2017-3 Business Ethics Chapter One 1

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Business Ethics
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Chapter One
Basic Principles: Ethics and Business

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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.
Example: B.F. Goodrich A7-D Fraud
Moral Standards = norms about the kinds of actions
that are morally right and wrong, as well as the values
placed on what is morally good or bad.
Non-Moral Standards: The standards by which we judge
what is good or bad and right or wrong in a non-moral
way.
Copyright 2012 Pearson Education, Inc. All rights reserved.

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Five Characteristics of Moral Standards
Involve significant injuries or benefits
Not established by authority figures
Should be preferred to other values including self-interest
Based on impartial considerations
Associated with special emotions and vocabulary.

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What is Business Ethics?
Broadly,ethics is the discipline that examines ones

moral standards or the moral standards of a society to
evaluate their reasonableness and their implications for
ones life.
Business ethics is a specialized study of moral right and

wrong that concentrates on moral standards as they
apply to business institutions, organizations, and
behavior.

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Types of Ethical Issues
Systemicethical
questions about the social, political,
legal, or economic systems within which companies
operate.
Corporateethical questions about a particular
corporation and its policies, culture, climate, impact, or
actions.
Individualethical questions about a particular
individuals decisions, behavior, or character.

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Can ethical qualities be attributed to
corporations?
View#1: Corporations, like people, act intentionally and

have moral rights, and obligations, and are morally
responsible.
View #2: It makes no sense to attribute ethical qualities
to corporations since they are not like people but more
like machines; only humans can have ethical qualities.
View #3: Humans carry out the corporations actions so
they are morally responsible for what they do and ethical
qualities apply in a primary sense to them; corporations
have ethical qualities only in a derivative sense.

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Arguments Against Business Ethics
In
a free market economy, the pursuit of profit will ensure
maximum social benefit so business ethics is not needed.
A managers most important obligation is loyalty to the

company regardless of ethics.
Solong as companies obey the law they will do all that

ethics requires.

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Arguments Supporting Business Ethics
Ethics applies to all human activities.
Business cannot survive without ethics.
Ethics is consistent with profit seeking.
Customers, employees, and people in general care about

ethics.
Studies
suggest ethics does not detract from profits and
seems to contribute to profits.

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Corporate Social Responsibility
Corporate social responsibility refers to a corporations

responsibilities or obligations toward society.
Business ethics is both a part of corporate social

responsibility and part of the justification for corporate
social responsibility.
Shareholder vs. Stakeholder Theory

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New Issues in Business Ethics
Advances in technology often create new issues for

business ethics.
Currently, advances in information technology
are creating new issues in business ethics.
Increasingconnections between the economic and
social systems of different nations, known as
globalization, has also created new issues in
business ethics.

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Resolving Cross-Cultural Ethical
Differences
Moral Relativism = the theory that there are no ethical

standards that are absolutely true and that apply or
should be applied to the companies and people of all
societies.
Objections to Moral Relativism:
Some moral standards are found in all societies;
Moral differences do not logically imply relativism;
Relativism has incoherent consequences;
Relativism privileges whatever moral standards are
widely accepted in a society.

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Resolving Cross-Cultural Ethical
Differences
According to the Integrative Social Contracts Theory

(ISCT), there are two kinds of moral standards:
Hypernorms: those moral standards that should be
applied to people in all societies.
Microsocial norms: those norms that differ from one
community to another and that should be applied to
people only if their community accepts those particular
norms.

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Kohlbergs Three Levels of Moral
Development
First Level:
Pre-conventional Stages
Stage One: punishment and obedience orientation
Stage Two: instrumental and relative orientation
Second Level: Conventional Stages

Stage One: interpersonal concordance orientation
Stage Two: law and order orientation
Third Level: Post-conventional Stages

Stage One: social contract orientation
Stage Two: universal principles orientation

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Moral Reasoning
The reasoning process by which human behaviors,

institutions, or policies are judged to be in accordance
with or in violation of moral standards.
Moral reasoninginvolves:
The moral standards by which we evaluate things
Information about what is being evaluated
A moral judgment about what is being evaluated.

