Revision. Exam Structure презентация

Revision

Exam Structure
Exam will have one section with 5 essay questions
You are required to answer 2 out of the 5 questions
Each question is worth 50%
Both are long essay question: around 1-2 pages
Make sure to answer all parts of the question!
90 minutes available

Core Topics
What is Business Ethics? (Lecture 1)
Why has it become more important in recent year?
Ethical theories (prescriptive) (Lecture 2)
How can we know right from wrong?
Utilitarianism, Deontology (Kantian duty ethics), Confucianism

Core Topics
Corporate social responsibility (CSR) (Lecture 3)
What are the responsibilities of the firm?
Moral vs. instrumental arguments for CSR
Arguments against CSR
Stakeholder analysis & engagement (Lecture 6)
Who are the stakeholders of the firm?
Which stakeholders should a firm’s managers pay attention to?
Stakeholder analysis
Stakeholder management/engagement

Core Topics
Behavioral ethics (descriptive) (Lecture 9)
Why do people and organizations engage in wrongdoing?
New vs. traditional perspective
Business ethics management (Lecture 10)
How can organizations prevent unethical behavior and encourage ethical behavior?
Fostering moral virtue (Lecture 10)
Why do some individuals (and companies) avoid wrongdoing and/or engage in doing good?
How can we strengthen the impulse to do good in individuals and organizations?

Applied Topics
Business ethics as applied to each of the following stakeholder groups:
Shareholders (Lecture 4)
Consumers (Lecture 5)
Suppliers and Competitors (Lecture 7)
Civil Society (Lecture 8)

Recurring Themes
Doing good vs. doing no harm
Moral and instrumental (pragmatic, strategic) considerations
Changing values and attitudes =
changing societal demands on companies +
new opportunities for companies

Seminar Topics
Seminar 1:
Cross-cultural ethics
Ethical theories
Ethics of gift-giving/bribery
Seminar 2:
Issue and stakeholder analysis
Labor issues and Global supply chains
Group presentation:
Issue and stakeholder analysis

Course Objectives
Bloom’s Taxonomy (updated)

Question Format
Some questions ask you to apply a core topic to a specific case
In 2015 German car manufacturer Volkswagen (VW) was forced to admit to installing devices in millions of its cars during the previous seven years that allowed them to pass emissions tests despite releasing amounts of harmful polluting gases that far surpassed legal limits.
If the board of directors of VW asks you to recommend company policies and practices that would ensure that such misconduct is prevented in the future, what recommendations would you give? Justify your recommendations.

Question Format
Some questions are directly about one of the applied topics
Discuss the advantages and drawbacks of using a standardized CSR reporting format, such as the one provided by the United Nations Global Compact, from the point of view of the adopting company. Support your key arguments by providing relevant examples.

Question Format
Some questions require a comparison between several perspectives or an analysis from several different perspectives
Imagine a company buys the only medicine available to fight a serious disease and raises its price from RMB 200 a bottle to RMB 15,000 a bottle. In the world’s poorest countries many people die of this disease every year. Discuss whether this is ethical from the view point of three ethical theories: Kantian deontology, utilitarianism and Confucianism. Justify your answers.

Question Format
Many questions have more than one part
Many foreign banks in China, such as JP Morgan Chase, operate a “Sons and Daughters” program which gives preference in hiring decisions to the sons and daughters of government officials and the managers of state-owned enterprises (SOEs). The program’s purpose is to gain favourable treatment from government agencies and lucrative deals from SOEs.
Critically discuss at least three rationalizations HR managers in these banks may have used to make their actions ethically acceptable to themselves.
Critique each rationalization and provide a counter-argument for each.

A Quality Response
Covers the question without including irrelevant content
Shows clear understanding and use of pertinent concepts
All parts of the question are answered
Arguments are supported with examples or relevant references
Incorporates appropriate materials from lectures, seminars and readings

Lecture 1:
Business Ethics

What is Business Ethics?
According to the textbook:
“Business ethics is the study of business situations, activities, and decisions where issues of right and wrong are addressed.”
Our module deals with the ethics of the actions and decision of:
Corporate Social Responsibility

An Ethical Hierarchy
Minimum
Obligatory
Desirable but
Discretionary

Chapter 2:
Ethical Theories and Business Ethics

Key Readings
Arnold & Bowie, 2003. Sweatshops and respect for persons
Chan, 2007. The relevance and value of Confucianism in contemporary business ethics

