Business Ethics

Chapter
2
Internalizing Ethics
in the Conduct of
Business
Learning Outcomes
At the end of this chapter, you should be able to:
 Identify and discuss the common ethical dilemmas faced by business

people.
 Identify and explain the three levels of decision making.
 Differentiate between ethical management and management of

ethics.
 Explain role as an ethical concept.
 Outline the role of leadership to inculcate an ethical culture in a business

organization.EXT
Business Ethics All Rights Reserved
© Oxford Fajar Sdn. Bhd. (008974-T), 2014 1– 3
Learning Outcomes
( continue….)
 Discuss the role of managers as economic actors, company leaders
and community leaders.
 Compare and contrast between compliance–based code of ethics

and integrity- based code of ethics and recognize their application to
inculcate an ethical corporate culture.
 Discuss the importance of integrating economic, legal and moral

dimensions to make effective and fair business decisions.
 Identify and explain the three check questions that one has to ask
and self-assess when faced with an ethical dilemma.
 Discuss the role of religion in resolving ethical issues in business.

Common Ethical Dilemmas of
Business People
 Balancing the economic character of

organizations with justice and fairness
 Conflict of interest
 Personality traits
 Responsibility to stakeholders
 Level of openness

The Three Levels of Decision
Making

Individual
 Organization
 Business System
 Identifying the appropriate level for a decision is

important, because an ethical problem may have no
solution on the level it is approached.

Difference between Ethical
Management and Management of
Ethics
 Ethical Management – acting ethically as a Manager by

doing the right thing for individual success and
organizational effectiveness.
 The Management of Ethics – acting effectively in

situations that have an ethical aspect.
Business Ethics CE Topic 1 - Jul 03 All Rights Reserved

Managers & Ethics
 Most managers think they are ethical but only to some

degree of relevancy to their work.
 There’s no difference from being ethical in business

and in private life.
 High-level managers have a responsibility for creating

and maintaining ethical corporate climate that protects
organization against unethical and illegal conduct by its
members.
Business Ethics CE Topic 1 - Jul 03 All Rights Reserved

Ethical Management
 Acting ethically as a manager by doing the right

thing.
 Ethical misconduct has shown severe harm to

many individuals and organizations.

Management of Ethics
 Acting effectively in situations that have an ethical aspect both in

internal and external environment of business.
 For this to function, organizations internally bind their members

through myriad rules, regulations, policies and values that must be
prudently managed.
 Effective organizational functioning also depends on gaining the

acceptance of these policies, rules and regulations.
 The acceptance of these policies, rules and regulations requires a

perception of fairness and commitment of employees.

Management of Ethics : What it
takes …
 It is necessary for managers to possess some specialized

knowledge to practise ethical management and management of
ethics.
 Managers must also have skills that come with experience and
training to make sound ethical decisions and implementing them.
 Needs for specialized knowledge and skills is especially acute when

business is conducted abroad.

Role as an Ethical Concept

A structured set of relationships with
accompanying rights and obligations that are
sometimes added to those of ordinary morality
over and above of everyday life

Roles, obligations and
justifications
1. People in certain positions have responsibilities to

many different groups and must consider a wide range
of interests.
2. Roles are created in order to serve society better as a

whole.

Ethical Values of Board
Members
Because the board members are stewards for not only the assets of the company but also the
interests of all stakeholders, Schwartz, Dunfee and Kline recommend six core values to guide their
behaviour as board members:
1) Honesty – truthful and forthright with their decisions
2) Integrity - act with honour and decision will always coincide with the ethical vision and standards
of the firm
3) Loyalty- avoid all deals that fulfill their self interests. Must fulfill the interests of stakeholders.
Objective in their decision and hold classified any confidential and/or proprietary information
4) Responsibility- Fulfill all their assigned responsibilities and their actions would be transparent.
Accountable for their actions.
5) Fairness- make fair decisions and treat others in a fair and respectable manner.
6) Citizenship- Act as good citizens for the communities in which the firm has operation. Make
decisions that would not be considered harmful to the environment.

What are the Roles of Managers?
 Managers as Economic Actors

- makes sound economic decisions, ensuring profitability for the growth of
company.
 Managers as Company leaders / Trustees

- manage assets prudently. Fulfill the needs of stakeholders and balance
any conflicting interests.
 Managers as Community leaders

- exercising powers given upon them that demonstrates their corporate
leadership.

