Ethics is the area of philosophy related with the assessment of the values of the human beings.

Ethics: a set of values or group of moral principles that are right and good

a code or principles of behavior or conduct governing an individual or group

Ethics is concerned about the individual's moral decisions to do right and wrong. Decisions are taken in
the organization may be made by individuals or in team, but the decisions taken inside company is
influenced by the culture of the organization. The decision to be made in morally way, that is the
employees in the organization must perceive that the decision made by the people is the right course of
action. Unethical behaviour may damage the organization’s reputations and eventually profits could
decrease. Thus, Business Ethics plays important role in making the goodwill from the public.

 attract customers to the firm's products, thereby boosting sales and profits
 make employees want to stay with the business, reduce labour turnover and therefore
increase productivity
 attract more employees wanting to work for the business, reduce recruitment costs and
enable the company to get the most talented employees
 attract investors and keep the company's share price high, thereby protecting the business
from takeover.

Business ethics has evolved through time and across disciplines into a discipline that is one of
the most important topics in the field of business.

For the historical development of business ethics, it is important to start with a definition of business
ethics in a global context. We define business ethics from a managerial perspective as ‘decisions about
what is right or wrong (acceptable or unacceptable) in the organizational context of planning and
implementing business activities in a global business environment to benefit: organizational
performance, individual achievement in the workplace, social acceptance and approval of peers and
coworkers in the organization as well as responding to the needs and concerns of relevant internal and
external stakeholders.’ The goal of proactive ethical organizations is to develop an ethical organizational
culture. This requires strategies, systems, and procedures to ensure that the firm’s ethics and compliance
program is in place and operating effectively with continuous assessment and improvement.

It is important to provide an initial overview of our managerial approach to understand

the diverse and broad span of influences on the discipline. To engage in a historical overview of ethics
would require the description of thousands of years of philosophy, social, cultural influences as well as
the religious writings on this topic. We narrow the scope to describe the development of business ethics.

Business ethics has only existed as an academic field since the 1970s. During the 1960s, corporations
found themselves increasingly under attack over unethical conduct. As a response to this, corporations -
most notably in the US - developed social responsibility programmes which usually involved charitable
donations and funding local community projects. This practice was mostly ad hoc and unorganised
varying from industry to industry and company to company. Business schools in large universities began
to incorporate ‘social responsibility’ courses into their syllabi around this time but it was mostly focused
on the law and management strategy.
Social responsibility has been described as being a pyramid with four types of responsibility involved -
economic (on the bottom level), then legal, ethical and finally philanthropic. Ethical issues were dealt
with in social issues courses
however, and were not considered in their own right until the 1970s when philosophers began to write
on the subject of business ethics. Previous to this development, only management professionals,
theologians and journalists had been highlighting problems of this nature on a regular basis.
When philosophers became involved they brought ethical theory to bear on the relevant ethical issues
and business ethics became a more institutionalised, organised and integral part of education in
business. Thereafter annual conferences, case books, journals and text books were more regular and
established.
This new aspect of business ethics differentiated it from social issues courses in three ways:
1) Business ethics provided an ethical framework for evaluating business and the corporate world.
2) It allowed critical analysis of business and development of new and different methods. (This also
made business ethicists unpopular in certain circles.)
3) Business ethics fused personal and social responsibility together and gave it a theoretical foundation.
In this way, business ethics had a somewhat broader remit than its predecessor (the social issues course)
and was a good deal more systematic and constructive. Business ethics also recognised that the world of
business raised new and unprecedented moral problems not covered by personal systems of morality.
Common-sense morality is sufficient to govern judgments about stealing from your employer, cheating
customers and tax fraud. It could not provide all the necessary tools for evaluating moral justification of
affirmative action, the right to strike and whistle-blowing.