Other Ethical Theories

Utilitarianism
Is concerned with consequences
The General Principle:
‘An action is morally right if it results in the greatest amount of good for the greatest amount of people affected by the action.’
The simple and easy way to understand utilitarianism is as a cost-benefit approach to ethics
Utilitarianism is not egoism!
Rule utilitarianism and act utilitarianism often lead to different conclusions (but not always)

Act vs. Rule Utilitarianism
Act utilitarianism considers only the consequences of a single act
Rule utilitarianism looks at a class of actions and asks whether in principle it produces the greatest amount of good for the greatest amount of people

Ethics of Duty (Deontology)
Focuses on defining the Categorical Imperative: An ethical theory or law our acts must conform to under all conditions
Consequences don’t matter; but intentions do
Intrinsic worth or dignity of all persons; therefore should be respected
Immanuel Kant (1724-1804)

Kant’s Three Maxims
Consistency – Apply the same standard to your action that you would to others’. Don’t make an exception for yourself.
Respect for human dignity – Don’t use others. Treat them as an end not as a means.
Universal acceptability – Act only as you would if your actions were known to all.
These are different formulations of one categorical imperative, according to Kant.
BUT still may lead to different conclusions.

Confucian Ethics
Strong focus on cultivating self and being virtuous – Ultimate goal is to become a jūnzǐ (君子)
Core Confucian virtues (dé 德):
Rén (仁): compassion, benevolence,
humaneness
Yì (義): Sense of rightness, righteous-
ness
Following Lǐ (禮 ): norms, protocols,
etiquette, propriety
and also wisdom, reciprocity,
trustworthiness and filial piety
Confucius (孔子)

Confucian Ethics
Essence of rén = “Golden Rule”
(1) weak form: “What you do not wish for yourself, do not do to others.”
(2) strong form: “A man of benevolence, wishing to establish his own character, also establishes the character of others, and wishing to be prominent himself, also helps others to be prominent.”
One must help others to develop morally to achieve one’s own moral development

Confucian Ethics
How and why matter: Motives and the manner something is done is more important than what is done
Profit-making is not bad unless done for selfish reasons
Woods & Lamond, 2011

Question Example
Imagine a company buys the only medicine available to fight a serious disease and raises its price from RMB 200 a bottle to RMB 15,000 a bottle. In the world’s poorest countries many people die of this disease every year. Discuss whether this is ethical from the view point of three ethical theories: Kantian deontology, utilitarianism and Confucianism. Justify your answers.

Lecture 3:
Corporate Social Responsibility

Key Readings
Friedman, 1970. The social responsibility of business is to increase its profits
Economist articles
Porter & Kramer, 2011. Creating shared value
Smith, 2003. Corporate social responsibility: Whether or how?

Definitions
Corporate social responsibility:
“The firm’s consideration of, and response to, issues beyond the narrow economic, technical, and legal requirements of the firm.” (Davis, 1973)
“Actions that appear to further some social good, beyond the interests of the firm and that which is required by law.” (McWilliam & Siegel, 2001)

The Debate over CSR Today
From a dichotomy to a continuum.
The question now is not “Whether” but “How?” (or “How much?”) (Smith, 2003)
What is the corporation’s purpose and what are its responsibilities?
Maximize Shareholder Value
(Exclusively)
Serve the
Broader Interests of Society
(Beyond Profits)

Carroll’s Four-Part Model:
The Pyramid of CSR
Philanthropic Responsibilities
Expected by society
Do Good
Do No Harm

Why should firms engage in CSR?
Moral arguments: pro-CSR arguments based on the view that corporations have moral obligations (“It’s the right thing to do”)
Normative view
Instrumental arguments: based on claims that CSR leads to desirable outcomes, specifically increased profits, for firms
“The business case for CSR”, pragmatic view, strategic CSR, “profit-maximizing” CSR

Moral Arguments for CSR
Typically focus on accountability, reciprocity, obligation, and social contract
Driven by growing concern over dwindling natural resources and environmental degradation:
Pollution, water contamination, over-population, deforestation, climate change, etc.
And concern over social issues:
Poverty, inequality, slavery, forced labor, starvation, health, human rights

Friedman’s Critique
“There is one and only one social responsibility of business–to use it resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud."
Three arguments against CSR (especially against moral arguments for CSR)

Instrumental Arguments for CSR
CSR “is good for business” (or it’s bad to ignore it)
Changing expectations & radical transparency
Growing “conscious consumer” & LOHAS (Lifestyles of Health and Sustainability) segments
Reputation
More attractive to employees and investors
Better relations with government
Cost reduction, risk management
New business opportunities

Critiques of Instrumental Arguments
Continues to prioritize profits above all
Can lead to superficial CSR initiatives (“Window-dressing”) or deception (“Greenwashing”)
What if there is no “Market for Virtue”? What happens when there is a real conflict between profits and the broader interests of society?