The Three Dimensions of
Effective Business Decisions
The economic dimension – thinking about business

benefits
The legal dimension – thinking about administrative

decision
The moral dimension – thinking about what is the best

thing to do

An Integrated Approach to
Effective Decision Making in
Business
 Effective business decision involves an integration of all

three points of view.
 Business ethics is the attempt to think clearly and deeply

about the ethical issues in business and to arrive at
conclusions that are supported by the strongest possible
arguments.

The Three Check Questions when
faced with Ethical Dilemmas in
Business
1) Is it legal?
Am I violating any law or company policy?
2) Is it balanced?
Am I acting fairly?
3) How will it make me feel about myself?

Will I be happy after taking such actions?

Role of Religion in Resolving
Ethical Issues in Business
 All believers of religion have their own principles to

uphold.
 Since most religions embody the idea of Transcendant

Reality which has some bearing upon purpose and
meaning of life, how one lives on earth and what lies
beyond this finite, mortal existence, it also shapes one’s
perception of ethics and determines one’s action in
resolving ethical issues in business.

Religion and Internalization of
Ethics
Internalization of ethics comes from within

out of one’s conscience to be ethical as a
social obligation and as a commitment to
obey God’s rules and laws above man –
made laws.

Internalization of Ethics from
Religious Viewpoints
 Islam: Role as a khalifah on Earth
- Iman and taqwa
 Hinduism: Dharma or righteousness

- individuals directing their possessions and passions to a spiritual
end
 Buddhism: Profound respect for inherent dignity of all life
 Christianity: Justice and freedom are possible only if the human

being is governed by the norms of God.


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Chapter

At the end of this chapter, you should be able to:

 Identify and discuss the common ethical dilemmas faced by business

 Identify and explain the three levels of decision making.

 Differentiate between ethical management and management of

 Explain role as an ethical concept.

 Outline the role of leadership to inculcate an ethical culture in a business

 Compare and contrast between compliance–based code of ethics

 Discuss the importance of integrating economic, legal and moral

 Discuss the role of religion in resolving ethical issues in business.

 Balancing the economic character of

Business Ethics All Rights Reserved

 Identifying the appropriate level for a decision is

Business Ethics All Rights Reserved

 Ethical Management – acting ethically as a Manager by

 The Management of Ethics – acting effectively in

Business Ethics CE Topic 1 - Jul 03 All Rights Reserved

 Most managers think they are ethical but only to some

 There’s no difference from being ethical in business

 High-level managers have a responsibility for creating

Business Ethics CE Topic 1 - Jul 03 All Rights Reserved

 Acting ethically as a manager by doing the right

 Ethical misconduct has shown severe harm to

Business Ethics All Rights Reserved

 Acting effectively in situations that have an ethical aspect both in

 For this to function, organizations internally bind their members

 Effective organizational functioning also depends on gaining the

 The acceptance of these policies, rules and regulations requires a

Business Ethics All Rights Reserved

 It is necessary for managers to possess some specialized

 Needs for specialized knowledge and skills is especially acute when

Business Ethics All Rights Reserved

Business Ethics All Rights Reserved

1. People in certain positions have responsibilities to

2. Roles are created in order to serve society better as a

Business Ethics All Rights Reserved

1) Honesty – truthful and forthright with their decisions

Business Ethics All Rights Reserved

 Managers as Economic Actors

 Managers as Company leaders / Trustees

 Managers as Community leaders

Business Ethics All Rights Reserved

The economic dimension – thinking about business

The legal dimension – thinking about administrative

The moral dimension – thinking about what is the best

Business Ethics All Rights Reserved

 Effective business decision involves an integration of all

 Business ethics is the attempt to think clearly and deeply

Business Ethics All Rights Reserved

3) How will it make me feel about myself?

Business Ethics All Rights Reserved

 All believers of religion have their own principles to

 Since most religions embody the idea of Transcendant

Business Ethics All Rights Reserved

Internalization of ethics comes from within

Business Ethics All Rights Reserved

 Hinduism: Dharma or righteousness

 Buddhism: Profound respect for inherent dignity of all life

 Christianity: Justice and freedom are possible only if the human

Business Ethics All Rights Reserved

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