Methods of Business Ethics

# Methods of Business Ethics How and why to do business ethics

## Some history - Business ethics emerged in the 1970s in discussions of business and social responsibility - Edward Freeman's *Strategic Management* aims to help managers perform in their complex and changing role. - The mission of business ethics is, at least in part, to help improve manager performance.

## Mission Implications 1. Business ethics is "morally intentioned" (23), aimed at understanding philosophically *how we should act* 2. Business ethics is scientifically informed -- aimed and understanding empirically *how we do act* 3. Business ethics is about manager/corporation dynamic. Who is responsible for the business, the leader or the whole group?

## 1. Philosophical and Ethical Methods 1. Goal is to understand and improve *manager performance* 2. And to understand and improve corporation's responsibility in society

### "Shareholder" v. "Stakeholder" 1. The manager's aim is to serve employees and shareholders, not solve social problems. 2. The manager's aim is to serve shareholders, stakeholders, and (possibly) society, not employees and shareholders. 3. Stakeholders are "communities, employees, consumers" contractors, neighbors, etc. (25)

### What does the manager do? - Maximize profit for shareholders and employees, regardless of morals? - Achieve independent moral aims, regardless of profit?

### Philosophically Informed ======= 3. Business ethics is about manager/corporation dynamic. (Who is responsible for the business, the leader or the whole group?)

## Philosophical and Ethical Methods 1. Goal is to understand and improve *manager performance* 2. And to understand and improve corporation's responsibility in society

### "Shareholder" v. "Stakeholder" Which? 1. The manager's aim is to serve employees and shareholders, not solve social problems. 2. The manager's aim is to serve shareholders, stakeholders, and (possibly) society, not employees and shareholders. Stakeholders = "communities, employees, consumers" contractors, neighbors, etc. (25)

### What does the manager do? - Maximize profit for shareholders and employees, regardless of morals? - Achieve independent moral aims, regardless of profit?

### Philosophically Informed - Business ethicists, business leaders, and business school teachers need moral philosophy to justify practical approaches to business. - There are four or five main theories! (We will discuss some next week) that sometimes offer conflicting practical direction.

### Philosophically Informed 8. Also, theories are sometimes not integrated into actual plan. (Reflecting on how you act, acting on your reflections) 9. Integrating philosophical theory into business ethics remains one of its most persistent challenges of the field. 9. Normative ethics has "primacy of place", but there is some metaethics (discussions of words and concepts). 10. Shortcomings include the fact that "case study" has replaced high level theory. (28)

## Scientifically Informed 1. "Co-presence of normative and descriptive methodologies" (23) means that we also have to study how businesses work 2. Business ethics then draws from work in economics, political science, psychology and social psychology, ethnography, anthropology, sociology. 2. It draws on game theory, study of ethical conduct, and misconduct, such as lying, cheating, stealing, whistle-blowing, bribery, environmental abuse, and so one.

### Scientifically Informed 3. One example from Primatology: Frans de Waal's research undermines the assumption that human beings are "driven by selfishness" (29)

### "Integrated Social Contract Theory" (ISCT) - Thomas Donaldson and Thomas Dunfee "seeks to address... the abstraction and generality of many ethical theories and their seeming irrelevance to the concrete norms, values, and practices with which business managers must work." (29) >>>>>>> origin/master

## Scientifically Informed 3. One example from Primatology: Frans de Waal's research undermines the assumption that human beings are "driven by selfishness" (29)

## "Integrated Social Contract Theory" (ISCT) - Thomas Donaldson and Thomas Dunfee "seeks to address... the abstraction and generality of many ethical theories and their seeming irrelevance to the concrete norms, values, and practices with which business managers must work." (29)

## "Integrated Social Contract Theory" (ISCT) 5. ISCT integrates macrosocial contracts that take precedence, religious, philosophical, social beliefs, with microsocial agreements, in communities, regions, businesses, etc.

## A tension between philosophical/scientific - Normatively inclined business ethicist can us language that involves critical rational analysis of arguments. - They also presume the autonomy and moral agency of those working in business environments. - In contrast, empirical research or is use the language of description and empirical methods to measure, explain, and predict behavior in organizations. - Their scientific orientation leads them to hold a more deterministic view of human nature." (31)

### Individual Decision Making 1. Most methods focus on the manager. 2. Business ethics emerged in contrast to the "amoral" pragmatic view of management. 3. Why focus on the individual manager? Partly because that is how business ethics courses were focused. It has also tried to show the "link between ethics and corporate flourishing" (33) Doing good leads to doing well. This still puts the definition of success as profit.

## Individual Decision Making 4. The Stakeholder theory shows how the Corporate Social Responsibility has other aims besides profit. ### Individual Decision Making 4. A second effect of focusing on individual managers is understanding how individual decisions exist within a system that supports or doesn't lead to ethical conduct. (33).

## Individual Decision Making 5. John Boatright argued that the Moral Manager Model "rests on the assumption that the business organization is the fundamental unit of analysis for business ethics" when it should be "the market itself", a system of businesses, economic systems such as capitalism, and even the laws. ## Some broader reflections on business **Here’s the question: What is the point of business?** Let’s reflect. (Hypothesis 1, 2, 3 on the board)

### What's the point of business? **Hypothesis 1: The point of business is to make money for the business owner and employees.** * But it can’t just be that. For what if a snake oil salesmen “makes money” by cheating people out of their money.

### What's the point of business? * Hypothesis 1: Making money * **Hypothesis 2: The point of business is to “busy” itself producing goods and services necessary for community.**

### What's the point of business? * A community needs food, water, shelter, clothes, and so on. * A community can each provide all their needs for themselves, or it can “divide and conquer”, each doing one task. For example, farmers provide food and water, homemakers cook, tailors provide clothes, carpenters build shelters, blacksmiths build tools for farming and cooking, and so on. These would be the “farming business” (agriculture), the homemaking business (parenting), the clothing business (fashion and textile manufacturing), the carpentry business (general contractors, engineering, project management), tools, and so on.

### What's the point of business? * But people are not just machines made of meat — they need “something to do. They need friendship, fun, art, religion, society, and entertainment.

* Hypothesis 1: Making money * Hypothesis 2: The point of business is to “busy” itself producing goods and services necessary for community. **Hypothesis 3: Business is what keeps everyone “busy”**

* **Hypothesis 3: Business is what keeps everyone “busy”** * Once everyone’s basic “necessary” needs are met, people need “something to do.” Religion, art, philosophy, science, sports, music, friends, and other “unnecessary” things. These things are not necessary for survival but necessary for humanity, necessary to thrive.

* **Hypothesis 3: Business is what keeps everyone “busy”** * So, divide and conquer: teachers and wise ones provide education, singers and story-tellers and actors provide entertainment, common meeting places such as houses, churches, and halls provide a place for society and culture. * These are all businesses. * But what is the point of these things?

======= Let’s reflect. (Hypothesis 1, 2, 3 on the board)

### What's the point of business? * Hypothesis 1: Making money * **Hypothesis 2: The point of business is to “busy” itself producing goods and services necessary for community.**

### What's the point of business? * But people are not just machines made of meat — they need “something to do. They need friendship, fun, art, religion, society, and entertainment.

>>>>>>> origin/master * Hypothesis 1: Making money * Hypothesis 2: Providing needs * Hypothesis 3: Keeping "busy" * **Hypothesis 4: Business is any human activity one can undertake and trade for some other good.**

# Before you go * Questions? * Write a short response: What is purpose of business? * Read for next time