2) Choose an ethical dilemma that is relevant to the Online Education emerging industry (examples of online schools emerging are Capella University, University of Pheonix, etc..) and using the concepts in Paine’s article attached “Ethics: a basic framework”, describe and defend your recommended course of action addressing the following questions: Is the action consistent with the actor's basic duties? Does it respect the rights and other legitimate claims of the affected parties? Does it reflect best practice? Is it compatible with the actor's own deeply held commitments?


Ethics: A Basic Framework 
Markets are sometimes described as “amoral,” but market participants frequently make ethical 
judgments about the people and practices they encounter in the marketplace. Indeed, most market 
actors prefer doing business with companies and individuals they can trust, and few—at least in a 
free and open society—willingly submit to treatment they regard as unethical. Wronged, injured, 
slighted, or ignored, many will take their business elsewhere, and some will actively seek redress 
through the courts, media, legislature, or other channels. Some will even “reward” or “punish” 
companies for their conduct toward third parties—for example, investors who favor good corporate 
citizens or customers who shun human rights violators. 
A growing body of research points to these and other links between ethics and performance. 
Researchers have found, for example, that greater creativity is associated with fair rewards, mutual 
helpfulness, and honest information;1 that employees are more likely to share knowledge in an 
environment of trust;2 that avoiding misconduct and practicing good corporate citizenship contribute 
to a positive reputation;3 and that firms convicted of wrongdoing often experience lower returns in 
succeeding years.4 Of course, these findings do not prove that ethics always “pays.” Indeed, such a 
conclusion would be mistaken. But this and other research does show that a company’s ethics has 
important implications for its functioning as an organization, its ability to manage risk, its reputation 
in the marketplace, and its standing in the community.5 
Despite these findings, ethical analysis has not traditionally been a defined part of management 
decision making. In most well-run companies, financial, legal, and competitive analyses are explicit 
and routine. Ethics, by contrast, is often left to instinct or “gut feel” and managed on an ad hoc basis as 
problems arise. As social science research indicates, many people make ethical judgments on the 
basis of instinct and emotion.6 If they use reason and analysis at all, they do so after the fact—to 
justify their instinctual response rather than to formulate or test their judgment. 
Instinct, of course, is an important guide to action and should rarely be ignored. But people’s 
instincts frequently differ, and few people have such well-honed instincts that they automatically see 
the ethical issues involved in, say, a complex financial restructuring, a new business model, or a 
technology breakthrough. While instinct alone may work well enough in relatively simple, familiar 
situations, a more structured approach to identifying and addressing ethical issues is essential for 
business leaders today. This note outlines one such approach. 

A Framework 
Scholars have long debated the definition of ethics.7 It has been defined as narrowly as “the study 
of right and wrong” and as broadly as “the general inquiry into what is good.”8 Our framework 
draws from only a small part of this vast territory. It involves four fundamental questions that an 
actor—individual, company, or group—should consider when evaluating a possible course of action: 
• Is the action consistent with the actor’s basic duties? 
• Does it respect the rights and other legitimate claims of the affected parties? 
• Does it reflect best practice? 
• Is it compatible with the actor’s own deeply held commitments? 
These questions elicit different types of ethical norms or standards. The first two questions bring 
out basic requirements—the ethical minimum that would be expected of anyone in the situation. The 
third and fourth raise considerations that are somewhat more discretionary though nonetheless 
important for companies and individuals who view themselves as leaders, given that leadership, 
almost by definition, means doing more than the minimum. Effective use of this framework requires 
an understanding of four concepts from ethical theory, each associated with one of the questions: 
Duties A basic moral duty is a requirement to act—or not act—in a certain way. Duties are 
typically owed to other parties—the company, colleagues, customers, the general public—though 
duties to oneself are also important. A distinction is sometimes drawn between “perfect” duties, 
which involve specific obligations to particular parties (e.g., to keep a promise), and “imperfect” 
duties, which are more general and open-ended (e.g., a duty of charity). Although any competent 
actor is presumed to be capable of fulfilling basic duties, specialized knowledge and expertise are 
often required. Many basic moral duties have been written into law or otherwise codified. For 
example, duties to respect property, refrain from fraud, and avoid certain injuries to others are 
enforced by many legal systems, and similar provisions are found in many codes of business conduct. 
Basic duties are not always explicit; they may also reside in tacit understandings of what human 
beings owe to one another. Because basic duties reflect widely held expectations, actions that breach 
these duties may give rise to criticism or blame. They may also subject the actor to demands for an 
apology or compensation for injuries caused by the offending action. 
