Business Ethics

Introduction

Class
Rules of engagement
Communication

mode

Participation
Questioning
Open

but within etiquettes

Any response to above

Ethics - Origin

Ethos (Greek)

Character and sentiment of the community

Ethikos (Greek) authority of custom and

tradition
Mos (Latin) moral, mores and Morales
Referring to:

Customs
Habits of life
Traditions of people

Carroll & Gannon (1997)

Ethical Standards

Specific Def. (Shea, 1988)

the principles of conduct governing an
individual or a profession
standards of behaviour
Help to guide decisions and actions
Whether Individual, corporations, professions,
nations

rules or standards that govern

behaviours (Toffler, 1986)

Ethics Defined

Customary norms and ways of behaving in a

society (Hegel)
Character and sentiment of the community
the principles of conduct governing an individual or
a profession.standards of behaviour (Shea, 1988)
rules or standards that govern behaviours (Toffler,
1986)
the basic ground rules by which individual acts. We
often give complex explanations of our actions, but
in fact we act for simple reasons. The ground rules
are a framework for defining which actions are
personally permissible, and which are not
(Drummond & Bain,1994)

Ethics Defined (Contd.)

how people try to live their lives according to a

standard of right and wrong behaviour in
both how we think and behave towards others
and how we would like them to think and behave
towards us. (Ghillyer, 2010)

Societal perspective

inquiry into the nature of grounds of morality

where the term morality is taken to mean
judgements, standards and rules of conduct.
(O.C. Ferrell)
Ethical Standards

Help to guide decisions and actions

Whether Individual, corporations, professions,
nations

Business Ethics

Business ethics is the study of how personal moral

norms apply to the activities and goals of commercial
enterprise. It is not a separate moral standard, but the
study of how the business context poses its own unique
problems for the moral person who acts as an agent of
this system (Laura Nash)
Falls into three basic areas of managerial decision
making

Choices about the law

Choices about the economic and social issues that are
beyond the laws domain
Choices about the pre-eminence of ones own self-interest

Business Ethics (Contd.)

Business ethics involves the application of

standards of moral behaviour to business
situations (Ghillyer, 2010)

The application of ethical standards to business

behaviour

the principles and standards that guide

behaviour in the world of business (O.C. Ferrell)

Business Ethics (Contd.)

Who determines the actions as right or

wrong

Investors
Employees
Customers
Interest groups
The legal system
The community

Approaches

Descriptive
Normative

Lacking BE

Ethical misconduct

NBES
Volume of organization
Level of management
Accounting frauds, conflicts of interests, defective
products, harassment, abusive behaviour, employee
theft and bribery
Harris Interactive Poll perception of trust

Enron, WorldCom, Anderson Worldwide, Global

Crossing, Adelphia etc.

Involvement of individuals, Corporations, Govt

officials, Researchers, Sports
Judgement of decisions SOCIETY
Reasons

Developments

1960

Ethical Climate

Major Ethical Dilemmas

Social Unrest
Anti-war sentiment
Loyalty to employer loyalty to ideals
Environment
Employee-employer tension
Civil rights
Honesty
Work ethics
Drug

BE Developments

Code of conducts & value statements

Social responsibility
Legal / Personnel departments

Developments (Cntd.)

1970

Ethical Climate

Ethical Dilemmas

Scandals
Recession
Unemployment
Heightened environment concerns
Public pressure over business accountability
Employee militancy
Human rights
Firms covering rather than correcting

BE Developments

ERC 1977
Compliance with law
Foreign Corrupt Practices Act
Values movement

Developments (Cntd.)

1980s

Ethical Climate

Ethical Dilemmas

Social contract
Stringent rules defence contractor
Downsizing & loyalty to employer eroded
Health care emphasized
Bribes & illegal practices
Influence paddling
Deceptive advertising
Financial frauds
Transparency

BE Developments

Code of Ethics for Government Service - 1980

Defence industry initiative
Ethic officers Ombudsman
False Claims Act

Developments (Cntd.)

1990s

Ethical Climate

Ethical Dilemmas

Global expansion
Child labour
Environment
Internet / Cultural borders
Forbidden - common
Unsafe work practices -3rd world
Increased corporate liability
Financial mismanagement and fraud

BE Developments

Federal sentencing guidelines for organizations

Lawsuits
Global Sullivan Principles
Board responsibility
Voluntary disclosure annual reports issuance on ethics

Developments (Cntd.)

2000s

Ethical Climate

Economic growth financial failures

High profile firms
Personal data
Hackers & data thieves
Aggression and fundamentalism

Ethical Dilemmas

Cyber crimes
Privacy
Financial mismanagement
International corruption
Loss of privacy
IP
SD

Developments (Cntd.)

BE Developments

Sarbanes Oxley Act -2002

Anticorruption
CSR and Integrity Management
UN Convention -2003
UN Global Compact 2004
Revised Federal Sentencing Guidelines 2004
Ethics programs

Ethical Culture and Benefits

Organizational

Ethics Officer

Global

The Caux Round Table

NYSE
UPS
Baxter Intl

NAFTA, WTO, EU,

Benefits

Employee commitment
Investor loyalty
Customer satisfaction
Profits

Levels of BE
Individual level
Organizational level
Association Level
Societal Level
International Level

End of Session
Book:
Business

Ethics: Ethical Decision

Making and Cases By O.C. Ferrell,
John Fraedrich and Linda Ferrell

Write down your strengths and

weaknesses on a page and
submit

Outline Chap1 & 2

The importance of Business Ethics

Stakeholder Relationships, Social Responsibility

and Corporate Governance

Understanding Business Ethics

Why study BE
Evolution of BE
Benefits
Stakeholder relationship
Stakeholder influence in CSR
Corporate Governance

Relevant Cases

Wall-Mart P292
The Fall of Enron P318
PETCO - 422