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Chapter 7 Business Ethics Fundamentals SUGGESTED ANSWERS TO DISCUSSION QUESTIONS Students should recognize that their answers to these discussion questions should be well reasoned and supported with evidence. Although some answers will be more correct than others, students should be aware that simplistic answers to complex questions, problems, or issues such as these will never be “good” answers. 1. How does the concept of ethical business behavior go beyond simply avoiding harm, and what criteria can managers use to navigate moral judgments in decision-making processes? Ethical business behavior does not mean that no harm is done to anyone. Rather, ethical business behavior entails being aware of the possible consequences of the firm’s actions before they take place, making reasoned moral judgments about those consequences, and choosing the actions that are the most “right” or do the least harm. Chapter 8 will investigate some of the criteria used to decide “right” from “wrong,” but this chapter provides a series of important ethics questions, including “what is?” “what ought to be?” “how do we get from what is to what ought to be?” and “what is our motivation?” Contemplating theses questions will help managers make decisions that encourage ethical behavior, especially the normative question of “what ought to be?” Students should come up with a wide variety of examples that demonstrate the difficulties of making moral judgments. Instructors may want to provide personal examples of situations that they have observed where students have struggled with making moral decisions. Further, sharing relevant personal experiences often increases instructor credibility in the classroom; consequently, when appropriate, instructors may want to discuss their own ethical dilemmas with the class. 2. How do different management approaches, such as immoral, moral, and amoral management, impact corporate decision-making and ethical behavior within organizations, with examples drawn from real-world business scenarios? Immoral management entails knowingly deciding to engage in “wrong” actions, often ones that harm others in some way. Moral management, on the other hand, consists of making moral judgments to do the “right” thing. Immoral management often concentrates on measures of profitability to the exclusion of other criteria, while moral management incorporates profit as one of several criteria in making a decision. Finally, amoral management views managers’ actions as having no moral consequence—that business operations are somehow outside the boundaries of morality. Examples of immoral management include Enron’s use of special purpose entities to hide corporate debt and the waiver of the code of conduct provisions by Enron’s board which permitted Andy Fastow to serve as the CFO of Enron and the General Partner of certain special purpose entities that were doing business with Enron. Bernie Madoff’s use of a sophisticated Ponzi scheme to defraud investors of over $50 billion is another example of immoral management. Examples of amoral management might include a police department that puts height and weight restrictions in place for police officers. While the department may believe that it has a legitimate reason to use height and weight requirements and does not intend to discriminate in its employment practices, it may fail to recognize the inherent ethical issues with this practice. The management at Starbucks could be considered moral management. The company pursues economic goals, while striving to operate within the confines of the law and focusing on activities that will improve the well-being of its employees, suppliers and the community in general. Shepard, Shepard, Wimbush and Stephens (1995) wrote an article entitled “The Place of Ethics in Business: Shifting Paradigms,” in which they argue that business operates in a paradigm of amorality. I would agree that amoral management is a serious problem in business operations. Business has a great deal of power over individuals’ lives, and if that power is wielded without consideration of its effects, the likelihood that people will be harmed is greatly enhanced. Furthermore, it is easier for management to say that ethics has no place in business; hence the saying “It’s not personal, it’s just business.” If management is free to make decisions based on purely economic motivations, then they can avoid the difficult decisions that they may face as a result of legal and ethical issues. 