МІНІСТЕРСТВО ОСВІТИ І НАУКИ УКРАЇНИ

НАЦІОНАЛЬНИЙ ТЕХНІЧНИЙ УНІВЕРСИТЕТ УКРАЇНИ

«КИЇВСЬКИЙ ПОЛІТЕХНІЧНИЙ ІНСТИТУТ ІМЕНІ ІГОРЯ СІКОРСЬКОГО»

Факультет менеджменту та маркетингу

Кафедра менеджменту

РЕФЕРАТ
з дисципліни «Англійська мова професійного спрямування”
на тему: “Business ethics”

Виконала:
студентка ІІІ курсу ФММ,
групи УВ-71
Довмат Анастасія

Перевірила:
викладач кафедри англійської мови
гуманітарного спрямування №3 ФЛ
Народовська Ольга Миколаївна

Київ
КПІ ім. Ігоря Сікорського
2020
 CONTENTS
INTRODUCTION......................................................................................................2
STANDARDS OF ETHICAL BEHAVIOUR..............................................................3
THE ROLE OF LAW.................................................................................................3
LEVELS OF CORPORATE RESPONSIBILITY........................................................4
THE ROLE OF RELIGION.......................................................................................5
CORPORATE BUREAUCRATIC CULTURE...........................................................7
CREATING AN ETHICAL ORGANIZATIONAL CULTURE..................................10
DEMONSTRATING CORPORATE SOCIAL RESPONSIBILITY...........................12
PROVIDING SERVANT LEADERSHIP.................................................................13
SUMMARY in English.............................................................................................15
SUMMARY translation............................................................................................16
GLOSSARY..............................................................................................................17
REFERENSES.........................................................................................................20

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 INTRODUCTION
The study of ethics per se has, of course, been a matter for intellectual
discourse going back to the ancient Greeks and earlier and the recognition that
business raises problems in applied ethics has an equally long pedigree.
But the recent interest in business ethics has a clear policy and practice
intent. On the one hand there has been a reaction to a number of manifestly
unethical episodes, examples of which have already been indicated; on the other
hand is the increasingly commonly expressed view that ethical business is good
business, that is, that the company that behaves ethically – and is seen to behave
ethically – will enhance its profitability. Consequently, the question has been
posed, “How can one ensure that people in business behave ethically?”
Ethics has to do with behaviour – specifically, one’s moral behaviour with
respect to society. The extent to which one’s behaviour measures up to societal
standards is typically used as a gauge of one’s ethicality. There are varieties of
standards for societal behaviour, of course, so ethical behaviour is often
characterized with respect to certain contexts.
The Ethics Resource Center says, ‘‘Business Ethics refers to clear standards
and norms that help employees to distinguish right from wrong behaviour at
work’’. In the context of doing business, then, ethics has to do with the extent to
which a person’s behaviour measures up to such standards as the law,
organizational policies, professional and trade association codes, popular
expectations regarding fairness and what is right, plus one’s own internalized
moral standards.
Business ethics is not an element distinct from ethics in general, but a
subfield of the broad area of study known as ethics. There is a complex set of
issues and expectations for doing business (which may differ from culture to
culture), and the subfield of business ethics refers to the examination and
application of moral standards within the context of finance; commerce;
production, distribution, and sale of goods and services; and other forms of
business. It can be fairly argued that an ethical person behaves appropriately in all
societal contexts. This indeed may be so, in which case one might prefer the term
‘‘ethics in business’’ to ‘‘business ethics.’’ The distinction is subtle, but serves as a
reminder that morality may be generalized from context to context.
Adam Smith, for example, saw no need for ethical relativism when it comes
to business: It is impossible to determine just how business became separated from
ethics in history. If we go back to Adam Smith, we find no such separation. In
addition to his famous book on business and capitalism, The Wealth of Nations,
Adam Smith also wrote The Theory of Moral Sentiments, a book about our ethical
obligations to one another. It is clear that Smith believed that business and
commerce worked well only if people took seriously their obligations and, in
particular, their sense of justice.

