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1 PART I PHILOSOPHICAL ETHICS: THE MORAL FOUNDATION OF BUSINESS...1 CHAPTER 1 INTRODUCTION TO ETHICS AND ETHICAL CONCEPTS...3 A. Terminology and Methodology The Importance of Definitions and Terminology in Ethics Philosophy Moral Philosophy Ethics Morals and Morality Beliefs and Knowledge Values Judgments Summary...8 B. Principles, Rules, Conventions, and Personal Taste Ethical Principles Moral Rules Social Conventions Personal Taste...10 C. Ethics Compared to the Sciences and the Law Ethics v. Science Ethics v. the Social Sciences Ethics v. Law...12 D. Methodology Introduction and Overview Deductive Reasoning Inductive Reasoning Joint Methodological Approach to Ethics The Justification Problem with Ethical Reasoning Summary...17 E. Socrates and the Socratic Method Socrates versus the Sophists The Socratic Method Virtue as Knowledge Problems with Socrates...20 F. Descartes: Cartesian Doubt and Method...20 G. Ethics as Religion Problems with Ethics as Religion Summary...22 H. Ethics as Conscience and Intuition Problems with Conscience and Intuition as Ethics...22 vii
2 I. Cognitive Moral Development and Ethical Thought Leaders...24 The Defining Issues Test (DIT-1 and DIT-2)...26 J. Summary...28 Discussion Questions...28 CHAPTER 2 PLATO: THE DOCTRINE OF THE FORMS, ORGANIZATIONAL ETHICS, AND THE JUST PERSON...29 A. The Doctrine of the Forms Introduction The Forms The Form of the Good Problems with Plato s Theory of the Forms...31 B. Organizational Ethics: Justice and the State Introduction The Good State The Just State as the Harmonious State The Creation of the Just State Problems with Plato s Organizational Ethics...33 C. The Just Person Introduction The Unjust Person The Just Person Problems with Plato s Ethics Summary...35 D. Plato: Corporate Applications...36 E. Summary...36 Discussion Questions...37 CHAPTER 3 ARISTOTLE: THE DOCTRINE OF THE MEAN AND VIRTUE ETHICS...39 A. The Good Introduction Happiness Realization Problems with Aristotle s Conception of the Good Summary...40 B. The Doctrine of the Mean...41 C. Virtue Ethics...43 D. Summary...45 Discussion Questions...45 CHAPTER 4 PSYCHOLOGICAL AND ETHICAL EGOISM...47 A. Psychological Egoism...47 B. Psychological Egoism versus Ethical Egoism...47 C. Typical Formulations of Psychological Egoism...48 D. Hobbes and Psychological Egoism...48 E. Problems with Psychological Egoism...50 F. Ethical Egoism...52 G. Limitations on Ethical Egoism...52 H. The Defense of the Doctrine...53 viii
3 I. Problems with Ethical Egoism...54 J. Hedonism...57 K. The Sophists...58 L. Summary...61 Discussion Questions...62 CHAPTER 5 MACHIAVELLI AND THE ETHICS OF EMPOWERMENT...63 A. Background...63 B. Introduction...63 C. Machiavelli s Two Questions...64 D. Machiavelli s Conception of Human Nature...64 E. The Traditional Virtues...65 F. The Machiavellian Virtues...65 G. The Instrumental Nature of Virtue...65 H. The Test of Success...66 I. Public v. Private Morality...66 J. Business Applications...66 K. Problems with Machiavelli...72 L. Summary...74 Discussion Questions...74 CHAPTER 6 ETHICAL EMOTISM, ETHICAL RELATIVISM, AND LEGAL POSITIVISM...77 A. Ethical Emotism Feelings v. Reason The Power of Feelings Hume s Generalized Feelings The Consequence of Ethical Emotism...79 B. Ethical Relativism Basic Tenets Effect on Business People Justification Cultural v. Ethical Relativism Problems with Ethical Relativism...83 C. Legal Positivism The Doctrine The Allure of Legal Positivism Hobbes and Legal Positivism The Law s Relationship to Morality The Democratic Rationale for Legal Positivism Problems with Legal Positivism Summary Discussion Questions...96 CHAPTER 7 UTILITARIANISM...99 A. Introduction, Background, and Principal Tenets...99 B. Impartiality of the Analysis C. Long-Term Consequences D. Foreseeing Consequences ix
