Ethics and international business - IB
Lecture 1
Chapter 1
Nature of morality
Ethics
• What is ethics?
The study of what is right and wrong, duty and obligation, moral norms, individual character,
and responsibility
• What is business ethics?
The study of what constitutes rights and wrongs, or a good and bad, in a business context
Ethics vs business ethics
• Moral standards concern behavior that is of serious consequence to human welfare, that
can injure or benefit people
Examples: lying, stealing, killing etc.
• Moral issues in business situations
Examples: whether products are healthful or harmful, work conditions are safe or dangerous,
hiring procedures are biased or fair, privacy respected or invaded
Business ethics
• Examples of ethical questions: what should an employee do when his or her
superiors pressure him/her to compromise ethical standards?
• Examples of ethical misconducts: corruption, illegal practices at the workplace, conf 氀 icts of
interests, public accountability, insider trading, etc.
Ethics and law: what is the difference?
• An action can be illegal but morally right
E.g., gay marriage, when it was
outlawed
• An action can be legal but morally wrong
E.g., brokers are not legally required to act in their customers’ best interest, even when they
are advising about their savings
Ethics and etiquettes: what’s the difference?
, • Etiquettes refer to the social norm of conduct in a given society
• They are nonmoral rules and are meant to serve as guidelines for socially acceptable behavior
• Business has its etiquettes
• Violations of etiquette can sometimes have moral implications
Ethical norms vs organizational norms
Employees of business organizations (especially corporations) are:
• Expected to further profit goals
• Often pressured to compromise moral values and ignore or violate rules of ethical conduct
Individual integrity and moral responsibility
• Conformity
• Groupthink
• Diffusion of responsibility
Moral reasoning
Moral reasoning
• The soundness of moral reasoning = quality of the arguments + the reasoning that
support them
• Determining whether an argument is valid or invalid requires familiarity with the rules of logic
• Argument: a group of statements in which one statement (conclusion) follows from
the others (premises)
• Example:
o All humans are mortal
o Socrates is a human
o Therefore, Socrates is mortal
Argument 1:
• If a person is a mother, the person is a female
• Marijke is a mother
• Therefore, Marijke is a female
> Valid argument: premises logically entail its conclusion
Argument 2:
• If a person is a mother, the person is a female
• Marijke is a female
• Therefore, Marijke is a mother
> Invalid argument: premises do not entail its conclusion
Counterexample
• An example that is consistent with the premises but is inconsistent with the conclusion
Argument 2: counterexample
• Marijke is a two-year-old > consistent with the premises but inconsistent with conclusion
since a 2yo could not be a mother.
Argument 3:
• If a person is a female, she must be a mother
• Marijke is a female
, • Therefore, Marijke must be a mother
Unsound argument
• Have at least one false premise even if the reasoning is valid
Sound vs. unsound argument
Sound argument:
• Have true premises and valid reasoning
• Example: argument 1
Unsound argument:
• Have at least one false premise, as in argument 3, or invalid reasoning, as in argument 2,
or both.
What makes an argument moral?
Arguments whose conclusions are moral judgements.
Argument 4:
• If an action violates the law, it is morally wrong
• Affirmative action on behalf of women and minorities in personnel matters violates the law
• Therefore, affirmative action on behalf of women and minorities in personnel matters
is morally wrong
Criteria for moral reasoning
• Should be logical
o Embedded in valid arguments
o Compatible with moral and nonmoral beliefs
• Should be based on facts
• Should be based on acceptable moral principles
Thus, an argument can be challenged by:
• Uncovering ambiguity in the terms
• Questioning the factual claims
• Challenging the moral standards
Chapter 5
Corporations
What is a corporation?
A corporation is a three-part organization made up of:
1. Shareholders, who provide the capital, own the corporation, and are liable (for
company debt) up to the extent of their investments
2. Managers, who run the business operations
3. Employees, who produce the goods and services
Definition: legal entity, with legal rights and responsibilities similar, but not identical, to those enjoyed
by individuals:
• Right to sue, issue stock, have property, limited-
liability Milton Friedman
• Milton Friedman (1912-2006)
• Nobel laureate economics
Lecture 1
Chapter 1
Nature of morality
Ethics
• What is ethics?
