practical ethical decision making

8/9/2019 Practical Ethical Decision Making

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PRACTICAL ETHICAL DECISION MAKING

Purpose of the Chapter

When a business sperson or professiona a!!ountant fa!es an ethi!a probe"# the first re!ourse for $ui%an!e shou%

be to !orporate an% professiona !o%es of !on%u!t& These often %o not app' spe!ifi!a' to the probe" fa!e% an%rae(uire interpretation to fit the !ir!u"stan!es& When this is r)(uire%#the %e!ision "a*er shou% be abe to use the

prin!ipes# approa!hes# an% fra"e+or*s %is!usse% in this !hapter to "a*e pra!ti!a %efensibe ethi!a %e!ision&

When the broa% prin!ipes or spe!ifi! rues e"bo%ie% in !o%es of !on%u!t %o not spe!ifi!a' app' to the parti!uar

probe" a professiona a!!ountant is fa!in$# the %e!ision "a*er !an be $ui%e% b' $enera ethi!a prin!ipes to arri,e

at a %efensibe ethi!a %e!ision& What are these $enera ethi!a prin!ipes an% ho+ shou% the' be appie%- .ui%in$

on the phiosophers/ !ontributions %is!usse% in Chapter 0# this !hapter e1pores these ethi!a prin!ipes an% %e,eopsa pra!ti!a# !o"prehensi,e %e!ision fra"e+or* base% on ho+ a propose% a!tion +ou% i"pa!t upon the

sta*eho%ers to the %e!ision& The !hapter !on!u%es b' proposin$ a !o"prehensi,e fra"e+or* for "a*in$ ethi!a

%e!isions&

Moti,atin$ De,eop"ents

The Enron# Arthur An%ersen# an% Wor%Co" s!an%as $a,e rise to pubi! outra$e# the !oapse of !apita "ar*ets#

an% uti"ate' the Sarbanes2O1e' A!t of 3443# +hi!h brou$ht about +i%esprea% $o,ernan!e refor"& Subse(uent

!orporate s!an%as an% the Subpri"e Len%in$ 5ias!o ser,e% to further hei$hten pubi! a+areness that !orporatee1e!uti,es !an "a*e better %e!isions# an% shou% %o so to preser,e the profitabiit' an% ,iabiit' of their

!orporations& Ensuin$ !ourt !ases as +e as reate% fines# i"prison"ents an% sette"ents ha,e un%ers!ore% the nee%

for those %e!isions to re%u!e ,unerabiit' to e$a a!tions as +e& The !ourt of pubi! opinion has aso been harsh to

!o"panies an% in%i,i%uas +ho ha,e beha,e% unethi!aH'& Loss of reputation %ue to unethi!a an%6or ie$a a!ts haspro,en to be re,enue an% profit re%u!in$# %a"a$in$ to share pri!es# an% !areer en%in$ for "an' e1e!uti,es e,en

before the a!ts are fu' in,esti$ate% an% responsibiit' for the" is fu'

pro,en& These %e,eop"ents ha,e been so i"portant that !orporate e1e!uti,es an% %ire!tors no+ "ust $i,e

in!rease% attention to !orporate $o,ernan!e an% the $ui%an!e it pro,i%es# in a%%ition to their o+n roe& A%%itiona'#business s!hoos that +ant +or%+i%e a!!re%itation

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b' the Asso!iation to A%,an!e Coe$iate S!hoos of .usiness 9AACS.:/ are to in!orporate ethi!s e%u!ation into

their poi!ies# pra!ti!es# an% !urri!ua& Spe!ifi!a'# a!!or%in$ to the AACS./s Ethi!s E%u!ation Tas* 5or!e#3

business s!hoo !urri!ua shou% %ea +ith se,era ethi!a "atters# in!u%in$ !orporate so!ia responsibiit'#$o,ernan!e# ethi!a !orporate !uture# an% ethi!a %e!ision "a*in$ 9AACS.# 344;:&

In 3440# the Internationa 5e%eration of A!!ountants 9I5AC: aso pronoun!e% upon the ethi!s e%u!ation

re(uire% for professiona a!!ountants& Their Internationa E%u!ation Stan%ar%s for A!!ountants 9ES 72


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Conse(uent'# the EDM fra"e+or* proposes that %e!isions or a!tions be !o"pare% a$ainst four stan%ar%s for a

!o"prehensi,e assess"ent of ethi!a beha,ior&

The EDM fra"e+or* assesses the ethi!ait' of a %e!ision or a!tion b' e1a"inin$ the

Conse(uen!es or +e2offness !reate% in ter"s of net benefit or !ost?Ri$hts an% %uties affe!te%?

5airness in,o,e%?

Moti,ation or ,irtues e1pe!te%&

The first three of these !onsi%erations>!onse(uentiais"# %eontoo$'# an% usti!e>are e1a"ine% b'

fo!usin$ on the i"pa!ts of a %e!ision on shareho%ers an% other affe!te% sta*e2ho%ers# an approa!h *no+n as

sta*eho%er i"pa!t ana'sis& The fourth !onsi%eration>the "oti,ation of the %e!ision "a*er>is an approa!h

*no+n as ,irtue ethi!s& It pro,i%es insi$hts i*e' to be hepfu +hen assessin$ !urrent an% future $o,ernan!eprobe"s as part of a nor"a

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EDM CONSIDERATIONS

WeII2offness or +e2bein$Respe!t for the ri$hts of sta*eho%ers

5airness a"on$ sta*eho%ersE1pe!tations for !hara!ter traits# ,irtues

PHILOSOPHICAL THEORIES

Conse(uentiais"# utiitarianis"# teeoo$'7

9ri$hts an% %uties:3Kant/s !ate$ori!a I"perati,e#0 usti!e as i"partiait';

irtueF

Spe!ifi! EDM Issues

Different beha,ior in %ifferent !utures 9briber':

Confi!ts of interest# an% i"its to sef2intereste% beha,ior

Reati,is"#< sube!ti,is"8 e$ois"

Deontoo$'# sube!ti,is"#

ris* "ana$e"ent e1er!ise& A four !onsi%erations "ust be e1a"ine% thorou$h' an% appropriate ethi!a ,aues

"ust be appie% in the %e!ision an% its i"pe"entation ifa %e!ision or a!tion is to be %efrnsibe ethi!a'&

Pra!ti!a EDM>the o,erri%in$ fo!us of this !hapter>is base% on !on!epts %e,eope% b' phiosophers#

+hi!h are the sube!t of %is!ussions in Chapter 0# an% +hi!h are re,ie+e% ater in this !hapter& De,eopin$ anun%erstan%in$ of the %e!ision2"a*in$ approa!hes phiosophers pioneere% is essentia& Tabe ;&7 pro,i%es a !ross2

referen!e of EDM !onsi%erations an% ree,ant phiosophi!a theories

5or referen!e purposes# a ist of %efinitions is pro,i%e% on the +ebsite for this boo* at

http66+++&!en$a$ebrain&!o"&

Phiosophi!a Approa!hes>An O,er,ie+ Conse(uentiais" 9tiitarianis":# Deontoo$' J irtue Ethi!s

Phiosophers ha,e on$ been fo!use% on "a*in$ the best %e!ision fro" a so!ieta as +e as in%i,i%ua

perspe!ti,e# but the saien!e of their phiosophies has not been +e2appre!iate% or un%erstoo% in business an% theprofessions& This is about to !han$e&

Sti"uate% to i"pro,e ethi!s e%u!ation an% EDM b' the Enron# Arthur An%ersen# an% Wor%Co"

s!an%as# an% the ensuin$ $o,ernan!e refor"# the AACS. Ethi!s E%u!ation Tas* 5or!e 9344;: has !ae% for

business stu%ents to be fa"iiar +ith three phiosophi!a approa!hes to ethi!a %e!ision "a*in$ !onse(uentiais"


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9utiitarianis":# %eontoo$'# an% ,irtue ethi!s& Ea!h of the three approa!hes !ontributes %ifferent' to a usefu an%

%efensibe approa!h for ethi!a %e!ision "a*in$ in business or persona ife& Ho+e,er# be!ause so"e phiosophi !a

prin!ipes an% theories !onfi!t +ith others an% appear to !ash +ith a!!eptabe business pra!ti!e# parti!uar' in

so"e !utures aroun% the +or%# it is best to use a "utifa!ete% set of !onsi%erations %ra+n fro" a three approa!hesto %eter"ine the ethi!ait' of a!tions# an% $ui%e !hoi!es to be "a%e&

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The basi! (uestion that interests phiosophers is What "a*es a %e!ision or a!tion or person "ore or ess

$oo% or ethi!a- Ea!h of the three phiosophi!a approa!hes to ethi!a %e!ision "a*in$!onse(uentaiF