Lecture 6: Stakeholder Analysis & Engagement

Stakeholder Relations
The Firm and its Managers
Suppliers: Supply high quality inputs &
receive payment
Civil society (NGOs): Don’t criticize or boycott & achieve their goals
Customers: Purchase products or services & obtain value
Shareholders: increase value of the firm & make profits
Governments: Don’t regulate extensively & and receive taxes
Employees: Create good products or services &
receive income
Interdependence

Types of Stakeholders
Werther & Chandler (2010)
Primary
Secondary
Which of all of these stakeholders should managers pay attention to? And how should the company engage with each?

Processes of Stakeholder Management
Stakeholder assessment is the process of understanding stakeholders and their relationship to a specific activity; it can be subdivided into two steps, stakeholder identification and stakeholder prioritization.
Stakeholder engagement is the process of interaction with stakeholders and can be subdivided into stakeholder communication and the co-creation of joint activities.

Stakeholder Prioritization
Laasch & Conaway, 2015

Stakeholder Analysis
Based on Eden & Ackermann, 1998

Exam Question
Senior managers at an IT company in the United States discover through a newspaper report that several of their suppliers in Country X employ forced labour. Now a group of human rights NGOs are gathering signatures for a shareholder resolution which would demand that the company cease all sourcing from Country X because of its oppressive government and terrible labour rights record.
Identify the key stakeholder groups in this issue and discuss the most likely position of each on the issue, justifying your arguments.
From an instrumental view of CSR which stakeholders should senior managers pay attention to and why?

Lecture 9:
Making Decisions in Business Ethics:
Descriptive Ethics

Key Readings
Palmer, 2013. The new perspective on organizational wrongdoing
Gioia, 1992. Pinto fires and personal ethics: A script analysis.pdf
Also: Drumwright & Murphy, 2004
Also see videos (Concepts Unwrapped and In it to Win by UT Austin) on Moodle

Behavioral Ethics
Why do people and organizations engage in wrongdoing?
How people make ethical decisions
Factors that influence ethical decision making

The New Perspective
Palmer, 2013

Rest’s Model of Ethical Decision Making
Recognise
Moral
Issue
Make
Moral
Judgement
Establish
Moral
Intent
Engage
in Moral
Behaviour
Individual factors
Contextual factors
Rest, 1986

Rational Decision Making or Not?
An emerging view holds that ethical decision making is often automatic, impulsive and unconscious (ethical impulse perspective) rather than rational (ethical calculus perspective)
This view is also known as bounded ethicality

Individuals
Situation
System
An Interactive Model
National Culture

Nested Systems
National/regional culture, religion, legal system: values, beliefs
Professional culture, education
Organizational culture, rewards systems, formal and informal structures of relationships and power
Situational cues can activate “mental programming” and programmed behavior associated with certain systems (or not)
Situation

Human Nature According to
Social Psychology
“Man is by nature a social animal” – Aristotle
Social psychology: human beings have evolved to harmoniously live in groups
We are therefore good at cooperating, following rules, observing others, conforming to group behavior, expectations and norms
Power & authority (Milgram’s experiments)
Social influence processes
Group & organizational factors

Moral Recognition
One key issue is whether the person realizes he or she is faced with an ethical decision
Also known as Moral awareness
Social & Cognitive Factors
Rest, 1986
Recognise
Moral
Issue
Make
Moral
Judgement
Establish
Moral
Intent
Engage
in Moral
Behaviour

Moral Muteness & Myopia
Moral muteness: When someone recognizes an issue has an ethical dimension but remains silent and avoids confronting the ethics of the issue
Moral myopia: Distortion of moral vision, leading to difficulty of recognizing ethical issues or seeing them clearly
Moral muteness can lead to moral myopia
Moral myopia can also occur due to rationalization
There are many cognitive biases and situational factors that can lead to moral myopia

