Business Ethics

Seventh Edition
Richard T. DeGeorge

Chapter 1
Ethics and Business

2011 Pearson Education. All Rights Reserved.

Chapter Topics
A.
B.
C.
D.
E.
F.
G.

Chapter Overview
What is Business Ethics?
Horatio Alger and Stock Options
The Myth of Amoral Business
The Relation of Business and Morality
Business Ethics and Ethics
The Case of the Collapsed Mine

A. CHAPTER OVERVIEW
Business is an important part of contemporary
society & it involves all of us, one way or another.
Business is not something separate from society
or imposed on it, its an integral part of society.
Morality consists of rules of human behavior &
specifies that certain actions are wrong or
immoral & that others are right or moral.
Since business activity is human activity, it can be
evaluated from a moral point of view, just as any
other human activity can be so evaluated.
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B. WHAT IS BUSINESS ETHICS?

The term business ethics is used in several
different senses
(1) ethics in business
(2) business ethics as a movement
(3) business ethics as part of the general field of ethics.

Whats the Aim of Business Ethics?

It is neither defense of the status quo nor its
radical change.
Rather, it should serve to remedy those
aspects or structures that need to change,
and it should protect those that are moral.

C. HORATIO ALGER
Horatio Alger (1832-1899) wrote a series of rags
to riches stories, involving success through the
energetic and dedicated work of the hero.
Luck and Pluck
The belief that those who worked hard could make it.
Hard work and a little luck were all that needed.

The belief received a new impetus in the high-tech

industry. Microsoft is the best-known example.
Pay was noncompetitive & long hours
were expected but stock options made
early employees millionaires.
As the industry matured, later
employees unfairly did not do as well.
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D. MYTH OF AMORAL BUSINESS

Expresses the ambivalence of many toward
business and a popular, widespread view of
Business. The myth has several variations:
Business is amoral insofar as ethical considerations
are inappropriate to business
Because business is business.
Ethical language is simply not the language of business.
Many businesses act unethically not
because of a desire to do evil,
But simply because they want to make a profit &
Therefore disregard some of the consequences
of their actions.
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The Breakdown of the Myth of

Amoral Business
1. By the reporting of scandals and the
concomitant public reaction to these reports;
2. By the formation of popular groups such as the
environmentalists and the consumerists;
3. By the concern of business in ethics,
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as expressed in conferences,
magazine and newspaper articles,
& the burgeoning of corp. codes of
conduct & of ethics programs.
Its better than admitting youre stupid.

ethical

E. THE RELATION OF BUSINESS

TO MORALITY
The business of business
The moral background of business
The changing mandate for business

The Business of Business

What is considered to be business & its business
varies from society to society.
Defining business per se & its proper
concern is a social question that must
be answered in a social context.
The limits & demands imposed
on business by society are
frequently moral ones.

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The Moral Background of Business

Morality consists of rules of human behavior &
specifies that certain actions are wrong or immoral
and that others are right or moral.
Since most businesses value their reputations, we
dont really live in a dog-eat-dog business world.
Because the ordinary person does not need to be told
that lying & stealing are wrong that they form part of the
background of business.

The limits set by society on business are often

moral, but theyre also often written into law.
The retreat to law as the norm to guide business
is reflects that most managers do not know how
to handle many moral issues in business.
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The Changing Mandate for Business

The social mandate to business is not only
given in law.
Today the mandate to business is more complex.
Corporations are asked to consider the impact of
their decisions and actions on the environment,
the public, and the common good.
Business must consider what structures promote
moral responsibility and
facilitate the weighing of
moral and other values.
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F. BUSINESS ETHICS & ETHICS

The term business ethics is used in three
different senses:
ethics in business
business ethics as a movement
business ethics as part of the general field of ethics.

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Ethics Studies Morality

Morality is a term to cover practices & activities:
that are considered importantly right & wrong;
the rules that govern those activities; and
the values that are embedded, fostered, or pursued by
those activities & practices.

Ethics is a systematic attempt to make sense of

our individual and social moral experience, in
such a way as to determine the rules that ought to:
govern human conduct,
the values worth pursuing, and
the character traits deserving development in life.
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General Ethics
Descriptive ethics is closely related to
anthropology, sociology, and psychology
Normative ethics builds on the whole that
descriptive ethics provides and attempts to supply
and justify a coherent moral system based on it
Metaethics is the study of normative
ethics, and, to some extent, both
normative and descriptive ethics
involve some metaethical activity

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Special Ethics
Causitry is the art of solving difficult moral
problems, cases, or dilemmas through careful
application of moral principles.
Applying general ethics to specialized fields yields
business ethics, medical ethics, engineering
ethics, professional ethics, etc.

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Business & Business Ethics Defined

Business includes any and all economic
transactions
between individuals,
between individuals & profit-making organizations,
between profit-making organizations and other such
organizations.

Business ethics as a field is defined by the

interaction of ethics & business

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Business Ethics Involves 5 Activities

1. The application of general ethics principles to
particular cases or practices in business.
2. Metaethics: whether moral terms generally used to
describe individuals & actions can also be applied
to organizations, businesses & collective entities.
3. Analysis of business presuppositions - both moral
presuppositions & those from a moral point of view.
4. Study of embedded problems that go beyond the
field of ethics & into other areas of philosophy &
into other knowledge domains, like econ. & org. theory.
5. Describing morally praiseworthy & exemplary acts
of either individuals in business or particular firms.

G. CASE OF THE COLLAPSED MINE

Though this case is fictitious, the reality of collapsed
mines in the coal industry is a real dilemma.
Miners were digging coal 1000s of metres below ground.
An explosion traps 8 miners in a pocket.
The cost of reaching the men in time to save their lives
would amount to several million dollars.
The problem facing the manager was whether the
expenditure of such a large sum was worth it.
What, after all, was a human life worth?
Who should make the decision, and how should it be made?
Did the manager owe more to the stockholders of the corporation
or to the trapped workers?

Should he use the slower, safer, cheaper way of reaching

them & save money, or the faster, more dangerous, more
expensive way, & maybe save lives?
End