MGMT20001 · Organisational Behaviour
Ethics and CSR
Business ethics (Crane & Matten) studies the moral principles guiding behaviour in business — what is right and wrong in an organisational setting — and Module 8 opens the macro half of the unit, taught by the case method. There is 'no single right answer', but there is a right method: define → apply with evidence → recommend. The unit teaches descriptive vs normative ethics and four classic lenses — consequentialist/utilitarian (outcomes), deontological (duties & rights), virtue (character) and justice/fairness (distribution) — whose verdicts can diverge. It explains why decent people act unethically (moral intensity, moral blindness, rationalisation, situational pressure), prescribes levers (codes, ethical culture, whistleblowing, governance), and bridges to CSR and the shareholder-vs-stakeholder debate. The worked case is Theranos.
What this chapter covers
- 01Business ethics defined; descriptive vs normative
- 02The four ethical theories (utilitarian, deontological, virtue, justice)
- 03When the lenses agree — and when they diverge
- 04Why decent people act unethically (moral intensity, rationalisation, situational pressure)
- 05Organisational & individual levers (codes, ethical culture, whistleblowing, governance)
- 06Corporate governance & the Theranos board
- 07The CSR bridge: shareholder vs stakeholder views
Worked example: run two ethical lenses on a case
- +1Utilitarian lens: judge by outcomes — even on its own logic it fails, because false results harmed patients; the net welfare was bad.
- +1Deontological lens: judge by duties and rights — patients had a right to accurate results and honest disclosure; both were violated, so it fails regardless of outcome.
- +1Note the convergence: the case is wrong on every lens (utilitarian, deontological, virtue, justice) — convergence makes the verdict easy; the hard exam cases are where lenses pull apart.
- +1Governance gap: a prestigious board lacking medical/scientific expertise and independent oversight, dominated by a founder who controlled information, never verified the core claim.
- +1Recommend: appoint directors with relevant (medical/scientific) competence, separate founder control from oversight, require independent validation, and build protected whistleblowing.
Key terms
- Descriptive vs normative ethics
- Descriptive ethics asks what people and firms actually do (empirical); normative ethics asks what they should do (evaluative, prescriptive). The exam wants moral reasoning, not a survey of behaviour or a compliance checklist.
- The four ethical theories
- Consequentialist/utilitarian (judge by outcomes — greatest good for the greatest number), deontological (judge by duties and rights, regardless of outcome), virtue (judge by character), and justice/fairness (judge by fair distribution). Apply two or more and show where they diverge.
- Why decent people act unethically
- Unethical conduct is usually a system failure: weak moral intensity (abstract, delayed harm), moral blindness (not seeing an ethical issue), rationalisation ('fake it till you make it') and situational pressure (authority, incentives, fear).
- Ethical levers
- Codes of conduct, ethical culture / tone at the top (the most decisive), whistleblowing channels and voice, corporate governance, and individual moral courage. A document alone is hollow if leaders ignore it.
- CSR: shareholder vs stakeholder
- The shareholder view says maximise owner returns within the law; the stakeholder view adds obligations to employees, customers, community and society. A firm that treats a safety-critical stakeholder as an afterthought reads as shareholder/founder-first.
Ethics and CSR FAQ
How is ethics examined in MGMT20001?
By frameworks applied to a case, not opinion. Expect to separate descriptive from normative ethics, analyse a scenario through two or more theories (utilitarian vs deontological is the classic pairing) and show they can disagree, explain why decent people act unethically, and prescribe organisational levers. Theranos is the worked case.
Isn't ethics just 'did it break the law?'
No — legality and ethics overlap but aren't the same: an act can be legal yet unethical, or ethical yet against a rule. The exam wants moral reasoning anchored to named theories, not a compliance checklist — and equally not bare opinion ('it just feels wrong').
Why do the four theories sometimes disagree?
A utilitarian might in principle excuse a small harm for a large aggregate gain, but a deontologist refuses because rights aren't for trading. When an act is wrong on every lens (as in Theranos) the verdict is easy; the hard, examinable cases are where the lenses pull apart — that's the skill being tested.
What does the Theranos case teach about governance?
That prestige is not competence. A celebrated board with little life-sciences expertise, dominated by a charismatic founder who controlled information, failed to verify the central claim. The recommendations write themselves: directors with relevant expertise, founder control separated from oversight, independent validation and protected whistleblowing.
Exam move
Ethics rewards method over opinion: separate descriptive from normative, then apply two or more of the four theories and show where they agree or diverge — the examinable cases are where lenses pull apart. Be able to explain why decent people act unethically (moral intensity, rationalisation, situational pressure) so you can pick the matching lever. Hold the levers ready — codes, ethical culture / tone at the top (most decisive), whistleblowing, governance — and the CSR shareholder-vs-stakeholder bridge. Structure every answer as define → apply-with-evidence → recommend.