%eontoo$'# an% ,irtue ethi!sfo!uses on a %ifferent !on!eption of a ri$ht a!tion& These +i be re,ie+e% in turn&

.ear in "in%# ho+e,er# sin!e phiosophers ha,e been stu%'in$ +hat "a*es an a!t $oo% or "ora' ri$ht forthousan%s of 'ears# it is not possibe to pro,i%e a !o"pete un%erstan%in$ of phiosophi!a !on!epts in a fe+ pa$es&

The foo+in$ brief un%erstan%in$ of un%er'in$ phiosophi!a approa!hes is inten%e% to enabe the use of the

pra!ti!a %e!ision te!hni(ues %e,eope% ater in this !hapter& 95or a "ore %etaie% e1panation an% ana'sis of these

phiosophi!a theories# see Chapter 0&: Rea%in$s are !ite% to fa!iitate further stu%' of phiosophi!a !on!epts&

Conse(uentiafis"# tiitarianis"# or Teeoo$'

Conse(uentiaists are intent on "a1i"iin$ the utiit' pro%u!e% b' a %e!ision& 5or the"# the ri$htness of an a!t

%epen%s on its !onse(uen!es& This approa!h is essentia to a $oo% ethi!a %e!ision an% an un%erstan%in$ of it +i be

part of AACS.2a!!re%ite% business s!hoo e%u!ation in the future& A!!or%in$ to the AACS.#

The !onse(uentiaist approa!h re(uires stu%ents to ana'e a %e!ision in ter"s of the har"s an% benefitsto "utipe sta*eho%ers an% to arri,e at a %e!ision that pro%u!es the $reatest $oo% for the $reatest nu"ber&;

Conse(uentiais" ho%s that an a!t is "ora' ri$ht if an% on' if that a!t "a1i"ies the net $oo%&F In

other +or%s# an a!t an% therefore a %e!ision is ethi!a if its fa,orabe !onse(uen!es out+ei$h its ne$ati,e

!onse(uen!es& Moreo,er# so"e beie,e that on' the a!t that "a1i"ies the net benefit of fa,orabe "inus ne$ati,e!onse(uen!es is "ora' ri$ht or ethi!a& Phiosophers aso %ebate

Whi!h !onse(uen!es shou% be !ounte%-

Ho+ shou% the' be !ounte%-Who %eser,es to be in!u%e% in the set of affe!te% sta*eho%ers that shou% be !onsi%ere%-

5or e1a"pe# shou% the !onse(uen!es to be !onsi%ere% be a!tua rather than foreseen# foreseeabe#

inten%e%# or i*e'- Shou% the !onse(uen!es to be !onsi%ere% %epen% on the ,aues in,o,e%# su!h as the i"pa!t onife# heath# peasure# pain# pri,a!' ri$hts# or propert' ri$hts? an% +ith +hat +ei$htin$- Ho+ shou% the o,era

assess"ent be %e,eope%- I .ase% on' on the best !onse(uen!es instea% of

attributin$ ,aue to on' satisfa!tor' out!o"es#

on a of the Out!o"es or ust parts thereof&

.ase% on tota net $oo% rather than a,era$e per person&

.ase% on the i"pa!ts on a persons or ust a see!t set&

.ase% on the assu"ption that a !onse(uen!es are !onsi%ere% of e(ua i"pa!t or that

so"e are "ore i"portant&Shou% the i"pa!t of the a!t on the %e!ision "a*er or a$ent in,o,e% be !onsi%ere%-

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An e1!eent o,er,ie+ of these ,ariations an% usefu referen!es !an be foun% in the +or* of

Water Sinnott2Ar"stron$ 93440:&Cassi! utiitarianis">!on!erne% +ith o,era utiit'>e"bra!es a of these ,ariants# an% therefore it is

oni' of partia usefuness in "a*in$ ethi!a %e!isions in a business# profess siona# or or$aniationa !onte1t&

Conse(uentiais"# ho+e,er# refers to a subset of these ,ariants that "a' be %efine% to a,oi% probe"ati!

"easure"ents or other issues# or in or%er to "a*e the pro!ess "ore ree,ant to the a!t# %e!ision# or !onte1t in,o,e%&.e!ause utiitarianis" an% !onse(uentiais" fo!us on the resuts or Ben%s of an a!tion# the' are so"eti"es referre%

to as teeoo$i!a&< In the %e,eop"ent of the pra!ti!a EDM approa!hes that foo+# this !hapter +i a%opt a


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!onse(uentiaist approa!h in,o,in$ the i"pa!t ana'sis of %e!isions an% a!tions upon a !o"prehensi,e set of

sta*eho7%ers an% their interests# base% upon foreseeabe i*e' i"pa!ts# +hi!h are ,aue +ei$hte% in i"portan!e&

The tota net benefit of aternati,e %e!isions an% a!tions is !onsi%ere% to i%entif' the best an%or "ost %efensibe

!hoi!es&

Deontoo$'

Deontoo$'8 is %ifferent fro" !onse(uentiais" in that %eontoo$ists fo!us on the obi$ations or %uties "oti,atin$ a

%e!ision or a!tions rather than on the !onse(uen!es of the a!tion&Deontoo$i!a ethi!s ta*es the position that ri$htness %epen%s on the respe!t sho+n for %ut'# an% the

ri$hts an% fairness that those %uties refe!t& Conse(uent' A %eontoo$i!a approa!h raises issues reate% to %uties#

ri$hts# an% usti!e !onsi%erations an% tea!hes stu%ents to use "ora stan%ar%s# prin!ipes# an% rues as a $ui%e to

"a*in$ the best ethi!a %e!ision&

Deontoo$i!a reasonin$ is ar$e' base% on the thin*in$ of I""anue Kant 97


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nfortunate'# utiitarianis" an% !onse(uentiais" fo!us on utiit' an% "a' ea% to %e!isions or a!ts that

i$nore# %o+npa'# or !ir!u"s!ribe the usti!e or fairness of a %e!ision# an% its respe!t for the %uties o+e% to an%

ri$hts e1pe!te% b' those in,o,e%& Ho+e,er# au$"entin$ the !onse(uentiaist approa!h +ith a %eontoo$i!a ana'sis

spe!ifi!a' in!u%in$ fair treat"ent +it6$uar% a$ainst the situation +here the %esire for +hat so"e !onsi%er to bebenefi!ia !onse(uen!es 9or en%s: +i be ao+e% to ust the use of ie$a or unethi!a a!tions

9"eans: to a!hie,e those en%s& 5or e1a"pe# a %eontoo$i!a ana'sis !ou% a,oi% en%an$erin$ the heath of +or*ers

an%6or the pubi! in or%er to "ini"ie the !osts of haar%ous +aste %isposa& 5ro" a phiosophi!a perspe!ti,e# as

+e as fro" the perspe!ti,e of %a"a$e% in,estors# +or*ers# an% other sta*eho%ers +ho ha,e suffere% fro" re!entfinan!ia s!an%as# unfettere% pursuit of sef2interest an% short2ter" profit has e% to ie$a an% unethi!a a!ts that

are re$rettabe&

5or so!ie# prote!tin$ so"e in%i,i%ua ri$htsto an% heathis usua' "ore i"portant than "a1i"iin$ the

net benefit to a& Ho+e,er# o!!asiona' su!h as in ti"es of +ar or %iree"er$en## a !hoi!e ustifie% b' !onse(uentiaana'sis is !onsi%ere% ethi!a' preferentia to a !hoi!e ustifie% b' %eon too$i!a !onsi%erations&175

Virtue Ethics

Conse(uentiais" e"phasies the !onse(uen!es of a!tions# an% %eontoo$' uses %uties# ri$hts an% prin!ipes as

$ui%es to !orre!t "ora beha,ior? +hereas ,irtue ethi!s is !on!erne% +ith the "oti,atin$ aspe!ts of "ora !hara!ter

%e"onstrate% b' %e!ision "a*ers& Responsibiit'>espe!ia' !upabiit' or ba"e+orthiness>in both "orait' an%

a+# has t+o %i"ensions the a!tus reus 9$uit' a!t: an% the "ens rea 9$uit' "in%:&/0 Conse(uentiais"# +hi!h

e1a"ines the for"er# is sai% to be Ba!t !entere% rather than Ba$ent !entere%# as %eontoo$' an% ,irtue ethi!s are&A!!or%in$ to the AACS.#

irtue ethi!s fo!uses on the !hara!ter or inte$rit' of the "ora a!tor an% oo*s to "ora !o""unities# su!h asprofessiona !o""unities# to hep i%entifr ethi!a issues an% $ui%e ethi!a a!tion&

