Ethics 3p82 Final Review

1. Ethical Theories
Utilitarianism
Definition: is an ethical theory that determines right from wrong by focusing on outcomes. It is
a form of consequentialism. Utilitarianism holds that the most ethical choice is the one that will
produce the greatest good for the greatest number.
What are the alternative courses of actions?
Who are the stakeholders for each alternative?
What are the costs and benefits to stakeholders?
Which option maximizes benefits and minimizes costs for the greatest number.
Does this option consider societal well-being in the long-term?
Does this option involve significant injustices, violation of human rights, etc.?
If so, is this yet the best option?
If not, what is the next best option
Traditional (Act) Utilitarianism:
• Act/ situation specific
• Act to promote the general welfare in any given situation
Rule Utilitarianism: (In response to criticism about Utilitarianism)
• Does moral rule underlying an action produce more pleasure than pain for society in the
long run? E.g. it better to tell the truth than lie
Follow moral rules that tend to promote the general welfare
Kantianism/deontology
• Humans are: rational beings capable of making decisions regarding right and wrong.
Humans have a fundamental human right of autonomy, or self-rule. They do not act
only out of instinct and conditioning; they make free choices about their lives.
• Two related rights have emerged as fundamental: If humans have the right to
autonomy ----- freedom to make our own choices is a basic right. Since all humans
possess this fundamental right, equal treatment and equal consideration is also a
fundamental right.
• In determining whether an act or decision is moral: Consider the motive (self interest)

 First formulation:
• Universalizable: Am I prepared for all others in a similar position to act in the same
way? Would this be a good thing? Can all people act the same way? Would most
reasonable people find this acceptable?
• Reversible: Would I want someone else to treat me in the same way?
 Second formulation:
 • Are people being treated as a means to my own ends and not as ends in
themselves? Am I infringing up on their rights and freedoms?
Procedural justice  Fair and transparent way in which to administer justice
Distributive justice  Fair distribution of society's benefits and burdens

• Virtue Ethics: is person rather than action based: it looks at the virtue or moral
character of the person carrying out an action, rather than at ethical duties and
rules, or the consequences of particular actions.
• An ethics of virtue shifts the focus from questions about what a person should do,
to a focus on who that person is.
Is this action representative of me/of my company?
Will this action lead me to become the kind of person I want to be?
Will this action align with the company’s reputation of with what the company wants to
be?
Would the person I most admire do this action?

2. Corporate Social Responsibility

Definition: the need for businesses to be good corporate citizens. CSR involves going beyond
the law’s requirements in protecting the environment and contributing to social welfare. It is
widely accepted as an obligation of modern business.
Economic
Primary responsibility: Produce goods/services (seek profit), within the law 
Shareholder’s theory
Philanthropic
Economic view + business may also choose to contribute to social needs as a matter of
philanthropy, but not as a matter of duty or social responsibility
Reputational and PR purposes
Because it is the right thing to do
Social web or “citizenship” model
 Business is embedded within a web of social relationships of mutual rights and
responsibilities (including but not limited to the responsibility to produce goods and
services, while obeying the law)
Integrative/Strategic model
 Part, or all, of the mission of the company is to serve some important social goals (e.g.
social enterprise, other businesses within serious commitment to sustainability)
 Ecology business
Friedman Shareholder Theory: The social responsibility of business is to pursue maximum
profit while engaging in open and free competition within the law and without deception or
fraud.
• Businesses cannot have responsibility, only people do. Business executives are the
agents (employees) of the shareholders (owners). They have responsibility (obligation,
duty) to their employers  to conduct the business in accordance with their desires
(make money)
• Any activity besides those that are profit-seeking is not acceptable

Freeman Shareholder Theory: holds that a company’s stakeholders include just about anyone
affected by the company and its workings.
• Stakeholders’ interests are joint, Business is about creating value for stakeholders
• The primary responsibility of the executive is to create as much value as possible for
stakeholders without resorting to tradeoffs
• If made, figure out how to improve the trade-off for all parties

