A00019 Business Ethics: managing for stakeholders

At the end of the course, students will be able to:

1. Display a systematic understanding of the three main normative ethical theories (Deontology, Utilitarianism and Virtue Ethics)
2. Demonstrate a critical understanding of the purpose of business, reflecting the different approaches (Shareholder Value Maximization and Stakeholder theory)
3. Apply a range of appropriate ethical theories to analyze business decisions
4. Give evidence of an in-depth ethical analysis of one specific business decision by completion of the Group project “Ethics in Movies”
5. Identify and analyze the ethical issues that arise in other courses.

At the end of the course, students will have an adequate knowledge and understanding of the main concepts of business ethics and stakeholder theory. They will be able to apply this conceptual framework to analyse business decisions and identify ethical issues in managerial choices (and managerial theories).

The dominant story about business—the one we teach in business schools, and most managers believe in—is characterized by three common assumptions:

• Business is about the money (the Shareholder Value Maximization ideology);
• Human beings are simple, self-interested Utility maximizers (the Economic Man assumption); and
• Business ethics is an oxymoron (the Separation Fallacy).

The focus of this elective is to show that all these three assumptions are flawed, both conceptually and practically (Freeman et al. 2010; Stout 2012). In contrast, a “Responsible Capitalism” approach (Freeman et al. 2010) is rejecting all the above assumptions and is based on the stakeholder theory approach, characterized by the three following ideas:

• Business is about a sense of purpose;
• Human beings are complex, and they care about other things beyond money (e.g. fairness and the self-interest of others); and
• There is no business decision that has no (at least, implicit) ethical dimension.

Main topics
The course introduces the main concepts of business ethics and their relevance for corporate strategy and individual decision-making. It provides a methodology for the identification, analysis and resolution of ethical dilemmas in business-related decisions (Kidder, 1995).
Business Ethics–and in particular Stakeholder Theory (Freeman, 1984; Freeman et al., 2010; Wicks et al., 2010) offers a critical view on the purpose of business, traditionally seen as “to maximize shareholder value” (Friedman, 1970). Students will discuss critical approaches coming from strategy, economic theory and corporate law (Stout, 2012). They will also be invited to reflect on the role of business schools to educate future managers and entrepreneurs (Smith & Van Wassenhove, 2010).
Students will discuss the main Normative ethical theories (deontology, utilitarianism and virtue ethics), which are prescriptive theories indicating us what is the action that we ought to do, and explore their meaning for today’s strategic management (Donaldson & Werhane, 2002). Then, they will examine the role of Descriptive ethical theories, which are empirically based explanations of human behavior - what human beings really do (Crane & Matten, 2010; Banaji et al., 2003).
The following are some of the questions that will be addressed during the course:

• What is the purpose of the firm? Shareholder or Stakeholder value creation?
• What are a “right versus wrong” and “right versus right” ethical dilemma?
• How can we apply the main normative ethical theories - deontology, utilitarianism and virtue ethics - to analyze managerial decisions?
• What are individual and situational factors that influence decision-making processes within organizations?
• What are the dangers of cultural relativism (Rachels, 2002)?

Participation to the course is highly recommended, since the pedagogical approach will be based on a balance between theory and practice (including live-experiments, teamwork, dilemma resolution, case-studies and class discussions). For this reason, a class not larger than 40 participants is recommended.
Students are expected to contribute to the overall learning through their active participation in all class activities, preparing to each class by reading the required articles and case-studies assigned every week. Moreover, students will present in the last class of the course (30% of the final grade) their group project “Ethics in movies”, where they will apply the ethical theories learned during the course to analyze a difficult decision from a list of movies proposed by the instructor (or selected TV series).
Participants who are not attending the course will have to contact the instructor to receive special instructions on how to prepare for the final, written exam.

40% • INDIVIDUAL CLASS CONTRIBUTION: The key requirement for the overall success of this course is your individual contribution to class discussions and teamwork. This means that class attendance is necessary but is not enough to achieve a good class contribution grade. The nature and the quality (not the quantity) of your contribution to each class will be assessed. Good class contribution includes:

• Professionalism: Adopting appropriate behavior that support the overall learning environment of the classroom (e.g.: Being on time; Avoiding chatting while one other person is talking; Paying attention to others’ comments; Avoiding using laptops and mobile phones during class, etc.) and showing personal responsibility for the whole learning process of the class (e.g. Contacting your instructor in case of issues with your group, or for any absence for more than one class, etc.);
• Class Preparation: Being prepared for each class discussion by reading all required readings before class. Being able to raise meaningful questions in class and offer your personal comments on the readings. Uploading the required assignments on time;
• Critical Thinking: Offering thoughtful contributions to class discussions that show your ability to analyze the core elements of an issue and articulate your understanding and personal view on it;
• Responsible Engagement: Actively contributing to team-work and class discussions, without imposing your ‘voice’ on your colleagues, showing respect for other’s opinions (even if in disagreement), listening to others and avoid interrupting when one student is speaking in the classroom (or, worse, chatting with your neighbor while one colleague is speaking).

60% GROUP PROJECT: “ETHICS IN MOVIES”

• Each Group will work on an assigned movie to identify and analyze a specific individual decision-making dilemma relevant for business ethics. The grade will be based on two components:
  • 30%for the oral presentation by the group.  This will be presented in the last class of the seminar (max 10 slides); and
  • 30% for the written report with the Group analysis of the ethical issue, stakeholders and application of normative and descriptive ethical theories to the decision-making dilemma presented in the Group Presentation.
     
• Specific Guidelines for both the PRESENTATION and the REPORT will be posted online. Please follow them carefully.
• DEADLINE: Each Group will upload their powerpoint or keynote PRESENTATION AND their GROUP REPORT (word or pdf) by 48hours before last class at the latest,
• IMPORTANT: Please indicate in the presentation all the names of the group members who actively contributed to the project. No group work sent by email will be accepted. Late uploading will result in a penalization.