Aristote/s !entra (uestion +as What is the $oo% ife an% ho+ !an I i,e it 9Cafaro# : The ans+er

e,o,e% to "ean that fourishin$# e1!een!e# an% happiness +ere !riteria for the $oo% ife# but there +as a!ontinuin$ %ebate o,er +hether the fo!us shou% be our !o""unities/ interests# or our o+n# or both& Moreo,er#

e1!een!e +as sai% to in,o,e Bintee!tua# "ora an% ph'si!a e1!een!e# the e1!een!e of hu"an bein$s an% their

!reations an% a!hie,e "ents&& & #B +hi!h a$ain !ou% be ta*en in%i,i%ua' or in re$ar% to broa%er !o""unities& The

fo!us of "o%ern7F ,irtue ethi!s is# ho+e,er# on !hara!ter ,irtues that ea% to Beni$htene% sef2 interest? it is notust fo!use% on sef2ser,in$ fufi"ent&

irtues are those !hara!ter traits that %ispose a person to a!t ethi!a' an% thereb' "a*e that person a"ora' $oo% hu"an bein$& 5or Aristote# a ,irtue ao+e% a person to "a*e reasonabe %e!isions& Pru%en!e +as his

*e' ,irtue in %eter"inin$ the proper !hoi!e bet+een e1tre"es& His other three i"portant or Car%ina ,irtues +ere!oura$e# te"peran!e# an% usti!e& 5or Christian phiosophers# these ,irtues +ere not suffi!ient#/< an% the' a%%e% the

theoo$i!a or Christian ,irtues of faith# hope# an% !harit' Other %ispositions that are often !ite% as ,irtues in!u%e

honest'# inte$rit' eni$htene% sef2interest# !o"passion# fairness# i"partiait'# $enerosit'# hu"iit'# an% "o%est'&

irtues nee% to be !uti,ate% o,er ti"e so that the' be!o"e i"be%%e% an% are therefore a !onsistentreferen!e point& BIf 'ou possess a ,irtue# it is part of 'our !hara!ter# a trait or %isposition that 'ou t'pi!a' sho+ in

a!tion& It is not ust so"ethin$ that 'ou are abe to e1hibit# but so"ethin$ that 'ou usua' or %epen%ab' e1hibit&8

5or ,irtue ethi!ists# possessin$ a ,irtue is a "atter of %e$ree& 5or e1a"pe# bein$ hones !an "ean that

one tes the truth& .ut a person/s honest' !an be !onsi%ere% stron$er or of a hi$her or%er if she6he %eas on' +ithhonest peope or !auses# +or*s for honest !o"panies# has honest frien%s# raises her6his !hi%ren to be honest# an% so

on& Si"iar'# the reason a person a!ts ,irtuous' is i"portant& 5or e1a"pe# an honest a!t un%erta*en to $ain a

$ree%' en% resut is !onsi%ere% to be ess ,irtuous than one ta*en be!ause it is beie,e% to be the ri$ht thin$ %o toi"pro,e so!iet' an%6or to %is!har$e a %ut' to another person or or$aniation& A further probe" in rea!hin$ thefuest e,es of ,irtue is a!* of "ora or pra!ti!a +is%o"# su!h as e,i%ent in so"e a!ts of o,er2$enerosit'# or too

"u!h !o"passion or !oura$e# +hi!h !an son ti"es be har"fu&176

Athou$h the a!* of a Bri$ht reason for ,irtuous a!tion "a' see" a!a%e"i!# +ithout su!h a reason

so"e businesspeope or professionas are prone to a!t for $ree%' sef2interest rather than "o%ern eni$htene% sef2interest# an% are i*e' to !o""it unethi!a an%6or unethi!a a!ts& The' represent hi$her ris*s of uti"ate %e!eption

an% "apra!ti!e be!ause the' a!* a basi! !o""it"ent to ,irtue or professionais" uness it suits their o+n purpose&


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Con,erse'# o,er2,irtuosit' "a' resut in e"otiona a!ts b' e1e!uti,es or e"po'ees before see*in$ an% re!ei,in$

fu infor"ation# or in ta*in$ too "u!h ris*# or in har"in$ others unne!essar' i'& .oth the a!* of ,irtue an% the

a!* of +hat Aristote +ou% !a Bpru%en!e !onstitute ethi!s ris*s to $oo% $o,ernan!e&

There are a nu"ber of reser,ations about the stren$th of ,irtue ethi!s as an approa!h to EDM& 5ore1a"pe# ,irtue ethi!s has to %o +ith the pro!ess of %e!ision "a*in$ in!orporatin$ "ora sensiti,it'# per!eption#

i"a$ination# an% u%$"ent# an% so"e !ai" that this %oes not ea% to easi' usefu EDM prin!ipes& Other !riti!is"s

are ree,ant# ho+e,er# in!u%in$ that

The interpretation of a ,irtue is !uture2sensiti,e#As is the interpretation of +hat is ustifiabe or ri$ht&

One/s per!eption of +hat is ri$ht is to so"e %e$ree infuen!e% b' e$o or sef2interest&

A fuer %is!ussion of ,irtue ethi!s an% the points raise% "a' be foun% in Chapter 0# an% in the +or* of

Rosain% Hursthouse 93440: an% Nafsi*a Athanassouis 9344;:# as +e as throu$h the rea%in$s note% on this tite/s+ebsite at http66+++!en$a$ebrain&!o"&

Tests J Co""on Rues of Thu"b>Prei"inar' of the Ethi!ait' of a De!ision

The phiosophi!a approa!hes pro,i%e the basis for usefu pra!ti!a %e!ision approa!hes an% ai%s# athou$h "ost

e1e!uti,es an% professiona a!!ountants are una+are of ho+ an% +h' this is so& Dire!tors# e1e!uti,es# an%

professiona a!!ountants ha,e# ho+e,er# %e,eope% tests an% rues of thu"b that !an be use% to assess the ethi!ait'

of %e!isions on a prei"inar' basis& If these prei"inar' tests $i,e rise to !on!erns# a "ore thorou$h ana'sis shou%

be prefor"e% usin$ the sta!eho%er i"pa!t ana'sis te!hni(ues %is!usse% ater in this !hapter&It is often appropriate for "ana$ers an% other e"po'ees to be as*e% to !he!* a propose% %e!ision in a

(ui!*# prei"inar' "anner to see if an a%%itiona fu2bo+n ethi!a ana'sis is re(uire%& These (ui!* tests are often

referre% to as sniff tests& Co""on' appie% sniff tests are note% in Tabe ;&3&If an' of these (ui!* tests are ne$ati,e# e"po'ees are as*e% to see* out an ethi!s offi!er for !onsutation#

Or perfor" a fu2bo+n ana'sis of the propose% a!tion& This ana'sis shou% Sniff Tests for Ethi!a De!ision

"a*in$

Wou% I be !o"fortabe if this a!tion or %e!ision +ere to appear on the front pa$e of a nationa ne+spaper

to"orro+ "ornin$-

Wi I be prou% of this %e!ision-

Wi "' "other be prou% of this %e!ision-Is this a!tion or %e!ision in a!!or% +ith the !orporation/s "ission an% !o%e-

Does this fee ri$ht to "e-788

Rues of Thu"b for Ethi!a De!ision Ma*in$

Go%en Rue Do unto others as 'ou +ou% ha,e the" %o unto 'ou&

Dis!osure Rue If 'ou are !o"fortabe +ith an a!tion or %e!ision after as*in$ 'oursef +hether

'ou +ou% "in% if a 'our asso!iates# frien%s# an% fa"i' +ere a+are of it#then 'ou shou% a!t or %e!i%e&

The Intuition Ethi! Do +hat 'our B$ut feein$ tes 'ou to %o&

The Cate$ori!a I"perati,e ou shou% not a%opt prin!ipes of a!tion uness the' !an# +ithout in!onsisten!'#

be a%opte% b' e,er'one ese&The Professiona Ethi! Do on' +hat !an be e1paine% before a !o""ittee of 'our professiona peers&

The tiitarian Prin!ipe Do Bthe $reatest $oo% for the $reatest nu"ber&

The irtue Prin!ipe Do +hat %e"onstrates the ,irtues e1pe!te%&

be retaine%# an% perhaps re,ie+e% b' the ethi!s offi!er& A rea%in$ on BSniff Tests is a,aiabe on the te1t +ebsite at

http66+++!en$a$ebrain&!o"&7

Man' e1e!uti,es ha,e %e,eope% their o+n rues of thu"b for %e!i%in$ +hether an a!tion is ethi!a or not& 5or

e1a"pe# Carro/ i%entifies the first si1 rues in Tabe ;&0 as i"portant# a!!or%in$ to pra!ti!in$ "ana$ers&

nfortunate'# athou$h these sniff tests an% rues of thu"b are base% on ethi!a prin!ipes an% are often ,er'

usefi&i# the' rare'# b' the"se,es# represent a !o"prehensi,e e1a"ination of the %e!ision an% therefore ea,e the

in%i,i%uas an% !orporation in,o,e% ,unerabe to "a*in$ an unethi!a %e!ision& 5or this reason# the "ore
http://wwwcengagebrain.com/http://wwwcengagebrain.com/http://wwwcengagebrain.com/