Rights Moral duties go hand in hand with moral rights. A right is often the converse of a duty. 
For example, one party’s property right corresponds with other parties’ duty not to steal. Similarly, 
one party’s right to know typically corresponds with another party’s duty to inform. A right is thus 
an entitlement to certain behavior from other people.9 Rights are sometimes categorized as “positive” 
if they require others to commit resources or take affirmative action (e.g., the right to education) and 
“negative” if they require others to forbear from certain actions (e.g., the right to privacy). Even 
though rights and duties are correlated, it is sometimes useful to focus on the rights side of the 
equation as rights are sometimes better defined than the related duties. Like basic duties, basic rights 
are often written into law or formal codes such as the Universal Declaration of Human Rights. Like 
failure to fulfill basic duties, failure to respect basic rights may be cause for blame, and rights 
violators may be penalized or required to compensate for harm caused by their actions. 
Best practice Beyond basic rights and duties, most ethical systems also posit certain principles 
or standards of excellence. In ethical theory, these are sometimes referred to as “ideals,” “values,” or 
“aspirations.” They might also be termed “best practice” standards since they represent conduct that 
is desirable but not necessarily obligatory. The distinction between behavior that is ethically required (the “musts”) and behavior that is good but not mandatory (“shoulds” or “good-to-dos”) is not 
always clear. One test is how the behavior would be received. Conduct that exemplifies best practice 
will often elicit praise or admiration even though its absence would not merit criticism or blame. For 
instance, honoring an agreement that it is not binding may earn the actor “moral credit” even if 
failure to carry out the agreement would have been excused. Similarly, a company that provides 
information beyond the requirements of law and basic honesty may garner praise for its candor even 
though nondisclosure would not have been blameworthy. 
Commitments Most individuals and organizations take on moral commitments that stand 
outside—or go beyond—the publicly defined rights, duties, and standards that apply to all. These 
self-chosen, or subjective, commitments may be rooted in an individual’s personal values and beliefs, 
the culture and practices of the organization, or the needs of the larger society. For example, a 
manager may believe deeply in honesty—telling it “straight” when most others would spin or shade 
the truth. Or a company may define itself around a commitment to the environment, employee 
development, or extraordinary service to the customer. Such commitments typically represent an 
important aspect of the actor’s identity. Thus, although falling short on these commitments may not 
generate external criticism, it can be quite damaging to the actor’s self-concept and may even lead to 
the actor’s impaired functioning. 
Applying the Framework 
This framework sounds simple, but applying it can be difficult. In using it to evaluate a possible 
course of action, challenges arise at each step in the process. 
Understanding the facts A crucial first step is to understand the proposed course of action. 
This may seem obvious, but in many cases decision makers do not fully understand the nature or 
consequences of actions they are contemplating or even their own ultimate purpose in acting. 
Confident in their own good intentions and focused on their own narrow objectives, they often 
overlook collateral effects, alternative interpretations, and likely impacts on others. Yet, such 
considerations are integral to a reliable analysis. Without them, it is impossible to determine whether 
an action is harmful, fair, or even legal—or to predict its effectiveness in furthering the actor’s own 
aims. Understanding key aspects of the action—its intended purpose, its proper description, and its 
likely consequences—is thus an essential step in the analytic process. 
A useful tool for this purpose is what is sometimes called “stakeholder analysis” or “stakeholder 
impact assessment.” 10 Stakeholder analysis has two basic components: identifying the parties likely 
to be affected by the action (that is, those with a “stake” to consider); and, for each party, mapping 
the action’s likely consequences—both positive and negative, short term and long. With the likely 
outcomes for various stakeholders thus arrayed, the proposed action can be more thoroughly and 
systematically evaluated against the relevant ethical standards (duties, rights, best practices, and 
commitments). This process may also reveal opportunities to mitigate unnecessary harms or enhance 
the planned action’s benefits. The workbook provided in Exhibit 1 can be used to guide this analysis. 
Identifying relevant standards A second challenge is defining what ethical standards to 
apply. Because ethical norms are often tacit rather than explicit and because they derive from varied 
sources—reason, law, philosophy, religion, custom, and perhaps even biology—deciding on the 
appropriate standards in a given situation is not always straightforward. 
11 One starting point will be 
the company’s own code and relevant industry standards. Another useful point of reference is the 
Global Business Standards Codex, a compilation of standards commonly found in leading codes of 
conduct for business around the world.12 Although the codex does not differentiate between basicduties and best practices, it provides a list of widely accepted standards to govern a company’s 
dealings with its stakeholders, including precepts such as obey the law, forgo bribery and deception, 
disclose conflicts of interest, practice fair dealing, safeguard health, and protect the environment.13 
The creators of the codex found that most of the commonly occurring standards were elaborations of 
just eight basic principles. A summary of the standards associated with each is found in Exhibit 2. 