Business ethics seems to have no history. It is one of the stranger aspects of a discipline that
routinely invokes the names of long-dead philosophers that its history seems murky,
unresolved. Business ethics textbooks will sometimes include a brief survey of the (potted)
history of business ethics, but rarely do their accounts agree with each other -- in fact some
report narratives which seem to have very little to do with business at all. There appears to be
a consensus that in some way business ethics simply did not exist before the 1970s
(McMahon 2002). Others appear to think that philosophers such as Aristotle spent time
expounding on the ethics of business. There are even those who propose to find ethics in all
parts of business -- what might be considered a glib understanding from a historical and
conceptual perspective. Cultural theorists may rightly believe that everything is of semiotic
value and some moralists see ethical issues in all parts of daily life. Yet to describe business
ethics in terms of universal experience is surely to rob the discipline of focus, not to mention
to make it sui generis in terms of the broader history of ideas.
It seems to me that there are three broad periods which we might reasonably think of as
epochal in business ethics. A fortune honestly made was considered a virtue in ancient Greek
tradition, but there is no sense of a particularly nuanced or developed tradition of business
ethics in classical philosophy. Yes, the ancient Greeks were a mercantile race, but no, the
ethics of business practice does not seem to have been of much concern in the writings of
ancient philosophers which have come down to us today. The medieval censors through
whom we experience such ancient writers may simply have judged business ethics trivial. But
there is no sense from St Thomas Aquinas that he had any classical predecessors when he
considered the notion of what was a just price in his Summa Theologica (ed. O’Sullivan
1952). Aquinas would seem to be the founder of business ethics, at least in terms of a
continuous tradition of a considered ethics of fairness in business activity.
If you were angry with a customer, rival or supplier in the ancient world, you could usually
go to a court to seek redress -- but this, then, was a matter of law, not ethics. Similarly, you
could go to a magician and get them to compose a curse on those who you reckoned had
slighted you -- and it was typical that ancient curses would justify why their commissioners
had ordered them made (Gager 1992). But like the Confucian texts which warn of the
perfidious nature of merchants, it would seem perverse indeed to attempt to see a rudimentary
form of business ethics in such expressions. And although the Prophet Mohammed was a
businessman, a continuous Koranic tradition of business ethics seems an equally fraught
notion. Instead it seems that the beginnings of a considered tradition of business ethics must
be sought in late medieval Italy, the home of the artistic and scientific renaissance that
accompanied the rebirth of European trade.
Aquinas’s just price theory was followed by a series of further writings on how a good
Christian might undertake business honourably. Indeed medievalists could point to the
writings of a Christine de Pizan (trans. Lawson 2003) or one of the many medieval trade
manuals for signs of an ethical facet to business literature already in Aquinas’s era. But unlike
his early-modern continuator Johannes Nider (trans. Reeves 1966), Aquinas was the king of
Christian philosophers, aiming to reconcile as he did the Greek tradition (as articulated in
Aristotle) with the teachings of Scripture. Although Christian philosophers are often written
out of ethics texts today, Aquinas remains a towering figure in the history of Western
philosophy (Stump 2003).
Immanuel Kant is the figure who has most clearly usurped the position of Aquinas, but
despite the constant recourse to Kantian approaches in modern business courses, the German
idealist par excellence had little interest in business philosophy (cf. Bowie 1997). Indeed his
age could be said to be the one which swept away the Aquinan tradition, and it was in
reaction to this new amorality that the first major development in Western business ethics
emerged. After all, the three “ethics” which have traditionally been seen as underlying the
emergence of capitalism could all be seen to undermine Aquinas’s notion of just price. The
market ethic of (moral philosopher) Adam Smith could be seen as an excuse to let market
forces decide what a just price was. The liberty ethic of John Locke similarly seemed to some
to be a tacit justification for self-centeredness. Even the more crucial focus on (or justification
of) acquisitiveness that Max Weber thought to see explained in Calvinist theology seemed to
grant the accumulation of capital a moral legitimacy that could outstrip other concerns of
ethicality (Wren and Bedeian 2009). If work was good for the soul, the sweatshop could
validly be seen as a moral reformatory. The moral value now attributed to work could justify
reform through hard labour. As the motto of the Nazi concentrations camps had it Arbeit
macht Frei, work makes you free.
The perverse moralities preached by the first noveau capitalists of the Britain of the
industrial revolution alarmed many contemporary observers. A new form of business ethics
arose as a critique of the Dickensian norms which had emerged in the land of Manchesterism.
Socialism arose as a moral critique of the perversities which had arisen in the new society. It
should not be forgotten that Engels’s first work (1845) was penned after a visit to Manchester.
It was also Manchester, the first capital of industrialism, that proved the intellectual trying
ground of Welshman Robert Owen. Owen was the first management thinker to outline a
comprehensive ethical vision for his workforce. A utopian visionary, his famous communalist
experiment at New Lanark brought him fame throughout Europe and was based around his
vision of a new moral order. And it was clearly a moral order based on an experience of
factory life that Owen took as his main point of departure (Owen 1857-58, Donnachie 2000).
Owen was a confident of Jeremy Bentham, and although neither as utilitarian nor atheistic
as his more famous fellow, Owen outlined a clear moral vision for capitalists and managers
during his time at New Lanark. His New Moral World of 1836 could well be considered the
first major contribution to business ethics, except that Owen was not satisfied with rethinking
the ethical bases of business, but extended his critique to the whole of British society. Owen
founded the British Co-operative movement, established a system of labour exchanges,
lobbied for the introduction of the first Factory Act and for paying labourers just wages
(Harrison 1969). But a sustained historiography of business ethics did not continue on after
his death. If anything the reverse might be said to have been true -- socialism instead became
increasingly seen as a movement in opposition to business, particularly so as a decidedly
American twang began to emerge in reckonings of capitalist values.
Much as Britain’s much earlier industrialisation lead to the emergence of all sorts of social
and governmental failures, American businessmen of the nineteenth century seemed more
than intent on revisiting the mistakes of their Transatlantic cousins than learning from them.
Visions of children labouring in sweatshops are part-and-parcel of American industrialisation
well after such moral blemishes had been outlawed in Britain. Indeed the era of the US robber
barons still proves welcome fodder for revisionist historians, as the American equivalents of
the Cadburys and Leverhulmes are re-excavated and the perfidious influence of Spencerism
and Fordism are downplayed (Josephson 1934, Folsom 1987). The rise of American
philanthropists such as Andrew Carnegie and John D. Rockerfeller Sr. are rarely seen by
modern apologists of American business frailty as examples of what Marx and Engels derided
as self-serving philanthropy (e.g. Wren and Bediean 2009). But the remarkable bequests of
such men (not to mention the emergence of the Community Chest movement) are often seen
as the roots of an American business ethics that was more prominent, more organised and
mainstream than any lesson Great Britain had to offer.
Railroad journalist Henry Poor (of Standard and Poor’s) served as some kind of business
conscience in the ante-bellum era (Chandler 1956). Yet it was not until the days of Frederick

