legal ethics and business

7/28/2019 Legal Ethics and Business

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DR NORAIN ISMAILFPTT

PPSW 6063 & MPSW 506317 MARCH 2013

LAW, ETHICS AND BUSINESS


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What do you think?A friend who is an A-student has offered to write

your paper, which is worth 25% of your grade, for$50. You need the course to graduate becauseyou only have a low C average. You hate writing,

do it very poorly, and know others have had goodresults submitting this students papers as their

own. Will you pay the money and submit thepaper or submit your own paper and pray for a

good result?(http://highered.mcgraw-

hill.com/sites/dl/free/0073524565/324445/jon24565_ch05.pdf)
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What will you do?

Suppose you see a person being mugged in thestreet. How will you behave? Will you act in some wayto help even though you risk being hurt? Will you walkaway? Perhaps you might adopt a middle-of-the-road

approach and not intervene but call the policeinstead? Does the way you act depend on whetherthe person being mugged is a fit male, an elderlyperson, or even a street person? Does it depend onwhether there are other people around, so you cantell yourself, Oh well, someone else will help or call

the police. I dont need to?

(http://highered.mcgraw-hill.com/sites/dl/free/0073524565/324445/jon24565_c

h05.pdf)
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OBJECTIVES Connection between ethics and business

Connection between law and morality

Differences of morals and ethics

Theories of ethics Issues of ethics in corporations


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ETHICS

What is ethics?

* derived from Greek words ethos which means

character; and ethikos which means practice andcustoms.

* custom, habit, character or disposition.

* a system of moral principles that affect howpeople make decisions and lead their lives.

* set standards of good and bad as opposed toright and wrong.


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Continue The principles of conduct governing an individual

or a group (Websters Dictionary)

the science of moral (Oxford English Dictionary)


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Ethics cover the following: How to live a good life

Our rights and responsibilities

The language of right and wrong

Moral decisions what is good and bad

Our concepts of ethics have been influenced fromreligion, philosophies and cultures

Thus ethics could mean a set of moral principles or

values that governs the conduct of an individual or agroup


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Ethical behaviour What is accepted as good and right in the context

of the governing moral code.

What is lawful conduct is not always ethicalconduct.

Legal behaviour is not necessarily ethical behaviour(the law may permit something that would ethicallywrong)

Personal values help determine individual ethical

behaviour

ethical codes statements about the norms andbeliefs of an individual

Norms are the standard of behavior

Beliefs are the standard of thoughts


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Ethics and Ethical Behaviour Ethics provides us with a moral map, a framework

that can be used to find our way through difficultissues

Ethics affect the way human beings behave

Factors influencing the formation of individualethics

Family influence

Peer influence

Life experience

Personal values and morals

Situational factors


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Sources of ethics Ethics are a system of moral principles and a

branch of philosophy which defines what is goodfor individuals and society

Philosophers suggest the source of ethics:

God and religion

Human conscience and intuition

A rational moral cost-benefit analysis of actions andtheir effects

The example of good human beings

A desire for the best for people in each uniquesituation

Political power


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Classification of ethical theories Ethical theories to distinguish right actions from

wrong actions

Consequentialism Egoism

Utilitarian

Non-consequentialism/Deontology Kants ethics

Kohlbergs theoery

Virtue ethics


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ConsequentialismAssess the moral worth of human actions by

looking at its consequences/results and not onthe actions themselves.

Teaches the people should do whatever producesthe greatest amount of good consequences.

If it is Good, the act is Right, and vice versa.

Consequences for whom?

Only for oneself or for everyone affected? The answer depends on the theory applied.

Egoism/individualism

Utilitarianism


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Conseqeuntialism: Egoism Defines right or acceptable behaviour in terms of

the consequences for the individual

Egoist believe that they should make decisionsthat maximise their own self-interest

In an ethical decision-making situation, an egoistwill probably choose the alternative thatcontributes most to his of her self-interest i.e.primary commitment is to ones long-term self-interests.


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Consequentialism: Utilitarianism Concerned with consequences, but seeks the

greatest amount of good for the greatest numberof people.

Decisions must result in the greatest total utility

i.e. achieve the greatest benefits for all thoseaffected by that decision.

