Business Ethics

What does it mean? Where do they come from?

CONS7820 Professional Business Management

CONS 7820 Professional Business
2
Management
 Ethics: by the dictionary

1. Moral principles that govern a person's behaviour or the

conducting of an activity.
‘a code of ethics’

1.1 The moral correctness of specified conduct.

‘many scientists question the ethics of cruel
experiments’

2 The branch of knowledge that deals with moral principles.

‘neither metaphysics nor ethics is the home of religion’
Source: Oxford Dictionary online 3

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 Ethics: Some concepts

Ethics is set of moral principles that govern a

person's behaviour or the conducting of an activity.

Ethics involves systematizing, defending, and

recommending concepts of right and wrong
conduct.

Ethics: a set of moral principles, especially ones

relating to or affirming a specified group, field, or
form of conduct.

CONS 7820 Professional Business Management 4

 Ethics is not:

 Just following one's feelings.

 A religion or confined to a religion.

Most religions advocate high ethical standards. But if
ethics were confined to religion, then ethics would apply
only to religious people. Ethics applies as much to the
behaviour of the atheist as to the devout religious person.

 The same as following the law.

The law often incorporates ethical standards. But
laws, like feelings, can deviate from what is ethical.
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Issues inINSTITUTE
>>UNITEC Ethics IIE V1 N1 (Fall 1987). Revised in 2010
OF TECHNOLOGY CONS 7820 Professional Business Management
 Ethics:
Western philosophy can be divided, very roughly,
into three sorts:

Aristotelian: Virtues (such as justice, charity, and generosity)

act in ways that benefit both the person and society. (Aristotle
3rd C BC)

Kantian: Duty is central to morality: humans are bound, to

obey the categorical imperative to respect other rational
beings. (Immanuel Kant 18th C)
Utilitarianism: The guiding principle of conduct should be the
greatest happiness or benefit of the greatest number. (Jeremy
Bentham 18th C)
Source: Oxford Dictionary online 6

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 Some ethical issues to think about
Download from Moodle

For each of the following, discuss in your groups.

For each issue report:

1. The Decision - if it is a unanimous decision
2. The Decision - if it is majority decision and by
what majority
3. The decisions – if there is a split in the group
4. If the group cannot come to a decision or agree on
any decision.
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 Groups

1. Should plumbers doing household

repairs decide amongst themselves
the prices they will charge?

2. Are “cash only” jobs acceptable or

should you always pay the tax?

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 Groups

3. Should engineers be allowed to agree

minimum fee levels to ensure they can
properly design and detail their projects
and thereby avoid the creation of unsafe
buildings or structures?

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 Groups

4. A client is offering you the chance to

tender for a great project but you know
they cannot get what they want within
their stated budget.

You know your competitors will not advise

them of this before they have secured
the tender. Should you?

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 How do we decide?

What is the basis of our decisions on

these matters?

How should we make our decisions?

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 Alternative approaches

• Consequentialsim: whether an action is right

or wrong depends on the consequences of
the action.

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 Alternative approaches

• Consequentialism: whether an action is right

or wrong depends on the consequences of
the action.

“Rightness” or ”Wrongness” can be

decided by the outcome.

But what if the outcome is not known?

How do you decide?

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 Alternative approaches

• Consequentialsim: whether an action is right

or wrong depends on the consequences of
the action.
“Rightness” or ”Wrongness” can be
decided by the outcome.
But what if your “Rightness” is my
“Wrongness”?
A “good” outcome for me leads to a “bad”
outcome for you.
Who chooses? 14

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 Alternative approaches

• Consequentialism: whether an action is right

or wrong depends on the consequences of
the action.
• Deontological: Duty is the basic moral
category and that duty is independent of
consequences.

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 Alternative approaches

• Deontological: Duty is the basic moral

category and that duty is independent of
consequences.
“Rightness” or ”Wrongness” can be
judged against an external standard.

But what if the standard rules differently

depending on the circumstances?

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 Alternative approaches

• Deontological: duty is the basic moral

category and that duty is independent of
consequences.
“Rightness” or ”Wrongness” can be
judged against an external standard.

But what if we cannot agree on the

standard?

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 Alternative approaches

• Consequentialism: whether an action is right

or wrong depends on the consequences of
the action.
• Deontological: duty is the basic moral
category and that duty is independent of
consequences.
• Rights & Justice: Citizens have rights and
are entitled to be treated fairly and justly,
actions must respect this.
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 Alternative approaches

• Rights & Justice: Citizens have rights and

are entitled to be treated fairly and justly,
actions must respect this.

Who decides the citizens rights?

Have they been decided ethically?

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Utilitarianism ( a sub-branch of consequentialism)

“--an ethical theory that holds that an action is right if

it produces, or if it tends to produce, the greatest
amount of good for the greatest number of people
affected by the action. Otherwise the action is
wrong.”

We should evaluate an action by looking at its

consequences, weighing the good effects against
the bad effects on all the people affected by it.

