1. Chapter 4 – Ethics and Business Decision Making Copyright © 2011- Jeffrey Pittman

2. Section 1 – Business Ethics

3. Ethics in the News After the recent bank and corporate failures and government takeovers, ethics continues to be in the news Jeffrey Pittman - Legal Environment of Business 3

4. Ethics Ethics pertains to the study of good versus evil, and to moral behavior Western philosophy regarding ethics was shaped by ancient Greek philosophers, and by Christianity Jeffrey Pittman - Legal Environment of Business 4

5. Greek Philosophers Leading Greek philosophers include : Socrates Plato Aristotle The Cynics The Epicureans The Stoics Jeffrey Pittman - Legal Environment of Business 5 Plato (c. 428 B.C. - c. 347 B.C.)

6. Why is Business Ethics Important? Note the difference between the textbook examples of “illegal” behavior versus “unethical” behavior What does the large number of convicted business executives tell you? Jeffrey Pittman - Legal Environment of Business 6

7. Ethical versus Legal Standards of Behavior Laws are promulgated by the government – the law is a mandatory system of rules from an external source Ethical principles are voluntary, except to the extent the principles are duplicated by the law – ethical principles are shaped by external sources (e.g., religion), but are ultimately defined by internal decisions A majority of the material in Chapter 4 is legal – for example, all court cases analyze law only, not ethics Jeffrey Pittman - Legal Environment of Business 7

8. Section 2 – Approaches to Ethical Reasoning

9. Duty-Based Ethics Deontology – Following absolute standards of moral behavior, such standards generally coming from religious sources Kantian Ethics - Kant’s categorical imperative The Principle of Rights – Application of rights corresponding to duties of others Jeffrey Pittman - Legal Environment of Business 9

10. Outcome-Based Ethics Utilitarianism – Ethical behavior as identified through analyzing the consequences of such behavior “The greatest good for the greatest number” summarizes this ethical theory Jeremy Bentham and John Stuart Mill are philosophers associated with utilitarianism Jeffrey Pittman - Legal Environment of Business 10

11. Lifeboat Example Compare duty-based ethics to outcome-based ethics in analyzing a lifeboat example discussed in class – the Nineteenth Century British case, Regina v. Dudley and Stephens (14 Q.B.D. 273 (1884)) Regina v. Dudley and Stephens Jeffrey Pittman - Legal Environment of Business 11

12. Regina v. Dudley and Stephens On July 25, 1884, Captain Dudley, seamen Stephens and Brooks, and cabin boy Parker were in a lifeboat 1000 miles from land After their ship sunk, the men had been 20 days in the lifeboat, 8 without food Dudley killed Parker for food; murder charges later followed Jeffrey Pittman - Legal Environment of Business 12

13. Miscellaneous

14. Strategy for Ethical Decision Making Facts – Gather all necessary facts Stakeholders – Which stakeholder groups will be affected by the company decision in question Values – What are your personal values and the company values Alternative actions – What alternatives actions are possible Choose and prioritize – Make a decision based on values and impact on stakeholders Decision and implementation strategy Jeffrey Pittman - Legal Environment of Business 14

15. Stakeholder Analysis Management InvestorsEmployees Supply Chain GovernmentCommunity Jeffrey Pittman - Legal Environment of Business 15