In making ethical decisions, utilitarians oftenconduct a cost-benefit analysis, which considersthe cost and benefits to all affected parties i.e anyact that can give the most benefit/happiness arethe right one

Limitation: difficult to estimate the good thatresult from different actions.


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Non-consequentialism/Deontology

Concerned with the actions themselves and notwith the consequences. It is the theory thatpeople are using when they refer to the principle

of thing


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Non-consequentialism/Deontology Concern with the actions themselves and not with

the consequences.

Theory that people are using when they refer tothe principle of the thing

Right and wrong is determined not only by theconsequences of the act but many factors

Examine every factor relevant to the moralassessment of an action

Non-consequentialist: Kohlbergs theory

Kantian ethics


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Non-consequentialism: KohlbergsTheory

3 level of moral: Pre-conventional (2 levels of moral development)

React to punishment

Reflect desire to receive a reward

Conventional level (morality stage-accept moralitythat learn from others)

Post-conventional (2 stages of self acceptedmoral principles)

Speak and understand morality based on rights ofindividual

Able to give reason/rational defense of the moralprinciples that guide our actions


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Non-consequentialism: Kantianethics (duty ethics)

A moral theory that says people owe moral dutiesthat are based on universal rules i.e if act in aparticular manner is suitable to become auniversal accepted principle guiding behaviour,

then committing that act is ethical Eg universal accepted principles right of freedom,

right to choose how to live.

This theory would have people behave accordingto the categorical imperative Do unto others asyou would have them do unto you

Based on the premise that people can usereasoning to reach ethical decisions


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Kantian ethics Deontologys universal rules are based on 2

principles:

Consistency all cases are treated alike with noexceptions

Reversibility the actor abide by the rule he/sheuses to judge the morality of someone elses

conduct

Non-consequentialist believe that conformity to

general moral principles determines ethicalness Limitation: it is hard to reach a consensus as to

what the universal rules should be


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Virtue Ethics Look at virtue or moral character, rather than at

ethical duties and rules, or the consequences ofactions

Particularly concerned with the way individuals

live their lives, less concerned in assessingparticular actions

Develops the idea of good actions by looking atthe way virtuous people express their innergoodness in the things that they do i.e. teachesthat an action is right only if it is an action that avirtuous person would do in the samecircumstances, and that a virtuous person issomeone who has a particularly good character


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Ethical Theories ComparedConsequentialism Deontology Virtue Theory

Example Mills utilitarianism Kantianethics

Aristotles moral theory

Abstractdescriptio

n

An action is right if itpromotes the best

consequences

An action isright if it is in

accordancewith a moralrule orprinciple

An action is right if it iswhat a virtuous agent

would do in thecircumstances

Moreconcrete

specification

The bestconsequences are

those in whichhappiness ismaximise

A moral ruleis one that is

required byrationality

A virtuous agent is onewho acts virtuously,

that is, one who hasand exercises thevirtues. A virtue ischaracter trait a humanbeing needs to flourishor live well.


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Business Ethics Business ethics involves applying general ethical

principles and standards to business activities,behavior and decisions

Ethical principles in business are not different from

ethical principles in generalAll professions have their codes of exemplary conduct

and abide by their codes to ensure that their professions

credibility is intact

Business actions are judged: By general ethical standards of society

Not by mere permissive standards

It is not study of what is legal but of the application of

moral standards to business decisions


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Business objectives vs ethics Positive business ethics: fairness, integrity, truth

telling, dependability, business plan, valuesbased, disclosure, transparency, accountabilityetc

Businessman not only to know the law but ethicaldecisions as well

Why do people get involve in businesss?

Often ethical conflict between making money anddoing what is right People in business claim they are bound only by

law not by normal norm

Business is no concern with ethics

Moral is something of a personal matter


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Business and moral issues The moral background of business: business is

not something separate from society or imposedon it; rather, it is integral part of society

It involves all of us in one way or another seller

sells, manufacturer produces and buyer buys The business of business: the business of

business was, and is, decided by the people ofeach society. The limits and demands imposed on

business by society are frequently moral ones If bribery is the common practice in a given society,

it is proper to engage in bribery in that society


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Continue Business and the law: business is a social

enterprise whose mandate and limits are set bysociety. The limits are often moral, but they arealso frequently written into law

To abide by the law in practicing discrimination toact immorally because racial discrimination wasimmoral before it was made illegal.


