IB - Module 10

ethics

doing the good and right things with the good and right reasons

Business Scandal Theory

scandals show the ethics and the lack of it; scandals call for a change, show causes attributed and measures taken; big scandal is a tipping point that leads to a new perspective that applies broadly; scandals learn us a lot

Phase 1 - ethics of individuals

key characteristics: empathic, balanced, courageous, accountable, having moral identity; selecting and promoting ethical people

Phase 2 - business code of ethics

Nestle case - infant milk; managing business ethics is also making the ethics of business explicit; a good code is customised; content layers: purpose/mission, values, norms

what code of ethics learns us?

companies all over the world embrace ethics; variety of topics, norms, stakeholders, structure and size; it is frequently updated, so ethics change

Phase 3 - Business Ethics Programme

Enron movie; managing business ethics is implementing the code of ethics, just a code works counterproductive, because we need to implement those rules; content: ethics reward system, training, committee

Definition of ethics programme

the formal organisational control system designed to impede unethical behaviour and promote ethical behaviour

Phase 4 - Business Ethics Culture

Lehman Brothers; managing business ethics is creating an ethical business culture; formal organization has limited impact, can even be counterproductive; ethical culture largely explains ethical behaviour of managers and employees

Culture of ambiguity

vagueness of purpose is a potential antecedent to unethical behavior; rational-bureaucratic control theory; virtue of clarity

rational-bureaucratic control theory

managers and employees behave unethically cuz they lack clear understanding of what is expected of them

virtue of clarity

ethical standards that managers and employees are expected to adhere to are concrete, comprehensive, understandable for them

Culture of bad role-modelling of management

bad behaviour of management is a potential antecedent to unethical behaviour of employees; social learning theory; virtue of congruency

social learning theory

people learn what behaviour is expected by observing behaviour of role models

virtue of congruency

managers show to employees the right example regarding ethics

culture of scantiness of resources

insufficient time, budget, info, authority is a potential antecedent to unethical behaviour; strain theory; virtue of feasability

strain theory

people resort to unethical behaviour when they are unable to achieve their goals through legitimate means

virtue of feasibility

managers and employees have sufficient resources to fulfil their ethical responsibilities

Culture of animosity

workplace characterised by demotivation, mistrust, dissatisfaction is a potential antecedent to unethical behaviour; Social bond theory; virtue of supportability

social bond theory

people engage in unethical behaviour cuz they no longer feel attached or committed to a given community

virtue of supportability

employees feel that they are stimulated by organization to be committed to ethics

Culture of opaqueness of (un)ethical behaviour

managers/employees who don't understand the potential influence of their behaviour cannot account for for behaviour, which makes them antecedent of unethical behaviour; deterrence theory; virtue of transparency

Deterrence theory

unethical behaviour to be inhibited, potential perpetrators must believe that they will be caught

Virtue of transparency

unethical behaviour and its consequences are observable to those who can act upon it

Culture of muteness

when criticism is neither encouraged nor accepted and readiness to discuss ethical issues is limited or even absent, unethical behaviour becomes more likely; communication theory; virtue of discussability

communication theory

through sharing and discussing issues people learn from each other, create and better understand their context, and are more motivated to honour agreements

virtue of discussability

managers&employees experience in their organization room to discuss ethical dilemmas and alleged unethical behaviour

Culture of laxity of unethical behaviour

when managers&employees are not punished for unethical behaviour or even rewarded for it, the message is that unethical behaviour is acceptable or even desirable, it makes unethical behaviour more likely; reinforcement theory; virtue of sanction ability

reinforcement theory

consequences of a decision made in past influence decision-making in future. Rewards will therefore lead to repetition and punishment to avoidance

Virtue of sanction ability

managers&employees are being punished for behaving unethically and rewarded for behaving ethically

Approaches to ethics

1. Ethical absolutism; 2. Utilitarianism; 3. Social ethics; 4. Tactical ethics

Ethical absolutism

absolute concepts of right and wrong; religions claim a universal moral code

Utilitarianism

pragmatic approach to transcendental ethics (ethical absolutism); an action is morally right if it produces the greatest good for the greatest number of people

Social ethics

ethical standards will vary between societies, reflecting their histories and influences; i.e. death penalty is acceptable in some countries, in others not

Tactical ethics

people pursue ethical standards cuz it suits them to do so; managers can even make rapid improvements to work places prior to a health and safety inspection but ignore health and safety issues after

Why should businesses be socially responsible?

1. The moral argument; 2. The business argument; 3. The strategic argument; 4. The critical argument