7/34

!o"prehensi,e te!hni(ues of sta*eho%er i"pa!t ana'sis shou% be e"po'e% +hene,er a propose% %e!ision is

(uestionabe or i*e' to ha,e si$nifi!ant !onse(uen!es&

5i$ure ;&7 is pro,i%e% to in* phiosophers/ prin!ipes an% the !riteria assesse% b' pra!ti!a sniff tests# rues of

thu"b# an% sta*eho%er i"pa!t ana'sis& Co"parison of the sniff tests an% rues of thu"b note% abo,e +ith theee"ents of 5i$ure ;&7 +i re,ea that the' usua' fo!us on a fra!tion of the fi&i set of !riteria rather than a

!o"prehensi,e set as %oes sta*eho%er i"pa!t ana'sis&178

Sta*eho%er I"pa!t Ana'sis>Co"prehensi,e Too assessin$ De!isions J A!tions

O,er,ie+Sin!e ohn Stuart Mi %e,eope% the !on!ept of utiitarianis" in 7


8/34

the pro!ess# it is %esirabe to i%entif' an% !onsi%er a set of !o""on' he% or fun%a"enta sta*eho%er interests to be

use% to fo!us ana'ses an% %e!ision "a*in$ on ethi!a %i"ensions# su!h as the foo+in$

7& Their interest9s: shou% be better off as a resut of the %e!ision&

3& The %e!ision shou% resut in a fair %istribution of benefits an% bur%ens&0& The %e!ision shou% not offen% an' of the ri$hts of an' sta*eho%er# in!u%in$ the %e!ision "a*er# an%

;& The resutin$ beha,ior shou% %e"onstrate %uties o+e% as ,irtuous' as e1pe!te%&

The first sprin$s fro" !onse(uentiais"# the se!on%# thir%# an% fourth fro" %eontoo$' an% ,irtue ethi!s& To so"ee1tent# these fun%a"enta interests ha,e to be te"pere% b' the reaities fa!in$ %e!ision "a*ers& 5or e1a"pe#

athou$h a propose% %e!ision shou% "a1i"ie the better"ent of a sta*eho%ers# tra%e2offs often ha,e to be "a%e

bet+een sta*eho%ers/ interests& Conse(uent'# the in!urren!e of poution !ontro !osts "a' be !ounter to the in

terests of short2ter" profits that are of interest to so"e !urrent shareho%ers an% "ana$ers&180

Si"iar'# there are ti"es +hen a sta*eho%ers +i fin% a %e!ision a!!eptabe e,en thou$h one or "ore of the"# or

the $roups the' represent# "a' be +orse off as a resut& In re!o$nition of the re(uire"ent for tra%e2offs an% for the

un%erstan%in$ that a %e!ision !an a%,an!e the +e2offness of a sta*eho%ers as a $roup# e,en if so"e in%i,i%uasare persona' +orse off# this fun%a"enta interest shou% be "o%ifie% to fo!us on the +e2offi-ess of sta*eho%ers

rather than on' on their better"ent& This "o%ifi!ation represents a shii fro" utiitarianis" to !onse(uentiais"&

On!e the fo!us on better"ent is rea1e% to shift to +e2offness# the nee% to ana'e the i"pa!t of a %e!ision in ter"sof a four fun%a"enta interests be!o"es apparent& It is possibe# for e1a"pe# to fin% that a propose% %e!ision "a'

pro%u!e an o,era benefit# but the %istribution of the bur%en of pro%u!in$ that %e!ision "a' be so %ebiitatin$ to theinterests of one or "ore sta*eho%er $roups that it "a' be !onsi%ere% $ross' unfair& Aternati,e'# a %e!ision "a'

resut in an o,era net benefit an% be fair# but "a' offen% the ri$hts of a sta*e2ho%er an% therefore be !onsi%ere%

not ri$ht& 5or e1a"pe# %e!i%in$ not to re!a a "ar$ina' fa+e% pro%u!t "a' be !ost effe!ti,e# but +ou% not be

!onsi%ere% to be Bri$ht if users !ou% be serious' inure%& Si"iar'# a %e!ision that %oes not %e"onstrate the!hara!ter# inte$rit'? or !oura$e e1pe!te% +i be !onsi%ere% ethi!a' suspe!t b' sta*eho%ers& Conse(uent'# a

propose% %e!ision !an be %e!are% unethi!a if it fais to pro,i%e a net benefit#3 7 or is unfair# or offen%s the ri$hts of

a sta*eho%er in!u%in$ reasonabe e1pe!tations for ,irtuous beha,ior 9see Tabe ;&;:& Testin$ a propose% %e!ision

a$ainst on' one prin!ipe is %efinite' shortsi$hte%# an% usua' resuts in a faut' %ia$nosis&

Measure"ent of uantifiabe I"pa!ts

Profit I Profit is fun%a"enta to the interests of shareho%ers an% is essentia to the sur,i,a an% heath of our!orporations& In infationar' ti"es# profit is essentia si"p' to repa!e in,entor' at the hi$her pri!es re(uire%&

5ortunate'# the "easure"ent of profit is +e %e,eope% an% nee%s fe+ !o""ents about its use in ethi!a %e!ision"a*in$& It is true# ho+e,er# that profit is a short2ter" "easure# an% that se,era i"portant i"pa!ts are not !apture%

in the %eter"ination of profit& .oth of these !on%itions !an be re!tifie% in the foo+in$ se!tions&

Ite"s Not In!u%e% In Profit Measurabe Dire!t'

There are i"pa!ts of !orporate %e!isions an% a!ti,ities that are not in!u%e% in the %eter"ination of the profit of the

!o"pan' that !ause% the i"pa!t& 5or e1a"pe# +hen a !o"pan' poutes# the !ost of !eanup is usua' absorbe% b'in%i,i%uas# !o"panies# or "uni!ipaities that are %o+nstrea" or %o+n+in%& These !osts are referre% to as

e1ternaities# an% their i"pa!t !an often be "easure% %ire!t' b' the !osts of !eanup in!urre% b' others&

5un%a"enta Interests of Sta*eho%ers

We2offness#The propose% %e!ision shou% resut in "ore benefits than !osts&

5airness# The %istribution of benefits an% bur%ens shou% be fair&Ri$ht# The propose% %e!ision shou% not offen% the ri$hts of the sta*eho%ers an% the %e!ision "a*er&

irtuosit'# The propose% %e!ision shou% %e"onstrate ,irtues reasonab' e1pe!te%& A four interests "ust be

satisfie% for a %e!ision to be !onsi%ere% ethi!a&77

In or%er to see a !o"pete pi!ture of the i"pa!ts of a %e!ision# the profit or oss fro" a transa!tion shou% be

"o%ifie% b' the e1ternaities it !reates& 5re(uent'# !orporations that i$nore their e1ternaities o,er ti"e +i fin%that the' ha,e un%eresti"ate% the true !ost of the %e!ision +hen fines an% !eanup !osts are in!urre%# or ba%

pubi!it' e"er$es&


9/34

Ite"s Not In!u%e% in Profit Not Measurabe Dire!t'

Other e1ternaities e1ist +here the !ost is in!u%e% in the %eter"ination of the !o"pan'/s profit# but +here the

benefit is eno'e% b' persons outsi%e of the !o"pan'& Donations an% s!hoarships are e1a"pes of this *in% ofe1ternait'# an% ob,ious' it +ou% be attra!ti,e to in!u%e an esti"ate of the benefits in,o,e% in the o,era

e,auation of the propose% %e!ision& The probe" is that neither the benefit nor the !ost of so"e ne$ati,e i"pa!ts#

su!h as the oss of heath suffere% b' peope absorbin$ poution# !an be "easure% %ire!t'# but the' shou% be

in!u%e% in an o,era assess"ent&Athou$h it is i"possibe to "easure these e1ternaities %ire!t'# it is possibe to "easure these i"pa!ts

in%ire!t' throu$h the use of surro$ates or "irror i"a$e aternati,es& In the !ase of the s!hoarship# a surro$ate for

the benefit !ou% be the in!rease in earnin$s $aine% b' the re!ipient& The ,aue of the oss of heath !ou% be

esti"ate% as the in!o"e ost pus the !ost of "e%i!a treat"ent pus the oss of pro%u!ti,it' in the +or*pa!ein,o,e% as "easure% b' the !ost of fi2in +or*ers/&

