15/09/2024
ETHICS AND SOCIAL
RESPONSABILITY
João Ricardo Crista 2023-2024
Universidade do Minho
1. The Concept of
Ethics and Social
Responsibility
1
15/09/2024
Business Ethics
The public’s interest in business ethics is at an all-time high, spurred by
headline grabbing scandals.
The Enron scandal impacted business to greatly it is called “The Enron
Effect.” (know more: https://www.britannica.com/event/Enron-scandal)
Business will never be the same.
Some examples to think about…
Volkswagen Emissions Scandal (2015):
In 2015, Volkswagen admitted to cheating on emissions tests for their diesel
vehicles. The company had installed software that manipulated emissions
data, leading to a massive environmental scandal and significant financial
penalties.
2
15/09/2024
Some examples to think about…
Wells Fargo Fake Accounts Scandal (2016):
In 2016, Wells Fargo faced a major scandal when it was revealed that
employees had opened millions of unauthorized bank and credit card accounts
to meet sales targets. This unethical behavior resulted in a $185 million
settlement and damaged the bank's reputation.
Some examples to think about…
Boeing 737 MAX Crisis (2019):
Boeing faced ethical questions regarding the safety of its 737 MAX aircraft
after two deadly crashes in 2018 and 2019. Investigations revealed issues with
the aircraft's design and the company's safety culture, leading to grounded
planes and a loss of trust.
3
15/09/2024
Some examples to think about…
Theranos Fraud (2016):
Theranos, a healthcare technology startup, was embroiled in a major scandal
when it was exposed for making false claims about its blood-testing
technology. Founder Elizabeth Holmes faced criminal charges for misleading
investors and patients.
Some examples to think about…
Each of these scandals involved ethical breaches that had far-reaching
consequences.
The Wells Fargo case highlighted the importance of ethical conduct within
financial institutions and led to increased scrutiny of sales practices in the
banking industry.
The Volkswagen emissions scandal raised questions about environmental
responsibility and corporate transparency.
The Boeing 737 MAX crisis shed light on the need for rigorous safety checks
and corporate accountability in the aviation sector.
Lastly, the Theranos case emphasized the significance of truthfulness and
integrity in the healthcare and biotechnology sectors.
4
15/09/2024
… and more recently…
The "PPE Shortage Profiteering" during the early stages of the COVID-19
In the early days of the COVID-19 pandemic, there was a global shortage of
personal protective equipment (PPE) such as masks, gloves, and gowns, which
were crucial for healthcare workers on the front lines. This shortage created an
environment where some individuals and businesses engaged in unethical practices
to profit from the crisis:
Price Gouging
Counterfeit and Substandard PPE
Hoarding and Stockpiling
Unfair Allocation
Not so long ago…
Predatory Lending and Subprime Mortgage Crisis (2008):
The subprime mortgage crisis highlighted ethical issues related to lending
practices. Financial institutions engaged in predatory lending, offering high-
risk mortgages to borrowers who couldn't afford them. This contributed to a
global financial crisis.
The subprime mortgage crisis, one of the most significant financial scandals of
the 21st century, raised questions about responsible lending, risk assessment,
and the ethical obligations of financial institutions.
5
15/09/2024
Another perspective: who runs the world?
Business Ethics: What is different now?
These incidents reveal that ethical issue became prominent today and
touches not only the business community but also education, government, etc
Corruption practices
Environmental crimes
Child labor
Discrimination
6
15/09/2024
Business Ethics: Meaning, Types,
Approaches
Ethics
Relates to principles of right, wrong, and fairness in behavior.
Moral Conduct
Customs, traditions, education...
Business Ethics
Concerned with morality and fairness in behavior, actions, and practices that take
place within a business context.
Business Ethics: Meaning, Types,
Approaches
Descriptive Ethics
Involves describing, characterizing, and studying morality.
Focuses on what is occurring.
Normative Ethics
Concerned with supplying and justifying a coherent moral system of thinking and
judging.
Focuses on what should be occurring.
7
15/09/2024
Approaches to Business Ethics
Conventional Approach
Based on how common society today views business ethics and on common sense.
Principles Approach
Based upon the use of ethics principles to justify and direct behavior, actions, and
policies.
Sources of Ethical Norms Communicated
to Individuals
Local
community
Fellow Region of
workers country
Family Profession
The Individual
------------------
Conscience
Friends Employer
Law Society
Faith/
Religious
beliefs
8
15/09/2024
Ethics and the Law
The law and ethics can overlap in many respects.
The law is a reflection of what society thinks are minimal
standards of conduct and behavior.
Research focuses on two questions:
1. Why do firms do illegal things?
2. What are the consequences of engaging in illegal behavior?
Ethical Relativism
Ethical Relativism
Picking and choosing which source of norms one wishes to use based on what will
justify current actions or maximize freedom.
A serious danger of the conventional approach to making ethical judgments.
“I swear to tell the truth…as I see it”.
9
15/09/2024
Ethical decision making
Ethical
responsibility 3 Area 1
Profitable, legal ethical.
Legal
responsibility
Area 2a
1 Profitable and legal.
2b Area 2b
2a Profitable and ethical.
Probably legal too.
Area 3
Economic
Legal and ethical but not
responsibility
profitable.
Ethical decision making
Only Ethical (Ethical, but not Legal or Economic)
Example: An individual who practices peaceful civil disobedience against an unjust law.
Although he is acting ethically by fighting for social justice, he is breaking the law
(illegal) and may suffer negative economic consequences, such as fines or loss of
employment.
