Business Ethics
Business Management
12
Ms. Stewart
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What is business ethics?
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Ethics – study of what is good and evil, right
and wrong, and just and unjust
Business ethics - a code of professional
standards, containing aspects of fairness and
duty to the profession and the general public
Discussions of business ethics frequently
emphasize unclear situations
However, applying clear guidelines resolves
the majority of them
Ethics and Managers
 Managers
act in different ways
according to their own moral
standards, values, personal
experiences and the culture of
the organization.
Surveys
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International Survey of more than 300
companies worldwide – top ethical issues:
– Employee conflict of interest 91%,
– Inappropriate gifts 91%,
– Sexual Harassment 91%,
– Unauthorized Payments 85%
Surveys - Incidence of unethical behaviors
in areas (from a Wall Street Journal survey):
– Government: 66%
– Sales 51%
– Law 40%
– Media 38%
– Finance 33%
– Medicine 21%
– Banking 18%
– Manufacturing 14%
Common Examples
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Individual values and the company:
– Receiving or offering kickbacks
– Stealing from the company
– Padding expense accounts to obtain
reimbursements for questionable business
expenses
– Divulging confidential information or trade secrets
– Using company property and materials for
personal use
– Conflict of interest
Language of Ethical Lapse
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Everybody else does it
– Not a valid choice – specially if law is being broken
If we don’t do it, someone else will
That’s the way it has always been done
We’ll wait until the lawyers tell us it’s wrong
– What’s legal may not be ethical
It doesn’t really hurt anyone
The system is unfair
Individual Determinants
Religion
 Moral Philosophy
 Cultural Differences
 Ethical Philosophies
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CODE OF ETHICS
 A formal
document that states
an organization’s primary values
and the ethical rules it expects
managers and employees
(operatives) to follow.
What is the managers responsibility?
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TO MAXIMIZE PROFITS?
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TO PROTECT AND IMPROVE THE
WELFARE OF SOCIETY?
Social Responsibility
 An
organization’s obligation, to
pursue long term goals that are
good for society
Social Obligation
 The
obligation of an organization
to meet its economic and legal
responsibility and no more
Social Obstruction
 Organizations
do as little as possible
to solve social or environmental
problems.
Example: Pollution (the law is
broken or a practice becomes
unethical – often the problem is
covered up or hidden) “Erin
Brockovich”
Social Response
 An
organization meets its basic
legal and ethical obligations and
also goes beyond social and
obligation in selected cases
 Example: IBM will match
employee contributions but have
to be solicited first – not voluntary
Social Contribution
 An
organization views itself as a
citizen in a society and
proactively seeks opportunities
to contribute to that society.
 Example: Ronald McDonald
House program run by
McDonald’s Corp.