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According to the dictionary, the term ethics has a variety of different meanings. One of its meanings is: "the principles of conduct governing an individual or a group. We sometimes use the term personal ethics, for example, when
referring to the rules by which an individual lives his or her personal life. We use the term accounting ethics when referring to the code that guides the professional conduct of accountants. A secondand more importantmeaning of ethics, according to the dictionary, is: Ethics is "the study of morality." Ethicists use the term ethics to refer primarily to the study of morality, just as chemists use the term chemistry to refer to a study of the properties of chemical substances. Although ethics deals with morality, it is not quite the same as morality. Ethics is a kind of investigation and includes both the activity of investigating as well as the results of that investigation whereas morality is the subject matter that ethics investigates. Business ethics is a form of Applied Ethics hat examines ethical principles and moral or ethical problems that arise in a business environment.
society no universal rules. Consequentialism act is ethical if it maximizes happiness Ethics of virtue Emphasis on the role of individual traits Ethical dilemmas in business conflict between organizations economic performance and its social performance. NATURE of ETHICS Ethics deals with human behavoiour. Ethics is more of a normative science it guides us. Ethics deals with human conduct and is voluntary.
Morals Rules or duties that govern our behavior eg. Do not tell lies Ends or goals sought by us e.g health, happiness Study of morality and its application to decisions
characteristics: 1. Moral standards deal with matters that can seriously injure or benefit humans. For example, most people in American society hold moral standards against theft, rape, enslavement, murder, child abuse, assault, slander, fraud, lawbreaking, and so on. 2. Moral standards are not established or changed by authoritative bodies. The validity of moral standards rests on the adequacy of the reasons that are taken to support and justify them; so long as these reasons are adequate, the standards remain valid. 3. Moral standards, we feel, should be preferred to other values, including selfinterest. This does not mean, of course, that it is always wrong to act on self-interest; it only means that it is wrong to choose self-interest over morality 4. Moral standards are based on impartial considerations. The fact that you will benefit from a lie and that I will be harmed is irrelevant to whether lying is morally wrong. 5. Moral standards are associated with special emotions and a special vocabulary (guilt, shame, remorse, etc.).
Business Ethics+Morality
Ethics is the discipline that examines one's moral standards or the moral standards of a society. It asks how these standards apply to our lives and whether these standards are reasonable or unreasonablethat is, whether they are supported by good reasons or poor ones. Therefore, a person starts to do ethics when he or she takes the moral standards absorbed from family, church, and friends and asks: What do these standards imply for the situations in which I find myself? Do these standards really make sense? What are the reasons for or against these standards? Why should I continue to believe in them? What can be said in their favor and what can be said against them? Are they really reasonable for me to hold? Are their implications in this or that particular situation reasonable? Ethical decisions differ according to individuals perspective. Ethical decisions normally have a multitude of solutions. Profit in business is OK but only profit is not O.K An IDEAL ETHICAL DECISION Right morally, Equitable and just, Good for all concerned, Proper and acceptable, Fair, Just.
businesses are some of the most influential institutions within modern society. Modern corporations are organizations that the law treats as immortal fictitious "persons" who have the right to sue and be sued, own and sell property, and enter into contracts, all in their own name. As an organization, the modern corporation consists of (a) stockholders who contribute capital and who own the corporation but whose liability for the acts of the corporation is limited to the money they contributed, (b) directors and officers who administer the corporation's assets and who run the corporation through various levels of "middle managers," and (c) employees who provide labor and who do the basic work related directly to the production of goods and services. MNC -Operating in more than one country at once produces a new set of ethical dilemmas.
social welfare. Business is a part of moral structure and moral ethics INTEGRATION VIEW Talcott Parsons combine business with ethical behaviour as both are inter-related
standards should be brought into business organizations. They make three general objections. First, they argue that the pursuit of profit in perfectly competitive free markets will, by itself, ensure that the members of a society are served in the most socially beneficial ways. Second, they claim that employees, as "loyal agents," are obligated to serve their employers single-mindedly, in whatever ways will advance the employer's self-interest. Third, they say that obeying the law is sufficient for businesses and that business ethics is, essentially, nothing more than obeying the law.
concerning right or wrong. Sometimes, they are directed at determining whether a person or organization is morally responsible for having done something wrong. People are not always responsible for their wrongful or injurious acts: moral responsibility is incurred only when a person knowingly and freely acts in an immoral way or fails to act in a moral way. Ignorance and inability to do otherwise are two conditions, called excusing condition, that completely eliminate a person's moral responsibility for causing wrongful injury. Ignorance and inability do not always excuse a person, however. When one deliberately keeps oneself ignorant to escape responsibility, that ignorance does not excuse the wrongful injury.
