Shareholders vs Stakeholders
Shareholder- company should be made as profitable as possible while complying with the law
Stakeholder-company should consider all those affected by activities
Ex)employees, customers, society, shareholders
Theories of ethics 2 types of approaches
- Right reason- focus on the values underlying the decision (“do the right thing”)
- Right result-focus on the outcome of the decision. (“End up in the right place”)
Utilitarianism
- Book by John Stuart Mill
- Greatest good for greatest number of people
a) maximize happiness minimize pain
b)”the ends justify the means”
Ex) cost benefit analysis
Deontological ethics
- Must always do what is morally right, regardless of outcome. Reasons>results
Immanuel Kant
- Categorical imperative- an act is only ethical if it would be acceptable for everyone to do the same
- Kantian evasion/palter= a truthful statement that is nonetheless misleading
- Criticism- reasons are important but so are results
Distributive Justice (“Rawism Ethics”)
- John Rawls American philosopher
- Life prospects= specific circumstance into which a person is born a hard worker is important, but cannot realistically discount the role of luck.
- “veil of ignorance”-what rules would we propose for society if we did not know how lucky we would be in the lift lottery?
a) different principle= society should reward behavior that provides the most benefit to the community as a whole
Moral universalism
- Existence of certain universal moral truths-some type of behavior are always right or wrong, regardless of what others think
Moral revlavtism
- Cultural relativism- a society’s culture defines what is right or wrong, ethical rules vary from one society to another’s
- Individual relativism- each person must develop their own ethical rules
Moral licensing
Many people are more likely to do something unethical after doing something ethical
Conflict of interest
When one’s vested interests raise question of whether their actions or judgment can be unbiased
Conformity
“ the five most dangerous words in business may be “everyone else is doing it.”
Blind obedience
“JUST FOLLOWING ORDERS”
a) fear of punishment
b)belief/trust in authority figures
c) ability to rationalize
Euphemisms and Reframing
- Ethical decisions require accurate terminology
a) the way info is presented affects people’s response
Diffusion of Responsibility
- Bystander effect- prob to help is related to the number of bystanders
a) much more likely to intervene if alone
Short term perspective
a) optimism bias- people are overly confident in their own success
Blind spots
Confirmation bias- people subconsciously notice/accept evidence that supports their existing beliefs
Front page test
When faced with a difficult ethics decision, think about if that action went viral
Does an organization have a responsibility to take care of its workers when doing what is best for employees does not lead to higher profits?
Shareholder model-no
Stakeholder model-yes