4 E. The Good F. Distribution of the Good G. Measuring Pleasure and Pain H. A Utilitarian Analysis I. Act versus Rule Utilitarianism J. The Justice Problem with Utilitarianism K. The Value of Morality The Utilitarian Approach L. Summary Discussion Questions CHAPTER 8 KANT S CATEGORICAL IMPERATIVE A. Introduction B. The Primacy of Reason C. Reason, Duty, and Happiness D. The Categorical Imperative E. Kantian Duty F. The Good Will G. The Three Parts of the Categorical Imperative H. Problems with Kantian Ethics I. Summary Discussion Questions CHAPTER 9 LAWS AND RIGHTS I Natural Law A. Introduction to Natural Law B. Natural Law v. the Civil Law C. The Stoics D. Locke E. Problems with the Natural Law Theory F. Summary II Natural Rights A. Introduction to Natural Rights B. Locke C. Natural Rights v. Legal Rights D. Natural Rights v. Utilitarianism E. Types of Natural Rights F. Problems with the Natural Rights Theory G. Summary Discussion Questions CHAPTER 10 SOCIAL CONTRACT AND FATALISM I The Social Contract Theory of Ethics A. Introduction B. History of the Social Contract C. Rousseau and the State of Nature D. The Social Contract and Morality E. Rousseau: The General Will as the Standard of Morality F. Problems with Rousseau s General Will G. Summary x
5 II Fatalism, Free Will, and Determinism A. Introduction B. Fatalism C. Free Will D. Determinism E. Summary Discussion Questions CHAPTER 11 BECOMING MORAL I The Moral Person A. Attributes of the Moral Person B. Conflict C. Balance D. Dual System of Ethics E. Why Be Moral? F. The Moral Business Leader, Manager, and Entrepreneur II Summary of Philosophical Ethics A. Reason B. Moral Education C. Certainty in Ethics and Morals D. Ethical Strategy E. Function of the Ethical Order F. The Social Good and the Community G. The Making of Morality H. Self-Interest I. Balance J. Summary Discussion Questions PART II APPLIED ETHICS: THE MORAL IMPERATIVE OF BUSINESS LEADERSHIP CHAPTER 12 MORAL ACCOUNTABILITY I. Moral Accountability A. Introduction B. Moral Accountability for Acting C. Moral Accountability Not Acting The Ethical Principle of Last Resort D. Social Responsibility E. Altruism F. Moral Saints and Heroes G. Ethical Codes H. Role Responsibility I. Agent Responsibility J. Collective Responsibility II Professionals, the Professions, and Management A. Introduction B. Professionals xi
6 C. Professions D. Management as a Profession Discussion Questions CHAPTER 13 CORPORATE GOVERNANCE: LEGAL AND MORAL ISSUES I The Legal and Moral Status of the Corporation A. Introduction B. Legal Characteristics of the Corporation C. The Moral Status of the Corporation D. Corporate Moral Responsibility: To Whom Owed E. Moral Status within the Corporation F. Corporate Culture and the Moral Company II Corporate Ethics Programs A. Introduction B. Ethics Department and Officers C. The Ethical Audit versus the Social Audit D. Corporate Codes of Ethics E. Ethics Training Programs F. Summary III Whistleblowing and the Moral Corporation A. Definition and Introduction B. Whistleblowing and the Law C. Morally Justifying Whistleblowing D. Preventing External Whistleblowing E. Ethical Examination of Whistleblowing Discussion Questions CHAPTER 14 GLOBAL ETHICS AND THE ENVIRONMENT I Multinational