1. Chapter 8 Making Ethical Decisions in Business

2. David Geffen David Geffen the son of poor Russian immigrants
Geffen was coming of age as an entrepreneur, he still had to face school
Geffen graduated from high school wanting to get rich in show business
From the mailroom a 21-year-old Geffen launched the career that made him “the richest man in Hollywood”

3. David Geffen
Irrespective of moral admonitions Geffen was now on his way
His extraordinary qualities in a business that rewards such traits
Geffen’s achievements and atonements can be weighed against his early indiscretions

4. Principles of Ethical Conduct
The following 14 principles are fundamental guides or rules for behavior
These principles distill basic wisdom that spans 2,000 years of ethical thought

5. The Categorical Imperative
Origination: Immanuel Kant
Basic premise: Act only according to that maxim by which you can at the same time will that it should become a universal law
Criticism: Theory is dogmatic and inflexible

6. The Conventionalist Ethic
Origination: Albert Z. Carr
Basic premise: Business is like a game with permissive ethics and any action that does not violate the law is permitted
Criticism: Commerce defines the life changes of millions and is not a game to be taken lightly

7. The Disclosure Rule
Basic premise: Test an ethical decision by asking how you would feel explaining it to a wider audience such as newspaper readers, television viewers, or your family

8. The Disclosure Rule Criticism:
Does not always give clear guidance for ethical dilemmas in which strong arguments exist for several alternatives
An action that sounds acceptable if disclosed may not, upon reflection, be the most ethical

9. The Doctrine of the Mean
Origination: Aristotle
Basic premise: Virtue is achieved through moderation
Avoid behavior that is excessive or deficient of a virtue
Criticism: The doctrine itself is inexact

10. The Ends-Mean Ethic
Origination: Ancient Roman proverb, but often associated with Niccolò Machiavelli
Basic premise: The end justifies the means
Criticism:
In solving ethical problems, means may be as important, or more so, that ends
The process of ethical character development can never be furthered by the use of expedient means

11. The Golden Rule
Origination: Found in the great religions and in works of philosophy
Basic premise: Do unto others what you would have them do unto you
Criticism:
People’s ethical values differ, and they may mistakenly assume that their preferences are universal
It is primarily a perfectionist rule for interpersonal relations

12. The Intuition Ethic
Origination: Defined by G.E. Moore in Principia Ethica
Basic premise: What is good or right is understood by an inner moral sense based on character development and felt as intuition

13. The Intuition Ethic Criticism:
Ethical intuition is reliable, but not infallible
Self-interest may be confused with ethical insight
No standard of validation exists outside the individual
Intuition may fail to give a clear answer when ethical norms are in conflict

14. The Might-Equals-Right Ethic
Origination: Thracymachus
Basic premise: Justice is the interest of the stronger
Criticism:
Confusion of ethics with force
Invites retaliation and censure, and is not conducive to long-term advantage

15. The Organization Ethic
Origination: Not credited
Basic premise: Be loyal to the organization
Criticism: Many employees have such deep loyalty to an organization that it transcends self-interest

16. The Principle of Equal Freedom
Origination: Herbert Spencer
Basic premise: A person has the right to freedom of action unless such action deprives another person of a proper freedom
Criticism: Lacks a tie breaker for situations in which two rights conflict

17. The Proportionality Ethic
Origination: Medieval Catholic theology
Basic premise: A set of rules for making decisions having both good and evil consequences
Criticism: These are intricate principles, requiring consideration of many factors

18. The Rights Ethic Origination: Western Europe during the Enlightenment
Basic premise: Each person has protections and entitlements that others have a duty to respect
Criticism:
Rights are sometimes stretched into selfish demands or entitlements
Rights are not absolute and their limits may be hard to define

19. The Theory of Justice Originator: Contemporary, John Rawls
Basic premise: Each person should act fairly toward others in order to maintain the bonds of community
Criticism: Rawl’s principles are resplendent in theory and may even inspire some business decisions, but they are best applied to an analysis of broad societal issues

20. Figure 8.1 - Three Spheres of Justice

21. The Utilitarian Ethic
Origination: Line of English philosophers, including Jeremy Bentham and John Stuart Mill
Basic premise: The greatest good for the greatest number

22. The Utilitarian Ethic Criticism:
In practice it has led to self-interested reasoning
Because decisions are to be made for the greatest good of all, utilitarian thinking has led to decisions that permit the abridgement of individual or minority group rights

23. Reasoning with Principles
The use of ethical principles, as opposed to the intuitive use of ethical common sense, may improve reasoning, especially in complex situations
Based on the application of utility, rights, and justice, the manager’s decision in the text example to remain silent is acceptable

24. Reasoning with Principles
Some judgment is required in balancing rights, but the combined weight of reasoning with all three principles supports the manger’s decision

25. Character Development
Character development is a source of ethical behavior separate from the use of principles reasoning
Virtue ethic: Ethical behavior stems from character virtues built up by habit
Aristotle believed that by their nature ethical decisions require choice, and we build virtue, or ethical character, by habitually making the right choices

26. The Neural Basis of Ethical Decisions
A fast, unconscious, and automatic process in neural circuits causes ethical judgments to appear in our awareness without any feeling of having gone through a reasoning process
There is no specific part of the brain that makes ethical decisions

27. The Neural Basis of Ethical Decisions
Functional magnetic resonance imaging: A method used to map activity in neural networks during ethical decision making
Emotions have a central role in ethical thought because of their importance to adaptive behavior
Moral intuition creates awareness of a moral judgment without any memory of having gone through a step-by-step reasoning process

28. The Neural Basis of Ethical Decisions
Moral intuition is a form of social intuition that is adaptive to the social environment and predominates in individual ethical decisions
There is considerable individual variation in perceptions of right and wrong
Neuroscience, as it removes physiological mysteries, reinforces the ethical teachings of centuries

29. Practical Suggestions for Making Ethical Decisions
Pay attention to your ethical intuition
Consider tactics that illuminate alternatives
Critical questions approach: A method of ethical reasoning in which insight comes from answering a list of questions
Sort out ethical priorities early

30. Practical Suggestions for Making Ethical Decisions
Set an example
Thoughts must be translated into action, and ethical deeds often require courage
Cultivate sympathy and charity toward others
Ethical perfection is illusory

31. Concluding Observations
There are many paths to ethical behavior
Not all managers appreciate the repertoire of principles and ideas that exist to resolve the ethical problems of business life