How do moral obligations apply to business organizations? Can companies be held accountable for what they do, or are the individuals who make up the company the ones we must hold accountable? National Seminductors case selling critical computer parts to U.S Defense department for deployment in missiles / nuclear bombs without adequate testing Gun sales in U.S. by companies to criminals (without verification) who use it for murders
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Law of the jungle might is right. Anything for profit- profit is the only goal. Short term profit maximization within legal constraints. Long term profit maximization sound ethics is good business. Stakeholder concept. Corporate citizenship business can be healthy only if the society around it is healthy
ORIGIN and MEANING of ethical concepts -deals with the philosophical, psychological and linguistic issues. 2. Applied ethics deals with specific and controversial issues like abortion, cloning, insider trading, tribal people displacement etc.
branch of ethics that guides your conduct Eg. The Golden rule Moral principles should be prescriptive, universal, overriding, practical and public. Three theories guide us on how to act in a situation:Teleological theory, Deontological theory and Virtue ethics
a theory of morality that derives duty or moral obligation from what is good or desirable as an end to be achieved. TELOS = chief aim or end of life Also called Consequentialist or Utilitarianism theories action is morally correct if the consequences are more favourable than unfavourable. Another way of looking at consequentialism is referred to as "the ends justify the means". First list the good and bad consequences and if good > bad then OK. Good and bad for whom?
if the sum total of utilities produced by that act is greater than the sum total of utilities produced by any other act the agent could have performed in its place. To determine what the moral thing to do on any particular occasion might be, there are three considerations to follow: 1. You must determine what alternative actions are available. 2. You must estimate the direct and indirect costs and benefits the action would produce for all involved in the foreseeable future. 3. You must choose the alternative that produces the greatest sum total of utility.
views we tend to hold when discussing governmental policies and public goods. Most people agree, for example, that when the government is trying to determine on which public projects it should spend tax monies, the proper course of action would be for it to adopt those projects that objective studies show will provide the greatest benefits for the members of society at the least cost. It also fits in with the intuitive criteria that many employ when discussing moral conduct. Utilitarianism can explain why we hold certain types of activities, such as lying, to be immoral: it is so because of the costly effects it has in the long run.
economic costbenefit analysis. This type of analysis is used to determine the desirability of investing in a project (such as a dam, factory, or public park) by figuring whether its present and future economic benefits outweigh its present and future economic costs. To calculate these costs and benefits, discounted monetary prices are estimated for all the effects the project will have on the present and future environment and on present and future populations. Finally, we can note that utilitarianism fits nicely with a value that many people prize: efficiency. Efficiency can mean different things to different people, but for many it means operating in such a way that one produces the most one can with the resources at hand.
taken to matter more than any other result. Thus, ethical egoism may license actions which are good for the agent, but it is generally seen as detrimental to general welfare. Utilitarianism - This form of utilitarianism holds that what matters is the aggregate happiness; the happiness of everyone and not the happiness of any particular person. Cost benefit analysis Altruism - Ethical altruism can be seen as a consequentialist ethic which prescribes that an individual take actions that have the best consequences for everyone except for himself. This was advocated by Auguste Comte, who coined the term "altruism," and whose ethics can be summed up in the phrase: Live for others Eg. Using the theories - Compare the actions of a driver of a car who sees an accident victim but does not attend him because of the consequent harassment he might have to face from police
based on concept of fairness. Distributive justice concerns what is just or right with respect to the allocation of goods in a society. Theories of distributive justice need to answer three questions: 1. What goods are to be distributed? Is it to be wealth, power, respect, some combination of these things? 2. Between what entities are they to be distributed? Humans (dead, living, future), sentient beings, the members of a single society, nations? 3. What is the proper distribution? Equal, meritocratic, according to social status, according to need?
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protected from invasion by others and must be equal to those of others. Basic liberties right to vote, freedom of speech, right to hold property, freedom from arbitrary arrest etc. Social and economic inequalities are to be arranged so that they are both
advantaged, and Principle of fair equality of opportunity everyone should be given equal opportunity to qualify for the more privileged positions in society.
argument to show that justice, and especially distributive justice, is a form of fairness: an impartial distribution of goods. Rawls asks us to imagine ourselves behind a veil of ignorance which denies us all knowledge of our personalities, social statuses, moral characters, wealth, talents and life plans, and then asks what theory of justice we would choose to govern our society when the veil is lifted this will force us to be impartial and look after the good of all. Decision without knowledge of the implications - You do not know whether you are going to be affected or benefited now decide in this situation
Distributive justice is concerned with the fair distribution of society's benefits and burdens. 2. Retributive justice refers to the just imposition of penalties and punishments 3. Compensatory justice is concerned with compensating people for what they lose when harmed by others.
