BUSINESS ETHIC

LECTURE 13
What is ethic?
 Ethics is a study which seeks to address questions
about morality; that is, about concepts such as
good and bad, right and wrong, justice, and virtue.

 A set of principles of right conduct.

What is business ethics?
 Business ethics is about relationships, values, justice,
and identity (personal, professional, corporate,
national, and global)
 the intersection between business and ethics and is
fundamental to the relationships between business
and society at large.
 Business ethics engage essential questions
 Why does the modern corporation exist in the first place?
 What is right and wrong, good and bad, and harmful and
beneficial regarding decisions and actions in organization
transactions?
 How does it treat its stakeholders?
Unethical business practice of
employees
 Abusive and intimidating behavior
 Misreporting hours worked
 Lying
 Withholding needed information
 Employees in transitioning organization (merger, acquisition, or
restructuring) observe misconduct and feel pressure at rates that
are nearly double those in more stable organizations
 Younger managers (under age 30) with low tenure in their
organizations are twice as likely to feel pressure to compromise
ethics standards
 Senior and middle managers have less fear of reporting misconduct
and are more satisfied with the response of their organizations.
They also feel that honesty and respect are practiced more
frequently than do lower level employees.
Unethical business practices by
industry
 Most of unethical behavior happens in the
following areas
 Government
 Sales
 Law
 Media
 Finance
 Medicine
 Banking
 Manufacturing
Why does ethics matter in
business?
 “Doing the right thing” matters

 To companies and employers, acting legally and ethically means saving

billions of dollars each year in lawsuits, settlements, and theft.

 CNN reported that an estimated one out of three business closes because
of employee theft.

 Costs to businesses also include deterioration of relationships; damage to

reputation; declining employee productivity; creativity, and loyalty;
ineffective information flow throughout the organization; and
absenteeism.

 For business leaders and managers, managing ethically also means

managing with integrity

 Integrity will shape and influences the values, tone, and culture of the
organization; the communications among the members; and the realism,
commitment, and imagination of everyone in a company.
Business ethics levels
International level
Societal level

Association level

Organizational level

Individua
l l level
A framework for classifying ethical
levels

Descriptive Normative Analytical

Ethics of the system

Ethics of the
organization

Ethics of the
person
 Business ethics myths
Ethics is personal

Information is neutral and amoral

Business and ethics don’t mix
5
MYTHS

Good business means good ethics

Business ethics is relative
Myth 1: Ethics is a personal, Individual affair,
not a public or debatable matter
 Individual ethics is based on personal or religious beliefs,
and that one decides what is right and wrong in the privacy
of one’s conscience.
 Individual ethical choices are most often influenced by
discussions, conversations and debates and made in group
contexts
 Individuals often rely on organizations and groups for
meaning, direction, and purpose
 Individuals are integral parts of organizational cultures,
which have standards to govern what is acceptable
 It is argued that integrating ethics into the strategic
management process is the right thing to do
 ‘doing well by doing good’
Myth 2: ‘Business and ethics do not
mix’
 This myth holds that business practices are
basically amoral-not necessarily immoral-because
business operate in a free market.