De George p56 & 57

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Utilitarianism ( a sub-branch of consequentialism)

… the greatest amount of good for the greatest

number of people affected by the action.

Sometimes called “The tyranny of the Majority”

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Utilitarianism ( a sub-branch of consequentialism)

… the greatest amount of good for the greatest

number of people affected by the action.

Sometimes called “The tyranny of the Majority”

e.g. Since burning fossil fuels confers the greatest
good on the greatest number of people – heating,
transport, derivative chemicals – it is right to keep
burning fossil fuels. Perhaps we should increase the
amount consumed?
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 “Firms must always honour Groups

their contractual obligations”

Ignoring the law, what is the correct ethical stance
using Utilitarian logic?

What are the consequences of complying

with this statement
a) For society as a whole?
b) For individual firms?

Discuss
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 Firms must always honour their Groups

contractual obligations
Ignoring the law, what is the correct ethical stance
using u\Utilitarian logic?

What are the consequences of not always

complying with this statement
a) For society as a whole?
b) For individual firms?

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 Groups

What should you do if meeting the

obligations of the contract will result in
your firm becoming bankrupt and staff
losing their jobs?

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Utilitarian Approach:

You work for an engineering company that sells

fresh water operations.
You have an opportunity to sell a plant to an African town
that has a very polluted water supply.
You know your price is significantly lower than your
competitors, however you find that you cannot get the
contract without bribing some officials who rely on such
“commissions” to make a living (it is a small amount of
money).
Your company is short of work and if you do not
secure this contract the company will have to start
laying off people.
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Utilitarian Approach:
• Your company sells fresh water operations. Groups
• Opportunity to sell a plant to an African town with a very
polluted water supply.
• Your price is lower than your competitors, but you must
bribe some officials who rely on such “commissions” to
make a living.
• Your company is short of work and if you do not secure
this contract the company will have to start laying off
people.
In your groups decide what is the Utilitarian ethical solution
considering:
The people of the town
Your company colleagues
The officials wanting bribes
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 Rights and Justice Approach

People have the rights such as free speech,

liberty, safety and security and equal protection
under the law. We have an ethical duty to
respect those rights.
People in equal circumstances should be
treated fairly and equally.
Except for equal pay?
Except for new immigrants?
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Rights and Justice Approach:
• Your company sells fresh water operations. Groups
• Opportunity to sell a plant to an African town with a very
polluted water supply.
• Your price is lower than your competitors, but you must
bribe some officials who rely on such “commissions” to
make a living.
• Your company is short of work and if you do not secure
this contract the company will have to start laying off
people.
In your groups decide what is the Rights and Justice ethical
solution considering:
The rights of the people of the town
The rights of the competitors
The rights of the officials wanting bribes 29

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 Deontological approach
Deontologists maintain that actions are morally right or
wrong independent of their consequences.
Ethics / morals come from faith, beliefs, teachings of our
society.
Immanuel Kant – “the source of morality is to
be found in ourselves and in our reasoning,
not is anything external to us.”
“Pleasure” is not a “good in itself” as some may take
pleasure seeing others suffer.

Nor is intelligence, nor is perseverance.

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 Deontological approach
Deontologists maintain that actions are morally right or
wrong independent of their consequences.
Ethics / morals come from faith, beliefs, teachings of our
society.
Moral Absolutism – Decisions are “good” or “bad”
based on Divine decree or Tribal custom.

“I will lie to protect my friend” – is morally wrong even if the

outcome is good for my friend.

Social customs, traditions, case law take this approach.

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 Ethical relativism vs absolutism

Absolutism: there are moral values and

principles that apply at all times and
everywhere.
Relativism: when two cultures or sets of
people hold different views both can be
right.

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 In every society murder is a “bad”.

In your groups discuss how to

justify this using the:
Consequential Approach
Deontological Approach
Rights and Justice Approach

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 Business Ethics

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 The business context
An Exchange economy
Private property ownership
Private enterprise
Exchanges are governed by contract (we honour contracts)
Accumulation of private wealth and the profit motive
Limited liability companies enable us to avoid the
consequences of our actions.

Note: This is a “Western” mixed market context.

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For some in business that means:
“the threshold of acceptable behaviour is
complying with the law; beyond that, any
artifice or brinkmanship that that brings in
more profit is not only appropriate but
encouraged”
(Gibson 2007 p6)

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 Read the Code of Ethics for NZIQS, RICS and
IPENZ (or at least one) and decide whether
they are based on Utilitarianism, Deontological,
or Rights or Justice.

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You are working for a contractor and you are involved in
preparing a bid for a design and build contract.
Whilst you are out drinking with a friend who works for
another contractor which is also bidding for the same project
they tell you of some key aspects of their bid which you
realise is significantly better than your own firms proposal.
Should you take this information back to your own company
and use it to improve your bid?
Adapted from Mirsky & Schaufelberger 2015

In your groups discuss how to justify this (or not) using

ONE of the:
Consequential Approach
Deontological Approach
Rights and Justice Approach 38

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