Business Ethics
General Perception
“Greed”: Main cause of economic misconduct
Ford Pinto
o Car of the lower compact class developed by Ford
o Problem:
Fuel tank behind the rear-wheel
Possibility of leaking fuel, danger of explosion
Engineers hinted to the problem
Managers reasoned about the costs
o Protecting with rubber shell: 137.5 m USD vs. costs of not attaching: 49.5 m
USD
o Ethical evaluation?
No contravention (prevailing rule: tank has to remain intact at the
speed of 20 mph)
Pinto was statistically as secure as every other vehicle
o Problems for Ford:
Loss of reputation (especially when the calculation was discovered)
Trial
First company accused of manslaughter
o Starting point for Corporate Social Responsibility (CSR)
Long-term ethics and commercial success compatible
What is the value of life?
Basic Concepts
Problems in Business Ethics as Interaction Problems (between people)
o Robinson Crusoe and Friday
Individuals are competing for limited resources
Scarcity becomes a social problem
Interaction problem as an economic problem
o Basic elements of problems in business ethics
At least two actors and an environment of scarcity
Cooperation as a solution to scarcity problems
o Distributive Justice: How should the cake be split?
Existing quantity of goods is immutable
Distribution based on rules
, Result should be as equitable as possible
Problem:
Problem of scarcity itself is not addressed and persists
o How distribution is made affects future production
o Allocative Justice: How can we improve the supply of goods quantitatively or
qualitatively to satisfy more demand than before?
Best possible allocation of scarce production factors
Gains from cooperation, problem of scarcity should be mitigated
Limits of individual moral actions
o Decoupling of motive and result morality is interpreted as an unintended
result of intentional action
Business Ethics should not be based on actions and their motives, but on the
conditions under which they are carried out
o Individual virtues cannot solve structural problems
o Problems in business ethics are by nature systemically interaction and
interdependence problems
o Conditions of modern world
Rising degree of complexity in economic relations
Prevalence of mutual interdependences between individuals, firms
and nation states
Ethics and Morality
Classification of Philosophy
o Theoretical Philosophy
What does exist? (Ontology)
What is the order of the world? (Metaphysics)
What can I know? (Epistemology, Philosophy of Science)
What is the relation of language and reality? (Philosophy of Language)
o Practical Philosophy
What should I do? (Ethics)
What is the best means to achieve an end? (Economics)
What is the best order of society? (Political Philosophy)
o History of Philosophy
Morality: complex of rules and norms that should determine people’s actions
o Aggregate of rules of action, standards, norms, values, conceptions of
significance that guide or ought to guide the actions of human beings
Violation leads to violations of oneself and/or others
Ethics: theory of morality (reflecting on morality)
, Descriptive Ethics (describing)
o Description, systematization and explanation of normative systems
o E.g., moral psychology, evolutionary biology, behavioural economics
Normative Ethics (judging)
o Conditions for approval and compliance
o Evaluation of an economic order as “just” or “unjust”
o Contains many empirical constituent parts
o Definition: Ethics is the analysis of human conduct from the perspective of
"good" and "bad" respectively "morally right" and "morally wrong"
o Different from psychology and humanities
Meta-Ethics
o Focuses on nature of morality, often relies on semantic analysis of moral
judgments
o Difference between cognitivism and non-cognitivism (can moral statements be
true?)
o Not directly related to content of rules or norms
o Moral Semantics:
What is the meaning pf moral terms or judgments?
o Moral Ontology:
What is the nature of moral judgments?
o Moral Epistemology
How may moral judgments be supported or defended?
General Perception
“Greed”: Main cause of economic misconduct
Ford Pinto
o Car of the lower compact class developed by Ford
o Problem:
Fuel tank behind the rear-wheel
Possibility of leaking fuel, danger of explosion
Engineers hinted to the problem
Managers reasoned about the costs
o Protecting with rubber shell: 137.5 m USD vs. costs of not attaching: 49.5 m
USD
o Ethical evaluation?
No contravention (prevailing rule: tank has to remain intact at the
speed of 20 mph)
Pinto was statistically as secure as every other vehicle
o Problems for Ford:
Loss of reputation (especially when the calculation was discovered)
Trial
First company accused of manslaughter
o Starting point for Corporate Social Responsibility (CSR)
Long-term ethics and commercial success compatible
What is the value of life?
Basic Concepts
Problems in Business Ethics as Interaction Problems (between people)
o Robinson Crusoe and Friday
Individuals are competing for limited resources
Scarcity becomes a social problem
Interaction problem as an economic problem
o Basic elements of problems in business ethics
At least two actors and an environment of scarcity
Cooperation as a solution to scarcity problems
o Distributive Justice: How should the cake be split?
Existing quantity of goods is immutable
Distribution based on rules
, Result should be as equitable as possible
Problem:
Problem of scarcity itself is not addressed and persists
o How distribution is made affects future production
o Allocative Justice: How can we improve the supply of goods quantitatively or
qualitatively to satisfy more demand than before?
Best possible allocation of scarce production factors
Gains from cooperation, problem of scarcity should be mitigated
Limits of individual moral actions
o Decoupling of motive and result morality is interpreted as an unintended
result of intentional action
Business Ethics should not be based on actions and their motives, but on the
conditions under which they are carried out
o Individual virtues cannot solve structural problems
o Problems in business ethics are by nature systemically interaction and
interdependence problems
o Conditions of modern world
Rising degree of complexity in economic relations
Prevalence of mutual interdependences between individuals, firms
and nation states
Ethics and Morality
Classification of Philosophy
o Theoretical Philosophy
What does exist? (Ontology)
What is the order of the world? (Metaphysics)
What can I know? (Epistemology, Philosophy of Science)
What is the relation of language and reality? (Philosophy of Language)
o Practical Philosophy
What should I do? (Ethics)
What is the best means to achieve an end? (Economics)
What is the best order of society? (Political Philosophy)
o History of Philosophy
Morality: complex of rules and norms that should determine people’s actions
o Aggregate of rules of action, standards, norms, values, conceptions of
significance that guide or ought to guide the actions of human beings
Violation leads to violations of oneself and/or others
Ethics: theory of morality (reflecting on morality)
, Descriptive Ethics (describing)
o Description, systematization and explanation of normative systems
o E.g., moral psychology, evolutionary biology, behavioural economics
Normative Ethics (judging)
o Conditions for approval and compliance
o Evaluation of an economic order as “just” or “unjust”
o Contains many empirical constituent parts
o Definition: Ethics is the analysis of human conduct from the perspective of
"good" and "bad" respectively "morally right" and "morally wrong"
o Different from psychology and humanities
Meta-Ethics
o Focuses on nature of morality, often relies on semantic analysis of moral
judgments
o Difference between cognitivism and non-cognitivism (can moral statements be
true?)
o Not directly related to content of rules or norms
o Moral Semantics:
What is the meaning pf moral terms or judgments?
o Moral Ontology:
What is the nature of moral judgments?
o Moral Epistemology
How may moral judgments be supported or defended?