Moral Intensity
Issue-specific factors that can influence moral awareness:
Magnitude of consequences
Social consensus
Probability of effect
Temporal immediacy
Proximity (social, cultural, psychological or physical) and
Concentration of effect
Jones, 1991

Rationalization Tactics
Rationalizations serve to convince the actor that their actions are not unethical through excuses or justifications.
Denial of responsibility
“I didn’t do it”, “I had no choice”, “None of my business”
Denial of injury
“No one was really harmed”, “It could have been worse”
Denial of victim
“They deserved it”, “They chose to participate”
Social weighting
“You have no right to judge us”, “Others are worse than we are”
Anand, Ashforth & Joshi, 2004

Rationalization Tactics
Appeal to higher loyalties
“We answer to a higher cause”
Moral equilibrium (or Moral licensing , aka “Metaphor of the ledger”)
Good deeds excuse wrongdoing
“Start small” (Zimbardo)
Rationalizations can be used before the act (prospective) or after (retrospective)
Prospective rationalization can lead to moral myopia
Retrospective rationalization helps reduce misgivings and feelings of guilt
Anand, Ashforth & Joshi, 2004

Exam Question
Many foreign banks in China, such as JP Morgan Chase, operate a “Sons and Daughters” program which gives preference in hiring decisions to the sons and daughters of government officials and the managers of state-owned enterprises (SOEs). The program’s purpose is to gain favourable treatment from government agencies and lucrative deals from SOEs.
Critically discuss at least three rationalizations HR managers in these banks may have used to make their actions ethically acceptable to themselves.
Critique each rationalization and provide a counter-argument for each.

Lecture 10:
Business Ethics Management

Key Readings
Zhang, Gino & Bazerman, 2014. Morality rebooted: Exploring simple fixes to our moral bugs

What is business ethics management?
Business ethics management is the direct attempt to formally or informally manage ethical issues or problems through specific policies, practices and programmes
Dr. Ulf Henning Richter

Typical Components
Mission or values statements
Codes of ethics
Reporting/advice channels
Risk analysis and management
Ethics managers, officers and committees
Ethics consultants
Ethics education and training
Stakeholder consultation, dialogue and partnership programs
Auditing, accounting and reporting

Codes of Ethics
A Code of Ethics is only effective if properly implemented and enforced, e.g. through:
Communication and training
Disciplinary actions
Whistleblowing mechanism
HR practices and policies (e.g., hiring, performance assessment)
Ethics committee or officer
Monitoring, auditing and reporting

Meta-analytic results from Kish-Gephert, Harrison & Trevino, 2010

Codes of Ethics
Source: KPMG 2008

Ethical Climate & Culture
Ethical climate consists of shared beliefs about “what constitutes right behavior” in an organization
Ethical culture refers to the organization’s formal and informal “systems, procedures, and practices for guiding and supporting ethical behavior” especially through the communication of “behavioral and accountability expectations” (Kish-Gephert et al 2010).
Emerges from rules and procedures, reward structures, among other things
Also leadership behaviors

Leadership
Leaders set the ethical tone in organizations
Being an ethical leader involves being a moral person and a moral manager
A moral person is someone who possesses a good character and displays virtues (honesty, trustworthiness, concern for others, etc.)
A moral manager sets ethical standards, communicates expectations and holds others in the organization accountable to those standards and expectations (Trevino & Brown, 2004)

Types of Factors
Formal vs. informal
Structure-oriented (extrinsic) vs. values-oriented (intrinsic)
Many approaches focus on one only
Problem: lack of alignment, inconsistencies, contradictions
An integrative approach tends to be more effective

Exam Question
In 2015 German car manufacturer Volkswagen (VW) was forced to admit to installing devices in millions of its cars during the previous seven years that allowed them to pass emissions tests despite releasing amounts of harmful polluting gases that far surpassed legal limits.
If the board of directors of VW asks you to recommend company policies and practices that would ensure that such misconduct is prevented in the future, what recommendations would you give? Justify your recommendations.