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Four Steps Leading to Ethical Behavior
Step One: Recognizing a situation is an ethical situation.
Requires framing it as one that requires ethical
reasoning
Situation is likely to be seen as ethical when:
involves serious harm that is concentrated, likely,
proximate, imminent, and potentially violates our
moral standards
Obstacles to recognizing a situation:
Euphemistic labeling, justifying our actions,
advantageous comparisons, displacement of
responsibility, diffusion of responsibility, distorting
the harm, and dehumanization, and attribution of
blame.
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Step Two:Judging the ethical course of action.

Requires moral reasoning that applies our moral
standards to the information we have about a situation.
Requires realizing that information about a situation
may be distorted by biased theories about the world,
about others, and about oneself.

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Step Three:Deciding to do the ethical course of action.

Deciding to do what is ethical can be influenced by:
The culture of an organizationpeoples decisions
to do what is ethical are greatly influenced by their
surroundings.
Moral seductionorganizations can also generate a
form of moral seduction that can exert subtle
pressures that can gradually lead an ethical person
into decisions to do what he or she knows is wrong.

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Step Four: Carrying out the ethical decision.
Factors that influence whether a person carries out

their ethical decision include:
Ones strength or weakness of will
Ones belief about the locus of control of ones

actions

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Moral Responsibility
ThreeComponents of Moral Responsibility

Person caused or helped cause the injury, or failed to
prevent it when he or she could and should have
(causality).
Person did so knowing what he or she was doing
(knowledge).
Person did so of his or her own free will (freedom).

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Factors that Mitigate Moral Responsibility
Minimal contribution
In general, the less ones actual actions contribute to
the outcome of an act, the less one is morally
responsible for that outcome.
Uncertainty
A person may be fairly convinced that doing something
is wrong yet may still be doubtful about some
important facts, or may have doubts about the moral
standards involved, or doubts about how seriously
wrong the action is.
Difficulty
A person may find it difficult to avoid a certain course of
action because he or she is subjected to threats or
duress of some sort or because avoiding that course of
action will impose heavy costs on the person.

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Basic Principles: Ethics and Business

Ethics is the study of morality.

Copyright 2012 Pearson Education, Inc. All rights reserved.

Involve significant injuries or benefits

Not established by authority figures

Should be preferred to other values including self-interest

Based on impartial considerations

Associated with special emotions and vocabulary.

Copyright 2012 Pearson Education, Inc. All rights reserved.

Broadly,ethics is the discipline that examines ones

Business ethics is a specialized study of moral right and

Copyright 2012 Pearson Education, Inc. All rights reserved.

Copyright 2012 Pearson Education, Inc. All rights reserved.

View#1: Corporations, like people, act intentionally and

Copyright 2012 Pearson Education, Inc. All rights reserved.

A managers most important obligation is loyalty to the

Solong as companies obey the law they will do all that

Copyright 2012 Pearson Education, Inc. All rights reserved.

Ethics applies to all human activities.

Business cannot survive without ethics.

Ethics is consistent with profit seeking.

Customers, employees, and people in general care about

Copyright 2012 Pearson Education, Inc. All rights reserved.

Corporate social responsibility refers to a corporations

Business ethics is both a part of corporate social

Shareholder vs. Stakeholder Theory

Copyright 2012 Pearson Education, Inc. All rights reserved.

Advances in technology often create new issues for

Copyright 2012 Pearson Education, Inc. All rights reserved.

Moral Relativism = the theory that there are no ethical

Copyright 2012 Pearson Education, Inc. All rights reserved.

According to the Integrative Social Contracts Theory

Copyright 2012 Pearson Education, Inc. All rights reserved.

Second Level: Conventional Stages

Third Level: Post-conventional Stages

Copyright 2012 Pearson Education, Inc. All rights reserved.

The reasoning process by which human behaviors,

Copyright 2012 Pearson Education, Inc. All rights reserved.

Step Two:Judging the ethical course of action.

Copyright 2012 Pearson Education, Inc. All rights reserved.

Step Three:Deciding to do the ethical course of action.

Copyright 2012 Pearson Education, Inc. All rights reserved.

Step Four: Carrying out the ethical decision.

Factors that influence whether a person carries out

Ones strength or weakness of will

Ones belief about the locus of control of ones

Copyright 2012 Pearson Education, Inc. All rights reserved.

ThreeComponents of Moral Responsibility

Copyright 2012 Pearson Education, Inc. All rights reserved.

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