The a!!ura!' of these esti"ates +i %epen% on the !oseness of the "irror i"a$e "easure& It is i*e'#

ho+e,er# that the esti"ates arri,e% at +i un%erstate the i"pa!t in,o,e%? in the pre,ious e1a"pe# no esti"ate +as

"a%e for the intee!tua $ain of the e%u!ation per"itte% b' the s!hoarship or the pain an% sufferin$ in,o,e% as aresut of the oss of heath& Ne,ertheess# it is far better to "a*e use of esti"ates that are $enera' a!!urate# rather

than "a*e %e!isions on the basis of %ire!t "easures that "easure pre!ise' on' a fra!tion of the i"pa!t of a

propose% %e!ision&

The "easure"ent an% use of surro$ates to esti"ate e1terna i"pa!ts of !orporate %e!isions is %is!usse% further in

the arti!e b' .roo*s 978:# +hi!h appears as a rea%in$ at the en% of this !hapter&

.rin$in$ the 5uture to the Present

The te!hni(ue for brin$in$ future i"pa!ts of %e!ision into an ana'sis is not %iffi!ut& It is han%e% in a parae

"anner to !apita bu%$etin$ ana'sis# +here future ,aues are %is!ounte% at an interest rate that refe!ts the e1pe!te%

interest rates in future 'ears& This approa!h is %e"onstrate% as part of !ost2benefit ana'sis 9C.A: in .roo*s 978:&

sin$ the net present ,aue approa!h of !apita bu%$etin$ ana'sis# the benefits an% !osts of a propose% a!tion !anbe assesse% as foo+s

Net Present aue Q Present aue of .enefits > Present aue of Costs of Propose% A!tion

+here benefits in!u%e re,enues an% $oo% e1ternaities# an% !osts in!u%e !osts pus ba% e1ternaities&

5re(uent'# e1e!uti,es +ho ha,e earne% the har% +a' to *eep their fo!us on short2ter" profit +i ree!t the i%ea ofin!u%in$ e1ternaities in their ana'ses& Ho+e,er# +hat is bein$ a%,o!ate% here is not that the' aban%on short2ter"

profit as a 'ar%sti!*# but that the' aso !onsi%er i"pa!ts that are no+ e1ternaities that ha,e an e1!eent !han!e of

affe!tin$ the !o"pan'/s botto" ine in the frture& It is i*e'# for e1a"pe# that poution !osts +i be turne% into

fines an%6or !eanup +i be re(uire%& Moreo,er# the a%,anta$es besto+e% throu$h %onations +i stren$then so!iet'an% ao+ the !orporation to rea!h its fu potentia in the future& What !ost>benefit ana'sis ao+s a %e!ision

"a*er to %o is to brin$ these future benefits an% !osts into the present for a fuer ana'sis of a propose% %e!ision&

5or e1a"pe# Tabe 3 of the Cost>.enefit Ana'sis rea%in$ 9.roo*s# 78: !ou% be refor"atte% as Tabe ;&F to

$i,e the %e!ision "a*er a !earer ,ie+ of present an% possibe future i"pa!ts on profit&73

Deain$ +ith n!ertain Out!o"es I ust as in !apita bu%$etin$ ana'sis# there are esti"ates that are un!ertain&

Ho+e,er# a fu ran$e of te!hni(ues has been %e,eope% to fa!tor this un!ertaint' into the ana'sis of propose%%e!isions& 5or e1a"pe# the ana'sis !an be base% on best esti"ates# on three possibiities 9"ost opti"isti!#

pessi"isti!# an% best esti"ate:# or on e1pe!te% ,aues %e,eope% fro" a !o"puter si"uation& A of these are

e1pe!te% ,aues# +hi!h are !o"binations of a ,aue an% a probabiit' of its o!!urren!e& This is nor"a' e1presse%

as foo+sE1pe!te% aue Q aue of the Out!o"e Probabiit' of that Out!o"e O!!urrin$ of an Out!o"e

The a%,anta$e of this e1pe!te% ,aue for"uation is that the !ost>benefit ana'sis fra"e+or* !an be "o%ifie% to

in!u%e the ris* asso!iate% +ith out!o"es to be in!u%e%& This ne+ approa!h is referre% to as ris*>benefit ana'sisR.A:# an% it !an be appie% +here ris*' out!o"es are pre,aent in the foo+in$ fra"e+or*


10/34

Ris*2A%uste% or E1pe!te% aue Q E1pe!te% Present aue of 5uture .enefits

of Net .enefits > E1pe!te% Present aue of 5uture Costs

I%entif'in$ Sta*eho%ers J Ran*in$ Their InterestsThe "easure"ent of profit# au$"ente% b' e1ternaities %is!ounte% to the present an% fa!tore% b' ris*iness of

out!o"e# is "ore usefu in assessin$ propose% %e!isions than profit aone& Ho+e,er# the usefuness oa sta*eho%er

i"pa!t ana'sis %epen%s on the fu i%entifi!ation of a sta*eho%ers an% their interests# an% on a fu appre!iation of

the si$nifi!an!e of the i"pa!ts on the position of ea!h& There are o!!asions# for instan!e# +hen the si"pe a%%in$ upof benefits an% !osts %oes not fu' refe!t the i"portan!e of a sta*eho%er or of the i"pa!t in,o,e%# su!h as +hen

the !apa!it' of a sta*eho%er to +ithstan% the i"pa!t is o+& 5or e1a"pe# ifa sta*eho%er is poor#

70

184

he +i not be abe to bu' re"e%ia treat"ent# or aternati,e' his reser,es "a' be so o+ that other fa"i' "e"bers

>perhaps !hi%ren>+i suffer& On the other han%# a s!hoarship to a poor re!ipient !ou% !reate a benefit for that

person an% others of si$nifi!ant' $reater i"pa!t than to a person +ho is +e off& In these situations# the ,aues

in!u%e% in the C.A or R.A !an be +ei$hte%# or the net present ,aues !reate% !an be ran*e% a!!or%in$ to thei"pa!t !reate% on the sta*eho%ers in,o,e%& The ran*in$ of sta*eho%ers an% the i"pa!ts on the" base% on their

situationa !apa!it' to +ithstan% is aso use% +hen non2"easurabe i"pa!ts are bein$ !onsi%ere%&

Reati,e finan!ia stren$th %oes not pro,i%e the on' rationae for ran*in$ the interests of sta*eho%ers& In fa!t#se,era "ore !o"pein$ reasons e1ist# in!u%in$ the i"pa!t of the propose% a!tion on the ife or heath of a

sta*eho%er# or on so"e aspe!t of our fora# fauna# or en,iron"ent that is near a thresho% of en%an$er"ent ore1tin!tion& sua'# the pubi! ta*es a ,er' %i" ,ie+ of !o"panies that put profits ahea% of ife# heath# or the

preser,ation of our habitat& In a%%ition# "a*in$ these issues a hi$h priorit' +i often tri$$er a rethin*in$ of an of

fen%in$ a!tion so as to i"pro,e it b' re"o,in$ its offensi,eness&

The iustrati,e Caste Manufa!turin$ In!& !ase soution pro,i%e% at the en% of this !hapter e1ten%s the !on!ept of

ran*in$ sta*eho%ers to !orreate e$a ri$hts# finan!ia an% ps'!hoo$i!a !apa!it' to +ithstan% the i"pa!t# an% the

resutin$ probabe pubi! i"pa!t of the a!tion& It is interestin$ that an ite" "a' not be "ateria to a a' in,estor in

an a!!ountin$ sense# but "a' be (uite si$nifi!ant to sta*eho%ers& In the on$ run# su!h sensiti,it' to !orporate%e!isions "a' reboun% on the shareho%ers throu$h the botto" ine& In ti"e# the a!!ountin$ !on!ept of "ateriait' as

+e *no+ it "a' be ina%e(uate an% nee% to be e1pan%e%&

T+o resear!h thrusts !an pro,e (uite usefu in i%entif'in$ an% un%erstan%in$ sta*e2ho%er $roups an% theirintera!tions& Mit!he# A$ie# an% Woo% 978: su$$est that sta*e2ho%ers an% their interests be e,auate% on three%i"ensions e$iti"a!' or e$a an%6or "ora ri$ht to infuen!e the or$aniation? po+er to infuen!e the or$aniation

throu$h the "e%ia# $o,ern"ent# or other "eans? an% per!ei,e% an% rea ur$en!' of the issues arisin$& Su!h an

ana'sis for!es the !onsi%eration of i"pa!ts thou$ht to be ,er' %a"a$in$ 9parti!uar' to e1terna sta*eho%ers: to

the fore# so that if an e1e!uti,e %e!i%es to $o ahea% +ith a subopti"a pan# at east the potentia %o+nsi%e +i be*no+n& The three sets of !ai"s are i%entifie% in 5i$ure ;&0&

7F

Approa!hes to The Measure"ent of uantifiabe I"pa!ts of Propose% De!isionsUA& Profit or oss on'

.& A& pus e1ternaities# 9i&e Cost2.enefit Ana'sis6C.A:

C& .& pus probabiities of out!o"es# 9i&e Ris*2.enefit Ana'sis6R.A:

D& C.A or R.A pus ran*in$ of sta*eho%ers

Lo$i! su$$ests that !ai"s +here the three !ir!es o,erap in 5i$ure ;&0 9i&e e$iti"ate an%6or ,ie+e% as e$iti"ate#

ur$ent# an% are he% b' the po+erfi: +i a+a's be the "ost i"portant& Ho+e,er# this is not ne!essari' the !ase&

other ur$ent sta*eho%er !ai"s !an be!o"e the "ost i"portant if the' $arner "ote support of the po+erfu an%those +ith e$iti"ate!ai"s# an% are uti"ate' seen to ha,e e$iti"a!'

