Business and

Economics
Ethics

Session 2

Prof. Marek Hudon

Academic Year 2016-2017

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 Table of Content
1. Introduction to ethical issues

2. Moral principles: Core theories

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 Systemic

Moral Reasoning:
1. Moral standards/ criteria
Corporate 2. Factual information
Individual 3. Moral judgement

When/ how can we infer

moral responsibility?
 Moral responsibility: Guns (Velasquez, p. 49)

Please read the document

Are gun manufacturers responsible for the

deaths?
When is a company morally responsible for
deaths caused by a product?
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When Moral Responsibility (Velasquez)?

Did they act of

their own free will Did they cause/
(no external helped it or fail to
abuse, internal prevent something
abuse)? avoilable?

1. Causality

3. Deliberate

2. Knowledge/ Did they know what

ignorance they were doing?

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 Who is responsible?

Managers put some pressure on his employee

Profit objectives of his unit
Increasing pressure on the managers shoulders
(51% of managers say they have a lot or too
much pressure, Journal of Management 2003)

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 Moral Responsibility

3 Views:
1. The employees who made the unethical decision
Corporations dont make decisions, people do
Therefore, the people who made the unethical
decision should be held responsible
2. The corporations
Employees decisions are made in the context of
corporate policies, corporate norms, organizational
structure, and corporate culture
Therefore, the corporation as a whole should be
held responsible
3. Both the corporation and the employees involved 9
 Moral Responsibility

Depends on the factual information: More pressure than

other department? Real pressure?
Depends on causality: Other reasons why employee is
stressed? Stress because of office disposition?
Depends on free-will: Was the manager forced to
increase productivity? To double productivity in one
month?

Implications for management: Employee complaining at

HR office for harrassment (frequent e-mails, phone calls at
night, managers shouting etc.)

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 Moral responsibility

Limit can be very thin..

Should we take the corporate culture into
account? Whatever the corporate culture and
the context?
Who should analyse this issue in the company?
HR department?
CEO?
Probably independant person but who is independant
(example of procedures of contact person at ULB)?

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 Table of Content

1. Introduction to Ethical Issues

Levels of ethical issues
Moral reasoning
Moral responsibility
2. Moral principles

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 Moral Principles

Main Issue:
What moral principles should be used to make
moral judgments in business?
Well use 5 moral principles
Why these 5 specific moral principles?
Complementary
Comprehensive
Commonly studied & used

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Where to start? Most obvious

Aggregated
consequences

Vs.
Which objective? It is all about..

Happiness is the
experience of frequent,
mildy pleasant emotions,
the relative absence of
unpleasant feelings, and a
general feeling of
satisfaction with one`s life.

Robert Biswas-
Diener / Ben Dean, 2007
Hapiness hype

BUT

Are we happier?

How did it evolve?

 Happiness?
Easterlin Paradox (Richard Easterlin, 1995)

What if income was

not the key issue? US case 17
 What about the British?

Measure of Domestic Progress (MDP). 18

Better than words..
 From happiness to utility:
Utilitarianism
Most good & least harm for everyone
Consider all good & all harm
Everyone who is affected (not private benefits &
costs, rather social benefits & costs) Not only the
one performing the action
Economic & non-economic
Example: loss of income (economic)
Example: pain & suffering (non-economic)
Present & future
Whether easily measured or not

Inspired Cost-benefits analyses

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 Example related to utilitarianism

Kill the man in question and save all the others?

Act also influences the decision!
Moving vs. not moving
 Strict utilitarian
would see no
Collateral effect difference (act vs.
Vs. murderer? no act)

90% would throw the

lever while a similar
Women are percentage think the
less likely Fat Man should not be
than men to thrown off the bridge.
sacrifice the
Fat Man, or
even to flip
the lever

2013; PUP
 Example related to utilitarianism (2)

The problem, of course, is that you (almost)

never know the future with certainty.

What if the group realized, after killing the man,

that they could very well have lived because the
rails would have stopped the train anyway.

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 Utilitarianism

Concerns:
Some benefits & costs might be hard to measure in
precise, non-controversial ways
Example: value of a human life
Response of utilitarianism: everything can be
monetarised
Utilitarianism might appear to justify unethical
conduct: the ends justify the means
Example: familly
Choices, rankings can change with time

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Other example
Back to happiness: Which country do you
prefer? (Van Ootegem & Verhofstadt, 2011)
 You may prefer living in country A (Belgium) to living
in country B (Brazil or China) because you prefer
the living conditions in country A.
DOMINANCE principle

However happiness is lower in Belgium

Brazil and China :

-adaptation to current (difficult) situation
-aspirations and high hopes for the future
 What elements impact happiness? (Frey and
Stuzzer, 2010)

Unemployment is correlated with substantial

unhappiness.

As the income level is kept constant, that

influence is not due to lower revenue, but to
non-pecuniary stress!

But also health, age, gender and familly

circumstances

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 Factors influencing subjective well-being

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Source: GfK NOP, 2005 for BBC quoted in Jackson, 2009, Prosperity withott Growth
 Other subjective factors

Social comparison (i.e. the richer you get, the

more likely that you will compare yourself with
others) Relative position!

Habits (i.e. people get used to money very

quickly)

Unobserved choice that is positively correlated

with income, but is associated negatively with
happiness (i.e. working hours, etc.)
Final video: What do about it?

Starting 955
Nevertheless

Country data!
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 Five Moral Principles

1. Utilitarianism
Maximize net social benefits
Concerns on unmeasurable and extreme cases

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