BECG Chapter 1-New

Chapter 1
Business Ethics: An Overview

Introduction to Ethics
Ethics or moral philosophy is a branch of
philosophy that involves systematizing,
defending, and recommending concepts of
right and wrong conduct.
The English word "ethics" is derived from the
Ancient Greek word ēthikós, meaning "relating
to one's character“.
Introduction to ethics
The study of what is morally right and wrong,
or a set of beliefs about what is morally right
and wrong:-Cambridge oxford dictionary.
Richard William Paul and Linda Elder define

ethics as “a set of concepts and principles that
guide us in determining what behavior helps
or harms sentient(responsive) creatures”
Areas of Ethics/ broad
classification
Three major areas of study within ethics
recognized today are:
Meta-ethics, concerning the theoretical meaning
and reference of moral propositions, and how
their truth values (if any) can be determined.
Normative ethics, concerning the practical means
of determining a moral course of action.
Applied ethics, concerning what a person is
obligated (or permitted) to do in a specific
situation or a particular domain of action.
What is Business Ethics?
Business ethics is the application of general

ethical ideas to business behaviour.
It is based on the principle of integrity and

fairness and concentrates on the benefits to the
stakeholders, both internal and external.
Stakeholder includes those individuals and groups
without which the organization does not have an
existence. It includes shareholders, creditors,
employees, customers, dealers, vendors,
government and the society.
What is not Business Ethics?
 Ethics is different from religion.
 Ethics is not synonymous to law.
 Ethical standards are different from cultural
traits.
 Ethics is different from feelings.
 Ethics is not a science in the strictest sense of
the term.
 Ethics is not just a collection of values.
Values and Ethics
A value is a view of life and judgment of what is
desirable. It is very much part of a person’s
personality and a group’s morale.
Business ethics relates to issues of “what is right”

and “what is wrong” while doing business. What
values are to individuals, ethics are to business.
Business ethics operates as a system of values,

relating business goals and techniques to specific
human ends.
Distinction Between Values and Ethics
Basis for Comparison Ethics Values
Value is defined as the

Ethics refers to the guidelines principles and ideals, that
Meaning for conduct, that address helps them in making
question about morality. judgement of what is more
important.
What are they? System of moral principles. Stimuli for thinking.
Differs from person to

Consistency Uniform
person
What is morally correct or
What we want to do or
Tells incorrect, in the given
achieve.
situation.
Extent of rightness or
Determines Level of importance.
wrongness of our options.
What it does? Constrains Motivates
Moral and Ethics
The word Morals is derived from a Greek
word “Mos” which means custom. On the
other hand, if we talk about Ethics, it is also
derived from a Greek word “Ethikos” which
means character.
Put simply, morals are the customs

established by group of individuals whereas
ethics defines the character of an individual.
Distinction Between Moral and Ethics
Basis for Comparison Morals Ethics
Morals are the beliefs of the Ethics are the guiding principles which help
Meaning individual or group as to what is right the individual or group to decide what is good
or wrong. or bad.
What is it? General principles set by group Response to a specific situation
Root word Mos which means custom Ethikos which means character
Governed By Social and cultural norms Individual or Legal and Professional norms
Deals with Principles of right and wrong Right and wrong conduct
Applicability in Business No Yes
Morals may differ from society to

Consistency Ethics are generally uniform.
society and culture to culture.
Morals are expressed in the form of

Expression Ethics are abstract.
general rules and statements.
Freedom to think and

No Yes
choose
Principles of Personal Ethics
Personal ethics refers to the application of values

in everything one does. Principles of personal
ethics include:
1. Concern for the well being of others;
2. Respect for the autonomy of others;
3. Trustworthiness and honesty;
4. Willing compliance to law;
5. Basic justice: being fair;
6. Refusing to take unfair advantage;
7. Benevolence: doing good; and
8. Preventing harm to any creature.
Principles of Professional Ethics
 The basic principles people are expected to follow in

their professional career are the following:
• Impartiality: Objectivity;
• Trustworthiness and honesty;
• Openness: Full Disclosure;
• Confidentiality: Trust;
• Due Diligence: Duty of care;
• Fidelity /loyalty to professional responsibilities; and
• Avoiding potential or apparent conflict of interest.
Code of Conduct and Ethics for Managers
Managers must observe the following ethical

values while performing their duties:
• Impartiality
• Responsiveness to public interest
• Accountability
• Honesty
• Transparency
• Integrity
Evolution of Business Ethics over
the years
The 1970s saw papers from the academic circle. Businessmen became
more concerned with their public image and addressed ethics more
directly.
 1974: The first conference held at the University of Kansas.