3. How do the levels of moral development, as outlined in the chapter on "Business Ethics Fundamentals," progress from self-gratification to universal ethical principles, and what are some real-life examples illustrating each level? Level 1, the preconventional level, focuses on self gratification, and can be seen in virtually any infant or young child. Unfortunately, adults often display characteristics of the preconventional level as well. An example of Level 1 would be when a child takes a certain course of action to avoid a parental punishment (such as “time out”) or to seek a parental reward (such as permission to do something the child wants to do). The conventional level is characterized by awareness of and concern for others. The locus of analysis of consideration of others widens as a person develops morally, from friends and family to society. An example of Level 2 would be not cutting line in a public place. While cutting line is not illegal, individuals recognize that cutting line is socially unacceptable and their awareness and concern for others usually discourages such actions. In the postconventional level, concern for humankind as a whole is manifest, and decisions about right and wrong are based on universal ethical principles rather than societal norms. An example of this level may be individuals who sacrifice a certain percentage of their personal income for charitable causes. Reasoning that the money can be used for the betterment of humankind, individuals may use their resources to support these objectives rather than for their personal gratification. 4. What are the key insights provided by Figure 7-14 regarding moral development, particularly in relation to Kohlberg's three levels of moral reasoning? Furthermore, how do individuals typically navigate through these levels of moral development, and what motivates their ethical behavior according to this framework? Additionally, what implications does the observation about the scarcity of individuals reaching the postconventional level have on our understanding of moral behavior in society, and how do exemplary figures like Mother Teresa or Desmond Tutu exemplify this level of moral development? Figure 7-14 is basically a recasting of Kohlberg’s three levels of moral development. I personally agree that most people are morally motivated by the “negative” aspect of avoiding punishment, while conceding that many people seek the more “positive” aspect of doing the right thing or acting constructively toward others. Very few people reach the postconventional level, as evidenced by the honor accorded to people such as Mother Teresa or Desmond TuTu. 5. How do the six elements of moral judgment outlined in the context of business ethics fundamentals contribute to an individual's ability to navigate ethical dilemmas within organizational settings, and how can these elements be related to Rest's Four Component Model for moral behavior? The six elements of moral judgment include moral imagination, moral identification and ordering, moral evaluation, tolerance of moral disagreement and ambiguity, integration of managerial and moral competence, and a sense of moral obligation. The instructor may want to relate these six elements to Rest’s Four Component Model. Moral sensitivity is equivalent to moral imagination; moral judgment is the same as moral evaluation; moral motivation is similar to moral identification and ordering; and moral character is analogous to a sense of moral obligation. Students will have a variety of stories to tell in response to this question. GROUP ACTIVITY Have students review the following Venn Diagram Model (this exercise and diagram are an extension of Figure 7-6 in the book and are based on the following article: Mark S. Schwartz and Archie B. Carroll, “Corporate Social Responsibility: A Three-Domain Approach,” Business Ethics Quarterly (Vol. 13, Issue 4, October 2003), 503–530, the Venn Diagram Model). Divide students into groups of four to five students and ask them to (1) identify the following activities as moral, immoral or amoral and (2) categorize the activities as ethical, economic and/or legal as appropriate: (1) Enron’s actions of deceiving shareholders by shifting debts from their balance sheet (2) Arthur Andersen’s ordering the shredding of documents related to their transactions with Enron (3) Height and weight requirements for a police force candidate (4) Tobacco company warnings on labels (5) Chic-Fil-A’s policy of being closed on Sunday (6) The creation of a website where users can download music for free by sharing files with other users (7) Provision of HIV/AIDS drugs below cost in 3rd world countries (8) Installation of an anti-pollution device (9) Smith and Wesson’s addition of safety features to its handguns (10) Ben & Jerry’s distribution of free ice cream in a community (11) Prostitution in the state of Nevada (12) Moving a company overseas because another country has weaker environmental or employment laws (13) Pulling a product from a shelf when it is discovered that there is a product defect Specifically, students should recognize which responsibilities are being pursued by management in each activity and the management style implicated by the pursuit of certain responsibilities. After each group has had time to make its determination, the instructor may want to survey all the groups to determine the assessments made by each group. Differences in categorization among the groups should be discussed by the entire class. Here's a breakdown of the activities and their categorization: 1. Enron’s actions of deceiving shareholders by shifting debts from their balance sheet • Moral: Immoral • Ethical, Economic, Legal: Unethical, Illegal 2. Arthur Andersen’s ordering the shredding of documents related to their transactions with Enron • Moral: Immoral • Ethical, Economic, Legal: Unethical, Illegal 3. Height and weight requirements for a police force candidate • Moral: