ESR Topic 1.

Chapter
1
At the end of this chapter, you should be able to:
q  Define and differentiate between ethics and morality

q  Understand how ethics is developed in an individual
q  List and explain the various factors that influence the ethical values
of an individual
q  Compare and contrast between ethics and legality
q  Compare between Western and Eastern perspectives on ethics
q  Relate the role of religion as an important contributing factor in
shaping the ethical values of individuals
q  Identify universally accepted moral values
q  Recognize ethics and its importance in the global business world
Business Ethics All Rights Reserved

© Oxford Fajar Sdn. Bhd. (008974-T), 2014 1– 3
How should I lead my life?
What type of person should I strive to be?
We often What values are critical for me to lead a

reflect and rewarding life?
ask
ourselves What standards or principles should I follow to
some basic conduct my life?
questions.
q  Our self-reflection and conscience in addressing these personal issues

immerses us in the study of right and wrong or moral reasoning. Moral
reasoning leads us to the study of morality, i.e. ethics.

q  ‘The term ethics is derived
from the Greek word, ethos,
which means character, spirit
Definition: and attitudes of a group of
be
Ethics can s et of people or culture’ (Rahman,
e d a s a
describ 2003).
in c ip le s t hat
‘pr vioural
i n s b e h a
conta r mine
t o de t e q  It also outlines the moral duty
codes
h a t is r ig ht or and obligations that any
w a h et
’ ( K h a li d human being should practise.
wrong
al., 2012).

q  There are many formal definitions of ethics.
q  Stanwick and Stanwick (2009) define ethics as ’the values an

individual uses to interpret whether any particular action or
behaviour is considered acceptable and appropriate’.
q  Velasquez (2012) and Nickels (2008) regard it as a ‘discipline

that examines one’s moral behaviour or the moral standards of a
society’.
q  According to Abdullah and Zainol Abidin (2011), ethics ‘concerns

itself with what is good or right in human interaction’. It revolves
around three central concepts: ‘self’, ‘good’ and ‘other’.
q  Ethics is also defined as ‘a critical analysis of human acts to

determine their rightness or wrongness in terms of two major
criteria⎯truth and justice’ (Mauro et al., 1999).

q  Complying to laws, rules and regulations is part of ethics. However, ethical
behaviour requires more than having to comply with policies, laws, rules and
regulations.
Ethics is above the law.

q  ‘Ethical behaviour therefore rests upon one’s full conscience and accountability to do
good deeds as a social responsibility under all circumstances’ (Khalidah et al.,
2012 ).

q  More often, morality is used interchangeably with the term
ethics.
q  Ethics, in contrast, is the ‘study of moral standards whose

explicit purpose is to determine, as far as possible, whether a
given moral standard or judgement based on that standard is
more or less correct’ (Velaquez, 2006).
q  This therefore demands for analytical thought and application

of reason to define specific rules, principles or ethical theories
that determine right or wrong for a given situation.
q  In addition, ‘these rules and principles must give an account

of the rights or entitlements we have and what is just or
fair’ (Boatright, 2007).

Ethics Morality
•  Deals with •  Deals with
the Study / the Act of
Reflection Doing of
of right right and
and wrong wrong

q  ‘It comes from our inner feelings which
subsequently translate into our moral
behaviour’ (Khalidah et al., 2012 ).
q  Ethics thus begins with each one of us.
q  According to Shaw (2011), rationally, we learn and

adapt to the ethics and moral principles through
our:
ü  upbringing
ü  socialization
ü  experiences and our critical reflections on
those experiences
ü  the explicit and implicit standards of our
culture

q  Ethics is also developed and internalized from religious teachings.
q  All religions teach their followers good ethics to lead rewarding lives.
q  Religion is one of the critical factors influencing an individual’s ethical

values.
q  ‘Most religions embody the idea of a Transcendent Reality which has some
bearing on the purpose and meaning of life, how one lives on earth, and
what lies beyond this finite mortal existence’ (Chandra Muzaffar, 2009).

q  Most religions have an ethical component. The Golden Rule of
Life, ‘do to others what you want others to do to you’, is found in
all religions. ‘Unfortunately, the international community has yet to
recognize and appreciate the significance of this rule’ (Chandra
Muzaffar, 2005:2).
q  In fact, according to Simon Blackburn in his book, Ethics: A Very

Short Introduction: ‘For many people, ethics is not only tied up
with religion, but is completely settled by it. Such people do not
think too much about ethics, because there is an authoritative code
of instructions, a handbook of how to live’ (Blackburn, 2001:9).

q  The Five Pillars of Islam forms the foundation of Muslim life.
Faith or belief in the Oneness of God and the finality of the

prophethood of Muhammad (Shahadah)
Establishment of the daily prayers 5 times a day (solat)
Self-purification through fasting in the month of Ramadhan
Concern for and almsgiving to the needy (zakat)
The pilgrimage to Mecca for those who are able (Hajj).

