BUSINESS ETHICS
“It is a hard task to be good. . . anyone can get angry – that is easy – or can
give away money or spend it; but to do all this to the right person, to the
right extent, at the right time, for the right reason, and in the right way is no
longer something easy that anyone can do. . . . It is for this reason that good
conduct is rare, praise-worthy, and noble”. Nicomachean Ethics, Book II
Ethics is a branch of philosophy that examines the moral standards of an
individual or society, and asking how these standards apply to our lives and
whether these are reasonable or unreasonable.
Business Ethics: The application of ordinary human moral and ethical
considerations in a business setting.
“Application”: Like medical ethics, environmental ethics, business ethics is
applied ethics.
Business: any or all-economic transactions between individuals, between
individuals and profit-making organizations, and between profit-making
organizations and other such organizations.
MORALITY
“Moral (Latin) and ethical (Greek) considerations”: How people ought to behave
(to each other). Values of honesty, fairness, loyalty, justice, respect, etc.
“Morality” refers to the standards that an individual or group has about
what is right and wrong conduct, good and evil, and the values embedded,
fostered or pursued in the act.
Ethics is the “discipline that examines one’s moral standards or the moral
standards of a society.”
Ethics “asks how these standards apply to our lives and whether these
standards are reasonable or unreasonable—that is, whether they are
supported by good reasons or poor ones.”
IMPLICATIONS:
Two questions arise from this definition:
1. What makes a standard moral?
2. What makes a moral standard reasonable?
In (1) we enter into questions of individual and social responsibility.
In (2) we enter into moral reasoning (since ethics is part of philosophy, and
philosophy uses reasons or reflection.
MORAL STANDARDS
What distinguishes moral standards from amoral standards?
1. Moral standards deal with matters that can seriously injure or benefit
human beings. E.g. theft, rape, fraud, slander, murder.
2. The validity of moral standards rests on the adequacy of reasons to
support and justify them, not on decisions of majority or authoritative
bodies. E.g. that one ought to tell the truth does not depend on how many
people will vote on it nor on the legislature. One indication of justification
is the consensus of participants in communication. (Habermas)
3. Moral standards are to be preferred to other values, including self-interest.
E.g. honesty is to be preferred than cheating, although cheating can make
me graduate.
4. Moral standards are based on impartial considerations. Another way of
expressing this is ‘universalizable’ or taking the point of view of an ‘ideal
observer.’ Still, this impartiality must be balanced with partiality towards
those we have a special relationship (family and friends) and the poor and
the disabled.
5. Moral standards are associated with special emotions such as ‘guilt,’
‘shame,’ ‘remorse,’ ‘praise,’ ‘indignation’.
What is common to all five characteristics? None other than society taken in
its broadest sense, or in philosophical terms, the ‘other.’
In other words, individual responsibility cannot be taken in isolation from
social responsibility.
INDIVIDUAL AND SOCIAL RESPONSIBILITY
In the first place, we acquire our individual moral standards from society: the
family, friends, school, church, associations, and media.
As we grow up, experience, learning and intellectual development may lead
us to revise these standards, adopt new ones, or reinforce existing ones in
order to meet moral challenges and dilemmas of adult life.
Maturity can be characterized by the expansion of the horizon of one’s
responsibility, from the ego to the other, or what one is originally
responsible-to becomes what one is responsible-for. e.g. my being
responsible to my parents becomes, when I have my own family, what I am
responsible-for, i.e. parenthood.
Morality is not just a question of avoiding evil (individual) but of pro-actively
doing good (social).
Justice is not just avoiding doing harm to the other person but of responding
to the objective demands of the situation, to the call of a higher value.
I am not solely responsible to myself or to my family, but also to others, to
the community. I cannot just be moral at home and not in the workplace.
The social and the individual interpenetrate.
At times, the individual and the social come in conflict, and there is need to
apply moral reasoning.
ETHICAL DILEMMAS:
A situation where a potential course of action offers potential benefit or gain
but is unethical, in that it violates one or more ethical standards.
The key question for business leader when presented with an ethical
dilemma is: “What to do?”
Behavior determines a person’s ethical reputation.
Ethical leadership is exhibited when ethical dilemmas are resolved in
appropriate manner.
POOR ETHICAL CHOICES
1. Flaws of Character or Character defects:
malice, intentional evil, sociopathy, personal greed, envy, etc.
2. Weakness in Corporate Culture:
poor leadership, lack of understanding of ethical standards poor or
in appropriate incentive system.
A Checklist for making Good Ethical Decisions
1. Recognize the Ethical dilemma.
2. Get the Facts.
3. Identify your options.
4. Test the Options: Is it legal, right, beneficial? Note : Get some
counsel.
5. Decide which option to follow.
6. Double-check your decision.
7. Take action.
8. Follow-up and monitor implementation.
MORAL REASONING
Moral reasoning is the reasoning process by which human behaviors,
policies, institutions are judged to be in accordance with or in violation of
moral standards.
Moral reasoning involves two essential components:
1. Moral standards that requires, prohibits, values, or condemns, and
2. The factual evidence or information that a particular person,
behavior, policy or institution has the kind of features that the
moral standard requires, prohibits, values or condemns.
In argument form, (1) forms the major premise, (2) the second premise, and
the conclusion is the moral judgment.
Example:
(1) A firm is unjust if it does not treat women equal to men.
(2) In Starbank, men are given preference for promotion than women.
______________________
Therefore, Starbank’s policy is unjust.
To evaluate the adequacy of moral reasoning, various criteria are used by ethicians:
1. Moral reasoning must be logical, that is, the premises must be true and the reasoning valid.
2. The factual evidence cited must be accurate, relevant, and complete.
3. The moral standards involved in the person’s moral reasoning must be consistent.
Consistency means that the moral standards involved in the reasoning are consistent with
each other and with other beliefs the person holds. Consistency also means that one is
willing to accept the consequences of applying one’s moral standards to all persons in similar
circumstances.
BUSINESS ETHICS:
Summary: “Business ethics is a specialized study of moral right and wrong. It
concentrates on moral standards as they apply particularly to business
policies, institutions and behavior.” (Velasquez, p. 13).