1 What is the business ethics (and why study it)

Ethics - general branch of philosophy that analyzes moral issues (good /evil, right /
wrong).
Examples:
• How can we justify the adoption of certain values or moral standards compared
to others?
• How do moral beliefs differ in relation to subjective preferences or tastes?
• To what extent are beliefs and moral obligations influenced by society and
culture?

Universalism vs. moral relativism.

Are moral norms and practices relative to their socio-cultural context? We see a lot of
diversity, but also convergence. The universality (in time and space) of moral behavior.
Any human society or culture in any era, has developed standards, values and moral
practices.
Discussion: examples of different values or moral standards to different cultures and
eras.
Universals: the golden rule, reciprocity, politeness.

Terminological distinctions

Morality

The values, norms, attitudes and behaviors considered morally preferable. In

comparison with legal norms, moral standards are not necessarily codified, are not
mandatory and there is no authority to enforce or punish those who ignore them.

Ethics

The study of morality: how moral norms and values operate at individual and collective
level and their role in human behavior and cognition.

Applied ethics

The analysis of moral problems, applied to specialized areas: occupational areas, types
of activities, scientific domains etc.
Environmental ethics, business ethics, medical ethics, ethics of public relations, etc..

Business Ethics

Andrew Crane and Dirk Matten: „Business ethics is the study of business situations,
activities and decisions which which have to do with what is right or wrong” (Crane &
Matten, 2004, p. 8)

Laura Nash: „Business ethics is the study of how personal moral norms are applied to
the activities and aims of commercial companies. It is not a separate moral standard, but
the study of how the business context raises specific issues for the moral person.”
(Nash, 1995, p. 5)
A specialized study of moral right and wrong, focused on the moral standards and
practices of business actors (individuals, SMEs, corporations).

The development of business ethics was influenced by:

• The diminishing influence of state – administrative decentralisation and privatisation.
Semi-private or private companies which take over are faced with a responsibility
issue: should they assume, along with control, some social responsibility regarding
not only the employees but the local, regional or national community?
• Globalisation – businesses take place in a global, dynamic and intercultural
environment, they are no longer confined to regional or national communities

Examples of business situations, activities, behaviors that entail moral choices. How are
they dealt with and what type of solutions are brought forward?

1
A chemical plant is constantly polluting a nearby river with toxic reziduals. The quality of
water is compromised and several towns and villages in the area are complaining. A
governmental agency who monitors the environment impact of industrial activities has
fined the plant several times, for failing to adopt a more environmentally friendly
production process. Nevertheless, the plant management keeps on polluting the river for
a very simple reason: it is cheaper to pay the fines than to invest in a system for
neutralizing and recycling the rezidual substances. When face with the prospect of
having to suspend their activity until they make some changes, they pretend that the
cost of such an investment will have to be offset by firing several dozens of employees.
These are rezidents of the very same towns and villages which are affected by the
polluted river.

2
A steelworks company has been recently privatised. The employees are unhappy with
the new private management, so they are demanding new negotiations in order to
obtain better contractual terms. The management doesn’t respond, so they decide to go
on strike. Still, a few days pass by and they have no word from the director. This
enrages the crowd and the employees spontaneously decide to block off a highway that
passes nearby the steelworks. Their action affects directly or indirectly tens of
thousands of people (by disrupting the normal functioning of businesses, schools and
hospitals, by obliging lots of people to change their route etc).

3
You have been recently hired by a company on very favourable terms (financial and
other). However, your contract includes a clause which makes it compulsory to report
any alleged illegal activity that you might notice. At a certain point in time, you began to
suspect that you best office buddy is using false financial documents in order to pocket
company money... What are you supposed to do?

*
But why should we study moral choices in business, if so many business practices seem
to ignore or disobey moral standards. Business and morality are mutually exclusive?
Not at all. The fact that some business people ignore the moral component of their
decisions and activities doesn’t change the moral nature of those activities. You can run,
but you can’t hide from the fact that all of us are bound to make moral choices. We have
to - by the simple fact that we are part of society and our decisions and actions have
consequences (on ourselves and on others).

Relativity of ethical values and standards? Discussion. Personal vs subjective.The moral

argument.