Man' e1e!uti,es for$et that an or$aniation/s sta*eho%ers !han$e o,er ti"e# as %oes the po+er the' +ie%

%epen%in$ on the ur$en!' the' fee about issues brou$ht to their attention& In rea ife# sta*eho%ers +ithoute$iti"a!' or po+er +i tr' to infuen!e those +ith !out# an% the' su!!ee%& Another resear!her# Ti" Ro+e'


11/34

978:# has su$$este% that a set of sta*eho%ers be !onsi%ere% as a %'na"i! net+or*# an% that proe!tions be "a%e

about +ho in the net+or* +i infuen!e +ho"# to fore!ast +hi!h issues an% interests +i be!o"e "ore i"portant&

These !on!epts are %e,eope% in the iustrati,e !ase .riber' or Opportunit' in China# o!ate% at the en% of the

!hapter&

Su""ar'# The pre,ious' %is!usse% approa!hes to the "easure"ent of i"pa!ts of propose% %e!isions are

su""arie% in Tabe ;&


12/34

+ ,"ir tre"t-e)t

E.ercise $( c$)scie)ce

/i')it* ")& ri"c*

,ree&$- $( seech

!$-e $( these ri'hts h"e ee) "cc$r&e& r$tecti$) u)&er %"s ")& %e'"%re'u%"ti$)s

hi%e $thers "re e)($rce& thr$u'h c$--$) %" $r thr$u'h u%ic s")cti$) $($((e)&ers ,$r

e."-%e e-%$*ees ")& c$)su-ers "re r$tecte& u)&er st"tute ($r he"%th ")&s"(et* here"s

&i')it* ")& ri"c* te)& t$ e suect t$ c$--$) %" ")& the e.ercise $(c$)scie)ce is suect

t$ u%ic s")cti$)

I) -")* c"ses ee) here r$tecti$) is "(($r&e& thr$u'h st"tute c$)si&er"%eu&'-e)t

is reuire& t$ #)$ he) ") i)&ii&u"%s ri'hts "re ei)' i$%"te& /ru'testi)' i) the ($r- $(

uri)"%*sis ($r e."-%e "e"rs t$ e "rr")te& he) the he"%th $( the $r#er")& (e%%$ $r#

ers is "t st"#e ut the &e'ree $( e$"r&* h"s t$ e seere Air%i)e i%$ts"re c$)si&ere& $rth*

$( uri)"%*sis ut "t the -$-e)t &riers $( tr")s$rt truc#s "re )$t There"re -")* re"s$)s ($r

this i)c%u&i)' the %"c# $( "ccur"c* ")& ti-e%i)ess $( the tests ")& thesti'-" th"t "tt"ches t$

" ("%se "ccus"ti$) H$eer it "e"rs t$ e re"s$)"%e t$ test " truc#&riers re(%e.es ")&

h")&e*e c$$r&i)"ti$) usi)' c$-uter '"-es ust ri$r t$ his:her shi(t s$ei&e)t%* the sti'-"

$( ("i%i)' " c$-uter '"-e re%"te& c%$se%* t$ the t"s# t$ e er($r-e& is

"ccet"%e i) t$&"*s

s$ciet* This c$-%e. i)ter%"* $( st"tute re'u%"ti$) c$--$) %" ")&u&'-e)t "se& $)

"%ues -"#es it "&is"%e t$ 'ie ")* ""re)t i)(ri)'e-e)t $( " st"#eh$%&ersri'hts er* c"re(u%

scruti)*


13/34

I !t"#eh$%&er I-"ct A)"%*sis; Tr"&iti$)"%

/ecisi$)uesti$) Ar$"ch

The 5uesti$) "r$"ch $r 5$. "r$"ch "s ?r"h"- Tuc#er h"s c"%%e& it i)" re"&i)'

"t the e)& $( this ch"ter i)$%es the e."-i)"ti$) $r ch"%%e)'e $@" r$$se&&ecisi$) thr$u'h

the (ie uesti$)s i) T"%e 48 The r$$se& &ecisi$) is t$ e ch"%%e)'e& *"s#i)' "%% $( the

C4 PRACTICAL ETHICAL /ECI!IO uesti$) Ar$"ch t$ Ethic"% /ecisi$)


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5uesti$) (r"-e$r# is " use(u% "r$"ch t$ the $r&er%* c$)si&er"ti$) $(r$%e-s ith$ut

-")* e.ter)"%ities ")& here " seci(ic ($cus is &esire& * the &ecisi$)r$cess &esi')er ,$r ")

e.")&e& tre"t-e)t $( this "r$"ch re(er t$ the re"&i)' "t the e)& $( thech"ter * ?r"h"-

Tuc#er G1990

ee i) -i)& th"t the tr"&iti$)"% 5uesti$) "r$"ch &$es )$t sec ii c"tt*i)c$r$r"te " th$r

$u'h reie $( the -$ti"ti$) ($r the &ecisi$)s i)$%e& $r the irtues $rch"r"cter tr"its e.ecte&

I Tr"&iti$)"% uesti$)s th"t sr")' (r$- e"ch st")&"r& ")& th"t $u'ht t$ e "%ie& t$ e"ch&ecisi$) "re "%s$

$((ere&

As sh$) i) T"%e 49 the s"tis("cti$) $( the uti%it"ri") ri)ci%e ise."-i)e& thr$u'h

" uesti$) th"t ($cuses $) c$stFe)e(it ")"%*sis $r ris#Fe)e(it ")"%*sisr"ther th") ust r$(it

C$)seue)t%* the (u%% r")'e $( $ti$)s &iscusse& i) T"%e 46 c") e e-%$*e&"s e(its the

)ee&


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188 I P2 ETHICAL BEHAVIOR

ti%it"ri");


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the 5uesti$) "r$"ch ,$r " (u%% tre"t-e)t $( the -$r"% st")&"r&s "r$"chsee Busi)ess Eth

ics; C$)cets ")& C"ses *


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!$ci"% c$)tr"ct ethics

T$ &eter-i)e h$ t$ -$e the $u)&"ries t$ re-$e c$)cer)s $r c$)(%icts

49


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&$ u)t$ *$u The est"%ish-e)t $( ru%es "se& $) resect ($r i)&ii&u"%ri'hts c") r$e he%

(u% he) ") i)terret"ti$) is "rticu%"r%* &i((icu%t $r he) se)i$re.ecuties ")t t$ re-$e

"-i'uit* "$ut h"t the* e%iee sh$u%& e &$)e i) cert"i) situ"ti$)s ,$re."-%e P"sti)

su''ests th"t ru%es ($r-u%"te& * se)i$r e.ecuties t$ "ssist theire-%$*ees c") &ii&e $ssi%e

"cti$)s i)t$ th$se th"t "re $%i'"t$r* r$hiite& $r er-issi%e !i-i%"r%*ru%es c") e cr"(te&

s$ "s t$ -"#e the- c"te'$ric"% Gie )$ e.ceti$)s "%%$e& $r ri-" ("cieGe.ceti$)s "re "%

%$e& i) cert"i) circu-st")ces $r t$ tri''er c$)su%t"ti$) ith se)i$re.ecuties As such ru%e

ethics rerese)t P"sti)s e."-i)"ti$) $( the i-"ct $( r$$se& &ecisi$)s $)the ri'hts $( the

i)&ii&u"%s i)$%e&

The c$)cet $( ("ir)ess is i)c$r$r"te& * P"sti) i)t$ his i&e" $( s$ci"%c$)tr"ct ethics