q  Iman is faith or belief.
Belief in Allah
Belief in angels
Belief in the revealed books
Belief in commissioned Messenger (peace be upon them)
Belief in the resurrection and the event of Qiyamah
Belief in the predestination by Allah if all things, both the (seemingly)

good and the (seemingly) bad

q  Taqwa is a comprehensive word found in the Quran that carries the
meaning of fear, respect and reverence for God.
q  An individual with taqwa will sincerely obey the rules of Allah and
be grateful to Him.
q  To carry out responsibilities, we must know what is right and what
is wrong.
q  We must consciously accept the existence of Allah and must be in
a state of remembrance of Allah.
q  In Islam, it must be enlightened obedience; not blind obedience.
(Green, 2008 at http:islamic-beliefs.suite101.com/article.cfm/what_is_taqwa)

q  Religious Values
Taqwa (conscience of God), Syukur (gratitude), Ihsan (benevolence; being kind
and helpful), Tawakkal (relying on Allah after making own efforts), Muhasabah
(self evaluation), Justice and amar makruf nahi munkar (promoting good and
forbidding evil).
q  Professional Values
Education, Skill, Honesty, Punctuality, Trustworthy and Syura (consultation).
q  Personal Values
Accountability, Moderation, Excellence, Patience, Tolerance, Humble, Salaam
(peace).
q  Quality Values
Quality, Productivity, Itqan (i.e. the level of quality work), Istiqamah
(commitment, being straight and steadfast), Efficiency, Creativity, Innovation,
Collectivity
Adapted from ‘The Role of Islamic Ethics in Organizations: An Experience in Malaysia’, USM)

Right
Right Views or Concentration
Right
Preliminary or Mind
Acts
Understanding Right Development
Effort
Right Right
Right Speech Samadhi,
Aims or Right leading to full
Motives Livelihood Enlightenment

q  Malaysia’s Rukun Negara/
National Principles directly Belief in God
state the belief in God as
a doctrine to be followed
by all Malaysians, Loyalty to Supremacy
irrespective of religious and King and of the
cultural differences. Country Constitution
Good
The Rule of Behaviour
Law and Morality

q  Ethical behaviour requires more than having to comply with policies,
laws, rules and regulations.
q  Ethical behaviour therefore ‘rests upon one’s full conscience and

accountability to do good deeds as a social responsibility under all
circumstances’ (Khalidah et al., 2012).

Good Values Bad Values
Compassion Cheating
Courage Cowardice
Honesty Cruelty
Integrity Deceit
Respect for human life Greed
Self-control Lying
Selfishness
q  The Business Environment in a Global Context
ü  There are a lot of challenges in the global business world.
ü  Apart from fulfilling the profit maximization objective which
drives aggressive competition in a free market system,
businesses have to face another challenge – managing the
global workforce.
ü  Society is undergoing dramatic change in values and societal
norms.
ü  There has been concerns on the decadence of moral values
among the younger generation, especially Generation Y.
ü  Generation Y employees who grew up in the ICT era and
represent the bulk of today’s workforce are more likely to see
unethical behaviour as justifiable in pursuit of their goals.

q  Many organisations develop a code of ethics to remind employees
on the importance of ethics at the workplace. A code is a
statement of principles, policies or rules that guides behaviour.
q  A code of ethics is defined as ‘a social, religious or civil code of

behaviour and principles of conduct that are considered correct,
especially those of a particular group, profession or
individual’ (Hanks,1979:502).
q  Two types of code of ethics:
Compliance based Integrity based

q  Is ethics important in the business world?
Yes, it is important for business people to be ethical as being ethical
in business is actually no different than being ethical in private life.
q  Today, business managers have many reasons to be concerned with

ethical standards of their organisations.
q  ‘The lessons learned from the collapse of Enron, Arthur Anderson,

etc. and the consequences of unethical behaviour and unethical
business institutions such as San Lu Corporation are too serious to
be ignored’ (Desjardins, 2009; Khalidah et al., 2012).
q  Business ethics is not an oxymoron!

q  However, business issues are not easily addressed by ordinary
ethical reasoning. Economic and organizational characters of
business firms differentiate the way business issues are handled, i.e.
in employer-employee relationships, social responsibility, etc.
q  Managing businesses effectively without compromising ethics is the

real challenge because it requires courage, respect for humans and
non-humans, honesty, integrity, etc. We all know these values up
front, but how do we translate them into actions?
q  Ethics in the business world definitely requires a self-conscience

and altruism that we are conducting businesses not only to
maximize profits for the organization’s sustainability, but also for the
well being of the ummah (as a social responsibility) and as a matter
of accountability – as a khalifah!
•  To keep existing customers: Maintain customer loyalty and business
1 sustainability.
•  To attract new customers: A good business or corporate image will

2 attract new customers and increase profitability.
•  To avoid lawsuits: Maintain good image and dignity of the company by

3 complying with laws and regulations.
•  To reduce employee turnover: Maintain employee loyalty and

4 subsequently increase organisational effectiveness.
•  To please customers, employees and society: Strive to fulfil the needs of

main stakeholders, i.e. customers, employees and the community they
5 serve.

