FOUNDATIONS

AND PRINCIPLES
OF BUSINESS
ETHICS
LESSON 2
 The Social
Function of
Business
 Guide Questions:
1. What do you think
is the business
organization’s primary
responsibility to its
stakeholders? Why?
 Guide Questions:
2. Cite some examples
of companies engaged in
projects and activitis
geared toward the
promotion of the quality
of life of people.
 Guide Questions:
3.
Differentiate
bribery from
 Guide Questions:
4. Why should
business take the
lead in the
protection of the
Businesses
play a major
role in keeping
any economy
Proper and
Ethical
governance
 Business People
Managers
Employees
Entrepreneurs
 Business People
All the
Organizational
Leaders
Remember!
Business Activities
MUST be viewed
and examined
from the
perspective of…
MORALITY
 Why?
Common
good
Protection
 Integrity is
paramount for a
successful
managerial
One must
grasp the
norms of
ethical
ETHICS
Business’ Role
in Poverty
Alleviation
 Effects of Poverty
20,000 perished
- 8,000 children dead of
malaria
- 5,000 parents dead of TB
- 7,500 young adults dead of
AIDS
(Sachs, 2005)
 Continuing
extreme poverty in
the midst of
economic growth
 Reasons:
EG is rarely distributed across
a country
Failure of government to
address the poorest of the
poor
Cultural
(Sachs, 2005)
Businesses’
role in
overcoming
the Poverty
 How?
Higher capital stock
Greater specialization
More advanced
technology
(Sachs, 2005)
 How?
Small and medium
enterprises (SMEs) are
important contributors
(Piza et al., 2016)
Areas of Business
MOST in Need of
Ethical Attention
 What:
Shareholders/Owners
Managers
Employees
Customers
Suppliers
 The Social
Responsibility of
Business
Levels of Responsibility
Earning a profit
Legal responsibility
Ethical responsibility
Discretionary responsibility
- William Sauser, “Ethics in Business: Answering the
call”
Corporate Social
Responsibility
 CSR
Continuing commitment by
business to behave ethically and
contribute to economic
development while improving the
quality of life of the workforce and
their families, the local
community, and society at large.”
- World Business Council for Sustainable Development
(WBCSD)
Areas in Business
MOST in Need of
ETHICAL
ATTENTION
1. The Morality
of Advertising
Deceptive Ads
 Examples
False statements
Misrepresentation
Individual words
Consumer Act of the PH
“The state shall protect
the consumer from
misleading
advertisements and
fraudulent sales
- R.A. # 7394, Article
promotion practices.” 108
 2. Basic Employee
Rights, Job
discrimination, Other
Labor-Related Ethical
Issues
The Labor Code of
The Labor Code of the PH
Lays down the rights of
workers in relation to wages,
rights to self-organization,
collective bargaining, security
of tenure, and just and
humane conditions of work.
P.D. # 442
3. Pollution and
Resource
Depletion
4. Whistle
Blowing
 Guide Questions:
1. What do you think
is the business
organization’s primary
responsibility to its
stakeholders? Why?
 Guide Questions:
2. Cite some examples
of companies engaged in
projects and activitis
geared toward the
promotion of the quality
of life of people.
 Guide Questions:
3.
Differentiate
bribery from
 Guide Questions:
4. Why should
business take the
lead in the
protection of the
LESSON 3
 Core Principles of
Fairness,
Accountability, and
Transparency
The Core Principle
of Good Corporate
Governance
Corporate
governance is the
system by which
businesses are
directed and
1. ACCOUNTABILITY
State of
being
accountable
 Assumes
Responsibility
Prevent and
detect
corruption
Able to
explain or
justify actions
and decisions.
 2.
FAIRNESS
 Quality of
making
judgments
without….
Discrimination
Judges and
Teachers
should all
strive to
How is FAIRNESS
can be applied in
the Business?
 Decision-making
Hiring
Firing
Compensation
Reward system
Fairness has
to do with
JUSTICE
 3.
TRANSPARENCY
 State of
being
Transparent
 Transparent
Able to seen through
Easy to notice or
understand
Honest and open
 4.
PROFESSIONALISM
 Studies show that
moral character and
technical competence
are viewed as being
equally important for
worker excellence.
PROFESSIONALISM
 The
Competencies of
PROFESSIONALS
 A. Technical Skills
Ability to apply
specialized
knowledge or
expertise.
 B. Human Skills
Understand
Communicate
Motivate
 C. Conceptual Skills
Analyze
Diagnose
Decision-making
Creativity
 The Solid
Competence in
Human sphere and
in the sphere of
work
 A. Human Maturity
Works efficiently
and effectively
w/
professionalism
B. Work is done in
a spirit of service
and love for those
around us.
C. Relational Intelligence
Combination of
Emotional
intelligence and
ethical
C. Relational Intelligence
Able to build
lasting and
trustful
relationships
 D. Trustworthy
With integrity
Benevolence
“Trust”
Works efficiently
and effectively
w/
professionalism
Maturity is learning to
walk away from people
and situations that
threaten your peace of
mind, self-respect,
values, morals, and
Codes of Ethics
and Business
Conduct
Scandals
Communications
propaganda
Ethical Codes
Reputation
Affirmative
action
CODE OF
ETHICS
 Code of Ethics
Written documents
Philosophical
principles and
articulate the values
 Code of Ethics
Ethical
Parameters what
is acceptable
and what is not
 Code of Ethics
Responsibilities
of the
organization to
STAKEHOLDERS
 Code of Ethics
Articulating the
conduct
expected of
employees.
 Code of Ethics
Codes clarify the
norms and values
the organization
seeks to uphold
Ethical managers
must know “what is
right, value what is
right, and do what is
right.”
 3 Key Principles that
are essential in the
practical and successful
management of ethics
at the organizational
level.
Four Types of
Organizational
Culture
 Cultures of Defiance
Leaders & members
may (or may not)
know what is right, but
they certainly neither
value nor do what is
Cultures of Compliance
Leaders know what
is right and even do
what is right, but do
not value what is
Cultures of Compliance
Members may be
tempted to bend or
break the rules when
opportunities occur, and
may be rewarded for
doing so.
 Cultures of Neglect
There may be a
conscious effort to
know, value, and
do what is right,
 Cultures of Neglect
Lack of diligence,
resulting in a breach
of moral standards.
Cultures of Character
Leaders and
members strive to
know what is right,
value what is right,
CODE OF
ETHICS
 CORE VALUES
Integrity
Long-term Vision
Empowering
Leadership
 Code of Ethics
Employees are
required to disclose
annually any
business and family
 Reason?