3. Sustainability Bowie:
• Business decisions that harm the environment do not violate any special environmental
moral obligations  they simply do not follow the law
• As long as business abides by environmental (and other) laws and other expected moral
obligations, society accepts most harms done to the environment by business.
Consumers are still un willing to purchase environmentally friendly products.
• Business must obey the law
• Business does not have an obligation to protect the environment over and above what
is required by the law
• Government is responsible for preserving and protecting the environment
• Businesses should not be allowed to intervene in the creation of adequate
environmental legislation.
Arnold & Bustos Perspective
• Bowie  if businesses are to protect the environment beyond what the law
requires, it must be because of consumer preferences.
• Two issues:
• Consumer preferences are not always satisfied by businesses, for example
limited options for those who want hybrid electric vehicles
• Consumers have limited or no influence on businesses’ environmental practices
Harm to Others:
• Global climate change will impact the entire global population and future
generations not only those who cause it.
Responsibility for the past:
• Those who benefit from burning fossil fuels (and thus contribute to climate
change) ought to pay more than those who do not/ did not benefits The
sustainability approach
• Sustainability approach combines financial opportunities with environmental
and ethical responsibilities.
• There are three goals, economic, environmental, and ethical sustainability
• A sustainable corporation creates profits for its shareholders while protecting
the environment and improving the lives of those with whom it interacts.
Business case for a sustainable economy
1. sustainability is a prudent long-term strategy.
2. the huge unmet market potential among the world’s developing economies can only
be met in sustainable ways.
3. significant cost savings can be achieved through sustainable practices.
4. competitive advantages exist for sustainable businesses.
5. good risk management strategy.
Principles of a sustainable business
1. Become more efficient in using natural resources (eco-efficient).
2. Model the entire production process on biological processes
(Take-make-waste  Cradle-to-grave  Cradle-to-cradle)
3. Emphasize the production of services rather than products.

4.Ethical Marketing
Marketing is the heart of a business, set of processes for creating, communication, and
delivering value to customers and for managing customer relationships in ways that benefit the
organization and its stakeholders.
Product - What, how, why, and under what conditions is something produced?
Price - What price is acceptable, reasonable, fair?
Promotion - How can the product be promoted to support, enhance, and maintain sales?
Placement - Where, when, and under what conditions should the product be placed in the
marketplace?
In a moral marketplace: Competition is free for all to enter, competition is open and not
limited, and deception and fraud are not used.
• Utilitarianism – if the parties engage in the exchange, it indicates that both are
better offer (in some respect) than they were prior to the exchange; overall
happiness increased
 • Deontology/ Kant — respects people by upholding their rights, treating them as
autonomous agents that are capable of pursuing their own ends. Deontological
theories are principle-based Deon  duty, obligation
There are some principles or rules that we ought to follow even if doing so
prevents good consequences or results in bad consequences.
Rules or principles create duties that bind us to act or decide in certain ways

Influencing customers: To manipulate is to guide or direct one’s behavior (cleverly, unfairly)

Manipulating customers: To seek to bypass an individual’s autonomy: using deception, or
outright lying
Kantianism: When I manipulate someone I treat them as a means to my own ends, as an
object to be used rather than as an autonomous person in their own right
Utilitarianism: someone is manipulated for their own good. But even in such cases, unforeseen
harms can occur. Most manipulation is done to further the manipulator’s own ends at the
expense of the manipulated  manipulation lessens overall happiness.
Vulnerability
• Some consumers are more competent that others: can determine differences in
quality, are aware of rights, have resources to enter markets etc.
Cognitive vulnerability – lack cognitive processing ability, to understand that information is
being withheld or manipulated; e.g. children, the senile, those with limited education
Physical vulnerability – unusually susceptible due to physical or biological conditions to
products on the market; e.g., severe allergies, special sensitivity to chemicals or substances that
are marketed
Motivational vulnerability – unable to resist ordinary temptations and/or enticements due to
individual’s own characteristics, E.g. the grieving, gravely ill
Socially vulnerability – social situation leads individual to be less able than others to resist
temptations, enticements that may harm them. E.g. Some groups of poor, the grieving, new
mothers in developed countries
Type 1: Consumer vulnerability: Impaired ability to make an informed consent to the market
exchange
Type 2: General vulnerability: Susceptible to some harm (e.g. physical)
Green washing: is the practice of making an unsubstantiated or misleading claim about the
environmental benefits of a product, service, technology or company practice.
Greenwashing can make a company appear to be more environmentally friendly than it really
is.
5.Ethical issues/supply chains
Outsourcing  Procurement goods and/or services by lead firms from independent outside
suppliers, when those goods and services had previously been provided internally within the
firm
Offshoring  Relocation of the production of goods and/or services overseas  international
fragmentation of production  global value chains (GVCs).
Article 1: Radin & Calkins Why do sweatshops continue to exist?’’ Local
Environments
• Attractive employment option in places with poor social and economic
conditions, few employment options, lack social services  any job preferable to
no job; no job, no/ reduced income, starvation/ worse jobs?
• Governments allow and encourage sweatshops  generate tax revenues and
other sources of income
• Societies attempting to improve their economic standing encourage sweatshops
 develop domestic markets and export activity.
Increased economic activity  attracts international investors (new markets, decrease
production costs)
Must distinguish “between cultural values and behavior that can legitimately be deemed
inappropriate even from outside the culture”  e.g. physical abuse, forced labour
Sweatshops, Choice, and Exploitation- Zwolinski
• People choose to work it sweatshops due to certain factors, and removing this
option would likely cause harm to the individual.
Most sweatshop workers choose to accept the conditions of their employment as it is there
best option. We will harm them by removing that option, it could be a violation of their
autonomy.
Therefore, it is wrong to take away the option of sweatshop labour from workers who would
otherwise engage in it.
2 ways to prevent sweat shops
• Bans and Boycotts – sweatshops will stop producing goods  counterproductive in aiding
the working poor (unacceptable)
• Legal regulations (new laws, and enforcement of existing laws) – increased costs  MNCs
 move operations (unacceptable)
Sweatshops and Respect for Persons - Arnold & Bowie -
Kant’s second formulation  “Act so that you treat humanity, whether in your own person or in
that of another, always as an end and never as a means only.”
• Based on Kantianism, MNC managers have a duty to ensure that those with whom they
conduct business are respected.
o Intentionally violating the law to further business interests is incompatible with
MNCs’ duty to respect employees
  Being indifferent to workers’ legal rights being violated is denying them
respect; 1st formulation considerations