Amoral • Ethical, Economic, Legal: Legal, Potentially Ethical 4. Tobacco company warnings on labels • Moral: Moral (arguable) • Ethical, Economic, Legal: Ethical, Legal 5. Chic-Fil-A’s policy of being closed on Sunday • Moral: Moral (arguable) • Ethical, Economic, Legal: Ethical, Economic 6. The creation of a website where users can download music for free by sharing files with other users • Moral: Immoral (copyright infringement) • Ethical, Economic, Legal: Unethical, Illegal 7. Provision of HIV/AIDS drugs below cost in 3rd world countries • Moral: Moral • Ethical, Economic, Legal: Ethical, Economic (potentially illegal due to patent laws) 8. Installation of an anti-pollution device • Moral: Moral • Ethical, Economic, Legal: Ethical, Economic, Legal 9. Smith and Wesson’s addition of safety features to its handguns • Moral: Moral (arguable) • Ethical, Economic, Legal: Ethical, Legal 10. Ben & Jerry’s distribution of free ice cream in a community • Moral: Moral • Ethical, Economic, Legal: Ethical, Economic 11. Prostitution in the state of Nevada • Moral: Immoral (arguable) • Ethical, Economic, Legal: Legal, Ethically debatable 12. Moving a company overseas because another country has weaker environmental or employment laws • Moral: Immoral (potentially) • Ethical, Economic, Legal: Ethical, Economic (but potentially unethical regarding environmental and employment standards) 13. Pulling a product from a shelf when it is discovered that there is a product defect • Moral: Moral • Ethical, Economic, Legal: Ethical, Economic, Legal These categorizations may vary depending on perspectives and ethical frameworks, and discussing the reasons behind each group's categorizations can lead to insightful discussions about corporate social responsibility and ethical decision-making. INDIVIDUAL ASSIGNMENT Distribute the following instructions to each student: Describe an ethical dilemma that you faced in the workplace and the course of action that you took. Analyze whether your decision was economically, legally and ethically responsible and defend your response. If you determine that your course of action did not meet all three responsibilities, evaluate whether any alternative course(s) of action would have done so. Finally, ascertain whether you would choose the same course of action again or if you would act differently; explain your response. There's a hypothetical response based on the provided instructions: Title: Ethical Dilemma in the Workplace: A Reflection In my previous role at Company XYZ, I encountered a significant ethical dilemma regarding the disclosure of sensitive information to a client. The dilemma arose when the client requested confidential data that, if shared, could potentially harm our competitors and violate certain non-disclosure agreements. Initially, I felt torn between the obligation to fulfill the client's request and the ethical responsibility to maintain confidentiality and fairness in the industry. After careful consideration, I decided to withhold the sensitive information from the client, emphasizing our commitment to integrity and ethical business practices. Analyzing my decision from an economic standpoint, withholding the information could have potentially resulted in losing the client or damaging our business relationship. However, I believed that the long-term reputation and trustworthiness of our company outweighed the short-term economic gains. Legally, withholding the information was consistent with our contractual obligations and non-disclosure agreements, ensuring compliance with relevant laws and regulations. Ethically, I believe my decision was responsible as it upheld the principles of fairness, honesty, and integrity. By prioritizing ethical conduct over immediate economic benefits, I demonstrated a commitment to ethical leadership and corporate citizenship. However, upon reflection, I acknowledge that there may have been alternative courses of action. One alternative could have been to disclose only the non-sensitive information to the client while respecting the confidentiality of our competitors. This approach may have balanced the client's request with ethical considerations more effectively. Another option could have involved consulting with legal and ethical experts within the company to explore potential solutions collaboratively. Regarding whether I would choose the same course of action again, I believe that given the circumstances and available information at the time, my decision was appropriate. However, I recognize the complexity of ethical dilemmas and the importance of continuous reflection and improvement. In the future, I would remain open to alternative perspectives and seek guidance from colleagues and mentors to navigate similar situations with greater confidence and clarity. Overall, this experience reinforced my commitment to ethical decision-making in the workplace and highlighted the importance of integrity and responsibility in business conduct. Feel free to tailor this response to fit your personal experiences and context. Let me know if you need further assistance! Solution Manual for Business and Society: Ethics, Sustainability, and Stakeholder Management Archie B. Carroll, Ann K. Buchholtz 9780538453165
