Chapter 4 – Ethics and Business
Decision Making
Copyright © 2011- Jeffrey Pittman
Section 1 – Business Ethics
Ethics in the News
• After the recent bank and
corporate failures and
government takeovers,
ethics continues to be in
the news
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Ethics
• Ethics pertains to the study
of good versus evil, and to
moral behavior
• Western philosophy
regarding ethics was
shaped by ancient Greek
philosophers, and by
Christianity
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Greek
Philosophers
• Leading Greek
philosophers
include:
• Socrates
• Plato
• Aristotle
• The Cynics
• The Epicureans
• The Stoics
Plato (c. 428 B.C.
- c. 347 B.C.)
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Why is Business Ethics Important?
• Note the difference
between the textbook
examples of “illegal”
behavior versus
“unethical” behavior
• What does the large
number of convicted
business executives tell
you?
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Ethical versus Legal Standards of
Behavior
• Laws are promulgated by the
government – the law is a mandatory
system of rules from an external
source
• Ethical principles are voluntary,
except to the extent the principles are
duplicated by the law – ethical
principles are shaped by external
sources (e.g., religion), but are
ultimately defined by internal
decisions
• A majority of the material in Chapter 4
is legal – for example, all court cases
analyze law only, not ethics
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Section 2 – Approaches to
Ethical Reasoning
Duty-Based Ethics
• Deontology – Following absolute
standards of moral behavior, such
standards generally coming from
religious sources
• Kantian Ethics - Kant’s categorical
imperative
• The Principle of Rights – Application of
rights corresponding to duties of others
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Outcome-Based Ethics
• Utilitarianism – Ethical behavior as
identified through analyzing the
consequences of such behavior
• “The greatest good for the
greatest number” summarizes this
ethical theory
• Jeremy Bentham and John Stuart
Mill are philosophers associated
with utilitarianism
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Lifeboat Example
• Compare duty-based
ethics to outcome-based
ethics in analyzing a
lifeboat example discussed
in class – the Nineteenth
Century British case,
Regina v. Dudley and
Stephens (14 Q.B.D. 273
(1884))
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Regina v. Dudley and
Stephens
• On July 25, 1884, Captain
Dudley, seamen Stephens
and Brooks, and cabin boy
Parker were in a lifeboat
1000 miles from land
• After their ship sunk, the
men had been 20 days in
the lifeboat, 8 without food
• Dudley killed Parker for
food; murder charges later
followed
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Miscellaneous
Strategy for Ethical Decision Making
• Facts – Gather all necessary facts
• Stakeholders – Which stakeholder
groups will be affected by the
company decision in question
• Values – What are your personal values
and the company values
• Alternative actions – What alternatives
actions are possible
• Choose and prioritize – Make a decision
based on values and impact on
stakeholders
• Decision and implementation strategy
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Stakeholder Analysis
Investors
Community
Employees
Management
Government
Supply Chain
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