 1975: Business ethics became institutionalized at many levels
through writings and conferences.
 1979: Three anthologies on business ethics appeared:
 (i) Ethical Theory and Business by Tom Beauchamp and Norman

Bowie;
 (ii) Ethical Issues in Business: A Philosophical Approach by Thomas
Donaldson and Patricia Werhane; and
 (iii) Moral Issues in Business by Vincent Berry.
the years (contd.)
• 1980s: The subject was taught in several
universities in the US and Europe. There were
also, by this time, many journals of business
ethics, apart from centers and societies
established to promote ethical practices.
• 1982: Richard De George brought out Business
Ethics, and Manuel G. Velasquez published his
Business Ethics: Concepts and Cases.
the years (contd.)
• 1990: Business ethics as a management
discipline was well-established.
• Parallel to these academic pursuits, the late
1980s and early 1990s saw increased concern
for consumer rights, quality, safety, price,
customer service and environment in Britain.
• Simultaneously, with these developments,
religion also lent its powerful voice.
Importance and Need for Business Ethics
• A business organization competes in the global market on

its own internal strength, in particular, on the strength of its
human resource and on the goodwill of its stakeholders.
• The value-based management and ethics that an

organization uses in its governance enables it to establish
productive relationship with its internal customers, and
lasting business relationship with its external customers.

• Real type situations (Tata Steel and Infosys) show that use of
ethical practices in business creates high returns for
companies.
Why should Businesses act
Ethically?
The reasons for an organization to be ethical
include:
• To protect its own interest,

• To protect the interests of the business community
as a whole so that the public will have trust in it,
• To keep its commitment to society to act ethically,
and
• To meet stakeholder expectations.
Why should Businesses act Ethically?
(contd.)
 The reasons for an organization to be ethical include:
• To prevent harm to the general public,

• To build trust with key stakeholder groups,
• To protect themselves from abuse from unethical
employees and competitors,
• To protect their own reputations,
• To protect their own employees, and
• To create an environment in which workers can act in
ways consistent with their values.
How Corporations Observe Ethics
in Their Organizations?
• Publish in-house codes of ethics to be strictly
followed by all their associates.
• Employ people with a reputation for high
standards of ethical behavior at the top levels.
• Incorporate consideration of ethics into
performance reviews.
• Give rewards for ethical behavior.
• Business Ethics: Top-down Approach

Moral Development
Heinz Dilemma
Kohlberg's Stages of Moral Development
Level 1 - Pre-conventional morality
Stage 1. Obedience and Punishment

Orientation. The child/individual is good in
order to avoid being punished. If a person is
punished, they must have done wrong.
Stage 2. Individualism and Exchange. At this
stage, children recognize that there is not just
one right view that is handed down by the
authorities. Different individuals have
different viewpoints.
Level 2 - Conventional morality
Stage 3. Good Interpersonal Relationships. The
child/individual is good in order to be seen as
being a good person by others. Therefore,
answers relate to the approval of others.
Stage 4. Maintaining the Social Order. The
child/individual becomes aware of the wider
rules of society, so judgments concern obeying
the rules in order to uphold the law and to avoid
guilt.
Level 3- Post-conventional morality
 Stage 5. Social Contract and Individual Rights.

The child/individual becomes aware that while
rules/laws might exist for the good of the
greatest number, there are times when they will
work against the interest of particular
individuals.
Stage 6. Universal Principles. People at this stage
have developed their own set of moral guidelines
which may or may not fit the law. The principles
apply to everyone.

BECG Chapter 1-New

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

BECG Chapter 1-New

Uploaded by

Copyright:

Available Formats

Chapter 1

Business Ethics: An Overview

Richard William Paul and Linda Elder define

Business ethics is the application of general

It is based on the principle of integrity and

Business ethics relates to issues of “what is right”

Business ethics operates as a system of values,

Basis for Comparison Ethics Values

Value is defined as the

What are they? System of moral principles. Stimuli for thinking.

Differs from person to

Put simply, morals are the customs

What is it? General principles set by group Response to a specific situation

Morals may differ from society to

Morals are expressed in the form of

Freedom to think and

Personal ethics refers to the application of values

 The basic principles people are expected to follow in

Managers must observe the following ethical

 1974: The first conference held at the University of Kansas.

 (i) Ethical Theory and Business by Tom Beauchamp and Norman

• A business organization competes in the global market on

• The value-based management and ethics that an

• To protect its own interest,

• To prevent harm to the general public,

• Business Ethics: Top-down Approach

Stage 1. Obedience and Punishment

 Stage 5. Social Contract and Individual Rights.

You might also like