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The myths of American amoralbusiness

A popular and widespread view among Americanbusiness describes how American business andbusinessman perceive themselves and areperceived by others

Business is concerned primarily with profit

Business and people in business are not explicitlyconcerned with ethics (they are not explicitlyconcerned with ethics (they are not unethical orimmoral; rather they are amoral)

Business is not expected to be concerned withethics


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Amoral business Argument: businesses act unethically not because of

a desire to do evil, but simply because they want tomake a profit and therefore disregard some of theconsequences of their actions.

Many people in and out of the business perceive tojudge a firm by its financial status or by its products thanto deal with ethical judgments

How to stop this practice?

Reporting the scandals and associate public reaction tothe report

Form popular groups such as environmentalist andconsumerist

Awareness of business in ethics

Form corporate codes of ethical conduct and of ethics


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Why ethics decision difficult? Reasons according to American research:

Managers confront a distinction between facts andvalues when making ethical decisions

It is often the case that good and evil exist

simultaneously Knowledge of consequence is limited

The existence of multiple stakeholders exposesmanagers to conflicting ethical claims

Some ethical standards are variable, they maychange with time and place


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Drivers of unethical strategies andbusiness behaviour

Ethics brief: corporations that conduct socialaudits will be more apt to prevent unethical andillegal conduct by managers, employees andagents

The view that business of business is businessnot ethics

Overzealous pursuit of persona gain, wealth, andother self-interests

Heavy pressures on company managers to meetor beat earnings targets

A company culture that places profits and good

performance ahead of ethical behaviour


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Factors affecting ethical choices The manager

Level or stage of moral development

Learned ethics

The organisation

Systems Explicit rules and policies

Reward system

Culture Common values

Traditions


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Ethical dilemmasAn ethical dilemma occurs when choices,

although having potential for personal and/ororganisational benefit, may be consideredunethical

Ethical dilemmas include: Discrimination

Sexual harassment

Conflicts of interest

Customer confidence

Organisational resources


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Guidelines for dealing with ethicaldilemmas

Is it legal? Is it right?

Is it beneficial? To whom? How much?

Is it harmful? To whom? How much?

Would you be willing to allow everyone to do whatyou are considering?

Would you like your family to know?

Would you like your decision printed in thenewspaper?

Have you consulted others who are objective andknowledgeable?


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Johnson & Johnson and the TylenolCase

In October 1982, Tylenol, the leading pain-killermedicine in the US at the time, faced atremendous crisis when seven people in Chicagowere reported dead after taking extra-strengthTylenol capsules suspected contaminated with 65milligrams of deadly cyanide into Tylenolcapsules, 10,000 more than what is necessary tokill a human. The tampering occurred once theproduct reached the shelves. They were removed

from the shelves, infected with cyanide andreturned to the shelves (Mitchell, 1989). In 1982,Tylenol controlled 37 percent of its market withrevenue of about $1.2 million. Immediately aftercyanide poisonings, its market share wasreduced to seven percent (Mitchell, 1989).


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Once the connection was made between theTylenol capsules and the reported deaths, publicannouncements were made warning peopleabout the consumption of the product. Following

one of the J&J guidelines of protecting peoplefirst and property second, McNeil ConsumerProducts, as subsidiary of J&J, conducted animmediate product recall from the entire country

which amounted to about 31 million bottles and aloss of more than $100 million dollars. (Lazare,Chicago Sun-Times 2002). Additionally, theyhalted all advertisement for the product.

(http://iml.jou.ufl.edu/projects/fall02/susi/tylenol.ht
http://iml.jou.ufl.edu/projects/fall02/susi/tylenol.htmhttp://iml.jou.ufl.edu/projects/fall02/susi/tylenol.htmhttp://iml.jou.ufl.edu/projects/fall02/susi/tylenol.htm


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Questions: Was J&J ethically obliged to recall Tylenol

immediately, as it did?

Would it have been ethically permissible for it towait until it was sure about what was happenings,

or to recall the product only from the Chicagoarea until there was evidence of tampering withthe product in some other part of the country?

What would be your answer?

legal ethics and business

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