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Fundamentals of business ethics
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Business Ethics Business Ethics FundamentalsFundamentals
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Introduction Business Ethics
• The value of what should be done and what should not be done from the business point of view
• Public’s interest in business ethics increased during the last four decades
• Public’s interest in business ethics spurred by the media
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Introduction
Inventory of Ethical Issues in Business
• Employee-Employer Relations• Employer-Employee Relations• Company-Customer Relations• Company-Shareholder Relations• Company-Community/Public Interest
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Business Ethics: What Does It Really Mean?
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Ex p
e cte
d a n
d A
c tu a
l Lev
e ls
of B
usin
ess
Eth
ics
Ethical Problem
Ethical Problem
Society’s Expectations of Business Ethics
Actual Business Ethics
1950s Early 2000sTime
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
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Business Ethics: What Does It Really Mean?
Two Key Branches of Ethics• Descriptive ethics involves describing,
characterizing and studying morality• “What is”
• Normative ethics involves supplying and justifying moral systems• “What should be”
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Ethical issues for business
• Product safety standards• Advertising contents• Working environment• Unauthorized payments• Employee’s privacy• Environmental issues
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origin of Ethics
• Ethics is a Greek word, it means Character or manners.
• Ethics is subjective while morality is objective.
• Ethics is about sense of belongingness to society of business. Formed with a limited vision for economic generation but should resolve conflict with society by servicing the community.
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Meaning of Ethics
Character of a man
Conductof a person
Series ofActions
Good or Bad,
Right orwrong,
Moral orImmoral
Moral Standards
Decided by Leads toTakentogether
Considered As
Known asMoral
Judgement
Requires
By which we can Judge again
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Objective of Ethics
• Studies human behavior and makes evaluative assessment about them as moral or immoral
• Establishes moral standards and norms of behavior
• Makes judgment upon human behavior based on these standards and norms
• Prescribes moral behavior and makes recommendations about how to or how not to behave
• Expresses an opinion or attitude about human conduct in general
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Business Ethics
When business people speak about “business ethics” they usually mean one of three things: 1. Avoid breaking the criminal law in one’s work related activity
2. Avoid action that may result in civil law suits against the company
3. Avoid actions that are bad for the company image
Businesses are especially concerned with these three things since they involve loss of money and company reputation.
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3D of Ethics.• UNITARIAN VIEW OF ETHICS
Business is a part of moral structure and moral ethics.
• SEPARATISTS VIEWS OF ETHICS Morality and ethics has no role in business. Society and law deals with ethics and morality.
• INTEGRATED VIEW OF ETHICSEthical behavior and business should be integrated in a new era called Business Ethics.
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Unitarian View: Business & morality cannot be separated and it must play by the rules of ethics of the community.
Views on relationship between Business & Ethics
Moral Structure
Business
Moral Ethics13
Separatist view of Ethics
• Proposed by Adam Smith and Milton Friedman: Business is a distinct entity and does not include ethics and morality
Business Ethics
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Integration view of ethics
• Proposed by Talcott ParsonsLaw
Society
Government
Market Systems
BusinessMorality
& Ethics
BusinessEthics
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Ethical Consciousness
Stage 6 corporate citizenship
Stage 5Stake holder concept
Stage 4 Profit Maximization in the long term
Stage 3 Profit MaximizationIn the short term.
Stage 2 Anything for Profit
Stage 1 Jungle Law
Ethical standardsVary between cultures
And countries.More evident
From /amongstEntrepreneurs/
Corporations.
Long term profitability and Attractiveness of Orgn
Is key to competitive strategy
Both attractiveness & competitivePosition can be shaped
i.e. challenging and exciting16
Stake holder concept
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Ethics and morality• Ethics is about field or domain of enquiry while
morality is the object of enquiry. • Ethics or behavior accepted with in a group is
recorded as credos– espoused value of group/Orgn. When espoused value become practiced values, then the group is said to be Ethical Organization.
Ethical theories can be classified into three subject areas:-
• Meta ethics• Normative ethics• Applied ethics.
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Details of 3 Ethical theories
Meta Ethics• Deals with entire scale of ethical issues:-
moral values of humans • It is the branch of ethics that focuses on how
we understand, know about, and what we mean when we talk about what is right and what is wrong.
• Addresses questions such as "What is goodness?" and "How can we tell what is good from what is bad?“.