Legal Only (Legal, but not Ethical or Economic)
Example: A company that uses legal loopholes to avoid paying taxes. Although this is
legal, it is considered unethical as it does not contribute fairly to society, and may not
bring significant economic benefits due to the cost associated with maintaining these
practices.
Economic only (Economic, but not Ethical or Legal)
Example: Selling counterfeit products. The activity generates profit (economic benefit),
but is illegal and unethical because it violates intellectual property rights and deceives
consumers.
10
15/09/2024
Ethical decision making
Ethical and Legal Intersection (Ethical and Legal, but not Economic)
Example: A company that implements sustainable practices beyond what is required by
law, without expecting a financial return. It is complying with the law and acting
ethically in favour of the environment, but may incur additional costs without immediate
economic benefits.
Ethical and Economic Intersection (Ethical and Economic, but not Legal)
Example: Distribution of generic medicines in violation of patents. It is an ethical action
to make medicines accessible and has economic benefits for consumers, but it infringes
intellectual property laws.
Legal and Economic Intersection (Legal and Economic, but not Ethical)
Example: Relocating operations to countries with cheap labour and less strict labour
regulations. The company acts within the law and reduces costs (economic benefit), but
faces ethical criticism for potentially exploiting workers and neglecting fair labour
standards.)
Ethical decision making
Intersection of the Three Pillars (Ethical, Legal and Economic)
Example: Investment in renewable energies. The company complies with
environmental legislation, acts ethically by contributing to environmental
sustainability and obtains economic benefits through energy efficiency and a
positive reputation with consumers.
11
15/09/2024
Four Important Ethical Questions
What is it? What should it be?
How do we get from what is it to what it should be?
What is our motivation in all this?
Five Levels for Questions
Level of the individual
Level of the organization
Level of the profession
Societal level
Global or international level
12
15/09/2024
Three Models of Management Ethics
Moral Management
Conforms to high standards of ethical behavior
or professional standards of conduct.
Characteristics of Moral Managers
Conform to high level of:
Ethical or right behavior Embrace letter and spirit of the
Personal and professional standards law
Ethical leadership is commonplace Possess an acute moral sense and
moral maturity
Goal is to succeed with ethics
High integrity is displayed
13
15/09/2024
Three Models of Management Ethics
Immoral Management
The operating strategy of immoral management is
focused on exploiting opportunities for corporate
or personal gain.
Characteristics of Immoral Managers
Intentionally do wrong
Self-centered and self-absorbed
Care only about self or organization’s profits/success
Actively oppose what is right, fair or just
Exhibit no concern for stakeholders
14
15/09/2024
Three Models of Management Ethics
Amoral Management
It is indifferent to moral principles, that is, it
does not practice them, but neither does it go
against them.
Characteristics of Amoral Managers
Intentionally Amoral Managers Unintentionally Amoral Managers
Don’t think ethics and business • Don’t consider the ethical
should “mix.” dimension of decision making.
Business and ethics exist in • Don’t “think ethically.”
separate spheres.
• Well-intentioned, but morally
casual or unconscious.
15
15/09/2024
Three Approaches to Management Ethics
Ethical norms
Management decisions, actions and behavior imply a positive and active opposition to what is moral
Immoral (ethical).
Management Decisions are discordant with accepted ethical principles.
An active negation of what is moral is implied.
Managment is neither moral nor immoral, but decisions lie outside the sphere to which moral
Amoral judgements apply.
Management Management activity is outsider or beyond the moral order of a particular code.
May imply a lack of ethical perception amd moral awareness.
Management activity conforms to a standard of ethical, or right, behavior.
Moral
Conforms to accepted professional standards of conduct.
Management Ethical leadership is commonplace on the part of management.
Three Approaches to Management Ethics
Motives
Immoral
Selfish. Management cares only about its or the company’s gains.
Management
Amoral
Well-intentioned but selfish in the sense that impact on others is not considered.
Management
Moral Good. Management wants to succeed but only within the confines of sound ethical precepts
Management (fairness, justice, due process).
16
15/09/2024
Three Approaches to Management Ethics
Goals
Immoral
Profitability and organizational success at any price.
Management
Amoral
Profitability. Other goals are not considered.
Management
Moral
Profitability within the confines of legal obedience and ethical standards.
Management
Three Approaches to Management Ethics
Orientation towards law
Immoral
Legal standards are barriers that management must overcome to accomplish what it wants.
Management
Amoral Law is the ethical guide, preferably the letter of the law. The central question is what we can do
Management legally.
Moral Obedience toward letter and spirit of the law. Law is a minimal ethical behavior.
Management Prefer to operate well above what law mandates.
17
15/09/2024
Three Approaches to Management Ethics
Strategy
Immoral
Exploit opportunities for corporate gain. Cut corners when it appears useful.
Management
Amoral Give managers free rein. Personal ethics may apply but only if managers choose. Respond to legal
Management mandates if caught and required to do so.
Moral Live by sound ethical standards. Assume leadership position when ethical dilemas arise.
Management Enlightened self-interest.
Integrity Strategy
Related to moral management; is characterized by a conception of ethics as the driving force
of an organization.
Guiding values and commitments make sense and are clearly communicated.
Company leaders are personally committed, credible, and willing to take action on values.
Adopted values are integrated into normal channels of management decision making.
The organization’s systems support and reinforce its values.
All managers have the skills, knowledge, and competencies to make ethically sound decisions
daily.
18
15/09/2024
2. Different Perspectives on
Ethics and Moral Philosophy
19