Corporations and Ethics A. Introduction and Overview B. Foreign Payments C. Plant Closing, Relocations, Outsourcing, and Offshoring II Ethics and the Environment A. Introduction B. Utilitarianism C. Kantian Ethics D. An Ethical Analysis of the Pollution Credit Plan E. Pollution and the Law F. Summary Discussion Questions CHAPTER 15 PRODUCT SAFETY, INSIDE INFORMATION, TRADE SECRETS, AND ADVERTISING ETHICS I Morally Safe Products A. Introduction B. Characteristics of a Morally Safe Product C. Ethical Justification for the Morally Safe Product D. The Manufacturer as Guarantor xii
7 II Inside Information and Trade Secrets A. Inside Information B. Trade Secrets III Advertising and Ethics A. Introduction B. Deceptive Advertising C. Half-Truth Advertising D. Psychological Advertising E. Poor Taste Ads F. Socially Responsible Advertising G. Summary Discussion Questions CHAPTER 16 EMPLOYMENT AND EMPLOYEE RELATIONSHIPS I Employee Moral Rights A. Introduction B. Basic Employee Moral Rights C. The Moral Minimum Wage D. Moral Rights to Speech, Press, Expression, and Association E. Privacy Rights F. Summary II The Employment at Will Doctrine and the Right to a Moral Discharge A. Introduction B. The Employment at Will Doctrine Overview and Background C. The Employment at Will Doctrine Rationales D. Criticism E. Legal Limitations F. Ethical Limitations G. Summary III An Ethical Analysis of Mergers A. Introduction B. Legal Background and Overview C. Ethical Analysis of Mergers D. Summary Discussion Questions CHAPTER 17 ETHICAL ANALYSIS OF AFFIRMATIVE ACTION AND AGE DISCRIMINATION PART I Affirmative Action A. Introduction B. Purpose and History of Affirmative Action C. Affirmative Action-Preference/Plus Plans D. The Morality of Preference Plans Utilitarian Ethical Arguments E. The Morality of Affirmative Action Preference Plans Kantian Ethical Arguments F. Affirmative Action Alternatives to Race and Sex-based Preference/Plus Plans G. Affirmative Action Proactive Diversity Efforts H. Summary xiii
8 PART II Age Discrimination A. Introduction and Overview B. Age Discrimination Issues in the U.S. Workplace C. Cross Cultural Study and Methodology D. Summary Discussion Questions CHAPTER 18 ETHICAL BUSINESS LEADERSHIP A. The Moral Corporation B. Business Leadership C. Leadership and Management D. Ethical Business Leadership E. Value-Driven Management Maximizing Value Over Time What Is Valued, Drives Action There Are Value-Adders and Value-Destroyers The Eight Facets The Value Drivers Good Judgment The VDM Method Conclusion F. Corporate Entrepreneurship, Ethics, and Value Creation G. Ethical Decision-Making Steps H. Summary Discussion Questions CHAPTER 19 CRITICAL ISSUES FOR SUCCESS A. Equable Success B. Moral Leadership C. Core Ethical Values D. Stakeholder Symmetry E. Transformational Change F. Ethical Realization and Personal Reflections Life Is a Bother Life Is a Hurry The Man in the Glass The Race I Did It My Way G. Summary Discussion Questions APPENDIX A CASES FOR ANALYSIS AND DISCUSSION Corporate Ethics and Social Responsibility Case 1.1: The Legality and Morality of Slavery Reparations Case 1.2: Corporate Social Responsibility: Crisis Funds Case 1.3: Norway s Ethical Investment Pension Fund Case 1.4: Social Responsibility and Safety: The Saga of British Petroleum CEO Sire John Browne Case 1.5: Rebuild New Orleans and Get a Green Card in Return Case 1.6: The Economist and Good Business Case 1.7: Bill Gates Creative Capitalism xiv