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of care, an approach to ethics that many feminist ethicists have recently advanced. According to this method, we have an obligation to exercise special care toward the people with whom we have valuable, close relationships. Compassion, concern, love, friendship, and kindness are all sentiments or virtues that normally manifest this dimension of morality.
from certain types of actions and that this duty derives from the nature of the act itself, rather than from the consequences produced by the action. Consequently, a deontologist might argue that we should stick to our duty regardless of the consequences. For example, Immanuel Kant famously argued that we had a moral duty to always tell the truth, even to a murderer who asks where the would-be victim is. Let justice be done though the heavens fall! is one of its slogans Duty to God, Duty to self and Duty to others What you do not wish done to yourself, do not do to others. Golden Rule act upon others as you would like others to act upon you Prescription of Universal laws Kant recognized universal rights such as freedom of speech, freedom of consent and right to privacy. Religion as a basis for deontology e.g Ten Commandments
Virtue ethics
Virtue theory is a branch of moral philosophy that emphasizes
character, rather than rules or consequences, as the key element of ethical thinking. In the West virtue ethics was the prevailing approach to ethical thinking in the ancient and medieval periods. Character development - describes that state achieved by the person who lives the proper human life, an outcome which can be reached by practicing the virtues. A virtue is a habit or quality that allows the bearer to succeed at his, her, or its purpose. The virtue of a knife, for example, is sharpness; among the virtues of a racehorse is speed. Thus to identify the virtues for human beings, one must have an account of what the human purpose is. There is, and always has been, sharp disagreement on this question!! Aristotle categorized the virtues as moral and intellectual. Aristotle identified nine intellectual virtues, the most important of which were sophia (theoretical wisdom) and phronesis (practical wisdom). The moral virtues included prudence, justice, fortitude, and temperance.
Aristotle - Courage, Self control, Generosity, Gentle, Friendly, Truthful, Modest, Wittiness
that deontology derives the rightness or wrongness of an act from the character of the act itself rather than the outcomes of the action, and from virtue ethics, which focuses on the character of the agent rather than on the nature or consequences of the action itself. AN EXAMPLE COMPARING THE THREE THEORIES LYING For example, a consequentialist may argue that lying is wrong because of the negative consequences produced by lying though a consequentialist may allow that certain foreseeable consequences might make lying acceptable. A deontologist might argue that lying is always wrong, regardless of any potential "good" that might come from lying. A virtue ethicist, however, would focus less on lying in any particular instance and instead consider what a decision to tell a lie or not tell a lie said about one's character and moral behavior.
Applied ethics
It is a term used to describe attempts to use philosophical methods to
identify the morally correct course of action in various fields of human life. Moves the consideration of business ethics from the morality of the economic system in general to the morality of specific practices within our system Bioethics, for example, is concerned with identifying the correct approach to matters such as euthanasia, or the allocation of scarce health resources, or the use of human embryos in research. Environmental ethics is concerned with questions such as the duties of humans towards landscapes or species. Business ethics concerns questions such as the limits on managers in the pursuit of profit, or the duty of 'whistleblowers' to the general public as opposed to their employers. As such, it is a study which is supposed to involve practitioners as much as professional philosophers. [1]
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American oil company operating in South Africa during that time. A large number of Caltex stockholders opposed the company's operations in South Africa, and introduced a series of shareholder resolutions requiring Caltex to leave South Africa, which they saw as racist and immoral. Caltex' s management did not agree. Rather than focusing on the financial assistance they were giving the South African government, they pointed to the positive effects their operations had on black workers. South African leaders, such as Archbishop Desmond Tutu, were not convinced by Caltex's arguments. He supported the shareholder resolutions, saying that comfort under an immoral regime was not preferable to freedom, even at the cost of economic hardship.
debate in business works. The arguments on both sides appealed to moral considerations and four basic types of moral standards: utilitarianism, rights, justice, and caring. 5. The shareholders' argument referred to the unjust policies of the apartheid government and the fact that these policies violated the civil rights of black citizens. 6. On the other side, Caltex's management made utilitarian arguments and arguments about caring: it was in blacks' best interests to have Caltex jobs, and Caltex had a duty to take care of these workers as best it could.
