1-1 Chapter 1 Discussion: Ethics & Business Paul L. Schumann, Ph.D. © 2004 by Paul L. Schumann. All rights reserved.

1-2 Introduction  What did Merck do to deal with the disease “river blindness”?  Why did Merck invest so much money and effort into a drug that made no money?

1-3 Nature of Business Ethics  What does “ethical” mean to you?  How does Velasquez define “morality”?  What are the five characteristics that distinguish moral standards from other standards?  How does Velasquez define “ethics”?  How does Velasquez define “business ethics”?

1-4 Nature of Business Ethics  To whom should moral standards apply:  Should a company be morally responsible for its actions? Why?  Should the managers involved be morally responsible for the actions they take in the name of a company? Why?  Should both a company and its managers be morally responsible? Why?

1-5 Nature of Business Ethics  In what ways do the following issues involving multinational companies raise ethical issues?  Shift operations to a country with cheaper labor and less government regulation.  Transfer materials and money between countries to escape paying taxes.  Transfer products to countries that aren’t ready for the technology.  Different nations have different standards.

1-6 Nature of Business Ethics  What is the theory of “ethical relativism”?  Are there some moral standards that a society must accept if it is to survive? Examples?  Do apparent differences in moral standards across different societies sometimes disappear on closer examination? Examples?  If two people disagree on moral standards, does that mean they both have to be right? Explain?  What are some examples of incoherent consequences of the theory of ethical relativism?

1-7 Nature of Business Ethics  Is it ethical for someone who believes in ethical relativism to impose their ethical relativism morality on others who disagree with ethical relativism? Explain?

1-8 Moral Development  According to Kohlberg, what is Stage One of moral development?  “The only crime is getting caught.” How is this an example of Stage One thinking?  Give an example of Stage One thinking.  Give an example of employee behavior in a business that illustrates Stage One thinking.  As managers, how can we motivate a Stage One employee to act ethically?

1-9 Moral Development  According to Kohlberg, what is Stage Two of moral development?  “You scratch my back and I’ll scratch yours.” How is this an example of Stage Two thinking?  Give an example of Stage Two thinking.  Give an example of employee behavior in a business that illustrates Stage Two thinking.  As managers, how can we motivate a Stage Two employee to act ethically?

1-10 Moral Development  According to Kohlberg, what is Stage Three of moral development?  Give an example of Stage Three thinking.  Give an example of employee behavior in a business that illustrates Stage Three thinking.  As managers, how can we motivate a Stage Three employee to act ethically?

1-11 Moral Development  According to Kohlberg, what is Stage Four of moral development?  Give an example of Stage Four thinking.  Give an example of employee behavior in a business that illustrates Stage Four thinking.  As managers, how can we motivate a Stage Four employee to act ethically?

1-12 Moral Development  According to Kohlberg, what is Stage Five of moral development?  Give an example of Stage Five thinking.  Give an example of employee behavior in a business that illustrates Stage Five thinking.  As managers, how can we motivate a Stage Five employee to act ethically?

1-13 Moral Development  According to Kohlberg, what is Stage Six of moral development?  Give an example of Stage Six thinking.  Give an example of employee behavior in a business that illustrates Stage Six thinking.  As managers, how can we motivate a Stage Six employee to act ethically?

1-14 Moral Development  According to research by Kohlberg and others, does everyone progress through all the stages? Explain.  In what ways are higher stages “better” than lower stages?  How has Carol Gilligan criticized Kohlberg?  What does the research show about Gilligan’s ideas?

1-15 For & Against Business Ethics  Velasquez argues that “…ethical behavior is the best long-term business strategy for a company…” (p. 5). Do you agree or disagree? Why? Examples?

1-16 Moral Responsibility  What are the two excusing conditions that can completely eliminate a person’s moral responsibility?  Why is ignorance an excusing condition? What if a person chooses to be ignorant?What if a person chooses to be ignorant? What if the person is ignorant because of negligence?What if the person is ignorant because of negligence?  Why is inability an excusing condition?

1-17 Moral Responsibility  Your boss orders you to do something unethical. Should you be able to reduce your moral responsibility because you were just “following orders”?  Murder a competitor?  Do you have a moral obligation as an employee to obey the immoral orders of your boss?

1-18 Case: The Air Force Brake  Cast of characters:  John Warren: engineer who designed brake, short-tempered when challenged  Searle Lawson: 26, engineer grad 1 year ago  Kermit Vandivier: lab asst, 42, married, 7 kids  Robert Sink: Warren’s boss, project manager, not engineer, HS degree, started as draftsman  Richard Gloor: test engineer  Russell Van Horn: Sink’s boss  Russell Line: senior executive

1-19 Case: The Air Force Brake  What were the 2 key reasons why Goodrich won the bid to make the A7D brakes?  Why did Goodrich make an “absurdly low” bid?  How was the brake design to be tested?  Why did the brake design fail the tests?  What happened when the brakes repeatedly failed the tests?

1-20 Case: The Air Force Brake  Who might be affected by what happens?  What moral issues did Kermit Vandivier face?  What choices did Kermit Vandivier have when he was ordered to write a false report?  What are the pros and cons of each choice?

1-21 Case: The Air Force Brake  Is it morally right for a person in Vandivier’s situation to write a false report? Why?  What moral standards can we develop to guide our moral judgment?  What is the consistency requirement for moral standards?  Do the moral standards meet the consistency requirement?

1-22 Case: The Air Force Brake  In terms of Kohlberg’s stages of moral development, at which stage is:  Searle Lawson? Why?  Kermit Vandivier? Why?

1-23 Case: The Air Force Brake  Additional facts:  After Goodrich submitted the false report, the Air Force began flight tests.  Several near crashes during landings: When the brakes were applied on landing, the wheels would lock, causing the plane to skid 1500 feet down the runway.When the brakes were applied on landing, the wheels would lock, causing the plane to skid 1500 feet down the runway.

1-24 Case: The Air Force Brake  Who should be morally responsible for any “accidents” caused by the brakes?  Kermit Vandivier? Why?  Searle Lawson? Why?  John Warren? Why?  Robert Sink? Why?  Russell Line? Why?  Goodrich as a company? Why?

1-25 Case: The Air Force Brake  Should anyone’s moral responsibility be reduced due to the ignorance or inability excuses?  Kermit Vandivier? Why?  Searle Lawson? Why?  John Warren? Why?  Robert Sink? Why?  Russell Line? Why?  Goodrich as a company? Why?

1-26 Case: The Air Force Brake  Additional facts:  Vandivier went to a lawyer, then FBI.  Lawson went to a lawyer, then FBI.  Air Force began investigation.  Vandivier resigned from Goodrich.

1-27 Case: The Air Force Brake  Additional facts:  US Senate held hearings. Vandivier testified.Vandivier testified. Lawson’s testimony supported Vandivier’s.Lawson’s testimony supported Vandivier’s. Sink and others denied wrongdoing.Sink and others denied wrongdoing. –Vandivier dismissed as a high school grad with no technical training. –Lawson dismissed as young and inexperienced.

1-28 Case: The Air Force Brake  Additional facts:  Vandivier became a newspaper reporter.  Lawson became an engineer for LTV.  Warren kept his job.  Line was promoted.  Sink was promoted to Line’s job.  What lessons can be learned from this case?