9 2 International Business and Bribery Case 2.1: Cultural Change and Ethnocentricity: Blunders in the International Arena Case 2.2: The Bhopal Disaster in India and Its Lessons Case 2.3: Nike and Commercial Speech Case 2.4: Chinese Organ Transplants and Sales Case 2.5: Organ Donations The Dutch Big Donor Show Case 2.6: Bribery and International Business Case 2.7: The Legality and Morality of the Salt Lake City Olympic Bribery Scandal Case 2.8: Academic Honesty, Bribery, and Ethical Relativism Whistleblowing Case 3.1: Whistleblowing at a Florida Bank Employment-At-Will Case 4.1: Employment-At-Will and Red Lobster Employee Review Panels Case 4.2: Employment-At-Will, Southland Corporation, and the No Resistance Dilemma Outsourcing Case 5.1: Outsourcing Downsizing Case 5.2: Outsourcing, Immigration, and the U.S. H-1B Visa Program Immigration Case 6.1: Illegal Immigration: The States Legal Response Case 6.2: Pesos por Pizzas Case 6.3: Clash between U.S. Immigration Law and Labor Law Discrimination Case 7.1: Challenges Facing Retailers: Wal-Mart s Gender Discrimination Case Case 7.2: Age Discrimination and Pilots U.S. v. International Law Case 7.3: Accommodating Muslim Employees: The Pork Product Sale and Taxi Liquor Controversies Case 7.4: Wal-Mart Sex Discrimination Lawsuit U.S. Court of Appeals Decision Case 7.5: The Don Imus Legal and Moral Controversy Case 7.6: Gay Rights, the U.S. Congress, and the Employment Non-Discrimination Act Product Regulation, Pricing, and Marketing Case 8.1: Guerrilla Marketing : The Boston Bomb Scare Case 8.2: Pizza Hut s Book It Program: Childhood Literacy or Obesity? Case 8.3: Advertising: The In An Absolut World Controversy Securities Regulation and Insider Trading Case 9.1: Enron: A Reason for Ethical Reform in Business Education and Practice Case 9.2: Martha Stewart Conspiracy and Insider Trading Antitrust and Merger Case 10.1: Exxon-Mobil Merger Case 10.2: AT&T-Bell South Merger Justice Department and Federal Communications Commission Approval Case 10.3: Starbucks: A Socially Responsible but Monopolizing Company? Case 10.4: Sirius-XM Satellite Radio Merger U.S. Justice Department Approval Case 10.5: The European Union and Microsoft: The 2007 European Court Antitrust Ruling xv
10 Case 10.6: Microsoft and the European Union (2008): Microsoft Fined $1.35 Billion Case 10.7: Miller-Coors Merger Case 10.8: Microsoft-Yahoo Merger Case 10.9: Supreme Court Anti-trust Price-setting Decision Executive Compensation Case 11.1: Stock Options United Health Group s CEO, William McGuire Case 11.2: Executive Compensation, Tax Deductibility, and Social Responsibility Human Resources Case 12.1: The Psychopath in the Corner Office Case 12.2: Office Romance Legal and Ethical Issues Case 12.3: Transgender and Transsexual Employees: Legal and Ethical Issues Case 12.4: Employment At-Will, Mass Layoffs, and Rehires: Circuit City s Wage Management Initiative Case 12.5: Employer Systems and Unionization Accounting Case 13.1: A CPA Firm s Ethical Crossroads Case 13.2: Over-Billing: An Accountant s Legal and Ethical Quandary File Sharing Case 14.1: Digital File Sharing: Music Industry Wins Copyright Infringement Lawsuit APPENDIX B FORMS, SURVEYS, AND APPLICATIONS A. Introduction Utilitarian Theory Personal Business Ethics Score Instrument B. Utilitarian Quantification Form C. Business Ethics Survey D. Age Discrimination and Cultural Values Survey E. Personal Ethics and the Future of the World F. Universal Principles Bibliography Don t Quit Author Biography Frank J. Cavico Bahaudin G. Mujtaba Contributors Biographies Index xvi
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