Transcript Using Case Studies to Teach Business Ethics in a High

Decision Making in an
Ethical Dilemma
William J. Wilhelm
College of Business
Indiana State University
Ethical Problem vs. Ethical
Dilemma
Problem:
right versus wrong choices
Dilemma:
right versus right choices
“morality” and “ethics”

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Morality – refers to the standards of
behavior in relation to others by which
people are judged
Ethics – encompasses the system of
beliefs that supports a particular view of
morality
(Hosmer, 2003)
The Four Components of Moral
Behavior (Rest & Narvaez, 1979)
1.
Moral sensitivity
2.
Moral judgment
3.
Moral motivation
4.
Moral character
Theory of Cognitive Disequilibrium
(Piaget, 1965)
We all have existing belief structures.
When new truths challenge our belief
structures we can:
1. assimilate new ideas of truth into our existing
belief structures or
2. adapt our belief structures to accommodate
the new ideas of truth.
Stages of Moral Development (Kohlberg, 1969)
STAGE
Stage 1:
Punishment and
Obedience
Orientation
Stage 2:
Instrumental Relativist
Orientation
CHARACTERISTICS
Right (good) and wrong (bad)
defined by Adults
 Physical consequences determine
goodness or badness
 Right is a matter of obedience

Right is what satisfies one’s own
needs while being aware of others’
needs
 Fairness is reciprocal


Stage 3:


“Good Boy-Good Girl”
Orientation


Adults sometimes hold Truth
Right is what helps in one’s Group
Right behavior earns approval
Cooperation with peers is moral
Right must involve others’ feelings
Stage 4:


“Law and Order”
Orientation


Stage 5:

Stage 6:

Right is doing one’s duty in social order
Society’s laws replace peer group’s laws
Laws of society followed without question
Breaking the law is never justified
Principles are abstract and ethical (Golden
Rule)
 Laws and values of society are somewhat
Universal Ethical
arbitrary and particular to that society.
Principle Orientation
 Laws are necessary to preserve social
order and ensure basic rights
Social Contract
Orientation
Right is defined in terms of individual
rights for all in the society.
 Ethical principles based on abstract
concepts of justice, equality and human
rights.
 Laws that violate these principles should
be disobeyed.
So how do we make decisions in
situations involving ethical dilemmas?
The same way we make decisions involving
non-ethical matters.
We look at the situation, assess alternative
courses of action, evaluate outcomes and
probabilities, and choose the best course of
action.
Steps in making a judgment
How do we
1.
2.
Problem recognition
EVALUATE
alternatives?
Identification of alternative courses of
action
3.
Evaluation of alternative courses of action
4.
Estimation of outcome probabilities
5.
Calculation of expected values
6.
Justification of course of action chosen
We use evaluation TOOLS.
For example, in management decisions
we use tools such as:

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return on investment
cost-benefit analysis
time-to-market analysis
net present value
S.W.O.T. analysis
etc.
We also use evaluation TOOLS in
ethical decision making:

Universal duty towards others
Kant’s categorical imperative


Greatest good for the greatest number
Bentham & Mill’s utilitarianism
Conventional cultural moral rules and codes
The Golden Rule, laws, codes of ethics, etc.

Characteristics of a good person
Aristotle’s virtue theory: bravery, honesty,
temperance, generosity, justice, pride.
Kant’s categorical imperative
categorical = universal, no exceptions
imperative = duty
An act is morally correct only if it can be
applied as a universal rule of conduct in
all situations and have the same result.
What if everyone did that?
Kant’s second formulation of the
categorical imperative
All people, including oneself, must be
treated with dignity and respect, and not
used merely as a means to accomplish
another’s objectives.
Does an action treat all people
with the dignity they deserve as
human beings?
Utilitarian Theory (Bentham & Mill)
The “greatest happiness principle” holds
that actions are right in proportion as they
tend to promote happiness; wrong as
they tend to produce unhappiness.
Does an action produce the
greatest good for the greatest
number of people?
Act vs. Rule Utilitarianism
Act utilitarians believe that each
individual action is to be evaluated.
Rule utilitarians believe that behavior is
best evaluated by rules that, if
universally followed, would lead to the
greatest good for the greatest number.
Conventional Moral Rules
Classic moral rules that have withstood the
test of time:
 The Golden Rule
 Thou shall not kill
 Thou shall not steal
Does an action violate any rules
or laws that promote the common
good?
Personal Virtue Ethics (Aristotle)
One should live one’s life virtuously:
bravery, honesty, temperance,, justice,
openness, generosity and pride.
Does your choice of an action
demonstrate personal
characteristics that your Mother
would be proud of?
A Framework for
Moral Decision Making
1.
Problem recognition
2.
•Categorical imperative
•Utilitarianism
Identification
of alternative
•Virtue theory
action
•Conventional rules
3.
Evaluation of alternative courses of action
4.
Estimation of outcome probabilities
5.
Calculation of expected values
6.
Justification of course of action chosen
courses of
a)
Which alternative respects the rights and
dignity of the stakeholders and can be
universally applied?
b)
Which alternative will produce the most
good and the least harm?
c) Do any of the alternatives violate a
conventional moral rule or law?
d)
Which alternative can you personally
live with?
Ethical Dilemma:
Beverage Sales in Schools
and Overweight Children
Dr. Chia-An Chao, Indiana State University
Beverage Sales in Schools

