Lecture one: Fundamentals of business ethics
Key definitions:
Morality: Human ability to distinguish between right and wrong.
Ethics: systematic study of morality
Ethical theories: principles and rules that determine right and wrong in different
situations.
Normative ethics: the study of how we should behave
Ethical absolutism: Belief of eternal ethical rules universally true and applicable.
Ethical relativism: claim of ethics being context related and subjective
Ethical pluralism: considers all theories and does not compare them on the same
ground.
Ethics
- Usually is anthrophocentric, meaning it focuses on what is right and wrong
from a human perspective
- it is not just theoretical but aims to affect the practice
- Different theories can give a completely different solution to the same problem
- business ethics focuses on business situations
Law is not the same as ethics, they don't overlap directly.
The Moral Machine:
The experiment makes people choose between who will be sacrificed in a car
accident, usually we have some shared preferences by the people.
Also is important the wording of the problem, and not always the people want to
choose (Preference for inaction), we see that some groups of entities invoke different
reactions, when present a stroller on the road people are more prone to save it and
when a cat present they prefer to sacrifice that instead of a human life.
Normative Ethical theories:
Our main ethical theories mainly stand between Principles -> Actions or Action ->
Outcomes, it means that PA (Principles -> Actions) theories focus on making the
action dictated by the Principles that the person follows, on the other hand AO
theories focus on the outcome of the action, and those are the main 4 theories:
Outcome oriented:
● Ethical egoism: this view puts the individual in the center, seeking short or
long term interest of the person, doing so it opens the possibility to harm
others for their own benefit contradicting our moral principles. Enlightened
egoism instead focuses on the long term human interest.
● Utilitarianism: this theory claims that is morally right what results in the
greatest amount of good to the greatest amount of people affected, it is very
, popular in economics. Problems with this theory are that good is subjective
and difficult to compare, also there are difficulties with the distribution of
wealth, it can not respect basic rights and lacks reciprocity.
Principles oriented:
● Ethics of duties (Kant): main concepts of this theory are duty, consistency,
dignity and universality, duties does not mean mechanically following the rules
but involves human ability to develop moral laws and rules. This theory gives
also categorical imperatives which help shape our actions:
○ Universal applicability: works for every human
○ Respect for persons: do not use humans as tools
The main problems with this theory are that it is too abstract, morality can be
a heavy burden its founded too strictly with the use of reason and undervalues
outcomes
● Right and Justice: This theory states that there exist human rights common
to everybody and everybody should try to protect, respect and support them.
Justice is the fair treatment of individuals in a given situation where everyone
gets what they deserve.
Alternative theories:
● Virtue ethics:The central aim is not to fulfill duties or aim for the greatest
good, but to lead a good life. Virtue ethics focuses on the character of the
individual decision-maker.
● Feminist ethics: Instead of abstract moral principles, feminist ethics
emphasizes caring, empathy, and harmonious and healthy social
relationships.
● Discourse ethics: Discourse ethics focuses on solving ethical conflicts
through democratic dialogue and providing a process of norm generation.
● Postmodern ethics:Moving away from rationality, postmodern ethics focuses
on emotional moral impulses towards others, and focuses on individual
questioning of universal rules
Ethical Leadership (Ciulla 2020)
Ethics and effectiveness: What is the meaning of a good leader, there are 2 ways
to express it: morally good (integrity, clean, fair ecc..) and technically good
(competent, skillful).
An incompetent but ethical leader can do as much harm as an competent and
unethical one.
There are cases where ethics and effectiveness is strictly proportional (Tylenol cases
Jonhson and johnson)
Leadership is a normative social construction it changes over time with society
, The Hitler problem: was hitler a leader? Under a purely descriptive lens it could
seem so but putting ethics into it we would consider him a tyrant or a bully.
Eva kort has a solution and distinguishes leaders in “purported” leaders from “real
leaders" (when followers voluntarily endorse and act following the ideas of the
leader considering him competent and ethical.
How to judge a leader? Often outcomes are outside of a leader's control and it is
hard to judge them. Bernard Williams describes two types of moral luck:
● Intrinsic moral luck: based on the thought process what was considered
what not and how luck had influence on it
● Extrinsic moral luck: when external factors influence the outcome of a
decision
Romance of leadership happens when people naturally overestimate the control of
a leader over the outcomes
A leader often has to make tough choices, Macchiavelli says that a good leader has
to know when not to be good to prevent greater harm, Also Micheal Walzer’s “dirty
hands” says that when presented with a moral dilemma when there are not good
choices the leader must feel “dirty” which is better the becoming comfortable with
moral compromise.
The “Bathsheba Syndrome” explains why highly successful and previously ethical
leaders suffer from sudden moral collapses, the main struggles are:
● Loss of focus: success distracts leaders from their primary duty
● Privileged access: power provides easy access to personal indulgences
● Control illusion: They overestimate their control over outcomes
● Escalating coverups: Conver ups makes the situation worse then admitting
to error
Requiring leaders to be purely altruistic would not be a feasible bath, a complete
altruistic person would focus on the good of others rather than his own and that
would lead to a miserable life.
Also leaders should be put on the same moral standards as other people, not higher
or lower, a higher one creates disillusion and the lower reduces ethics.
