Summary lecture 1, ethics and International Business

What is ethics:
The study of right and wrong, duty and obligation, moral norms, individual character and responsibility. (concern behaviour that is a serious consequence to human welfare, that can injure or benefit people (for example killing))

Business ethics:

Ethics in a business context (Is it beneficial for the customer). Example: corruption, illegal practices at the work place.

There is difference between ethics and law. There is a huge overlap, but there can be things that are unethical but legal and the other way around.

Etiquette: refer to the social norm of conduct in a given country, those are often nonmoral rules and are meant to serve as guidelines for socially acceptable behaviour. Business do have this as well. Sometimes a violation of these etiquettes can have moral implications.

Employees are expected to further profit goals and they might feel pressure to compromise on their ethical standards. Example: Conformity or groupthink.

Moral reasoning: the soundness of moral reasoning= quality of the arguments+ the reasoning that support them. Logic to see whether it is valid.

Argument: a group of statements (incl. conclusion) follows from the others (premises).

Valid argument: premises logically entail its conclusion.

If A, then B


Therefore B

Invalid argument: premises do not entail its conclusion.

If A then B


Therefore A

Counterexample: an example that is consistent with the premises but is inconsistent with the conclusion.

Unsound argument: have at least one false premise even if the reasoning is valid or invalid reasoning

Sound argument:

Valid and no false premises

Criteria for Moral reasoning:

  1. Should be logical
  2. Should be based on facts
  3. Should be based on acceptable moral principles

Good moral reasoning can be challenged by:

  1. Uncovering ambiguity
  2. Questioning the factual claims
  3. Challenging the moral standards

What is a corporation (legal entity, with legal rights and responsibilities similar, but not identical of  enjoyed by individuals) But do they have morally responsibility:

  1. Shareholders, provide the capital, own the corporation and are liable up to the extent of the investment
  2. Managers, who run the business operations
  3. Employees, who produce the goods and services

Friedman’s argumentation:

  1. Only human beings have a moral responsibility for their actions. So corporations per se do not have responsibility. But corporations are set up by humans beings, so it is those human beings that have moral responsibility. Against: But corporations do have responsibility. This is because they have a internal decision structure and the organizational culture is the set of beliefs and values that lay out what is generally regarded as right and wrong.
  2. Only act in shareholders’ interest. Doing something that not focusses on that is wrong, otherwise managers would act in their own interest+good for society. Against: also act in the interest of stakeholders (corporate social responsibility, this is the broad view) why also look at the stakeholders? All corporate activities have social impacts. Corporations can cause social problems and corporations rely on the contribution of a wide set of stakeholders.
  3. Social issues and problems are the proper province of the state rather than corporate managers. Because corporations lack the expertise to make other than economic decisions. Against: but the firm is a political factor. Firms namely have started to take up many of the functions that previously were undertaken by the government. Social issues and problems are also he province of corporate managers.
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