Soda sales supplement school budgets

Up to 1/4 quarter of some schools’ budgets

Exclusive access = significant fees

GAO report: vending machines in schools
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99% high schools
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97% middle schools
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83% elementary schools
Source: Laborers’ Health and Safety Fund of North America.
Overweight Children and Adolescents
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Poor dietary habits and inactivity linked to
increasing rates of obesity among children and
adolescents
Overweight children = > 85th percentile BM Index;
Obese children = > 95th percentile
30% of children and adolescents are overweight;
15% are obese
Source: CDC, National Center for Health Statistics, National Health and
Nutrition Examination Survey.
Overweight Children and Adolescents

An article in the International Journal of
Pediatric Obesity predicted nearly 50% of North
American children will be overweight by 2010
Percentage of Obese Children
Boys Girls
All are
increasing
Percentage of Obese Adolescents
M
F
1999 – 2000 16.0 14.5
1999 – 2000 15.5 15.5
1988 – 1994 11.6 11.0
1971 –1974
4.3 3.6
1988 – 1994 11.3
1971 –1974
6.1
Source: CDC, National Center for Health Statistics, National Health and
Nutrition Examination Survey.
9.7
6.2
Weight-Related Health Risks

asthma

diabetes

hypertension

orthopedic complications

psychosocial effects and stigma
Source: American Obesity Association.
Removing Sugary Beverages from
Schools
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In May 2006, American Beverage
Association (ABA) agreed to stop nearly all
soda sales in public schools over a fouryear period
ABA plans to implement the changes at
75% of the nation’s public schools by the
2008 – 2009 school year, and 100% public
schools a year later.
Source: Laborers’ Health and Safety Fund of North America.
Case Study: Beverage Sales in
Schools and Overweight Problems
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Middleburg High School (MHS) is in its second year of a
five-year contract with a local beverage distributor.
Under the current contract, MHS receives a minimum
annual commission of $65,000. MHS uses the fund to
supplement various operating expenditures and student
clubs.
If MHS renegotiates the contract to exclude unhealthy
beverages, the commission may be lower.
Ethical Dilemma: Should MHS continue its current
contract until it terminates by 2010, or change it now?
A Framework for
Moral Decision Making
1.
Problem recognition
2.
Identification of alternative actions
3.
Evaluation of alternative actions
4.
Estimation of outcome probabilities
5.
Calculation of expected values
6.
Justification
Step 1. Problem recognition.
Continuing the contract to sell unhealthy
beverages to students or deciding NOT to
continue the current contract, but then
end up loosing money for the school.
Actors: Students and MHS
Other Actors: parents, community, society
Step 2.
Identify alternative courses of action
Alternative 1: Continue sales contract until
its expiration.
Alternative 2: Renegotiate current contract
and stop selling unhealthy beverages.
Step 3.
Evaluation of alternative courses of
action
a)
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Which alternative respects the rights and
dignity of the stakeholders and can be
universally applied?
What would happen to students and the
obesity problem if all schools postpone
halting the soda sales?
Does continuing the sale of potentially
unhealthy beverages to overweight
students treat them with dignity?
Does halting beverage sales treat nonoverweight students with dignity?
b)
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Which alternative will produce the most
good and the least harm?
By continuing the contract, MHS and its
students will receive substantial financial
benefits over the next three years.
However, what would be the cost to the
students? Families? MHS? Community?
What would be the effects if renegotiating
the contract to eliminate soda sales now?
c) Do any of the alternatives violate a
conventional moral rule?
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Would MHS violate any conventional
moral rule or law should it choose to
continue the soda sales contract until
2010?
What about if it decided to stop soda
sales?
d)
Which alternative can you personally
live with?
Knowing the likely outcomes of
continuing the current contract, would
you feel good about the decision? How
would you feel if it were in the
newspaper?
Step 5. Estimation of outcome probabilities
Step 6. Calculation of expected values
Step 7. Justification of action chosen
What did you decide?
Can you justify your decision?
Questions
Additional Case Study Ideas
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International Business: what are the
appropriate actions for dealing with
unlicensed software use at a foreign
subsidiary
General Business/Business Law: should a
company require its employees to quit
smoking or else lose their jobs?
Marketing: should a sales person sell a
product that a customer doesn’t really need?