Business Ethics: An Introduction Mgmt 621 Contemporary Ethical Issues in Management Jeffery D. Smith

Customary vs. Normative Ethics Customary Ethics The moral values, principles, norms, and methods used to evaluate individual conduct and social arrangements. Developed and fostered through socio- cultural practices and institutions

Normative Ethics An attempt to identify, clarify, explain, and justify the moral values, principles, norms, and methods used to evaluate individual conduct and social arrangements.

Customary Ethics describes what social groups and individuals do value and what principles they do accept. Normative Ethics evaluates and attempts to justify certain values and principles apart from what is customarily accepted and practiced.

“[Normative] ethics requires us to abstract ourselves from what is normally or typically done and reflect upon whether or not what is done, should be done, and whether what is valued, should be valued. The difference between what is valued and what ought to be valued is the difference between [customary ethics] and [normative] ethics.” Joseph DesJardins (2003). An Introduction to Business Ethics ( :McGraw Hill), p. 8.

Questions posed by Normative Ethics… How should I lead my life? What kind of person should I be? What principles ought to guide my actions? How should we live/work together in society?

Distinguishing Normative Ethics ETHICS LAW SELF INTEREST RELIGION

Basic Ethical Values for Business Trust Honesty Fairness Dignity and Respect for Humanity Respect for Legitimate Law Respect for Property Autonomy and Freedom Impartiality/Objectivity Compassion

Correlative Principles One ought to negotiate in good faith Live up to your agreements Provide each employee with equal opportunity Do not work with suppliers that use child labor Obey all environmental regulations Respect the trade secrets of competitors Require employee drug testing only for safety Provide sound advice to clients Support local communities before downsizing

Are Ethics and Business Compatible? Alan Wolfe, Professor of Political Science at Boston College, Washington and Lee Law Review, 1993: “[The corporation is] a device through which human beings, who have moral obligations, come together for the purpose of ridding themselves of their capacity to exercise their moral obligations.” “mechanism of responsibility displacement” “If chimpanzees could be trained to count, they would be just as good, if not better, managers than human beings.”

“No one expects poker to be played on the ethical principles preached in churches. In poker it is right and proper to bluff a friend out of the rewards of being dealt a good hand… Poker’s own brand of ethics is different from the ethical ideals of civilized human relationships. The game calls for distrust of the other fellow. It ignores the claim of friendship. Cunning, deception and concealment of one’s strengths and intentions, not kindness and open-heartedness, are vital in poker. Not one thinks any worse of poker on that account. And no one should think any worse of the game of business because its standards of right and wrong differ from the prevailing traditions of morality in our society.” Albert Carr, “Is Business Bluffing Ethical?” p. 245.

The purpose of business is to maximize the wealth of shareholders, i.e., maximize profits, not to be “socially responsible” to members of society Milton Friedman (1970). “The Social Responsibility of Business is to Increase Profits,” pp Managers ought to “conduct the business in accordance with the desires [of shareholders]” 2. Corporate social endeavors function like a “tax” on the property of shareholders, customers and employees. What are the assumptions are guiding Friedman’s claims?