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CHAPTER 5
ETHICS AND ETHICAL REASONING
INTRODUCTION
People who work in business frequently encounter and must deal with on-the-job ethical
issues. Being ethical is important to the individual, the organization and the global
marketplace in today’s business climate. Managers and employees alike must learn how
PREVIEW CASES
Qualcomm Penalized by South Korea
Stewart Parnell and the Peanut Corporation of America
The chapter opens with two examples of a company and a business executive acting in an
unethical manner. Qualcomm’s unfair business practice was investigated by the South
Korean government and given the largest antitrust penalty for any company operating in
CHAPTER OUTLINE
I. THE MEANING OF ETHICS
A. What Is Business Ethics?
Teaching Tip: Defining Ethics
Establishing a clear definition of ethics is a critical task in
understanding this and the following chapter. Ethics is not identical to
law nor is it simply personal or cultural values. Defining ethics should
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B. Why Should Business Be Ethical?
Enhance business performance
Comply with legal requirements
Prevent or minimize harm
Meet Demands of Business Stakeholders
Promote personal morality
II. WHY ETHICAL PROBLEMS OCCUR IN BUSINESS
A. Personal Gain and Selfish Interest
Teaching Tip: World’s Most Ethical Companies
Students might be interested in exploring in greater detail firms who
Teaching Tip:
World’s Corporate Sentencing Guidelines
and the Sarbanes-Oxley Act
The U.S. Corporate Sentencing Guidelines and the Sarbanes-Oxley Act
appeared on the U.S. ethics scene years ago. There are numerous
Teaching Tip: World’s Meet Demands of Business Stakeholders
Students may be challenged by the question: How important is it to you
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B. Competitive Pressures on Profits
C. Conflicts of Interest
D. Cross-Cultural Contradictions
III. THE CORE ELEMENTS OF ETHICAL CHARACTER
A. Managers’ Values
B. Spirituality in the Workplace
C. Managers’ Moral Development
IV. ANALYZING ETHICAL PROBLEMS IN BUSINESS
A. Virtue Ethics: Pursuing a “Good” Life
Teaching Tip: Ethical Egoism
There are plenty examples of ethical egoism in the media, including the
example given in the chapter: Alphons Iacobelli. What led this
Teaching Tip: Conflicts of Interest
Conflicts of interests are reportedly one of the most common forms of
ethical dilemmas in the workplace. Perhaps students can identify and
describe their own conflicts of interest – how they spend their time,
with whom they spend their time, do they attend class or a job
interview scheduled at the same time, how they make decisions to
resolve their conflicts of interest?
Teaching Tip: Stages of Moral Development
Popular television shows or movies can be used to illustrate the stages
of moral development. Some scholars have researched and published
papers describing a moral reasoning analysis of M*A*S*H characters
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B. Utility: Comparing Benefits and Costs
C. Rights: Determining and Protecting Entitlements
D. Justice: Is It Fair?
E. Applying Ethical Reasoning to Business Activities
V. THE MORAL INTENSITY OF AN ETHICAL ISSUE
GETTING STARTED
KEY LEARNING OBJECTIVES
LO 5-1: Defining ethics and business ethics.
LO 5-2: Evaluating why businesses should be ethical.
Teaching Tip: What Is a Virtuous Person?
Student may be assigned to create their own list of virtues or good
values to see how their ideas compare to those lists presented in the
business managers or employees.
Teaching Tip: Do Patients Have the Right to Try?
After reading Exhibit 5.A, should patients be given the right to try
therapy or experimental drugs that are still in the testing phase in the
hope of stopping the spread of their disease or possibly saving their
Teaching Tip: Applying Moral Intensity
The concept of moral intensity can be found in many common ethical
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Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the
prior written consent of McGraw-Hill Education.
Ethical business behavior enhances business performance, complies with legal
requirements, prevents or minimizes harm, is demanded by business stakeholders,
and promotes personal morality.
LO 5-3: Knowing why ethical problems occur in business.
LO 5-4: Identifying managerial values and people’s spirituality as influences on
ethical decision-making.
LO 5-5: Understanding stages of moral reasoning.
LO 5-6: Analyzing ethical problems using generally accepted ethics theories.
LO 5-7: Understanding how moral intensity affects ethical decision-making.
The perceived moral intensity of an issue, as determined by the issue’s
characteristics, affects how individuals make ethical decisions.
KEY TERMS
business ethics
Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the
prior written consent of McGraw-Hill Education.
Sarbanes-Oxley Act
spirituality
stages of moral development
U.S. Corporate Sentencing Guidelines
utilitarian reasoning
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DISCUSSION CASE
LAFARGEHOLCIM AND ISIS IN SYRIA
Discussion Questions
1. Do you agree with the French government’s charges against Lafarge and its managers?
Why or why not?
2. What arguments did Lafarge managers make to justify their decision to pay terrorist
groups in Syria? Do you believe that these were their real reasons?
3. Do you believe that Lafarge’s actions in Syria were ethical or unethical? Use the four
Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the
prior written consent of McGraw-Hill Education.
4. Evaluate the moral intensity of the decision Lafarge managers made, based on the
dimensions of moral intensity.
Each of the moral intensity characteristics could be applied. Magnitude of consequences –
5. Is there anything Lafarge could have done to protect its employees adequately without
paying terrorists?