The Role of Business Ethics Today

Business and IT students spend the majority of their time at university learning about economics,
business development, software engineering and computer programming. This is all valuable and
necessary knowledge to prepare them for the demands of employment in the business/IT sector.
However, running or working in a business will raise many difficulties that are completely unrelated to
the skills or knowledge gained in university.
How do you evaluate such problems as hiring the more qualified candidate for a job when she has a
disability requiring costly adaptations to the work environment, outsourcing production materials from
countries where child labour and sweatshops are prevalent etc.?
In recent years there have been several business scandals that caused serious damage to the credibility
of the companies involved, occasionally the entire industry in which they operate, and the numerous
stakeholders of the business. One such example is the collapse of Barings Bank - the actions of one rogue
trader incurred losses of almost US$1 billion. It has been discovered that many high profile people (at
home and abroad) are involved in tax-evasion, insider trading and fraud, Charlie Haughey and Martha
Stewart are two such examples of people with considerable wealth and public standing who have been
involved in questionable business dealings.
At this stage in your course, you are well equipped with knowledge of your subject, and this will be built
on when you go into the workplace due to on-going training and other such practices. But it is fair to say
that some of you may have never had the chance to think of the ethical issues entailed in business and
IT. During this course on business ethics it is hoped that you will be given such an opportunity and attain
a working knowledge of the different theoretical frameworks that can be applied to business.