2 Moral values and moral norms.

Moral values refer to the consequences or our decisions or actions on others or on

ourselves. They represent qualities (personality traits, features of our decisions or
actions) whose development and cultivation that are considered desirable, right or
correct.

There are several theoretical approaches that evaluate the nature and role of moral
values:
Subjectivism: equates value with individual preference, the basic criterion being
pleasure or personal utility. But we have to clearly distinguish the two:
• Individual preferences are different (across individuals and for the same
individual, in time) and leave no room for common ground
• There are preferences which are socially unacceptable
• What we prefer to do and what we should do does not always coincide

Objectivism: values have to do with intrinsic qualities or characteristics of objects,

not with the subject. Objects or persons have a certain utilitarian, vital, aesthetic or
moral value, just as they have mass, density, colour etc. But there are problems:
• Utility is meaningless without a subject to evaluate or establish it
• Value cannot be always quantified or linked to certain utility characteristics

Relativism: acknowledges the differences in moral norms and moral behavious

between different cultures, societies, religions. Each community has shaped its own
moral hierarchy, which has to do with traditions and customs and are enforced by
society or by certain authorities (Church etc.)
„Fiecare popor – spune Friedrich Nietzsche – vorbeşte o limbă proprie în ce priveşte
binele şi răul, pe care nu o înţelege vecinul său. El izvodeşte pentru sine un limbaj, în
ce priveşte dreptul şi morala. [...] O tablă de valori este înscrisă deasupra fiecărui
neam. Tabla izbânzilor în lupta cu sine însuşi. Şi glasul vrerii sale de putere“
(Nietzsche, 1991, pp. 53; 63).

Moral norms
A norm is a pattern of behaviour, to be applied in different circumstances. Every
norm is an abstract, ideal model of a specific kind of actions, which leaves aside the
accidental and insignificant aspects of the social setting, to emphasize the
unchangeable and important things to be done or to be avoided.

It is a rule of behavior with supra-individual relevance and which is deliberately

accepted and obeyed by individuals (moral liberty).

A moral norm cannot be applied machanically to real life situations. It is not a ready-
made recipe and does not offer foolproof guarantees. The morality of a decision or
action has to be evaluated in comparison with the whole system of values and
norms, not with only one of them taken separately.
Ex „sa nu ucizi” sau „sa nu minti” – exista situatii in care pare justificat sa incalci
norma (atunci cand viata iti este in pericol sau situatia in care nu spui adevarul
pentru a salva vieti). Nu pare moral sa respecti o norma morala independent de
celelalte, nu o poti absolutiza in dauna altora.

Moral norms vs customs and traditions

• Morality is based on individual freedom, it is not imposed by community, state,

traditions etc. (even it is influenced by them); moral freedom is the capacity to
choose between options that are valued differently (as regards their
consequences etc)
• Moral decisions are backed up with arguments, while the justification of tradition
and custom is basically given by their very existence and permanence

• Moral norms and rules are taken to be, at least in principle, universal – they apply to
all human being irrespective of their culture, tradition, religion or status. Traditions
are always linked to a specific context.
• Are there immoral traditions? Or is the permanence of custom and habit a sign of
their morality? Examples.
There is no necessary link between the social acceptability of a certain behavior and its
moral value. There are – and there were – various communities which accepted (or
considered morally right) to do things that we, today, consider morally wrong. Examples:
slavery, poligamy, adultery, use of drugs. Aristotel – justification of slavery as a ‘natural’
form of human organisation.

Moral vs religious norms

• Moral norms are in principle applicable to any individual, while religious norms
apply primarily to believers, to a certain community
• Religious sanctions usually imply the existence of an after-life, while moral
sanctions are part of this world
• Generally, their is an authority which enforces religious norms and sanctions
disobedience, while moral norms are not imposed by a specific authority
(although there might be some sort of social pressure to respect them)

Moral norms vs law

• Juridical rules are enforced by a political, administrative or legal authority; their

have to be complied with, and lack of compliance is sanctioned

• Moral norms are not enforced by an external authority (they are dealt with by the
moral conscience) and they are not compulsory
• Legal norms apply to certain well-defined categories (citizens of a state, the
military, European bureaucracy etc), while moral norms have universal relevance
• Legal sanctions are generally punitive (only lack of compliance is sanctioned),
while moral sanctions can be punitive as well as premial (compliance might be
rewarded while lack of compliance is sanctioned)

• Moral responsibility of business persons can be reduced to obeying the laws?