Conflicts of
Interest
 Code of Ethcs
Maintain fair
dealings with its
shareholders,
customers,
 Reason?
Strive to maintain an
exceptional
standard of conduct
guided by the
Corporate
Culture
 Culture has a
profound
influence on all
aspects of human
behavior.
Influences of a Changing Culture
Political
Social
Economic
Technological
The human person
is an open system
and is capable of
learning
True Humanity is a
learning that is
positive
And is made most
perfectly positive
through the
cultivation of the
virtues.
Codes of Ethics
and Business
Conduct
Scandals
Communications
propaganda
Ethical Codes
Reputation
Affirmative
action
CODE OF
ETHICS
 Code of Ethics
Written documents
Philosophical
principles and
articulate the values
 Code of Ethics
Ethical
Parameters what
is acceptable
and what is not
 Code of Ethics
Responsibilities
of the
organization to
STAKEHOLDERS
 Code of Ethics
Articulating the
conduct
expected of
employees.
 Code of Ethics
Codes clarify the
norms and values
the organization
seeks to uphold
Ethical managers
must know “what is
right, value what is
right, and do what is
right.”
 3 Key Principles that
are essential in the
practical and successful
management of ethics
at the organizational
level.
Four Types of
Organizational
Culture
 Cultures of Defiance
Leaders & members
may (or may not)
know what is right, but
they certainly neither
value nor do what is
Cultures of Compliance
Leaders know what
is right and even do
what is right, but do
not value what is
Cultures of Compliance
Members may be
tempted to bend or
break the rules when
opportunities occur, and
may be rewarded for
doing so.
 Cultures of Neglect
There may be a
conscious effort to
know, value, and
do what is right,
 Cultures of Neglect
Lack of diligence,
resulting in a breach
of moral standards.
Cultures of Character
Leaders and
members strive to
know what is right,
value what is right,
CODE OF
ETHICS
 CORE VALUES
Integrity
Long-term Vision
Empowering
Leadership
 Code of Ethics
Employees are
required to disclose
annually any
business and family
 Reason?