Ethics

Objectives:

1. What are ethics?

2. What ethical theories and frameworks can impact our analysis of ethical behavior

examples to demonstrate these frameworks you are already learning

3. Professional ethics

“Engineers shall hold paramount the safety, health, and welfare of the public in the performance of their
professional duties.” ASCE Code of Ethics

1. What are ethics?

Ethics: a set of values or group of moral principles that are right and good

a code or principles of behavior or conduct governing an individual or group

Engineering Ethics: activity or discipline aimed at understanding the moral values that should guide
engineering practice

(only since late 1970s has systematic attention to ethics been devoted by engineers and
others, as spurred by a national engineering ethics project sponsored by the U.S.
Government (NSF, NEH) in 1978-1980)

Why study ethics? to increase your ability as engineers to responsibly confront moral issues raised by
technological activity
not always in short term best interest, and bring long-term into decision making

ethics are imprecise, complex, and in a given situation may conflict

vague = which moral considerations to apply to a situation and in what “hierarchy”

conflicting moral reasons are common, resulting in a moral dilemma

disagreement over how to interpret, apply, and balance moral reasons in particular situations

Illustrative “Thinking” Exercise

You and your best friend graduate from high school and decide to take a cruise the summer
before starting college at Yale University in the fall. While on the boat, tragedy strikes and the boat
begins to sink. Your friend is severely injured, but you both manage to get into a life boat. You float in
the ocean, with only a little water and sharks circling. Your friends asks you to promise that if for some
reason you are rescued that you will see that all their money is donated to the local Country Club. You
agree. Your friend dies, and as you wait to die you begin to see life differently. By a miracle, an oil tanker
rescues you. You make it back, but decide to donate the money to the Burn Ward at the local children’s
hospital instead. Was your decision ethical?

Why or why not?

Questions to ask yourself to determine “Is a Decision Ethical?”

Is it legal? Does it conform to policies and codes? Is it honest?

Does it pass the benefit/harm test? Whom does it harm? Whom does it benefit?

Can these be justified? -> cost/benefit analysis; risk assessment

Does it treat everyone equally? equitably? If not, can the differences be justified?

(think about affirmative action, American Disabilities Act)

Does it deny anyone his or her rights? (sometimes these collide?)

Can I live with my decision? Does it rest comfortably on my conscience?

Can it pass the test of public scrutiny? Could I disclose it fully without hesitation to my
supervisor, my family, or to a reporter from the New York Times?
 do ethical principles apply to non-humans?

Environmental Ethics - Aldo Leopold’s Land Ethic: “A thing is right when...”

The Valdez Principles: to modify company policies to incorporate environmental ethic

2. Ethical theories and frameworks that can impact an analysis of ethical behavior

examples to demonstrate these frameworks you are already learning

Four Principal Ethical Theories:

1. Rights Ethics - act is morally right when it respects rights relevant to a situation

Examples: rights for “life, liberty, pursuit of happiness”

other rights: private property, privacy, freedom of speech, fair trial, ...

human rights and non-human rights?

2. Duty Ethics - act it right when it conforms with duties

Examples: uphold promise, be fair, respect personal freedom

duty to protect the weak, duty to comply with laws, ...?

duty to do job to best of ability

3. Utilitarianism - right action consists entirely in producing good consequences

Interpretation: good intentions, outcomes, results; “ends justify means”

Example: most good for most people is optimal

4. Virtue Ethics - persons are morally good when their character is virtuous and expressed in
action, attitude, and relationships (oldest, prominent in classical Greek thought and religion). Example
Virtues: honesty, fairness, conscientiousness, etc.

Note that you may or may not agree with all of the above ethical theories. More specifically, you may
generally agree with the overall theory, but individuals often disagree about what are specific rights,
duties, and virtues.
Four Secondary Theories:

1. Ethical Egoism - act is correct when it maximizes one’s own interests

2. Corporate Egoism - act is acceptable when it maximizes the interest of a corporation

3. Ethical Relativism - act is right when it is approved by a group (conforms to laws)

4. Divine-command ethics - act is correct when it is approved by God

Situational ethics vs Absolutism

Situational ethics means that depending on the specific circumstances, different rights, duties,
values, etc. may apply. Absolutism implies that regardless of a situation, the basic ethical foundations
remain the same. For example, most people would agree that killing is wrong / unethical. However,
absolutism implies that it is always wrong. Therefore, a person who was absolutist would not be in the
military and would not use deadly force to defend themself. Alternatively, situational ethics would allow
that killing in some situations IS ethical. For example, the idea of justifiable homicide, such as in self-
defense. Or defense of ones country in time of war. Again, neither view is either right or wrong. Ethical
theory can support either argument.

