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Chapter 1
Introducing
Business Ethics
Lecture 1
Overview
• What is business ethics?
• Why is business ethics important?
• Globalization: a key context for business
ethics?
• Sustainability: a key goal for business ethics?
What is business ethics?
Business ethics is the study of business
situations, activities, and decisions
where issues of right and wrong are
addressed.
Ethics and the law
Ethics
grey
area
Law
Defining morality, ethics and ethical
theory
• Morality is concerned with the norms, values
and beliefs embedded in social processes
which define right and wrong for an individual
or a community.
• Ethics is concerned with the study of morality
and the application of reason to elucidate
specific rules and principles that determine
right and wrong for any given situation.
• These rules and principles are called ethical
theories.
The relationship between morality,
ethics and ethical theory
Ethics … to
rationalize produce …that can
s morality ethical be applied
… theory … to any
Potential
Morality Ethics Ethical situation.
solutions to
theory ethical
problems
Why is business ethics important?
1. Power and influence of business in society
2. Potential to provide major contribution to society
3. Potential to inflict harm
4. Increasing demands from stakeholders
5. Lack of business ethics education or training
6. Continued occurrence of ethical infractions
7. Evaluating different ways of managing business
ethics
8. Interesting and rewarding
Types of misconduct across sectors
30
10
Nonprofit
Business
Government
43%
Nonprofit
25%
Business
Government
0%
Responsible Shareholders and Owners Donors and clients General public, higher
and/or other stakeholders level government
accountable to organizations
• Cultural issues
• Legal issues
• Accountability issues
Global business activities brings the company in direct interaction to local communities
Civil society
with possibility for erosion of traditional community life; globally active pressure groups
(NGOs, etc) emerge with aim to “police“ the corporation where governments are weak and tolerant.
Globalization weakens governments and increases the corporate responsibility for jobs,
Government & welfare, maintenance of ethical standards, etc. Globalization also confronts governments
regulation with corporations from different cultural expectations about issues such as bribery,
corruption, taxation, and philanthropy.
International perspectives on
business ethics
Different approaches to business
ethics
• Who is responsible for ethical conduct in
business?
• Who is the key actor in business ethics?
• What are the key ethical guidelines for ethical
behaviour?
• What are the key issues in business ethics?
• What is the most dominant stakeholder
management approach?
Regional differences: Europe, North
America, Asia
Europe N. America Asia
Who is responsible for ethical Social control by the The individual Top management
collective
conduct in business?
Who is the key actor in business Government, trade The corporation Government,
unions, corporate corporations
ethics? associations
What are the key guidelines for Negotiated legal Corporate codes of Managerial
framework of business ethics discretion
ethical behaviour?
What are the key issues in Social issues in Misconduct and Corporate
organizing the immorality in single governance and
business ethics? framework of business decisions situations accountability
What is the dominant stakeholder Formalised multiple Focus on shareholder Implicit multiple
stakeholder approach value stakeholder
management approach? approach, benign
managerialism
Sustainability: a key goal for
business ethics?
Defining sustainability
• Sustainable development is development
that meets the needs of the present without
compromising the ability of future generations
to meet their own needs. (World Commission
on Environment and Development 1987)
• Sustainability refers to the long-term
maintenance of systems according to
environmental, economic and social
considerations
The three components of
sustainability
Economic Social
Environmental
Triple bottom line
• Coined by John Elkington
• Bottom line thinking suggests sustainability as
a goal
• Three dimensions:
– Environmental perspectives
– Economic perspectives
– Social perspectives
Corporate commitments to
sustainability
Company Sustainability statement Source
“At BP we define sustainability as the capacity to endure as a group: by
renewing assets; creating and delivering better products and services that meet
BP Sustainability
the evolving needs of society; attracting successive generations of employees;
Report, 2007
contributing to a sustainable environment; and retaining the trust and support
of our customers, shareholders and the communities in which we operate.”
“[Sustainability] means enhancing our relationship with host and partner www.debeersgr
DeBeers governments, building consumer confidence in diamonds, and ensuring our oup.com, 2009
activities contribute positively to … both present and future generations.”
“Corporate responsibility (CR) at Nokia is a collective effort. We believe that
Nokia management of CR issues is most effective when sustainability policies and CSR Report,
programs are embedded in every aspect of our operations. ” 2007
“ [For Toyota, a guiding principle is] ‘contributing to the development of a
Toyota prosperous society through the manufacture of automobiles.’ ‘Contributing to Sustainability
the development of a prosperous society’ means ‘contributing to the Report, 2008
sustainable development of the earth.’”
“Values, social responsibility and active sustainability are integral [to] our
company culture. We are future-oriented in our approach to important issues www.volkswage
Volkswagen
such as climate change. We operate a broad range of [R&D] activities and nag.com, 2009
provide trend-setting approaches to the mobility of tomorrow.”
Summary
• Definition of business ethics
• Business ethics is vital for business in
contemporary capitalism
• Global view is essential to understand ethical
issues
• Different regions have distinctly different
perspective on business ethics issues
• Sustainability is an important goal for
business ethics