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Chapter

q Define and differentiate between ethics and morality

Business Ethics All Rights Reserved

What type of person should I strive to be?

We often What values are critical for me to lead a

q Our self-reflection and conscience in addressing these personal issues

Business Ethics All Rights Reserved

Business Ethics All Rights Reserved

q Stanwick and Stanwick (2009) define ethics as ’the values an

q Velasquez (2012) and Nickels (2008) regard it as a ‘discipline

q According to Abdullah and Zainol Abidin (2011), ethics ‘concerns

q Ethics is also defined as ‘a critical analysis of human acts to

Business Ethics All Rights Reserved

Ethics is above the law.

Business Ethics All Rights Reserved

q Ethics, in contrast, is the ‘study of moral standards whose

q This therefore demands for analytical thought and application

q In addition, ‘these rules and principles must give an account

Business Ethics All Rights Reserved

Business Ethics All Rights Reserved

q Ethics thus begins with each one of us.

q According to Shaw (2011), rationally, we learn and

Business Ethics All Rights Reserved

q Religion is one of the critical factors influencing an individual’s ethical

Business Ethics All Rights Reserved

q In fact, according to Simon Blackburn in his book, Ethics: A Very

Business Ethics All Rights Reserved

Faith or belief in the Oneness of God and the finality of the

Establishment of the daily prayers 5 times a day (solat)

Self-purification through fasting in the month of Ramadhan

Concern for and almsgiving to the needy (zakat)

The pilgrimage to Mecca for those who are able (Hajj).

Business Ethics All Rights Reserved

Belief in the revealed books

Belief in commissioned Messenger (peace be upon them)

Belief in the resurrection and the event of Qiyamah

Belief in the predestination by Allah if all things, both the (seemingly)

Business Ethics All Rights Reserved

Business Ethics All Rights Reserved

Business Ethics All Rights Reserved

Business Ethics All Rights Reserved

Business Ethics All Rights Reserved

q Ethical behaviour therefore ‘rests upon one’s full conscience and

Business Ethics All Rights Reserved

Business Ethics All Rights Reserved

q A code of ethics is defined as ‘a social, religious or civil code of

q Two types of code of ethics:

Compliance based Integrity based

Business Ethics All Rights Reserved

q Today, business managers have many reasons to be concerned with

q ‘The lessons learned from the collapse of Enron, Arthur Anderson,

q Business ethics is not an oxymoron!

Business Ethics All Rights Reserved

q Managing businesses effectively without compromising ethics is the

q Ethics in the business world definitely requires a self-conscience

• To attract new customers: A good business or corporate image will

• To avoid lawsuits: Maintain good image and dignity of the company by

• To reduce employee turnover: Maintain employee loyalty and

• To please customers, employees and society: Strive to fulfil the needs of

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q  Define and differentiate between ethics and morality

q  Our self-reflection and conscience in addressing these personal issues

q  Stanwick and Stanwick (2009) define ethics as ’the values an

q  Velasquez (2012) and Nickels (2008) regard it as a ‘discipline

q  According to Abdullah and Zainol Abidin (2011), ethics ‘concerns

q  Ethics is also defined as ‘a critical analysis of human acts to

q  Ethics, in contrast, is the ‘study of moral standards whose

q  This therefore demands for analytical thought and application

q  In addition, ‘these rules and principles must give an account

q  Ethics thus begins with each one of us.

q  According to Shaw (2011), rationally, we learn and

q  Religion is one of the critical factors influencing an individual’s ethical

q  In fact, according to Simon Blackburn in his book, Ethics: A Very

q  Ethical behaviour therefore ‘rests upon one’s full conscience and

q  A code of ethics is defined as ‘a social, religious or civil code of

q  Two types of code of ethics:

q  Today, business managers have many reasons to be concerned with

q  ‘The lessons learned from the collapse of Enron, Arthur Anderson,

q  Business ethics is not an oxymoron!

q  Managing businesses effectively without compromising ethics is the

q  Ethics in the business world definitely requires a self-conscience

•  To attract new customers: A good business or corporate image will

•  To avoid lawsuits: Maintain good image and dignity of the company by

•  To reduce employee turnover: Maintain employee loyalty and

•  To please customers, employees and society: Strive to fulfil the needs of