Stages of moral development:

It is generally recognized that people tend to transition between different levels of moral understanding
throughout their lifetime. As small children, we don’t innately understand right from wrong, do not
know what laws govern society, etc. As we learn, our views evolve over time. These so-called “stages of
moral development” are often classified as follows:

1. obedience or punishment

2. marketplace morality

3. conformity

4. law and order

5. social contract

6. universal human rights

7. integrity - whole environment ethic

Alternatively, Kohlberg grouped moral development into 3 MAIN levels:

pre-conventional = self benefit, avoid punishment, defer to authority or power

conventional = conform blindly to societal norms or customs

post-conventional = autonomous, reasoned positions beyond self interest

Steps to confront moral dilemma:

1. Identify relevant moral factors and reasons

what are the conflicting responsibilities, competing rights, and clshing ideals involved

2. Gather all available information that is relevant to the moral factors involved

3. Rank the moral considerations in order of importance (if possible)

4. Consider alternative courses of action to resolve the dilemma, considering the FULL implications of
each

5. Talk with others to get alternative perspectives on the dilemma

6. Arrive at a reasoned judgment by weighing all moral factors on the basis of your information

Ethics of Rules and Rights vs Ethics of CARE

Case Studies

1. What would a person at each stage of moral development do?

2. What do societal values require in this case?

3. What do professional ethical standards require in this case?

4. What would you do?

To “solve” case study homework problems, you must be willing to tolerate some uncertainty in making
difficult moral judgments....but be able to adequately express and defend your views. Also, realize that
in your career as an engineer you should aim to integrate your personal convictions into your
professional activities.

3. Professional Ethics

This section discusses some of the key facets of professional ethics. Specifics for each of these areas are
provided in the professional codes of ethics from the National Society of Professional Engineers (NSPE)
and the American Society of Civil Engineers (ASCE).

Duty to the Public and Clients

“Being ethical also means being honest. In carrying out large and complex assignments, we confront
issues that aren’t purely technical. There are business and financial ramifications to consider in our
projects, and sometimes we must suppress our engineering egos in favor of the client’s interests.” Joel
Cerwick, vice president Burn’s & McDonnell

Avoid conflict of interest: no favoritism, based on personal biases, during engineering practice. This can
include things such as influencing decisions that will yield personal gain.

“The Architecture and Engineering Firm and its client cannot forget their duty to the general public. We
design facilities that are used by people who rely on the engineer’s skill, diligence and ethics for their
safety. Sometimes governmental organizations are our clients -- which means that the pulbic at large is
our ultimate client.” John Riley, vice president, Burn’s & McDonnell

Do not perform a task for which you are not qualified.

It is important not to “fake” knowledge. What you don’t know could result in a failure of your project,
loss of human life, cost over-runs, etc.

Engineering disasters in history have frequently been linked to ethical judgments regarding the balance
of safety and risk

Challenger Exxon Valdez oil spill

 3 Mile Island, Chernobyl asbestos use

Chemical plant in Bhopal cigarettes

Key professional ethics are:

1. hold paramount the safety, health, and welfare of the public

2. perform services only in areas of competence

3. issue public statements only in objective and truthful manner

4. act in professional manner for each client and avoid conflicts of interest

5. not compete unfairly with others

6. act in a manner to uphold and enhance the honor, integrity, and dignity of the profession

7. enhance personal development of self and others

“..there are, under peer review for people found to have blatantly violated [the code of ethics],
economic penalties associated with the kinds of sanctions that the profession can apply. In extreme
cases the engineering society can remove an engineer from the society, and when the word gets out
they will basically be black-listed.” Stratmoen, S. “The Ethics of Engineering.” Iowa Engineer, March
1991, p. 18-19.

Three Principles

There are three different principles that engineers sometimes use to guide their decision making.
Different engineers subscribe to different principles. None of these is exclusively right or wrong... just
different points of view.

1. Engineers should not impose their moral views on society; they should let society decide what
projects are undertaken.

