BUS 60204
Business Ethics and Values
Lecture 1
Introduction
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Learning Outcomes
 To understand the meaning and importance of ethics in the
business world.
 To understand the implications of businesses operating
ethically.
 To know the social implications of business ethics.
 To understand ethical concerns facing different communities.
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What is Ethics?
 Ethics deals with individual character and the moral values
that govern and limit individuals conduct / action
 The study of right and wrong, moral norms, individual
character and responsibility
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Ethics and Morality
 Ethics is the study of morality.
 Morality : The standards that an individual or a group has about
what is right and wrong, or good and evil.
 Moral standards: The standards that govern our conduct
are moral standards.
 Nonmoral standards: Standards about behavior or
practices with no serious or immediate effects upon human
well-being.
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The Sources of Morality
• The justification of moral norms:
Moral philosophers study mainly the justification, rather
than the origin, of moral norms.
• The claim that morality is based on religion:
• Religion provides incentives to be moral.
• Religion provides moral guidance.
• Moral norms are in essence divine commands.
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Some Features of Moral Standards
• Moral standards take priority over nonmoral standards.
• The soundness or validity of moral standards depend on
the quality of the arguments or the reasoning that
support them.
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Professional codes
The rules that govern the conduct of the members of a
given profession.
• Individuals have the responsibility to critically assess
the rules of their professions.
• These rules are not always complete and reliable
guides to adequate moral conduct
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What is Business Ethics?
 The study of what constitutes right and wrong, duty and
obligation, moral norms, individual character and
responsibility – in the context of business .
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Business Ethics
 Comprises principles, values, and standards that guide behavior in
the world of business
 Principles: Specific boundaries for behavior that are universal
and absolute
 Freedom of speech, civil liberties
 Values: Used to develop socially enforced norms
 Integrity, accountability and trust
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Types of Ethical Issues
 Systemic—ethical questions about the social, political, legal,
or economic systems within which companies operate.
 Corporate—ethical questions about a particular corporation
and its policies, culture, climate, impact, or actions.
 Individual—ethical questions about a particular individual’s
decisions, behavior, or character.
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A Timeline of Ethical and Socially
Responsible Concerns
The 21st Century : A New Focus
• Continued issues with corporate non-compliance – firm’s
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greatest danger is not discovering misconduct early
Public / political demand for improved ethical standards in
areas like :
Misuse of company resources
Abusive behavior
Harassment
Accounting fraud
Conflicts of interest
Defective products
Bribery
Employee theft
Conflict between Individual Integrity
and Moral Responsibility
• Principles may conflict with conscience (the
internalized set of moral principles taught to us by
various authority figures – parents and social
institutions)
 Groupthink – peer pressure to conform to collective
policies (corporate norms) may resulting in
unethical conduct
 Problem from diffusion of responsibility
 The multiplicity, complexity, and distribution of
tasks that can lead individuals to feel less
responsibility or accountability for their actions.
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Acting Ethically and Legally
Argument
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Implication
1. The law cannot regulate all aspects of business activity.
Not everything that is legal is moral.
Not everything that is immoral is illegal.
2. The law is often slow to develop in new areas of concern.
Businesses should not wait to “do the right thing” until forced to act by
law.
3. The law often employs moral concepts that are not precisely
defined.
To abide by the law, business leaders need to understand key moral
concepts well enough to use their own judgment when making
decisions.
4. The law itself is unsettled on whether some course of action is
legal.
The courts are often guided by moral considerations in making a
decision. Where there is doubt about what the law is, morality is a good
predictor.
5. An exclusive reliance on law alone and failure to act responsibly
can result in legislation and litigation.
Self-regulation and observing ethical standards can prevent unnecessary
lawsuits and new laws that may interfere with business.
Organizational and Global Ethical Culture
• Ethical culture describes the component of corporate culture that
captures the values and norms that an organization defines as
appropriate conduct
 Creates shared values
 Goal is to:
 Minimize need for enforced compliance
 Maximize utilization of principles/ ethical
Source: Triangle Images
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reasoning
Ethical Relativism
 Ethical Relativism is a theory that what is right is
determined by what a culture or society says is right .
 Moral norms are derived from the customs of the society in
which they occur.
 This means that moral norms are not universal, but are
dependent upon a particular cultural or social context .
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Ethical Relativism
 For example, abortion is immoral in Catholic
Ireland but is
form of birth control in
practiced as a morally neutral
Japan.
 An ethical relativist would view that abortion is wrong in
Ireland but morally permissible in Japan
 An ethical relativist believes that there can be no independent
standard to judge actions.
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Ethical Relativism
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Ethical Relativism
 Ethical relativism ultimately rejected, does not mean nothing
to teach us
 Moral standards of a society are the only standard by which
actions in the society can judged.
 Simply cannot dismiss the moral belief of other culture when
they do not match our own
 It is not universal
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The Role of Organizational Ethics
in Performance
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Ethics Contributes to Employee
Commitment
 Comes from employees who believe their future is tied to
the organizations.
 Are willing to make personal sacrifices for the organization
 The more dedication on the part of the company, the
greater the employee dedication
 Concerns include a safe work environment, competitive
salaries and benefit packages, and fulfillment of contractual
obligations
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Ethics Contributes to Investor Loyalty
 Companies perceived by their employees as having a high
level of honesty and integrity are more profitable than
companies with a low level of honesty and integrity.
 Ethical climates in organizations provide platform for:
 Efficiency
 Productivity
 Profitability
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Ethics Contributes to Customer Satisfaction
 Consumers respond positively to socially concerned
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businesses
Being good can be extremely profitable
Customer satisfaction dictates business success
A strong organizational ethical climate places customers’
interests first
Research shows a strong relationship between ethical
behavior and customer satisfaction
Ethics Contributes to Profits
 Corporate concern for ethical conduct is
being integrated with strategic planning
 Maximize profitability
 Corporate citizenship is positively associated
with:
 Return on investment and assets
 Sales growth
 Studies have found a positive relationship
between citizenship and performance
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Source: PhotoLink
Importance of Ethics in Business
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• To keep existing customers: Maintain customer loyalty and business sustainability.
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• To attract new customers: A good business or corporate image will attract new
customers and increase profitability.
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• To avoid lawsuits: Maintain good image and dignity of the company by complying with
laws and regulations.
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• To reduce employee turnover: Maintain employee loyalty and subsequently increase
organisational effectiveness.
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• To please customers, employees and society: Strive to fulfil the needs of main
stakeholders, i.e. customers, employees and the community they serve.
Thank You
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