Fiduciary principle: Act in the best interests of the company and its investors. 
Property principle: Respect property and the rights of those who own it. 
Reliability principle: Keep promises, agreements, contracts, and other commitments. 
Transparency principle: Conduct business in a truthful and open manner. 
Dignity principle: Respect the dignity of all people. 
Fairness principle: Deal fairly with all parties. 
Citizenship principle: Act as responsible members of the community. 
Responsiveness principle: Be responsive to the legitimate claims and concerns of others. 
While many of these principles—and their associated standards—have roots in numerous ethical 
traditions, their significance and interpretation can vary enormously across different social and 
cultural contexts. So it would be simplistic to call them “universal values.” Still, given their 
widespread endorsement, they provide a useful point of reference.14 
Maintaining objectivity All forms of analysis are vulnerable to the prejudices of their users. 
To correct for self-serving and other biases in ethical analysis, many “tests” of ethical judgment have 
been offered. Three of the best known and most useful are: 
Visibility: Would I be comfortable if this action were described on the front page of a respected newspaper? 
Generality: Would I be comfortable if everyone in a similar situation did this? 
Legacy: Is this how I’d like my leadership to be remembered? 
These tests evoke varied perspectives for evaluating our judgments.15 The “visibility” test—also 
called the “transparency,” “sunshine,” or “newspaper” test—reminds us to consider how our actions 
may be viewed by others. The “generality” test asks us to consider what would happen if our actions 
became the general practice.16 Would society benefit? Would we want to live in such a society? 
The 
legacy test appeals to the decision maker’s own future self-evaluation. Although these tests are 
presented as hypothetical, their importance for leaders is often real—given that leaders’ actions are 
frequently reported in the press, replicated by others, and even, in some cases, recorded in history. 
As this discussion indicates, ethical analysis requires rigorous thought and careful deliberation. In 
many cases, it will also require research and information gathering—on law and regulation, codes of 
conduct, customary practice, expert opinion, stakeholder concerns, public opinion, and other matters. 
Of course, ethical analysis is, to some extent, situational across time and cultures. As with legal and 
economic analysis, reasonable people will disagree, and errors will be made. But the magnitude of 
the errors can be substantially lessened and better decisions made if the method is consistently and 
carefully applied. 
Exhibit 2 Widely Endorsed Standards of Corporate Conduct 
Principles What they require What they prohibit 
Fiduciary 
Diligence, candor, loyalty to company 
Disclosure of conflicts of interest 
Prudence, intelligence, best efforts 
Unauthorized self-dealing 
Self-benefit at expense of company 
Negligence, carelessness, half-hearted effort 
Bribery, inducing breach of fiduciary duty 
Dignity 
Protect human health, safety, privacy, dignity 
Respect fundamental human rights 
Affirmative action to develop human capacities 
Special concern for the vulnerable 
Coercion, humiliation, invasion of privacy 
Injury to health, safety 
Force, violence, harming the innocent 
Violations of basic human rights 
Property 
Respect for others’ property 
Safeguarding own property 
Responsible use of own property 
Theft, embezzlement 
Misappropriation of intellectual property 
Waste 
Infringement on others’ property 
Transparency 
Accuracy, truthfulness, honesty 
Accurate presentation of information 
Disclosure of material information 
Correction of misinformation 
Fraud, deceit 
Misrepresentation 
Materially misleading nondisclosures 
Reliability 
Fidelity to commitments, keeping promises 
Fulfilling contracts, carrying out agreements 
Care in making commitments—not more than 
can deliver 
Breach of promise 
Breach of contract 
Going back on one’s word 
Fraudulent promises 
Fairness 
Fair dealing (in exchange) 
Fair treatment (opportunity, pay) 
Due process (notice, opportunity to be heard) 
Fair competition (conduct among rivals) 
Preferential or arbitrary treatment 
Unfair discrimination 
Unfair competitive advantage 
Suppressing competition 
Citizenship 
Respect for law and regulation 
Share in maintaining the commons 
Cooperation with public officials 
Civic contribution 
Recognizing government’s jurisdiction 
Illegality, indifference to the law 
Freeloading, free riding 
Injury, damage to society, the environment 
Improper involvement in politics or 
government 
Responsiveness 
Readiness to listen 
Responding to complaints and suggestions 
Addressing legitimate concerns of others 
Indifference to legitimate claims and claimants 
Neglect of serious concerns