Here he su''ests th"t ($r-u%"ti)' the r$$se& &ecisi$) i)t$ ") i-"'i)"r*c$)tr"ct $u%& e

he%(u% ec"use it $u%& "%%$ the &ecisi$) -"#er t$ ch")'e %"ces ith thest"#eh$%&er

t$ e i-"cte& u$) As " resu%t the &ecisi$) -"#er c$u%& see i( the i-"ct"s ("ir e)$u'h

t$ e)ter (ree%* i)t$ the c$)tr"ct I( the &ecisi$) -"#er ($u)& th"t he $r she"s )$t re"re& t$

e)ter i)t$ the c$)tr"ct ith the r$%es reerse& the) the ter-s G$r$u)&"ries $( the c$)tr"ct

sh$u%& e ch")'e& i) the i)terests $( ("ir)ess This tech)iue $( r$%ereers"% c") r$e t$ e

uite he%(u% "rticu%"r%* i) the c"se $( str$)'i%%e& e.ecuties h$ "re$(te) surr$u)&e& *

N*es -e) $r $-e) I) the c"se $( " re"% c$)tr"ct this "r$"ch c") euse(u% i) r$ecti)'

h$ r$$se& "cti$)s i%% "((ect the c$)tr"ct $r hether " c$)tr"ct ch")'eGsuch "s i) " u)i$)


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c$)tr"ct i%% e resiste&

Li#e the $ther t$ "r$"ches t$ st"#eh$%&er ")"%*sis the tr"&iti$)"% P"sti)Ar$"ch

&$es )$t seci(ic"%%* i)c$r$r"te " th$r$u'h reie $( the -$ti"ti$) ($r the&ecisi$)s i)$%e& $r the

irtues $r ch"r"cter tr"its e.ecte&

I E.te)&i)' B%e)&i)' the Tr"&iti$)"% Ar$"ches

,r$- ti-e t$ ti-e ") ethic"% r$%e- i%% "rise th"t &$es )$t (it er(ect%*i)t$ $)e $( the "

r$"ches &escrie& ,$r i)st")ce the issues r"ise& * ") ethic"% r$%e- -"*e e."-i)e& *

the 5uesti$) "r$"ch e.cet th"t there "re si')i(ic")t %$)'ter- i-"cts$r e.ter)"%ities th"t

c"%% ($r c$stFe)e(it ")"%*sis r"ther th") r$(it"i%it* "s " (irst%ee%uesti$) ,$rtu)"te%* c$stF

e)e(it ")"%*sis c") e sustitute& $r "&&e& t$ the "r$"ch t$ e)rich it!i-i%"r%* the c$)cet $(

'r$u)& ru%e ethics c") e 'r"(te& $)t$ " )$)P"sti) "r$"ch i( )ee&e& i) "&ecisi$) th"t &e"%s

ith ") i)c$-")* setti)' C"re sh$u%& e t"#e) he) e.te)&i)' ")& %e)&i)'the "r$"ches

h$eer t$ e)sure th"t e"ch $( the "re"s $( e%%$(()ess ("ir)ess ")&i-"ct $) i)&ii&u"% ri'hts

"re e."-i)e& i) " c$-rehe)sie ")"%*sisF$therise the (i)"% &ecisi$) -"* e("u%t*


I)te'r"ti)' Phi%$s$hic"% !t"#eh$%&er I-"ct

I A)"%*sis Ar$"ches

The hi%$s$hic"% "r$"chesFc$)seue)ti"%is- &e$)t$%$'* ")& irtue ethicsF

th"t ere

&ee%$e& e"r%* i) this ch"ter ")& i) Ch"ter 3 u)&er%"* ")& sh$u%& e #eti) -i)& t$

i)($r- ")& e)rich the ")"%*sis he) usi)' the three st"#eh$%&er i-"ct"r$"ches I) tur)


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the st"#eh$%&er i-"ct ")"%*sis "r$"ch use& sh$u%& r$i&e ") u)&erst")&i)'$( the ("cts

ri'hts &uties ")& ("ir)ess i)$%e& i) the &ecisi$) $r "ct th"t "reesse)ti"% t$ " r$er ethic"%

")"%*sis $( the -$ti"ti$)s irtues ")& ch"r"cter tr"its e.ecte&C$)seue)t%* i) ") e((ec

tie c$-rehe)sie ")"%*sis $( the ethic"%it* $( " &ecisi$) $r r$$se&"cti$) the tr"&iti$)"%

hi%$s$hic"% "r$"ches sh$u%& "u'-e)t the st"#eh$%&er -$&e%s ")& iceers" "s sh$)

i) ,i'ure 44


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he) r$er se%('ui&")ce ")&:$r e.ter)"% -$)it$ri)' is %"c#i)' Bec"usee.ter)"% -$)it$ri)' is

u)%i#e%* t$ c"ture "%% &ecisi$)s e($re i-%e-e)t"ti$) it is i-$rt")t ($r"%% e-%$*ees t$

c%e"r%* u)&erst")& the r$"& -$ti"ti$) th"t i%% %e"& t$ their $) ")& their$r'")i="ti$)s

est i)terest (r$- " st"#eh$%&er ersectie C$)seue)t%* &ecisi$) -"#erssh$u%& t"#e -$ti

"ti$)s ")& eh"i$r e.ecte& * st"#eh$%&ers i)t$ "cc$u)t seci(ic"%%* i) ")*c$-rehe)sie

E/< "r$"ch ")& $r'")i="ti$)s sh$u%& reuire "cc$u)t"i%it* * e-%$*ees ($rth$se

e.ect"ti$)s thr$u'h '$er)")ce -ech")is-s

I Ethic"% Assess-e)t $(


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the "cti$) I) the -i)&s $( st"#eh$%&ers erceti$)s i%% &eter-i)ereut"ti$)"% i-"cts

hether th$se erceti$)s "re c$rrect $r )$t


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/$es the &ecisi$) $r "cti$) i)$%e ")& e.hiit the i)te'rit* ("ir)ess ")&c$ur"'e

e.ecte&D

A%ter)"tie%*

/$es the &ecisi$) $r "cti$) i)$%e ")& e.hiit the -$ti"ti$) irtues ")&ch"r"cter

e.ecte&D

The $ectie $( these tech)iues sh$u%& e t$ c$)struct " r$(i%e "$ut the-$ti"ti$)s

irtues ch"r"cter tr"its ")& r$cesses i)$%e& ith ")& e.hiite& * the&ecisi$) $r "cti$)

th"t c") e c$-"re& t$ th$se e.ecte& The resu%ti)' irtue ethics '"")"%*sis is ") esse)ti"%

c$)si&er"ti$) i) " c$-rehe)sie E/< ")"%*sisFsee T"%e 412F&esi')e& t$r$&uce ethic"%%*

&e(e)si%e &ecisi$)s ")& "cti$)s ")& i-r$e '$er)")ce r$cesses

I) c$)c%usi$) i) $r&er t$ e)sure " c$-rehe)sie E/< ")"%*sis "ssess-e)ts $(the -$ti"ti$)

irtues e.ecte& ")& ch"r"cter tr"its e.ecte& -ust e "&&e& t$ thetr"&iti$)"% "r$"ches there*

r$&uci)' " uesti$) $r Tuc#er A)"%*sis "


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The &istriuti$) $( e)e(its ")& ur&e)s sh$u%& e ("ir

Virtue e.ect"ti$)s $r Virtue Ethics

The -$ti"ti$) ($r the &ecisi$) sh$u%& re(%ect st"#eh$%&ers

e.ect"ti$)s $( irtue

C4 PRACTICAL ETHICAL /ECI!IO


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"sset $r res$urce ")& there($re -"#e the r$)' &ecisi$) A"re)ess $( ther$%e- sh$u%& c$r

rect this ")& i-r$e &ecisi$) -"#i)' I( ") e.ecutie is c$)(r$)te& * the$eruse $( ") "sset

$r res$urce the* i%% &$ e%% t$ e-%$* the s$%uti$)s "%ie& i) $%&e) ti-es

I /ee%$i)' "


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NIts " &$' e"t &$' $r%& $ut there $r

NEer*$)es &$i)' it $r

NI( I &$)t &$ it s$-e$)e e%se i%% $r

NI- $(( the h$$# ec"use -* $ss $r&ere& -e t$ &$ it $r

Its " st$r* $r r"ctice -e)ti$)e& i) the $u%"r ress -e&i" $r -$ies

I) t$&"*s $r%& these usti(ic"ti$)s ($r u)ethic"% &ecisi$)s "re er*susect E"ch

"cti$) c$)te-%"te& -ust e ri'$r$us%* c$)si&ere& "'"i)st the ethic"%st")&"r&s &is

cusse& i) Ch"ters 3 ")& 4

I ,$cusi)' $) sh$rtter- r$(it ")& sh"reh$%&er $)%* i-"cts O(te) the -$stsi')i(ic")t

i-"cts G($r )$)sh"reh$%&er st"#eh$%&ers $( " r$$se& "cti$) "re th$se th"tsur("ce

i) the (uture ")& th$se th"t e("%% )$)sh"reh$%&er st"#eh$%&ers (irst O)%*"(ter these

