Business Ethics

Fundamentals
Prof. Sunil Bakshi
Introduction
Business Ethics
Publics interest in business ethics
increased during the last four decades
Publics interest in business ethics
spurred by the media
Inventory of ethical issues in business
Employer-Employee Relations
Company-Customer Relations
Company-Shareholder Relations
Company-Community/Public Interest
Publics Opinion on Business
Ethics
Gallup Poll finds that only 17% to 20% of
the public thought the business ethics of
executives to be very high or high
To understand public sentiment towards
business ethics, ask three questions
Has business ethics really deteriorated?
Are the media reporting ethical problems
more frequently and vigorously?
Are practices that were once socially
acceptable no longer acceptable?
Business Ethics:
What Does It Really Mean?

Ethical
Problem
Ethical Problem
Societys
Expectations of
Business Ethics
Actual Business
Ethics
1950s 2000s Time
Business Ethics: Today vs. Earlier Period
Business Ethics:
What Does It Really Mean?
Definitions:
Ethics involves a discipline that examines
good or bad practices within the context of
a moral duty
Moral Conduct is behavior that is right or
wrong
Business Ethics include practices and
behaviors that are good or bad
Business Ethics:
What Does It Really Mean?
Two Key Branches of Ethics:
Descriptive ethics involves studying,
describing & characterizing morality
What Is
Normative ethics involves supplying and
justifying moral systems
What Should Be
Conventional Approach to
Business Ethics
Conventional approach to business ethics
involves a comparison of a decision or
practice to prevailing societal norms
Pitfall: Ethical Relativism
Decision
or
Practice
Prevailing
Norms
Sources of Ethical Norms
Peer
Pressure
Family
Friends
Legal
Framework
Regions of
Country
Profession
Employer
Society at
Large
Fellow
Employees
Religious
Beliefs
The
Individual
Conscience
Ethics and the Law
Law often represents an ethical minimum
Ethics often represents a standard that
exceeds the legal minimum
Ethics Law
Frequent Overlap
Making Ethical Judgments
Behavior or act
that has been
committed
Prevailing
norms of
acceptability
Value
judgments and
perceptions of
the observer
compared
with
Four Important Ethical Questions
What is?
What ought to be?
How to we get from what is to what ought
to be?
What is our motivation for acting ethically?
Three Types Of Management Ethics
Three Approaches to
Management Ethics
1. Immoral ManagementA style devoid of
ethical principles and active opposition to
what is ethical.
2. Moral ManagementConforms to high
standards of ethical behavior.
3. Amoral Management
Intentional - does not consider ethical
factors
Unintentional - casual or careless about
ethical considerations in business


Approaches To Mgmt Ethics
Models of Management Ethics
- Emphasis on Corp Social Resp
Moral Mgmt
Model
Economic
Resp
Legal
Resp
Ethical
Resp
Philanthropic
Resp
Immoral Mgmt XXX X X
Amoral Mgmt XXX XX X X
Moral Mgmt XXX XXX XXX XXX
Component of the CSR Definition
Weighing Code:
X = Token consideration (For appearance only)
XX = Moderate consideration
XXX = Significant consideration
Moral Management Models
Acceptable Stakeholder Thinking
Moral Mgmt Model Acceptance of SHT SHT Posture
Immoral Mgmt SHT rejected: Mgmt is
self absorbed
SHT rejected, not
deemed useful.
Accepts profit
maximization model
but does not realy
pursue it.
Amoral Mgmt SHT accepted;
Narrow view (Min nbr
of stakeholders
considered
Insrumental view of
SHT prevails How
will it help mgmt?
Moral Mgmt SHT enthudiastically
embraced: Wider view
(Max nbr of
stakeholders
considered
Normative view of
SHT prevails. SHT is
fully embraced in all
decision making.
SHT: Stakeholders Thinking
Developing Moral Judgment
Why Managers Behave Ethically
Most of Us
Many of Us
Very Few
of Us
To avoid some punishment
To receive some reward
To be responsive to family,
friends % superiors
To be a good citizen
To do what is right, pursue
some ideal, such as justice
Developing Moral Judgment
External Sources of Managers
Values:
Religious Values
Philosophical Values
Cultural Values
Legal Values
Professional Values


Developing Moral Judgment
Internal Sources of Managers Values:
Respect for the authority structure
Loyalty
Conformity
Performance
Results
Elements of Moral Judgment
Moral imagination
Moral identification and ordering
Moral evaluation
Tolerance of moral disagreement and
ambiguity
Integration of managerial and moral
competence
A sense of moral obligation
Elements of Moral Judgment
Amoral Managers Moral Managers
Moral imagination
Moral identification
Moral evaluation
Tolerance for ambiguity
and moral disagreement
Integration of managerial
and moral competence
A sense of moral obligation
Ethics, Economics, and Law