Key definitions:
Morality: Human ability to distinguish between right and wrong.
Ethics: systematic study of morality
Ethical theories: principles and rules that determine right and wrong in different
situations.
Normative ethics: the study of how we should behave
Ethical absolutism: Belief of eternal ethical rules universally true and applicable.
Ethical relativism: claim of ethics being context related and subjective
Ethical pluralism: considers all theories and does not compare them on the same
ground.
Ethics
- Usually is anthrophocentric, meaning it focuses on what is right and wrong
from a human perspective
- it is not just theoretical but aims to affect the practice
- Different theories can give a completely different solution to the same problem
- business ethics focuses on business situations
Law is not the same as ethics, they don't overlap directly.
The Moral Machine:
The experiment makes people choose between who will be sacrificed in a car
accident, usually we have some shared preferences by the people.
Also is important the wording of the problem, and not always the people want to
choose (Preference for inaction), we see that some groups of entities invoke different
reactions, when present a stroller on the road people are more prone to save it and
when a cat present they prefer to sacrifice that instead of a human life.
Normative Ethical theories:
Our main ethical theories mainly stand between Principles -> Actions or Action ->
Outcomes, it means that PA (Principles -> Actions) theories focus on making the
action dictated by the Principles that the person follows, on the other hand AO
theories focus on the outcome of the action, and those are the main 4 theories:
Outcome oriented:
● Ethical egoism: this view puts the individual in the center, seeking short or
long term interest of the person, doing so it opens the possibility to harm
others for their own benefit contradicting our moral principles. Enlightened
egoism instead focuses on the long term human interest.
● Utilitarianism: this theory claims that is morally right what results in the
greatest amount of good to the greatest amount of people affected, it is very
, popular in economics. Problems with this theory are that good is subjective
and difficult to compare, also there are difficulties with the distribution of
wealth, it can not respect basic rights and lacks reciprocity.
Principles oriented:
● Ethics of duties (Kant): main concepts of this theory are duty, consistency,
dignity and universality, duties does not mean mechanically following the rules
but involves human ability to develop moral laws and rules. This theory gives
also categorical imperatives which help shape our actions:
○ Universal applicability: works for every human
○ Respect for persons: do not use humans as tools
The main problems with this theory are that it is too abstract, morality can be
a heavy burden its founded too strictly with the use of reason and undervalues
outcomes
● Right and Justice: This theory states that there exist human rights common
to everybody and everybody should try to protect, respect and support them.
Justice is the fair treatment of individuals in a given situation where everyone
gets what they deserve.
Alternative theories:
● Virtue ethics:The central aim is not to fulfill duties or aim for the greatest
good, but to lead a good life. Virtue ethics focuses on the character of the
individual decision-maker.
● Feminist ethics: Instead of abstract moral principles, feminist ethics
emphasizes caring, empathy, and harmonious and healthy social
relationships.
● Discourse ethics: Discourse ethics focuses on solving ethical conflicts
through democratic dialogue and providing a process of norm generation.
● Postmodern ethics:Moving away from rationality, postmodern ethics focuses
on emotional moral impulses towards others, and focuses on individual
questioning of universal rules
Ethical Leadership (Ciulla 2020)
Ethics and effectiveness: What is the meaning of a good leader, there are 2 ways
to express it: morally good (integrity, clean, fair ecc..) and technically good
(competent, skillful).
An incompetent but ethical leader can do as much harm as an competent and
unethical one.
There are cases where ethics and effectiveness is strictly proportional (Tylenol cases
Jonhson and johnson)
Leadership is a normative social construction it changes over time with society
, The Hitler problem: was hitler a leader? Under a purely descriptive lens it could
seem so but putting ethics into it we would consider him a tyrant or a bully.
Eva kort has a solution and distinguishes leaders in “purported” leaders from “real
leaders" (when followers voluntarily endorse and act following the ideas of the
leader considering him competent and ethical.
How to judge a leader? Often outcomes are outside of a leader's control and it is
hard to judge them. Bernard Williams describes two types of moral luck:
● Intrinsic moral luck: based on the thought process what was considered
what not and how luck had influence on it
● Extrinsic moral luck: when external factors influence the outcome of a
decision
Romance of leadership happens when people naturally overestimate the control of
a leader over the outcomes
A leader often has to make tough choices, Macchiavelli says that a good leader has
to know when not to be good to prevent greater harm, Also Micheal Walzer’s “dirty
hands” says that when presented with a moral dilemma when there are not good
choices the leader must feel “dirty” which is better the becoming comfortable with
moral compromise.
The “Bathsheba Syndrome” explains why highly successful and previously ethical
leaders suffer from sudden moral collapses, the main struggles are:
● Loss of focus: success distracts leaders from their primary duty
● Privileged access: power provides easy access to personal indulgences
● Control illusion: They overestimate their control over outcomes
● Escalating coverups: Conver ups makes the situation worse then admitting
to error
Requiring leaders to be purely altruistic would not be a feasible bath, a complete
altruistic person would focus on the good of others rather than his own and that
would lead to a miserable life.
Also leaders should be put on the same moral standards as other people, not higher
or lower, a higher one creates disillusion and the lower reduces ethics.
