Ethical Issues in Business Thomas Donaldson and Patricia Werhane

Some definitions: Ethics the study of whatever is right and good for humans Business ethics business actions etc in light of some aspect of human value. it requires the evaluation of business practices. Goes beyond facts to include the ought to of a situation.

The two traditional issues involved with ethics:

1. Ethical Relativism are there universal values that apply to everyone or is everything relative to individual, country, company etc. a. Relates to cultural relativism. This presumes that different peoples reason about morality varies by culture, education and religious traditions. b. Arguments for ER are: i. Empirical evidence of cultural relativism. ii. There is no viable universal standard that can be applied to everyone. c. Arguments against ER are: i. Just because finding universals is hard that does not imply that ER is correct. ii. Just because a particular issues is not resolved does not imply that it is, in principle, not ever resolvable. iii. Taking ER to its full extent means that you cant justify any moral judgements at all. d. The Foreign Corrupt Practices Act (1977) attempted to legislate that what we say is moral is how we should behave. This Act was driven by the issue that you are being inconsistent with yourself if you say something is immoral yet do it anyway just because you are in a foreign country.

2. Truth telling can you ever justify not telling the truth? Must we communicate honestly? a. A vigorous defender of truth telling is Kant. TT is an essential feature of right communication (Lectures on Ethics). His reasoning is: i. We all want others to follow this when speaking to us. ii. All societies depend on mutual bonds of honesty and truthfulness to enforce their continued existence. iii. Lying thwarts the discovery of new truths. Knowledge growth is required for the advancement of a society.

b. Counter agreements to this are: i. Everyone understands the game of inflating claims (not lying) in advertising etc. so it is all right. ii. You cant ever know the perfect truth around a product/service because perfect information is not available people cant know if a company is lying or bluffing. iii. Outside of the advertising arena: How do you conduct a business negotiation if you never put something on the table that gives you room to wiggle so to speak?

The Lockheed Case Study:

Overview: The Japanese expected that certain individuals would be paid cash in exchange for the favours of giving access to the right people and to influence the awarding of orders for the TriStar jet. The payments were for significant amounts of money and were communicated by third parties who were setting up the deals. None of the individuals who were paid ever asked for money nor did anyone ever promise that if money was paid that orders would definitely be given. However, the strong implication was that if the money was not paid, the reverse would definitely occur (no orders). The amount of payments grew after the orders started, since the payments were later claimed to be for each airplane not just a one time payment. This was not communicated up front. The justifications of Lockheed management over this were:

1. 2. 3. 4. 5. 6.

The $12 million was beneficial to Lockheed, only about 3% of the purchase price. The payments did not violate American laws. Workers, communities and stockholders would benefit. Lockheed never brought up making any payments. The sale would not have been made without the payments. Lockheed never talked about money to any Japanese politicians, government officials, or airline officials.

Cultural Relativism:

(William Graham Sumner)

The concept of the folkways; they are the right way of doing things because they are traditional.

Rights are never God-given or absolute they are the rules of mutual give and take that are imposed on members of a group for the long-term strength and health of the group. The morality of a group at a particular time is the sum of the taboos and prescriptions in the folkways by which right is defined.

When lifes conditions change over time then the folkways change. New ethics and mores develop to support and justify the new ways. Conformance to the mores and ethics of a time is the driving force for why something exists or is the way it is.

The Greeks and Romans defined as follows:

Ethos: the compilation of the usages, ideas, standards, and codes by which a group lives. Ethics pertained to the ethos and therefore were the standard of right.

Modern definitions have lost the intensity and interweaving of these two. Morals get connected only with religion or philosophy now. This separates them from what would have been the ethos or mores of the people today. If it is only connected with religion, then time spent systematizing right and wrong upon common, universal principles tends to be elevated apart from the people and becomes important in itself this is counterproductive.
Sumner wants to study the ethos of groups, to see how it arises, how it gains power, how it influences group members. He substitutes mores for ethos in our society. They are what directs society, not philosophy or ethics (which according to Sumner are products of the folkways). The mores of a people are, by definition, good for that group of people and time. However, they shift over time and therefore are not forever or absolute. Since the mores exist before we are born, we grow up into them as naturally as breathing. The morals of a particular age or people are simply the acting out of the mores of the people (what is done and the mores coming together).