BUSINESS ETHICS
LESSON 2. BUSINESS ETHICS DEFINED
INTRODUCTION
Most of term today have strong written codes of ethical behavior, companies also
conduct training programs to ensure that employees understand proper behavior in different
situations. When conflicts arise involving profits and ethics, ethical considerations sometimes
are so obviously important that they dominate. In other cases, however, the right choice is not
clear.
What is Ethics?
Ethics is the disciplined that investigates the rightness or wrongness of human actions. When
this discipline is used to explore the rightness or wrongness of business activities and the
conduct of the business persons and professionals, then it is called Business Ethics. Let us list
the textbook definitions, and descriptions of business ethics.
1. “In its simplest form, business ethics can be defined as systematic study of ethics as
applied to the issues arising in business”.
2. “Business ethics is the study of good and evil, right and wrong, and just and unjust
actions in business.”
3. “Business ethics involves the application of standards of moral behavior to business
situations.”
4. “Business ethics is concerned with good and bad or right and wrong behavior and
practices that take place within a business context. Concepts of right and wrong are
increasingly being interpreted today to include the more difficult and subtle questions
of fairness, justice, and equity.
5. “Business ethics is a study of moral standards and how these apply to the social system
and organizations through which modern societies produce and distribute goods and
services and to the behaviors of the people who work within these organizations.
Business ethics, in order
Ethics is generally subdivided into three sub-fields:
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Meta-ethics – Focuses mainly on the investigation of the sources of our ethical
principles.
Normative ethics – Attempts to come up with those ethical principles that we can judge
whether our actions are right or wrong.
Applied ethics – investigates morally debatable issues such as death penalty, the use of
artificial contraceptives, euthanasia, and others.
Business Ethics is an applied ethics because it generally talks about the morally debatable issues
in the field of finance, bioethics, legal ethics, advertising ethics, ethics of healthcare, and we can
speculate that more specified ethics applied will be developed.
Many academic institution now zero in on applied ethics that fit the specific discipline of the
students. Thus, health care ethics offered to nurse students; accounting ethics to future
certified public accountants (CPAs); bioethics to aspiring medical practitioners; journalism
ethics to mass communication and journalism students, legal ethics to the aspiring lawyers, and
so on. Even the field of business ethics is now further subdivided into ethics of financial
management, ethics of economics, accounting ethics, marketing ethics, and advertising ethics.
Importance of Studying Business Ethics
According to an adage: “Values are caught and not taught.” If this is true, then why
should we turn business ethics into an academic discipline?
Business ethics is to debate, deliberate, and clarify the common notion on that business and
ethics are concepts that are oxymoronic or contradictory.
As Marlene Caroselli stated: “To be sure, no course, no book, no training activity can convert an
unethical person into an ethical one. You can’t be a Professional.
According to Thomas Donaldson: “Ethics may not be teachable in the same way as astronomy
or psychology, but it can be taught. Part of a successful teaching strategy involves drawing from
the humanities, which resuscitate habits of the mind and of the heart, both too often
suffocated by mere technical training.”
According to Treviño and Nelson wrote: “Good general character doesn’t prepare an individual
to deal with the very special ethical problems that are likely to arise in one’s career. That’s why
many professional schools (business, law, medicine and others) have added ethics courses to
their curricula and why most large business organizations now conduct ethics training for their
employees.”
According to Edward Stevens (Author of a business ethics book): a business decision can
reflect a person’s worldview, philosophy in life, and moral standards. A business decision,
therefore, is necessarily an ethical decision.
It is also important to study business ethics because this would give us the opportunity to
analyze and understand a kind of religious and moral “schizophrenia” that Gaudium et Spes
has rightly called one of the more critical errors of our times- “the split between the faith which
many profess and their daily lives.”
