Theoretical Foundations for Ethics in Management

Session Plan • Personal Ethics

– Kohlberg’s Stages of Moral Development – Religion and Morality

• Management and Ethics – Normative Theories

• Egoism • Utilitarianism • Kant’s Ethics • Stockholder Theory • Stakeholder Theory • Social Contract Theory • Indian Ethical traditions

Morality

• Concept of right and wrong

How are Moral Standards Formed?: Kohlberg’s Stages of Moral Development

Pre-Conventional

• The Punishment and obedience Orientation • The instrumental Relativist Orientation

Conventional

• Interpersonal Concordance or Good Boy – Nice Girl Orientation

• The “Law and Order” Orientation

Post-Conventional

• The Social Contract legalistic Orientation • The Universal Ethical Principle Orientation

• Should Heinz have broken into the laboratory to steal the drug for his wife? Why or why not?

Conventional Level Interpersonal Concordance or Good Boy – Nice Girl Orientation The “Law and Order” Orientation

Post-Conventional Level The Social Contract legalistic Orientation

The Universal Ethical Principle Orientation

Egoism

• The view that associates morality with self-interest is referred to as Egoism

• Instrumental Relativist Orientation?

Utilitarianism

Kantianism: Ethics of Duty

Universal- Ethical Principle Orientation?

Stockholder Theory

• Business relationship between the owners (Shareholders) and their agents who are the managers running the day to day business of the company

Stakeholder Theory

Primary Stakeholders

• Shareholders (Owners)

• Employees

• Customers

• Business Partners

• Communities

• Future Generations

• The Natural Environment

Secondary Stakeholders • Local, State, and Federal

Government • Regulatory Bodies • Civic Institutions and

Groups • Special Interest Groups • Trade and Industry Groups • Media • Competitors

Stakeholder Theory: Manager’s Role

• Principle of corporate legitimacy: the corporation should be managed for the benefit of its stakeholders…. The rights of these groups must be ensured and further, they must participate, in some sense, in decisions that substantially affect their welfare

• Stakeholder Fiduciary Principle: Management bears a fiduciary relationship to stockholders and to the corporation as an abstract entity…. Safeguarding the long term stakes of each group.

• Applicability issues…

Social Contract Theory

• All businesses are ethically duty-bound to increase the welfare of the society by catering to the needs of the consumers and employees without in any way endangering the principles of natural justice – An implicit agreement between the society and

any created entity such as a business unit, in which the society recognizes the existence of a condition that it will serve the interest of the society in certain specified ways.

Catholic Social Thought

• It is not wrong to live better, what is wrong is a style of life which is presumed to be better when it is directed toward “having” rather than “being” and which wants to have more, not in order to be more, but in order to spend life in enjoyment as an end in itself.

Indian Ethical Traditions

• Sarvodaya

• Antyodaya

• Nishkama Karma

• Business and Islam – explicit edict against the exploitation of people in need through lending them money at interest and doing business through false advertising

• Shariah bans taking of interest