Applied ethics
Ethical theories lay down moral standards that provide a reference
point and help managers to take acceptable decisions. Ethical decisions are complex and should strike a balance between multiple factors. Multiple analysis framework:ECONOMIC ANALYSIS Limited resources, efficient and effective use of resources, best value for money best at lowest cost Follow the rules established by society Follow business ethics principles
Freedom of choice
Product Information
1. Dynamics of market system is needed to allocate goods/services. 2. Unethical behaviors like coercion, deceptive information, theft and bribery lead to misallocation of resources LACK OF TRUST and hamper the functioning of the market system
Is it fair ? To the various stakeholders? Thou shall not be ashamed when found The Golden Rule or ethic of reciprocity is a maxim, ethical
code, or morality that essentially states either of the following: One should treat others as one would like others to treat oneself (positive form) One should not treat others in ways that one would not like to be treated (negative/prohibitive form, also called the Silver Rule) Do not do to others that which we do not want them to do to us
Trust
Three elements of Trust:1. Dependability assurance that a person will perform as expected. 2. Predictability eliminates unforeseen actions or risks. 3. Faith belief that one will continue to be dependable and predictable. When Trust is built through experience it is a good risk reducing mechanism. Examine the Impact of unethical behavior on trust in business relations with Suppliers, Customers, Employees. Business should build up trusted relationships with all its stakeholders to survive and succeed. Integrative Social Contract theory Thomas Donaldson and Thomas Dunfee developed it based on principles of hyper norms (universal norms), Macro (global) norms and Micro (Community) norms. It is an informal agreement concerning behavior - An organization that fulfills the social contract has performed well.
resources to attain everyone's objectives, so we are forced to consider the net social benefits and social costs consequent on the actions (or policies or institutions) by which we can attain these objectives. Standards that specify how individuals must be treated - must be employed when our actions and policies will substantially affect the welfare and freedom of specifiable individuals. Moral reasoning of this type forces consideration of whether the behavior respects the basic rights of the individuals involved and whether the behavior is consistent with one's agreements and special duties. Standards of justice - indicate how benefits and burdens should be distributed among the members of a group. These sorts of standards must be employed when evaluating actions whose distributive effects differ in important ways.
owed to those with whom we have special concrete relationships. Standards of caring are essential when moral questions arise that involve persons embedded in a web of relationships, particularly persons with whom one has close relationships, especially those of dependency. One simple strategy for ensuring that all four kinds of considerations are incorporated into one's moral reasoning is to inquire systematically into the utility, rights, justice, and caring involved in a given moral judgment. Unfortunately, there is not yet any comprehensive moral theory to show when one of these considerations should take precedence.
corporate values and Ethical behavior (espoused vs values in practice) Ethics and stakeholders theory. Ethics and corporate governance. According to the first theory, the culture and values of an organization play an important role in developing an ethical organization. The second theory states that the behavior of the management towards its stakeholders plays a pivotal role in building an ethical organization. And according to third theory, good governance is necessary for building an ethical organization
ethics (refer Johnson & Johnson Credo) Align espoused values to values in practice. Michael Hoffman basic values, org. goals around these values and org. procedures and processes. The need to constantly monitor ethical behavior and align reward systems to ethical behavior. STAKEHOLDER THEORY pay attention to needs and rights of all stakeholders. CORPORATE GOVERNANCE large cos. Are similar to large states the system by which corporations are directed and controlled should be similar to how a State is managed accountability, authority, power, responsibility. FOCUS on policy and decision making which is ethical and value driven
copy of your chief competitor's bid on a big contract. He swears he got it legally, but you aren't sure. And whether he did or didn't, it's still proprietary information. Are you going to use it in developing your bid? Or what if someone in sales is up against some very tough quarterly objectives, but she can make them by concealing from a customer that the product he's interested in will be made obsolete by a new line in six months. Should she do it? These cases have two things in common: how they're handled can dramatically help or hurt your organization; and they're ethical issues. But how would you want the people in your company to handle these situations? What have you done to let them know what they should do? What have you done to help them? major corporations, you have a code of conduct that might give your employees help with some of these situations.
Corporate Code
Policy statements that lay down a companys ethical
standards. Compliance codes, corporate credos, management statements, compliance certificates etc. Development involves identifying key behaviors, review by top management, communication and periodic updating. Implementation- Org. structure, Coordination, Motivation and Communication. Individual dimension, Group /peer influence and org. strategies for ethical leadership etc. Ethics committee
Corporate Code
What issues are covered by general governance codes? 1. Fair treatment of shareholders 2. The role of the board of directors and board members 3. Disclosure, reporting, verification 4. Relations with stakeholders
Comply or explain
Ratings and rankings Recognition/reward systems