Conflicts of
Interest
 Code of Ethcs
Maintain fair
dealings with its
shareholders,
customers,
 Reason?
Strive to maintain an
exceptional
standard of conduct
guided by the
 CORE
VALUES
 CORE VALUES
Social Justice
Peace
Freedom
Academic Excellence
 CORE VALUES
Cultural identity
Respect for diversity
Civil society
engagement
Corporate
Culture
 Culture has a
profound
influence on all
aspects of human
behavior.
Influences of a Changing Culture
Political
Social
Economic
Technological
LESSON 5
 Foundations of
the Principles of
Business Ethics
 Classical
Philosophers
Impacts of Belief
Systems
SOCRATES
(428-348 BC)

Principles
For a person to be
HAPPY, he has to
live a VIRTUOUS
LIFE.
- Virtues are not
taught or
acquired through
education
 - It is an awakening of
the seeds of good deeds
that lay dormant in the
mind and heart of a
person.
Knowing what is in the
mind and heart of
human being requires
SELF-
KNOWLEDGE.
 Knowledge does
not only theoretical
or speculative but a
practical one.
Practical Knowledge
means that one does
not only know the
rules of right living,
but one lives them.
 Hence, true
knowledge means
wisdom, which in
turn, means virtue.
Major Ethical
Claims of
Socrates
1. Happiness is
impossible
without moral
virtue
2. Unethical actions
harm the person who
performs them more
than the victim.
PLATO
(428-348 BC)

Principles
Absolute Truth
goes beyond the
merely popular
opinions of the
multitudes.
Moral values are
objective beyond
subjective human
conventions.
 Moral Values
•Absolute
•Eternal
•Universal
Aristotle
(384-300BC)

Principles
ACTION
-Attainment on
Man’s good
-Right action
-Wrong action
Virtues are good
habits that we
acquire, which
regulate our
emotions.
 11 Specific Virtues
• Courage •Friendliness
• Temperance •Truthfulness
• Liberality •Wit
• Magnificence •Friendship
•Justice*
• Honor
Immanuel
Kant
(1724)

Principles
 The
Principles of
Duty
“We have moral
duties to oneself
and others”
 Developing one’s
talents, and
keeping our
promises to others.
 Categorical
Imperative is
simply mandates
an action.
“Treat people as an
end and not a
means to an end”
- Kant
Augustine
(354 AD)