Fostering Individual
Moral Virtue

Meta-analytic results from Kish-Gephert, Harrison & Trevino, 2010

Your Beliefs and Values
What you believe matters
Locus of control
Idealist vs. relativist moral philosophy
Idealist moral philosophy: Individual’s belief that a “right” choice, especially one that avoids harm to others, exists in every situation
Principled vs. expedient ethical ideology

Integrity
Integrity is a “steadfast commitment” to one’s values or principle and to acting in ways that are consistent with these
Associated with a principled ethical ideology
Reduces propensity to morally disengage and rationalize
Leads to more helping behavior (like volunteering) and less unethical behavior (like lying, cheating, etc.)
Linked to more self-esteem, meaning in life, and empathy toward other, and less materialism

Moral Imagination
Definition:
“Articulating and examining alternatives, weighing them and their probable implications, considering their effects on one’s other plans and interests, and considering their possible effects on the interests and feelings of others’’ (Jacobs, 1991: pp. 25)
The ability to think “outside the box”, get beyond seeing only two choices, and generate creative ethical alternatives or solutions
Also linked to principled ethical ideology

Conclusions
Commitment to moral self-improvement
Have strong values, know what you believe in or stand for
Have others you can talk to about your values
Talk to others about ethical issues or problems
Mind the company you keep (the influence of peers, friends and colleagues, and organizational culture)
Work on your self-control and empathy
Try a creative problem solving approach

Other Topics

Corporate Governance
How can shareholders be victims of unethical behavior?
What is the purpose of corporate governance?
Reasons why corporate governance arrangements fail too work

Corporate Governance Reforms
In the wake of alarming corporate scandals, CG reforms have been introduced in the US and most European countries. These tend to focus on:
Separation of CEO and Chairman positions (often recommended but not required)
Number or proportion of independent outside directors
Independence of audit committee
Independence of compensation committee
Disclosure of compensation
But CG problems persist. Why?

Ethical Issues in Marketing

Consumer Sovereignty Test

Social Issues in Marketing
Concerns that marketing communications:
Are intrusive and unavoidable
Create artificial wants
Reinforce consumerism and materialism
Create insecurity and perpetual dissatisfaction
Perpetuate social stereotypes
Cause-related marketing

Greenwashing
Source (text and pictures): Futerra (2008) The Greenwash Guide”, www.futerra.co.uk

Ethics and Supply Chains

Ethical Sourcing
Often involves collective action and multi-stakeholder collaboration
Government-led initiatives: Kimberley Process
Industry-led initiatives: Accord on Fire and Building Safety in Bangladesh
Company-led initiatives: Intel and conflict minerals
Business-NGO (CSO) partnerships: Marine Stewardship Council
CSO-led initiatives: Fairtrade

Supply Loops
(a) Linear flow of resources
Extraction
Manufacture
Product recapture
Distribution
Disposal
Consumption
(b) Circular flow of resources

Civil Society
What is the role of the civil society sector?
Types of CSOs
CSO Tactics:
Indirect action
Violent direct action
Non-violent direct action

Ethical Challenges for CSOs
CSO accountability
Do CSOs truly listen to their beneficiaries and represent their concerns?
Do CSOs disseminate accurate and complete information? Or do they engage in deception?
Do CSOs use their funds responsibly? (Issues: embezzlement and corruption, CEO pay, etc.)
Do CSOs really try to solve the problems they claim to solve?
“Who watches the Watchmen?”

The Nonmarket Environment
What is the nonmarket environment? How does it differ from the market environment?
Why is it important?
(Baron, 1995)

Management
Nonmarket
Strategy
Market Strategy
Market
(competitive)
Analysis
Nonmarket
Analysis
Integrating Market and Nonmarket Strategy
(Baron, 1995)

Business-NGO Partnerships
Traditionally the relationship between promotional CSOs (NGOs) and firms has been an antagonistic one
In recent years, firms and NGOs have tried partnering instead
Oxfam and Marks & Spencer
Unilever and Oxfam
Coca-Cola and WWF
UNICEF & P&G (Pampers)

“Social entrepreneurship is the process of recognizing and relentlessly pursuing opportunities to create social value.”
(Center for the Advancement of Social Entrepreneurship, Duke University)
What is Social Entrepreneurship?

Key differences between social enterprise, CSOs & corporations
Sources: Dees (1998); Defourny and Nyssens (2006); Nicholls (2006)

Conclusion

Make sure you write clearly – always good if the marker is able to read your answer
Make sure you answer the question – think carefully what the essence of the question is
Pay attention to details. Some questions have sub-parts. Address them all.
Good luck with the preparations and the exam
Final Notes