Ethics as a Prescriptive Subject
The primordial question that students of ethics ask is: “Given a particular situation, what should
a person do?” That is why so many authors would say that ethics is not just a descriptive
subject; rather, it is a prescriptive one. Instead, ethics is concerned about prescribing what
should be done after knowing all the facts, the circumstances, and the principle involved. It is
what some business ethics scholars would call as “normative discourse,” that which “outlines
not how the world is but rather how it ought ideally to be…”
However, one must be careful on this point. It is because human acts are always complex and
outright prescription of ethically correct actions based on traditional ethical theories may
oversimplify the complexities of the ethical issues under analysis. The verb “to prescribe” came
from the Latin praescribere which means “to write beforehand.”
Ethics and Etiquette
We must not confuse ethics with etiquette. One may violate etiquette without necessarily
violating an ethical standard. You may not use the words “po” and “opo” in talking with elder
people but it does not make you immoral. You may not observe some table manners but it does
not make you morally bad. Duksa said that “the actions examined in ethics are those that affect
other people and ourselves positively or negatively in some serious way.”
Ethics and Law
We may hear some businessmen sat that as long as you follow the law, then you have got no
problem. While abiding the law is an important component of any business activity, it does not
guarantee the fulfillment of the requirements of ethics by the businessperson. In other words,
one cannot equate ethics with the law, and vice versa. To illustrate the relationship between
these two closely intertwined concepts, let us borrow the simple diagram that the authors
Linda Treviño and Katherine Nelson used in their book:
ETHICS
LAW
The Overlap of ethics and law shows that many human actions are legal and, at the same time,
ethical. In fact, the point of law-making is to express and incarnate ethical principles. Thus,
stealing is both an illegal act and unethical act. Honoring a contract is a legal act and at the
same time, an ethical act. It is therefore, a common tendency for some people to simply equate
the law, then I am doing what is right.” It is because the law commonly mirrors the society’s set
of ethical codes and moral beliefs.
Gael McDonald, stated: “Many businesses may regard themselves as ethical if their legal staff
can keep them safely within the law, but ethics is not only concerned with operating within, or
just above, legal requirements. It involves a more detailed questioning of actions and
consequences that may not be covered by law.”
Nathan Roscoe Pound a prominent American legal scholar, once said that “Law must be stable
and yet, it cannot stand still.” Laws are not perfect.
Augustine of Hippo a medieval philosopher said that “an unjust law is no law at all.”
Thomas Jefferson one of the founding fathers of the United States, declared that “if a law is
unjust, a man is not only right to disobey it; he is obligated to do so.”
Martin Luther King Jr. an American activist for Negro liberation maintained that “one has not a
legal but a moral responsibility to obey just laws. Conversely, one has a moral responsibility to
disobey unjust laws.”
These important of history are unanimous in saying that we are not bound to follow oppressive
and unjust laws.
Ethics and Professional Code of Ethics
Civil laws are general norms that are applicable to all the members of the population in a
particular jurisdiction. Professional code of ethics (PCE) is an attempt to translate the general
norms into the specific context of a particular profession. It is ordinarily defined as “a set of
principles and rules used by professional organizations to govern their decision-making in
choosing between right and wrong.” PCE is binding for those who possess professional licenses
specifically to practice their professions. Today, there are PCEs for specific professionals such
as: journalists, teachers, accountants, doctors, nurses, lawyers, financial managers, and
businessmen.
Considerations in Ethical Decision-Making
1.
2.
3.
4.
Know all the facts and circumstances.
Identify other needed information and find ways to attain them.
Identify the ethical problems and issues involved.
Identify those who will be affected by any decision that you will make. Picture the
possible reactions, feelings, and insights of those who will be affected.
5. Consult the various ethical principles that you studied in your ethics subject. But
remember that these ethical theories are not the end-all and be-all of ethical reasoning.
6. Consult people especially those whom you trust much and those who you believe to
embody firm values and moral principles.
7. Think of your family and whether they will agree and support you on your decision.
8. Think of your personal relationship with your God and how this will factor in your
decision.
9. Ask yourself whether your decision contributes to your overall idea of meaningful life, a
worthwhile living, and a virtuous person.
10. Make a decision and own it.
11. Always remember that your final decision may be revised in the event that new
circumstances or insights enter the picture. This means that when it comes to resolving
an ethical dilemma, a final decision will never remain final after all.