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)

 Specific Def. (Shea, 1988)

 “the principles of conduct governing an
individual or a profession”
 “standards of behaviour”
 Ethical Standards
 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 law’s domain
 Choices about the pre-eminence of one’s 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
Lacking BE
 Ethical misconduct
 NBES
 Large organizations have limitations due to ethical
constraints
 Ethics' role in public sector
 Accounting frauds, conflicts of interests, defective
products, harassment, abusive behaviour, employee
theft and bribery
 Ethics in sports
 Judgement of decisions – SOCIETY’s role
Reasons

 To deal with moral dilemmas as they affect

everyone’s ability to perform – Can he
smoke or use alcohol? Can we prohibit?
 Ensuring collective agreement- personal
traits like honesty, truthfulness are not
enough from business perspective, it’s
complex!
 Decision making process in business and
non-business activities varies
 Promoting ethical behaviors in the
organization
Developments
 1960
 Ethical Climate
 Social Unrest
 Anti-war sentiment
 Loyalty to employer – loyalty to ideals
 Major Ethical Dilemmas
 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
 Scandals
 Recession
 Unemployment
 Heightened environment concerns
 Public pressure over business accountability
 Ethical Dilemmas
 Employee militancy
 Human rights
 Firm’s covering rather than correcting
 BE Developments
 ERC – 1977
 Compliance with law
 Foreign Corrupt Practices Act
 Values movement
Developments (Cntd.)
 1980s
 Ethical Climate
 Social contract
 Stringent rules – defence contractor
 Downsizing & loyalty to employer eroded
 Health care emphasized
 Ethical Dilemmas
 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
 Global expansion
 Child labour
 Environment
 Internet / Cultural borders
 Forbidden - common
 Ethical Dilemmas
 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
 NYSE
 UPS
 Baxter Intl
 Global
 The Caux Round Table
 NAFTA, WTO, EU,

 Benefits
 Employee commitment
 Investor loyalty
 Customer satisfaction
 Profits
Levels of BE
Individual level

Organizational level

Association Level

Societal Level

International Level
Case Study
Marcus is a computer engineer who has recently developed an
app which helps users keep track of medical information,
doctor’s appointments, and prescriptions.
Information about the user is stored in this app, including what
prescriptions they are taking and how frequently they schedule
doctor’s appointments. As the developers of the app, Marcus and
his company have access to this information.
The marketing department requests Marcus supply them with
customer-specific information so they can better target ads and
app suggestions to the users. Marcus understands that he is part
of a company, but also feels that the privacy of the app users
should be protected. Additionally, Marcus feels that as an
engineer, he should be responsible to those who use his
technology.
How does Marcus determine how much of the user’s
information should be shared with marketing? Is this an
ethical use of information or a violation of the user’s
privacy?
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
 Understanding Business Ethics
 Why study BE
 Evolution of BE
 Benefits
 Stakeholder Relationships, Social Responsibility
and Corporate Governance
 Stakeholder relationship
 Stakeholder influence in CSR
 Corporate Governance
 Relevant Cases
 Wall-Mart – P292
 The Fall of Enron – P318
 PETCO - 422