The study of what is right and wrong, duty and obligation, moral norms, individual character,
and responsibility
• What is business ethics?
The study of what constitutes rights and wrongs, or a good and bad, in a business context
Ethics vs business ethics
• Moral standards concern behavior that is of serious consequence to human welfare, that
can injure or benefit people
Examples: lying, stealing, killing etc.
• Moral issues in business situations
Examples: whether products are healthful or harmful, work conditions are safe or dangerous,
hiring procedures are biased or fair, privacy respected or invaded
Business ethics
• Examples of ethical questions: what should an employee do when his or her
superiors pressure him/her to compromise ethical standards?
• Examples of ethical misconducts: corruption, illegal practices at the workplace, conf 氀 icts of
interests, public accountability, insider trading, etc.
Ethics and law: what is the difference?
• An action can be illegal but morally right
E.g., gay marriage, when it was
outlawed
• An action can be legal but morally wrong
E.g., brokers are not legally required to act in their customers’ best interest, even when they
are advising about their savings
Ethics and etiquettes: what’s the difference?
, • Etiquettes refer to the social norm of conduct in a given society
• They are nonmoral rules and are meant to serve as guidelines for socially acceptable behavior
• Business has its etiquettes
• Violations of etiquette can sometimes have moral implications
Ethical norms vs organizational norms
Employees of business organizations (especially corporations) are:
• Expected to further profit goals
• Often pressured to compromise moral values and ignore or violate rules of ethical conduct
Individual integrity and moral responsibility
• Conformity
• Groupthink
• Diffusion of responsibility
Moral reasoning
Moral reasoning
• The soundness of moral reasoning = quality of the arguments + the reasoning that
support them
• Determining whether an argument is valid or invalid requires familiarity with the rules of logic
• Argument: a group of statements in which one statement (conclusion) follows from
the others (premises)
• Example:
o All humans are mortal
o Socrates is a human
o Therefore, Socrates is mortal
Argument 1:
• If a person is a mother, the person is a female
• Marijke is a mother
• Therefore, Marijke is a female
> Valid argument: premises logically entail its conclusion
Argument 2:
• If a person is a mother, the person is a female
• Marijke is a female
• Therefore, Marijke is a mother
> Invalid argument: premises do not entail its conclusion
Counterexample
• An example that is consistent with the premises but is inconsistent with the conclusion
Argument 2: counterexample
• Marijke is a two-year-old > consistent with the premises but inconsistent with conclusion
since a 2yo could not be a mother.
Argument 3:
• If a person is a female, she must be a mother
• Marijke is a female
, • Therefore, Marijke must be a mother
Unsound argument
• Have at least one false premise even if the reasoning is valid
Sound vs. unsound argument
Sound argument:
• Have true premises and valid reasoning
• Example: argument 1
Unsound argument:
• Have at least one false premise, as in argument 3, or invalid reasoning, as in argument 2,
or both.
What makes an argument moral?
Arguments whose conclusions are moral judgements.
Argument 4:
• If an action violates the law, it is morally wrong
• Affirmative action on behalf of women and minorities in personnel matters violates the law
• Therefore, affirmative action on behalf of women and minorities in personnel matters
is morally wrong
Criteria for moral reasoning
• Should be logical
o Embedded in valid arguments
o Compatible with moral and nonmoral beliefs
• Should be based on facts
• Should be based on acceptable moral principles
Thus, an argument can be challenged by:
• Uncovering ambiguity in the terms
• Questioning the factual claims
• Challenging the moral standards
Chapter 5
Corporations
What is a corporation?
A corporation is a three-part organization made up of:
1. Shareholders, who provide the capital, own the corporation, and are liable (for
company debt) up to the extent of their investments
2. Managers, who run the business operations
3. Employees, who produce the goods and services
Definition: legal entity, with legal rights and responsibilities similar, but not identical, to those enjoyed
by individuals:
• Right to sue, issue stock, have property, limited-
liability Milton Friedman
• Milton Friedman (1912-2006)
• Nobel laureate economics