Principles
 Dualistic
Theory
“Good and Evil”
 The principle both
eternal, reflected in the
WORLD which is the
production of the two
principles in mutual
conflict (Copleston, 1993)
 EUDAEMONISTIC
An end for human
conduct is
happiness.
Human being is a
moral agent
composed of spirit
and body.
The unity of these
to elements will
help us understand
our complexity.
“An act is good or bad
depending whether it
contributes to or deters
us from our proper
human end.
Happiness is
completion,
perfection, or
well-being
Happiness is to
be found only in
God; Supreme
and Infinite
 God is the
universal good in
the concrete
 Through
Knowledge and
Love
 Classical
Philosophers
Impacts of Belief
Systems
3 Types of Major Problems
•Systematic
•Corporation
•Individual
 1. Systematic
•Economy
•Politics
•Social system*
 2. Corporation
•Business activities
•Policies
•Practices
•Structures*
 3. Individual
•Attitudes
•Actions
•Character*
ISLAM
Principles
 ISLAM
•2nd largest
•Muhammad
•Allah is merciful, all-
powerful, and unique
ISLAMIC Business Ethics
•Relationship between
humas and their
environment and with
God
ISLAMIC Business Ethics
•Prohibits business
conducted by the evil
•Must not contain
elements of usury
•Has social functions
ISLAMIC Business Ethics
• Prohibits the reduction of an
item or commodity for
acquisition
• Upholding the values of
economic and social balance
ISLAMIC Business Ethics
• Upholding safety and
kindness
• Do not approve damage and
injustice
• No “CHEATING” policy
ISLAMIC Business Ethics
• Must not interfere with the
activities of worship to God
• Must not endanger ones life
• Good creditor and debtor
HINDUISM

Principles
 Hinduism
•Indian Religion
•Dharma (way of life)
•The oldest religion*
 Hinduism
•Bhagavad-Gita
the basis of Hinduism
on the ethical system
(Character-building)
 Hiduism Business Ethics
• To be peaceful •Equitable
• Charitable •Truthful
• Simple •Obedient
•Merciful
• Clean
•Not greedy
• Expert
•Humble*
• Compassionate
CONFUCIANISM

Principles
 Confucianism
•a religion of
optimistic
humanism
 Confucianism
•Impact upon the life,
social structure, and
political philosophy of
China.
 Confucianism
•deals primarily with moral
conduct and ethical living
and is often categorized
as an ethical system,
rather than a religion
Confucianism

Doctrines
 1. Ancestor Worship
•Veneration of the
deceased ancestors
whose spirits are believed
to control the fortunes of
the descendants.
 2. Filial Piety
•devotion and obedience
to and reverence of the
elders of the family by the
younger members.
Confucianism

Primary
Principles
 1. Jen
•The Golden Rule
 2. Chun Tai
the gentlemanly
man of virtue
 3. Cheng-ming
the proper
playing of
society’s roles
 4. Te
The power of
virtue
 5. Li
Ideal standard of
conduct
 6. Wen
The peaceful
arts
Christianity

Principles
 Christianity
•Most followed
•Jesus Christ
•The Bible*
 Christianity
•Greatest
commandments
Christian Business Ethics
• If someone does not work
should not be fed
• Treat others as you would want
to be treated
• Honesty
• Running a responsible business*
Christian Business Ethics
•Has a “conscience”
to be sensitive to
the social problems
Serve others
Christian Business Ethics
• Love •Goodness
• Joy •Faithfulness
• Peace •Gentleness
•Self-control*
• Patience
• Kindness
 Key Points
• Happiness is the end, choose the
best way in achieving it.
• Being Intentional is good, pure
intention is the best
• Morality– strive for it, live by it.
• To become an excellent leader, be a
good follower
 VIRTUE
ETHICS
The Implications
 Virtue Ethics
•Focuses on the
process of personal
moral character
development
 Virtue Ethics
•How the Person’s
character to act in
ways that promote
the human race to
flourish
 Virtue Ethics
•It is helpful to
become a good
person in the
business
 Threat of Situational determinism

•Institutional
behaviorism
•Overblown emphasis on
free will
•Personal autonomy
The Virtues
Of Virtue Ethics
 1. It is
personal.
 2. It focuses on the
motivations and the
sources of action,
bringing dynamic to
ethical understanding.
 3. It is
contextual.
4. It complements
other disciplines
addressing human
behavior.
5. It focuses on the
conformity
between right
thinking and
 6. It treats virtue
as a manifest,
perceptible feature
of action.
7. It preserves a role
for excellence and
helps counter the
levelling tendency of
deontological ethics.
8. It stresses that
people become
what they are
within a
Reference:
Business Ethics and Social Responsibility (1st
Edition), Rex Bookstore