'r$us re"ct &$ sh"reh$%&ers e"r the c$st ($r -is&ee&s The re-e&* ($r this-*$i" is

t$ e)sure ") "&eu"te ti-e h$ri=$) ($r the ")"%*sis ")& t$ t"#e i)t$ "cc$u)te.ter)"%i

ties $) " c$stFe)e(it "sis ee) th$u'h the i-"ct -e"sure& is (e%t i)iti"%%** " )$)

sh"reh$%&er 'r$u

I ,$cusi)' $)%* $) %e'"%ities


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c$r$r"ti$)s %$* "'"i)st such ru%e ch")'es Just ec"use " r$$se& "cti$)is

%e'"% &$es )$t -"#e it ethic"%

I Li-its t$ ("ir)ess !$-eti-es &ecisi$) -"#ers "re i"se& $r ")t t$ e ("ir$)%* t$ 'r$us

the* %i#e )($rtu)"te%* ($r the- the* &$ )$t h"e the "i%it* t$ c$)tr$%u%ic $i)i$)

")& usu"%%* e)& u "*i)' ($r their $ersi'ht


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ers$)"% i)terest ersus the c$r$r"ti$)s est i)tcrest $r the i)terests $(" 'r$u the &eci

si$) -"#er is "rti"% t$ ersus the c$r$r"ti$)s est i)terest c") $th"cc$u)t ($r err$)e

$us "ssess-e)ts ")& &ecisi$)s !$-eti-es e-%$*ees 'et c"u'ht $) h"t isc"%%e& " s%ier*

s%$e here the* e'i) ith " -i)$r &ecisi$) hich c$)(%icts ith the i)terest$( their

e-%$*er hich is ($%%$e& * ")$ther ")& ")$ther $( 'r$i)' si')i(ic")ce")& it

ec$-es e.tre-e%* &i((icu%t t$ c$rrect $r "&-it t$ their e"r%ier &ecisi$)sO(te) ")

e-%$*ee i%% e c"u'ht * &$i)' " -i)$r ("$r hich %e"&s t$ " 're"ter ($r")& s$ $)

ut he) the e-%$*ee ")ts t$ st$ 'r")ti)' (urther ("$rs the* "re t$%&th"t the* c"))$t

st$ $r their $ss i%% he"r $( their e"r%ier "cti$)s ")& the* "re c"u'ht $)" s%ier* s%$e

I)terc$))ecte&)ess $(st"#eh$%r%ers O(te) &ecisi$) -"#ers ("i% t$ ")tici"teth"t h"t the*

&$ t$ $)e 'r$u i%% re&$u)& t$ tri''er "cti$) * ")$ther ,$r e."-%e&es$i%i)' the

e)ir$)-e)t i) " ("r$(( c$u)tr* c") c"use )e'"tie re"cti$)s * &$-esticcust$-ers

")& c"it"% -"r#ets

,"i%ure t$ i&e)t "%% st"#eh$%&er 'r$us The )ee& t$ i&e)ti(* "%% st"#eh$%&er'r$us

")& i)terests e($re "ssessi)' the i-"cts $) e"ch is se%(ei&e)t H$eerthis is "

ste th"t is ree"te&%* t"#e) ($r 'r")te& ith the resu%t th"t i-$rt")tissues '$ u))$

tice& A use(u% "r$"ch t$ "ssist ith this r$%e- is t$ secu%"te $) the&$)si&e

th"t -i'ht h"e) (r$- the r$$se& "cti$) ")& tr* t$ "ssess h$ the -e&i"i%% re"ct

This $(te) %e"&s t$ the i&e)ti(ic"ti$) $( the -$st u%)er"%e st"#eh$%&er'r$us


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,"i%ure t$ r")# the seci(ic i)terests $(st"#eh$%&ers The c$--$) te)&e)c* ist$ tre"t "%%

st"#eh$%&er i)terests "s eu"% i) i-$rt")ce H$eer th$se th"t "re ur'e)tusu"%%*

ec$-e the -$st i-$rt")t I')$ri)' this is tru%* sh$rtsi'hte& ")& -"* resu%ti) "

su$ti-"% ")& u)ethic"% &ecisi$)

Le"i)' $ut e%%$((%iess ("ir)ess $r ri'hts As rei$us%* $i)te& $ut "c$-rehe)sie

ethic"% &ecisi$) c"))$t e -"&e i( $)e $( these three "sects is $er%$$#e&Ree"te&%*

h$eer &ecisi$) -"#ers sh$rtcircuit their "ssess-e)ts ")& su((er thec$)seue)ces

,"i%ure t$ c$)si&er the -$ti "ti$) ($r the &ecisi$) ,$r -")* *e"rsusi)esse$%e ")&

r$(essi$)"%s ere)t c$)cer)e& "$ut the -$ti"ti$) ($r ") "cti$) "s %$)' "sthe

c$)seue)ces ere "ccet"%e )($rtu)"te%* -")* &ecisi$) -"#ers %$st si'ht$( the

)ee& t$ i)cre"se $er"%% )et e)e(its ($r "%% G$r "s -")* "s $ssi%e ")&-"&e &ecisi$)s

th"t e)e(ite& the-se%es $r $)%* " se%ect (e i) the sh$rt ru) ")&&is"&")t"'e& $thers

i) the %$)'er ru) These sh$rtsi'hte& ure%* se%(i)tereste& &ecisi$) -"#ersrerese)t

hi'h '$er)")ce ris#s ($r $r'")i="ti$)s

,"i%ure t$ c$)si&er the irtues th"t "re e.ecte& t$ e &e-$)str"te& B$"r&-e-ers e.ecu

ties ")& r$(essi$)"% "cc$u)t")ts "re e.ecte& t$ "ct i) '$$& ("ith ")&&isch"r'e the

&uties $( " (i&uci"r* ($r e$%e re%*i)' $) the- I')$ri)' the irtues

e.ecte& $( the- c")

%e"& t$ &ish$)est* %"c# $( i)te'rit* i) the re"r"ti$) $( re$rts ("i%ure t$"ct $) eh"%( $(



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st"#eh$%&ers ")& ("i%ure t$ &isch"r'e c$ur"'e i) c$)(r$)ti)' $thers h$ "rei)$%e& i)

u)ethic"% "cts $r i) hist%e%$i)' he) )ee&e& Pr$(essi$)"% "cc$u)t")tsh$ i')$re

irtues e.ecte& $( the- "re r$)e t$ ($r'et th"t the* "re e.ecte& t$ r$tectthe u%ic

i)terest

A C$-rehe)sie Ethic"% /ecisi$)


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($%%$i)' three stes r$i&es " s$u)& "sis ($r ch"%%e)'i)' " r$$se&&ecisi$)

1 I&e)t* the ("cts ")& "%% st"#eh$%&er 'r$us ")& i)terests %i#e%* t$ e"((ecte&

2 R")# the st"#eh$%&ers ")& their i)terests i&e)ti(ri)' the -$st i-$rt")t")& ei'hti)'

the- -$re th") $ther issues i) the ")"%*sis

3 Assess the i-"ct $( the r$$se& "cti$) $) e"ch st"#eh$%&er 'r$ui)terests ith re'"r&

t$ their e%%$(()ess ("ir)ess $( tre"t-e)t ")& $ther ri'hts i)c%u&i)'irtue e.ect"

ti$ris usi)' " c$-rehe)sie (r"-e$r# $( uesti$)s ")& -"#i)' sure th"t thec$-

-$) it("%%s &iscusse& %"ter &$ )$t e)ter i)t$ the ")"%*sis

It -"* e he%(u% t$ $r'")i=e ") ethic"% &ecisi$) ")"%*sis usi)' the see)stes $ut%i)e& *

the A-eric") Acc$u)ti)' Ass$ci"ti$) G1993 "s ($%%$s;

1 /eter-i)e the ("ctsFh"t h$ here he) ")& h$

2 /e(i)e the ethic"% issueGs

3 I&e)ti(* -"$r ri)ci%es ru%es ")& "%ues

4 !eci(* the "%ter)"ties

5 C$-"re "%ues ")& "%ter)"ties ")& see i(" c%e"r &ecisi$) e-er'es

6 Assess the c$)seue)ces

7

practical ethical decision making

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