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Applied Ethics:-Applied ethics is, in the words of Brenda Almond, co-founder of the Society for Applied Philosophy, "the philosophical examination, from a moral standpoint, of particular issues in private and public life that are matters of moral judgment".
• It is thus a term used to describe attempts to use philosophical methods to identify the morally correct course of action in various fields of human life
• E.g. BIOETHICS, BUSINESS ETHICS , ENVIRONMENTAL ETHICS
Details of 3 Ethical theories
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Applied Ethics contd..
• There are six domains to help improve organizations and social issues at the national and global level:
• Decision ethics, or ethical theories and ethical decision processes
• Professional ethics, or ethics to improve professionalism
• Clinical ethics, or ethics to improve our basic health needs
• Business ethics, or individual based morals to improve ethics in an organization
• Organizational ethics, or ethics among organizations• Social ethics, or ethics among nations and as one global
unit21
Normative theoriesThat which guides and controls human conduct. Sets out
certain standards that determine what is right and what is wrong. Golden principle behind this –
• WE SHOULD TREAT OTHERS THE SAME WAY THAT WE WANT OTHERS TO TREAT US”
There are Three leading theories of Normative ethics-1. STOCK HOLDERS THEORY2. STAKE HOLDERS THEORY3. SOCIAL CONTRACT THEORY
Details of 3 Ethical theories
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Sources of Ethical Norms
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Fellow Workers
Family
Friends
The Law
Regions of Country
Profession
Employer
Society at Large
Fellow Workers
Religious Beliefs
The Individual
Conscience
3 Models of Management Ethics
1. Immoral Management—A style devoid of ethical principles and active opposition to what is ethical.
2. Moral Management—Conforms to high standards of ethical behavior.
3. Amoral Management• Intentional - does not consider ethical factors• Unintentional - casual or careless about ethical
considerations in business 24
3 Models of Management Ethics
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Three Types Of Management Ethics
Three Approaches to Management Ethics
266-18
Making Moral Management Actionable
Important Factors• Senior management• Ethics training• Self-analysis
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Developing Moral Judgment
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Developing Moral Judgment
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Developing Moral Judgment
External Sources of a Manager’s Values
• Religious values• Philosophical values• Cultural values• Legal values• Professional values
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Developing Moral Judgment
Internal Sources of a Manager’s Values
• Respect for the authority structure• Loyalty• Conformity (TRADITIONAL VALUES)• Performance• Results
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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
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Common Unethical Acts...
• Lying and withholding needed information
• Abusive or intimidating behavior
• Misreporting time worked
• Discrimination and sexual harassment
• Stealing
• Breaking environmental and safety laws
• Falsifying records
• Drug or alcohol abuse
• Giving or accepting bribes
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Why Misconduct Is Not Reported...
• Belief that nothing will be done
• Fear of retaliation
• Fear of being viewed as a troublemaker
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Why ethical behavior is important???
• Business is a subsystem of society
• Reduction in cost of friction with social environment
• Important for organizations leaders because they influence the ethical climate for the rest.
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Why Ethical problems occur?
• Personal gain
• Individual values widely differ with organizational goals
• Managers values and attitudes
• Competitive pressures
• Cross-Cultural contradictions 36
Encouraging Ethical Conduct
• Ethics Training• Key features of effective ethics training
programs• Top management support.• Open discussion.• A clear focus on ethical issues.• Integration of ethics into the organization.• A mechanism for anonymously reporting ethical
violations.• Reward ethical conduct.
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Encouraging Ethical Conduct (cont’d• Whistle-Blowing
• The reporting of perceived unethical matters.• Reducing the fear of retaliation against
whistleblowers• Anonymous hotlines and web sites• Personal, confidential guidance
• Ethical Advocate• An ethics specialist who plays a role of critical
questioner in top-management’s decision-making.• Serves as the Board of directors’ social conscience.• Helps prevent groupthink and blind conformity
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Encouraging Ethical Conduct (cont’d)
• Code of Ethics• Published statement of moral expectations for
employee conduct• Requirements for an effective ethics code
• Must describe specific practices as unethical (e.g., kickbacks, payoffs, gifts, falsification of records, and misleading product claims).
• Must be firmly supported and fairly enforced by top management.
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Role of the Business Officer
• Employee/Staff rely on you to explain the rule/policy• Be able to say no and explain why
• Ethical leadership• Be the example, not the exception• “Ethics are what you would you do, if you were
sure no one would see you.”• Be consistent
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THANK YOU
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