 Asserts that management is based on scientific,

rather than religious or ethical, principles
Myth 3: ‘Ethics in business is relative’
• More popular myths, and it holds that no right or
wrong way of believing or acting exists
• Right and wrong are in the eyes of the beholder
• The claim that ethics is not based solely on absolutes
has some truth to it
• All ethics is relative contradicts everyday experience.
E.g. a person or society believes something to be right
makes it right is problematic when examined.
• The question that can be asked regarding this myth is
– Relative to whom or what? And why?
• The logic for this ethic, which answers that question
with ‘Relative to me, myself and my interests’
Myth 4: “Good business means good
ethics”
• Executives and firms that maintain a good corporate
image, practice fair and equitable dealings with
customers and employees, and earn profits by
legitimate, legal means are real ethical?
• Do you think ‘Good ethics means good business’?
• Do you think ‘ethical first and also profitable’?
• What happens, if what should be ethically done is not
the best thing for business?
• What happens when good ethics is not good business?
• The ethical thing to do may not always be the best
interests of the firm
• Do you think we should promote business ethics in our
business?
Myth 5: “Information and computing
are amoral”
• This myth holds that information and computing are
neither moral nor immoral but are amoral
• They are in a ‘gray zone’ a questionable area regarding
ethics
• Information and computing have positive dimensions, such
as empowerment and enlightenment through exposure to
information, increased efficiency, and quick access to
online global communities.
• Information about individuals can be used as ‘a form of
control, power, and manipulation’
• The negative side: the misuse of information and
computing.
– Fraud
– Misrepresentation
– Falsehood
Why use ethical reasoning in
business?
• There are 3 reasons:

1. Many times laws do not cover all aspects or ‘gray areas’ of a

problem
E.g. tobacco industry.

2. Free market and regulated-market mechanisms do not

effectively inform owners and managers how to respond to
complex issues that have far-reaching ethical consequences

3. Complex moral problems require ‘an intuitive or learned

understanding and concern for fairness, justice, due process to
people, groups, human, and communities’. Ethics plays a role
in business because laws are many times insufficient or guide
action.
Can business ethics be taught and
trained?
 Because laws and legal enforcement are not
always sufficient to help guide or solve complex
human problems relating to business situations,
the questions arise:
 Can ethics help?
 If so, how?
 Can business ethics be taught?
Cont…
• Decisions depend on:
– Facts
– Inferences and rigorous
– Ethical reasoning

• Ethics courses and training can do the following:

– Provide people with rationales, ideas, and vocabulary to help
them participate effectively in ethical decision making process
– Help people ‘make sense’ of their environments
– Enhance sensitivity to moral issues and commitment to finding
moral solutions
– Enhance moral reflectiveness and strengthen moral courage
– Improve the moral climate of firms by providing ethical concepts
and tools for creating ethical codes and social audits
Quick test of your ethical beliefs
 Answer each following with your first reaction.
Circle the number, from 1 to 4, the best represents
your beliefs if
 1 represents ‘completely agree’ and
 4 represents ‘completely disagree’.
Answer each following with your first reaction. Circle the number, from 1 to 4, the best
represents your beliefs if
1 represents ‘completely agree’ and
4 represents ‘completely disagree’

1. I consider money to be the most important reason for 1 2 3 4

working at a job in an organisation.
2. I would hide truthful information about someone or 1 2 3 4
something at work to save my job
3. Lying is usually necessary to succeed in business 1 2 3 4
4. Cutthroat competition is part of getting ahead in the 1 2 3 4
business world
5. I would do what is needed to promote my own career in 1 2 3 4
a company, short of committing a serious crime
6. Acting ethically at home and with friends is not the 1 2 3 4
same as acting ethically on the job
7. Rules and for people who don’t really want to make it 1 2 3 4
to the top of a company
8. I believe that the ‘Golden Rule’ is that the person who 1 2 3 4
has the gold rules
9. Ethics should be taught at home and in the family, not 1 2 3 4
in professional or higher education
10 I consider myself the type of person who does whatever 1 2 3 4
. it takes to get a job done, period
Total Score
ANSWER

Total your scores by adding up the numbers you circled.

The lowest possible score is 10, the highest score is 40.
Be ready to give reasons for your answer.

THE LOWER YOU SCORE, THE MORE QUESTIONNABLE

YOUR ETHICAL PRINCIPLES REGARDING BUSINESS
ACTIVITIES
References
 Weiss, J.W.(2006). Business ethics. 4th
Edition, Thompson South-Western
 McNamara, C. (1997) Complete guide to ethics ma
nagement: An ethics toolkit for managers. http://w
ww.managementhelp.org/ethics/ethxgde.htm#anc
hor26548
. Assessed on 11/10/08