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Business Ethics

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Business Ethics ­MGT610
VU
LESSON 05
MORAL REASONING
Moral reasoning itself has two essential components: an understanding of what reasonable
moral standards require, and evidence or information concerning whether a particular policy,
person, institution, or behavior has the features of these moral standards. People often fail to
make their moral standards explicit when they make a moral judgment, mainly because they
assume them to be obvious. This assumption is not always true, however; often we must retrace
a person's moral reasoning to deduce what their moral standards are. Of course, it is not always
easy to separate factual information from moral standards.
Moral reasoning refers to the reasoning process by which human behaviors, institutions, or
policies are judged to be in accordance with or in violation of moral standards. Moral reasoning
always involves two essential components: (a) an understanding of what reasonable moral
standards require, prohibit, value, or condemn; and (b) evidence or information that shows that
a particular person, policy, institution, or behavior has the kinds of features that these moral
standards require, prohibit, value, or condemn.
To evaluate the adequacy of moral reasoning, ethicists employ three main criteria:
1. Moral reasoning must be logical.
2. Factual evidence must be accurate, relevant, and complete.
3. Moral standards must be consistent.
Consistency refers not only to the fact that one's standards must be able to coexist with each
other, but also to the requirement that one must be willing to accept the consequences of
applying one's moral standards consistently to others in similar circumstances. The consistency
requirement is, in fact, the basis of an important critical method in ethics: the use of
counterexamples and hypothetical examples.
This consistency requirement can be phrased as follows:
If I judge that a certain person is morally justified (or unjustified) in doing A in
circumstance C, then I must accept that it is morally justified (or unjustified) for any other
person:
(a) To perform any act relevantly similar to A
(b) In any circumstances relevantly similar to C.
Arguments For and Against Business Ethics
Some people object to the entire notion that ethical standards should be brought into business
organizations. They make three general objections.
First, they argue that the pursuit of profit in perfectly competitive free markets will, by itself,
ensure that the members of a society are served in the most socially beneficial ways. Of course,
the assumption that industrial markets are perfectly competitive is highly suspect. Even more,
there are several ways of increasing profits that will actually harm society. Producing what the
buying public wants may not be the same as producing what the entirety of society needs. The
argument is essentially making a normative judgment on the basis of some assumed but
unproved moral standards ("people should do whatever will benefit those who participate in
markets"). Thus, although the argument tries to show that ethics does not matter, it can do this
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Business Ethics ­MGT610
VU
only by assuming an unproved moral standard that at least appears mistaken.
Second, they claim that employees, as "loyal agents," are obligated to serve their employers
single-mindedly, in whatever ways will advance the employer's self-interest.
As a loyal agent of his or her employer, the manager has a duty to serve his or her
employer as the employer would want to be served (if the employer had the agent's
expertise). An employer would want to be served in whatever ways will advance
his or her self-interests.
Therefore, as a loyal agent of his or her employer, the manager has a duty to serve
his or her employer in whatever ways will advance the employer's self-interests.
But this argument itself rests on an unproven moral standard that the employee has a duty to
serve his or her employer and there is no reason to assume that this standard is acceptable. An
agent's duties are defined by what is called the law of agency, (i.e., the law that specifies the
duties of persons [agents] who agree to act on behalf of another party and who are authorized
by the agreement so to act). Also, agreements to serve another do not automatically justify
doing wrong on another's behalf.
Third, they say that obeying the law is sufficient for businesses and that business ethics is,
essentially, nothing more than obeying the law. However, the law and morality do not always
coincide (again, slavery and Nazi Germany are relevant examples). Some laws have nothing to
do with morality because they do not involve serious matters. These include parking laws, dress
codes, and other laws covering similar matters. Other laws may even violate our moral
standards so that they are actually contrary to morality.
Thus, none of the arguments for keeping ethics out of business seems forceful. In contrast,
there are fairly strong arguments for bringing ethics into business.
One argument points out that since ethics should govern all human activity, there is no reason
to exempt business activity from ethical scrutiny. Business is a cooperative activity whose very
existence requires ethical behavior. Another more developed argument points out that no
activity, business included, could be carried out in an ethical vacuum.