• What is the moral responsibility of a person confronted with imperfect or immoral
laws?
In principle, compliance with law is a moral duty, but there are notable exceptions
(the Nurnberg laws in Nazi Germany, Jim Crow laws in the US etc.). In most cases,
obeying the law is a necessary but nor sufficient condition of morality. A precarious
individual or public morality makes any legal system – no matter how well designed
– inefficient.

Types of norms: obligations (you must), interdictions (you must not) and
permissions (you may).
Which seems to be the most common (especially in cultural traditions and religion)?
Which seem to be best suited for adult, rational individuals?

3 Moral responsibility

Two distinct meanings:

• moral duty or moral obligation

• a person is to blame for something

A person is morally responsible for an injury or a wrong if

• the person caused or helped cause it, or failed to prevent it when he could
and should have;

• the person did so knowing what he was doing;

• the person did so of his own will.

The absence of any of these three elements will completely eliminate a person's
responsibility for damage or injury? Do they also apply to collective entities (as
companies)?

Example: ASBESTOS AND LUNG DISEASES

Several manufacturers of asbestos were recently judged responsible for the lung
diseases suffered by some of their workers.
The judgment was based in part on the finding that the manufacturers had a special
duty (a duty they were assigned by their position) to warn their workers of the known
dangers of working with asbestos but they knowingly failed to perform this duty;
therefore the lung diseases were a foreseen injury that they could have prevented
had they acted accordingly.
In their defense, the asbestos manufacturers argued that:

• The lung injuries suffered by their workers were not caused by working with
asbestos, but by smoking;
 • They did not know that something that had to do with the working conditions
(asbestos) could cause lung cancer in their workers;

• They were not free to prevent the injuries because they had tried to get their
workers to wear protective masks, but the workers refused and so they were
harmed because of circumstances the manufacturers could not control.
If any of these claims were true, then could the manufacturers still be morally
responsible, to a certain degree, for the lung diseases of their workers?

1 The first requirement for moral responsibility: The person must either
cause the injury or wrong or else must fail to prevent it when she could and
should have done so.

In many cases, it is easy to determine whether a person's actions caused an injury or

wrong – commissions.
But it is not so easy when a party does not cause an injury but merely fails to prevent
it – ommissions. Moral (as well as legal) responsibility may be much more difficult to
establish when it comes to ommissions.

Example: NIKE AND CHILD LABOR

The athletic shoe company has been the center of a controversy over its
responsibility for the mistreatment of the workers who produce its shoes.
Nike does not actually manufacture any of the athletic shoes it sells. Instead, Nike
designs its shoes in Seattle, and then pays manufacturing companies in developing
countries (China, Indonesia, India, etc.) to make the shoes according to these
designs. It is these foreign supplier companies that have directly mistreated and
exploited their workers.
Nike has claimed that it is not morally responsible for this mistreatment because the
iharm was inflicted by the supplier companies, so Nike itself did not cause any harm.
Critics have responded that although it is true that Nike did not directly cause harm,
Nike could have prevented it by forcing its suppliers to treat their workers humanely.
If it is true that Nike had the power to prevent the harm done, and should have done
so, then Nike meets the first condition for moral responsibility. But if Nike was truly
powerless to prevent it – if Nike had no control over the actions of its suppliers – then
it doesn′t meet the first condition.
People are morally responsible for a harm or injury when they failed to prevent it,
only if they should have prevented it. People cannot be held morally responsible for
all the injuries they know about and fail to prevent.
We are not morally responsible for failing to save all the members of all the starving
groups in the world that we learn about by reading the newspapers, even if we could
have saved some of them. If we were morally responsible for all these deaths, then
we would all be serial criminals and this seems wrong.
A person is responsible for failing to prevent an injury only when, for some reason,
the person had an obligation to prevent that particular injury. Such an obligation
generally requires some sort of special relationship with the injured party.