o Minimally, MNCs have a duty to ensure that its partners’ are in compliance with
local laws
o Minimum ensure employees do not live under conditions for overall poverty
(lack income needed to satisfy basic non-food needs)  adequate pay for a
48hour week to satisfy basic food and non-food needs Hiring discrimination:
• Ethical perspectives on discrimination
• Utilitarianism  different competencies, skills required for different jobs; found
all through population
• Rights, Kant  respect dignity, equal treatment and consideration
• Justice  egalitarianism, John Rawls Direct or indirect
• Direct: “men to load trucks”
• Indirect: “ truck loaders wanted. Must be at least 175 cm (5 feet 9 inches) tall.”

Two general and connected understandings of privacy:

• Privacy as a right to be “left alone” within a personal zone of solitude
• Privacy as the right to control information about oneself
Reciprocal obligation: For an individual to expect respect for her or his personal autonomy, that
individual has a reciprocal obligation to respect the autonomy of others.
• Implies that, while an employee has an obligation to respect the goals and
property of the employer, the employer has a reciprocal obligation to respect
the rights of the employee as well, including the employee’s right to privacy.
• Balance employees’ rights to privacy with the employer’s right to inquire into
the activities of employees

6.The Financial Sector

A Myopic Corporation
Main goal: Maximize “Short-Term” Shareholder Value
• Companies whose directors focus on stock price will run firms in a way that raise
the price in the short term, but harm firms’ long term prospects
Ignoring stakeholders’ needs (i.e. Shareholders; Customers; Suppliers; Employees;
Community) Bonuses based on short term profits so executives take risks The revolving door:
The movement of individuals from legislative, political or regulatory positions into positions
within the industry or associated lobbying firms or political appointment of former industry
executives into positions with significant influence over regulations that relate to their former
firms
 Gatekeepers: Rules necessary for the effective functioning of markets, attorneys, auditors,
accountants, and financial analysts
Their role is to ensure that those who enter into the marketplace are playing by the rules and
conforming to the very conditions that ensure the market functions as it is supposed to function
Do CEOs get paid to much Three views of justice in wages:
• Agreement view –just wage is based on arms length negotiations between informed
CEO and informed owners.
• Desert view –just wage is paying what the individual deserves
CEO’s contribute a lot and have stress but by how much more. Is it worth 300 times a factory
job
• Utility view – A just wage is one that maximizes firm wealth by attracting talented
employees, retaining them in face of competing offers, and motivating them to do their
best
• Aligning CEO and shareholders interests  owners want stock prices to increase so
compensate CEO with a package whereby he or she also wants stock prices to increase.
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