“guns for hire” view

“should we...accept the hazards of pesticides in order to feed hungry people? Stop building a
dam and thus protect an endangered fish? These are political questions: it is...a little frightening to see
citizens abdicate their responsibilities by assigning them to the realm of engineering ethics.”
 “...each person is entitled to legal representation, is it not equally important the each legitimate
business entity...should have access to expert engineering advice? ...engineers will sometimes labor on
behalf of causes in which they do not believe”

2. Engineers should refuse to work on projects which conflict with their moral values.

engineers should not be neutral...refuse to work on certain projects...use their skills only for
projects of positive value to humanity

implies that moral values are personal and not professional

may therefore be disagreements about what is “good for humanity”

3. Engineers should refuse to work on projects that increase risk unless the public is informed about the
risk and given the opportunity to consent to the project.

engineering as social experimentation, and always involving risk

adequately informing the public: neither the extreme views of one or two

secrecy in engineering?

the building of atomic weapons...

decision making (such as the Ford Pinto)

even given full disclosure, can the public fully appreciate the balance of costs:benefits,
risks:rewards that enter in to engineering decisions?

Ethical Issues Associated with Whistle-Blowing

loyalty to a corporation is a non-issue?

what is good about loyalty? is it always good to be loyal? if not, when?

what should you do if loyalties conflict?

NSPE Code states “..will serve with devotion his employer, his clients, and the
public”...these sometimes DO conflict
Whistle-Blowing: the act by an employee of informing the public on the immoral or illegal behavior of an
employer or supervisor (obligation to public overrides obligation to employer?)

may be other, better solutions to the problems than whistle-blowing

problem: how to maximize safety or reduce un-safety to a minimum

preclude the need for whistle-blowing

On a scale of 1 to 7 rank the frequency you believe these ethical issues
arise for practicing engineers, where 1 = never and 7 = very frequently

On a scale of 1 to 7 rank the seriousness of these problems,

1 = not serious at all, 7 = extremely serious

Compare your ratings to the average results when consulting engineers were polled.

Your ratings Consulting

Engineers

Ethical Issue Frequency Serious Frequency Serious

Rating Rating Rating Rating

Technical Incompetence or 4.14 5.95

misrepresentation of
competence

Conflicts of interest 3.70 5.60

Failure to protect public health, 2.88 6.12

safety or welfare

Improper relations with clients, 3.12 5.40

contractors, etc.

Poor quality control or quality 4.72 5.69

of work
Failure to protect the 3.19 5.36
environment
Koehn, E. “Ethical Issues Experienced by Engineering Students and Practitioners.” 1992. JPIEEP, Vol
119(4): 402-408.
References

Atchison, G.J. 1991. Environmental Science U St 223, Iowa State University, Class Notes.

Baum, R. J., Ed. 1980. Ethical Problems in Engineering. Volume 2: Cases. Rensselaer Polytechnic Institute, Troy,
NY.

Bench Mark, Aug 1990, Burns and McDonnel, “Ethics”.

Bovay, H.E. 1992. “Ethics: A Necessary Foundation of a Professional.” The Bent, Summer 1992, p. 21-25.

Johnson, D. G. 1991. Ethical Issues in Engineering. Prentice Hall.

Killingsworth, R. A. and D. J. Twale. 1994. Integrating Ethics into Technical Curricula. J. of Prof. Issues in Engr. Edu
and Practice. 120(1): 58-69.

Koehn, E. 1994. Ethical Issues Experienced by Engineering Students and Practitioners. J. of Prof. Issues in Engr.
Edu and Practice. 119(4): 402-408.

Madsen, P. “The Ethics of Teaching Engineering.” Notes from presentation at the NSF Engineering Education
Scholars Workshop

Martin, M.W. and R. Schinzinger. 1996. Ethics in Engineering. Third Edition. McGraw-Hill Companies, Inc.

McCuen, R. H. 1994. Constructivist Learning Model for Ethics Education. J. of Prof. Issues in Engr. Edu and
Practice. 120(3): 273-278.

Nair, I. 1997. “Ethics in Engineering II.” Materials presented at the NSF Engineering Education Scholars
Workshop, Carnegie Mellon University.

Porter, J.C. 1993. Ethics in Practice. J. of Prof. Issues in Engr. Edu and Practice. 119(1): 46-50.

Stratmoen, S. “The Ethics of Engineering.” Iowa Engineer, March 1991, p. 18-19.