If I know I am the only person near enough to save a drowning child, and I can do so
easily, then my special physical relationship to the child creates in me an obligation
to save the child and so I am morally responsible for the child's death if I fail to
prevent it.
Or if I am a police officer on duty and see a crime that I can easily prevent, then,
because it is my job to prevent such crimes, I have a specific obligation to prevent
this crime and am morally responsible if I fail to do so.
Other similar examples – what sort of obligation is involved?
Legal/professional/moral
Ex: accidents in the mining industry (obsolete technology, lack of investment,
“relaxed” standards for work safety)
Employers likewise have a special obligation to prevent work injuries on their
employees and so are morally responsible for any foreseen work injuries they could
have prevented.

2 The second requirement for moral responsibility: The person must know
what she is doing.

If a person is ignorant of the fact that her actions will injure someone else, then she
cannot be morally responsible for that injury.

A person may be ignorant of either:

• The relevant facts: I may be sure that bribery is wrong (a moral standard) but
may not have realized that in tipping a customs official I was actually bribing him
into canceling certain import fees (a fact).
• The relevant moral standards: In contrast, I may be genuinely ignorant that
bribing government officials is a wrong (a moral standard), although I know that
in tipping the customs official I am bribing him into reducing the fees I owe (a
fact).

Ignorance, however, does not always excuse a person.

• One exception is when a person deliberately stays ignorant of a certain matter

to escape responsibility.
If Nike managers told their suppliers that they did not want to know what was
going on in their factories, they would still be morally responsible for
whatever mistreatment went on that they could have prevented.

• A second exception is when a person negligently fails to take adequate steps

to become informed about a matter that has its own importance.
A manager in an asbestos company, who has reason to suspect that asbestos
may be dangerous but who fails to become informed on the matter out of lack
of interest or laziness, cannot plead ignorance as an excuse.

3 The third requirement for moral responsibility: The person must act of his
own free will.

A persons acts of his own free will when the person acts deliberately or purposefully
and his actions are not the result of some uncontrollable mental impulse or external
force.
A person is not morally responsible if he causes injury because he lacked the power,
skill, opportunity, or resources to prevent his actions from resulting in injury. Nor is a
person morally responsible when he is physically forced to inflict an injury on
someone else or physically restraint from doing something to prevent the injury, nor
when a person's mind is psychologically impaired in a way that prevents her from
controlling her actions. But it may be difficult to draw a clear dividing line between
real constraint and circumstances used as an alibi.

• An employee may injure a fellow worker when a machine he thought he knew

how to operate suddenly veers out of his control.

• A manager working under extremelly stressful circumstances may be so tense

that one day he is overcome by rage at a subordinate and genuinely is unable
to control his actions toward the subordinate.
In all of these cases, the person is not morally responsible for the wrong or the injury
because the person did not choose the action deliberately or purposefully but was
forced to inflict the injury by a mental impairment or some uncontrollable external
forces.

Mitigating factors can lessen (but not eliminate) a person's moral

responsibility.

Circumstances that minimize but do not completely remove a person's involvement

in an act that caused or brought about an injury - the degree to which the person
actually caused or helped to cause the injury.
An engineer may be aware of the unsafe features in somebody else's design but
passively stand by without doing anything about it because 'that's not my job'. In
general, the less one's actual actions contribute to the outcome of an act, the less
one is morally responsible for that outcome.

Circumstances that cast doubts over the morality of some action, although they do
not offer a certainty regarding its imorality - the person's knowledge.
An office worker who is asked to carry proprietary information to a competitor might
feel fairly sure that doing so is wrong yet may also have some genuine uncertainty
about how serious the matter is.

Circumstances that make it difficult but not impossible for the person to avoid doing
it.
Middle managers are sometimes intensely pressured or threatened by their superiors
to reach unrealistic production targets or to keep certain health information secret
from workers or the public, although it is clearly unethical to do so. If the pressures
on managers are great enough, then their responsibility is correspondingly
diminished.

The extent to which these three mitigating circumstances can diminish a person's
responsibility for a wrongful injury depends on the agent’s degree of involvement and
the seriousness of the wrong.

DuPont, Resistol, Tylenol:

• Common elements
• Similar examples: Danone, Nokia?
• Type of relation involved: employer/employee or producer/consumer
• These actions imply a moral responsibility that goes beyond the group of
employees or consumers? Is the community involved (and how)?