One interesting argument actually claims that ethical considerations are consistent with
business activities such as the pursuit of profit. Indeed, the argument claims that ethical
companies are more profitable than other companies. The data is mixed on this question, but
even though it cannot demonstrate that ethical behavior is always more profitable, it does
clearly show that it is not a drag on profits.
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Table of Contents:
  1. INTRODUCTION:Business Issues
  2. INTRODUCTION (CONTD.)
  3. THEORY OF ETHICAL RELATIVISM
  4. MORAL DEVELOPMENTS AND MORAL REASONING
  5. MORAL REASONING:Arguments For and Against Business Ethics
  6. MORAL RESPONSIBILITY AND BLAME
  7. UTILITARIANISM:Utilitarianism: Weighing Social Costs and Benefits
  8. UTILITARIANISM (CONTD.):rule utilitarianism, Rights and Duties
  9. UNIVERSALIZABILITY & REVERSIBILITY:Justice and Fairness
  10. EGALITARIANS’ VIEW
  11. JOHN RAWLS' THEORY OF JUSTICE:The Ethics of Care
  12. THE ETHICS OF CARE:Integrating Utility, Rights, Justice, and Caring
  13. THE ETHICS OF CARE (CONTD.):Morality in International Contexts
  14. MORALITY IN INTERNATIONAL CONTEXTS:Free Markets and Rights: John Locke
  15. FREE MARKET & PLANNED ECONOMY:FREE TRADE THEORIES
  16. LAW OF NATURE:Theory of Absolute Advantage, Comparative Advantage
  17. FREE MARKETS AND UTILITY: ADAM SMITH:Free Trade and Utility: David Ricardo
  18. RICARDO & GLOBALIZATION:Ricardo’s Assumptions, Conclusion
  19. FREE MARKET ECONOMY:Mixed Economy, Bottom Line for Business
  20. COMPETITION AND THE MARKET:Perfect Competition
  21. PERFECT COMPETITION
  22. MONOPOLY COMPETITION:Oligopolistic Competition
  23. OLIGOPOLISTIC COMPETITION:Crowded and Mature Market
  24. OLIGOPOLIES AND PUBLIC POLICY:Ethic & Environment, Ozone depletion
  25. WORLDWATCH FIGURES:Population Year, Agriculture, Food and Land Use
  26. FORESTS AND BIODIVERSITY:The Ethics of Pollution Control
  27. THE ETHICS OF POLLUTION CONTROL:Toxic Chemicals in Teflon
  28. THE ETHICS OF POLLUTION CONTROL
  29. THE ETHICS OF POLLUTION CONTROL:Recommendations to Managers
  30. COST AND BENEFITS:Basis of social audit, Objectives of social audit
  31. COST AND BENEFITS:The Ethics of Conserving Depletable Resources
  32. COST AND BENEFITS:The Club of Rome
  33. THE ETHICS OF CONSUMER PRODUCTION AND MARKETING:DSA Comments
  34. THE ETHICS OF CONSUMER PRODUCTION AND MARKETING:Should Consumers Bear More Responsibility?
  35. THE CONTRACT VIEW OF BUSINESS' DUTIES TO CONSUMERS
  36. THE CONTRACT VIEW OF BUSINESS' DUTIES TO CONSUMERS:The Due Care Theory
  37. THE SOCIAL COSTS VIEW OF THE MANUFACTURER’S DUTIES
  38. ADVERTISING ETHICS:The Benefits of Advertising, The harm done by advertising
  39. ADVERTISING ETHICS:Basic Principles, Evidence, Remedies, Puffery
  40. ADVERTISING IN TODAY’S SOCIETY:Psychological tricks
  41. ADVERTISING IN TODAY’S SOCIETY:Criticism of Galbraith's Work
  42. ADVERTISING IN TODAY’S SOCIETY:Medal of Freedom
  43. ADVERTISING IN TODAY’S SOCIETY:GENERAL RULES, Substantiation
  44. ADVERTISING IN TODAY’S SOCIETY:Consumer Privacy, Accuracy
  45. THE ETHICS OF JOB DISCRIMINATION:Job Discrimination: Its Nature