: Freeman, 1984

Pressure to modern manager

Results!!!
Competitiveness
Ambition
Business
organisations

Innovation
Work-Life Balance ?
 Business Ethics: Definitions
“To educate the mind without the morals is to educate a
menace to society” Theodore Roosevelt
“Business is not just about making money, it is also a way to
achieve peace through respect for human rights and social
responsibility” Fr. Oliver Williams
“Business is about people, people and people…”
Richard Branson
• Ethics:
(1) “the principles of conduct that governs individual or a group”
(2) “the study of morality” - a discipline that examines good or bad
practices within the context of a moral duty
• Moral conduct is behaviour that is wrong or right. Morality is a set of
standards (norms) that people has about what is wrong or right
• Ethics applies to all human activities
• Business ethics studies business practices and behaviours that are good or
bad. Business cannot survive without ethics
 What is important about people?
Employees are not Resources. They are people that have their
Rights, Values and Feelings.
The relationships with the people who are employees should
be managed.
Emotional Intelligence
Emotional intelligence is the capacity of
individuals to recognise their own, and
other people's emotions, to
discriminate between different feelings
and label them appropriately, and to
use emotional information to guide
thinking and behaviour.

So, good or bad practices in business are about ...

 People are not an asset
Employers no longer chant the old mantra:
“People are our greatest asset”.
Instead, they claim: “People are our greatest liability”.
For business organisations, this shift will require more than just
a few new programmes and a few new practices. It will require
new measurements, new values, new goals, and new policies.
Peter F. Drucker, 2002
 Relationship: Ethics - Morality
Ethics Morality
Prescribing good actions Proscribing bad actions

Good Benign Indifferent Bad

Positive actions for Avoiding doing Ignoring harm done Taking actions to do
good or to prevent harm, supports the by or to others and harm
harm being done doing of good but disregarding the Taking no action to
takes no positive rights of others prevent harm being
action to do good done
• Social • Bullying and Social
development and • Reciprocity • Lying and irresponsibility
Caring dishonesty • Harming and
• Social • Fairness Social and
responsibility and • Cheating and environmental
Supporting Selfishness disengagement
 Reputation and Trust

Business is about people, and your reputation is built on how you treat people.

In business your reputation affects how likely others are to trust you, and
what kind of deals they'll offer at the negotiating table.

It take years to build trust and reputation and a seconds to destroy it.
 Ethics and the Law
• Law often represents an ethical minimum
• Ethics often represents a standard that exceeds
the legal minimum
Frequent Overlap

Ethics Law
 Sources of Ethical Norms

Fellow Workers Mass Media Country

Family Profession
The Individual
Conscience
Friends Employer

The Law Religious

Society at Large
Beliefs
External Sources of a Manager’s Values
• Philosophical values
• Cultural values
• Professional values
• Religious values
• Legal values etc.

Terminal and
 Instrumental Values
Rokeach, M. (1973). The Nature of Human
Values. New York: The Free Press.

https://study.com/academy/lesson/terminal-
values-definition-examples-quiz.html
 Terminal Values
A Comfortable Life
A World of Beauty 18 Equality
16
A World at Peace 14 An Exciting Life

12
10
Wisdom Family Security
8
6
4
True Friendship Freedom
2 WOMEN MAN
0

Social Recognition Health

A Sense of
Inner Harmony
Accomplishment

Self-Respect Mature Love

Salvation National Security

Pleasure
 Instrumental Values
Ambitious
Self-controlled 18 Broad-minded
16
Responsible 14 Capable

12

10
Polite Clean
8

4
Obedient Courageous
2
WOMEN
0
MAN

Loyal Forgiving

Loving Helpful

Logical Honest

Intellectual Imaginative
Independent
 Ethical Dilemma
Dilemmas are situations or problems where a person
has to make a difficult or unpleasant choice.
If a person decides to act according to one set of
conventional norms or rules then they will break
another set of expectations.
Situation 1 Situation 2
 A map of ethical theories
Individual Processes

Virtue ethics Ethical learning and

growth
• Virtue ethics • Ethical egoism
• Ethical care • Communitarianism
• Individual growth
Principle Policy
Doing right Doing good
Deontological ethics Teleological ethics
(Strict adherence to (Consequentialism)
principles and duties)
• Kantian imperatives • Utilitarianism
• Rights • Discourse ethics
• Justice as fairness

Institutional Structure
Fisher and Lovell, 2009
 Ethical decision making

Moral Moral Moral Moral

Awareness Judgment Intention Action

Does not always happen…

Discuss in your groups:

Why do you think managers sometimes behave unethically even
if they are aware of ethical grounds?
Give examples.
 Grounds for Manager’s Decisions
Manager's perceptions of whether he/she does "what's right"
depend on …
• Respect for the authority structure
• Loyalty
• Conformity
• Performance
• Results
And it is influenced by such things as the situation, the time
frame, the expectations of others, and whether he/she has face-
to-face interaction with the object of the actions etc…
 Management Judgment
Situation 1
The chairman of a company has to decide whether to adopt a new programme. It would
increase profits and help the environment too.
“I don’t care at all about helping the environment “, the chairman says.
“I just want to make as much profit as I can. Let’s start the new programme”.

1) Would you say that the chairman intended to help the environment?
2) Would you say it is an example of ethical judgment?

Situation 2
The chairman of a company has decided to adopt a new programme. The programme
would increase profits but harm the environment .
“I don’t care at all about helping the environment “, the chairman says.
“I just want to make as much profit as I can. Let’s start the new programme”.

1) Would you say that the chairman intended to harm the environment?
2) Would you say it is an example of ethical judgment?
 Management Judgment - Ethics
1. Moral Management: Conforms to high standards of
ethical behaviour.
2. Amoral Management:
– Intentional - does not consider ethical factors
– Unintentional - casual or careless about ethical
considerations in business (bounded ethicality)
3. Immoral Management:
A style devoid of ethical principles and active
opposition to what is ethical.
 Ethical Evaluation Framework

Behavior or act compared with

Ethical norms and
that has been
standards
committed

Judgments and
perceptions of the
observer

• What is more difficult – to judge yourself or others?

• How can you improve the quality of ethical decision

making?
Kohlberg's Levels of Moral Development
Focus: Focus: Focus:
Self Others Humankind

Level 3:
Post-conventional,
Autonomous, or Principled
stages
Stage 6: Universal ethical principle
Level 2: orientation
Conventional stages Stage 5: Social-contract orientation

Stage 4: Law and other morality

Level 1: Stage 3: Good boy / nice girl
Pre-conventional stages morality

Stage 2: Seeking of rewards

Stage 1: Reaction to punishment

http://www.youtube.com/watch?v=XUqT8IHCeLE
 Why managers behave ethically
1. To avoid some punishment
MOST OF PEOPLE
2. To receive some reward

3. To be responsive to family, friends or

MANY OF PEOPLE
superiors

4. To be a good citizen

VERY FEW PEOPLE 5. To do what is right, pursue some ideals

Kinky Boots
 Kinky Boots

The factory consists of people, not of the bricks …