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 STANDARDS OF ETHICAL BEHAVIOUR
The law is one important and legitimate source of ethical guidance, of
course. Violation of the law is almost always considered unethical behaviour (with
the possible exception of civil disobedience as a mechanism for putting the law
itself on trial). One who pursues business outside the law is considered to be
following an obstructionist approach to business ethics (Schermerhorn, 2005, p.
75). Such an individual would almost certainly be labelled ‘‘an unethical business
person.’’
A second important source of authority consists of organizational policies.
These are standards for behaviour established by the employing organization.
Typically they are in alignment with the law (which takes precedence over them)
and spell out in detail ‘‘how things are to be done around here.’’ All employees are
expected to abide by organizational policies. It is very important that managers at
the highest level of the organization set the example for others by working always
within the law and the policies of the organization.
Likewise, another important source of ethical guidance is the code of
behaviour adopted by one’s professional and trade associations. These are often
aspirational in nature, and frequently establish higher standards for behaviour than
the law requires. Members of a professional or trade association typically seek to
meet these higher standards in order to establish and uphold the reputation of the
profession or trade.
A fourth type of standard – often unwritten and ‘‘commonly understood’’ –
is the community’s conceptualization of morality. These social mores, based on
commonly held beliefs about ‘‘what is right and what is wrong’’ and ‘‘what is fair
and what is unfair’’ can be powerful determinants of one’s reputation in society.
Behaviour which – in the strictest sense – meets legal requirements, organizational
policies, and even professional standards may still be viewed by the general public
as unfair and wrong (Krech et al., 1962).
Yet a fifth set of standards are those of the individual conscience. Coleman
(1980, p. Glossary IV) define ‘‘the conscience’’ as ‘‘the functioning of an
individual’s moral values in the approval or disapproval of his or her own thoughts
and actions,’’ and equate it roughly with the Freudian concept of the superego.
Highly ethical business leaders typically have moral standards which exceed all
four of the lesser standards listed above. These values, learned early in life and
reinforced by life’s experiences, are internalized standards which are often based
on personal religious and/or philosophical understandings of morality (Baelz,
1977, pp. 41–55).
THE ROLE OF LAW
The law plays an important – most would say an essential – part in
establishing the moral and practical milieu in which business takes place. Says
Fieser (1996), ‘‘The law is necessary since the laws are what establish the
contractual framework within which businesses operate’’. Stackhouse (1995a)
adds, ‘‘Modern business presupposes a stable fabric of law. Law, of course, means
limits; there are some things that businesses cannot do and remain legitimately in
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business’’ (p. 18). While few business philosophers question the role of the law as
a necessary standard of business morality, there is a raging debate over whether the
law is a sufficient standard of ethicality in business. In other words, is it enough for
the ethical business person to obey the law, or are there higher standards of
morality which also must be met?
Friedman (1970) argues that the law is both a necessary and sufficient
standard of morality in business, and even claims that corporate officers who seek
to ‘‘go beyond the law’’ in the name of social responsibility may be breaking trust
with corporate shareholders who expect the officers to serve as their agents in
making a profit within the law. ‘‘What does it mean to say that the corporate
executive has a ‘social responsibility’ in his capacity as a businessman?’’ asks
Friedman. ‘‘If this statement is not pure rhetoric, it must mean that he is to act in
some way that is not in the interest of his employers’’ (p. 33).
Fieser (1996) disagrees with Friedman regarding this latter claim; Fieser is
more sanguine with respect to the corporate officer’s voluntary actions to guide the
business to act in a socially responsible manner. However, Fieser summarizes his
careful examination of the issue of the sufficiency of the law as a moral guideline
for business with the ‘‘cautious conclusion’’ that ‘‘the typical business in our
society has no moral obligation beyond what the law requires’’ (p. 465).
In contrast, in an elegant treatise on the role of law in business morality,
Hosmer (2003) reaches the opposite conclusion: Legal requirements can serve as a
guide to managerial decisions and actions, but they are not enough. They don’t
include the full range of personal goals, norms, beliefs, and values and
consequently don’t represent the true nature and actual worth of human beings.
Legal requirements are useful, but we need something more (pp. 75–76.).
Stackhouse (1995a) takes a similar stance: Indeed, much of morality is
beyond the law. Law is best when it provides general guidelines for organization
and action, yet preserves maximum freedom, protects persons and groups from
danger or exploitation, and constrains those who subvert the capacity to live
responsibly. The point is this: economics and law cannot generate business
morality alone. Something in addition to them must guide business. So which is it?
Does the law provide sufficient moral guidance for business leaders, or is
‘‘something else’’ needed? One’s answer to this question will differ depending on
one’s philosophy about corporate responsibility (p. 18.).
LEVELS OF CORPORATE RESPONSIBILITY
Drawing on Carroll’s (1979) excellent scholarly work, Schermerhorn
(2005) makes these observations about four responsibilities of business firms:
– An organization is meeting its economic responsibility when it earns a profit
through the provision of goods and services desired by customers.
– Legal responsibility is fulfilled when an organization operates within the law
and according to the requirements of various external regulations.
– An organization meets its ethical responsibility when its actions voluntarily
conform not only to legal expectations but also to the broader values and moral
expectations of society.

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 – The highest level of social performance comes through the satisfaction of an
organization’s discretionary responsibility. Here, the organization voluntarily
moves beyond basic economic, legal, and ethical responsibilities to provide
leadership in advancing the well-being of individuals, communities, and society as
a whole. (pp. 74–75.)
Next Schermerhorn (2005), using Gatewood and Carroll (1981) as his
guides, describes a fourfold taxonomy of social responsibility strategies:
An obstructionist strategy (‘‘Fight the social demands’’) reflects mainly
economic priorities; social demands lying outside the organization’s perceived
self-interests are resisted...
A defensive strategy (‘‘Do the minimum legally required’’) seeks to protect
the organization by doing the minimum legally necessary to satisfy expectations.
Corporate behaviour at this level conforms only to legal requirements, competitive
market pressure, and perhaps activist voices...
Organizations pursuing an accommodative strategy (‘‘Do the minimum
ethically required’’) accept their social responsibilities. They try to satisfy
economic, legal, and ethical criteria. Corporate behaviour at this level is congruent
with society’s prevailing norms, values, and expectations. But, it may be so only
because of outside pressures...
The proactive strategy (‘‘Take leadership in social initiatives’’) is designed
to meet all the criteria of social performance, including discretionary performance.
Corporate behaviour at this level takes preventive action to avoid adverse social
impacts from company activities, and it takes the lead in identifying and
responding to emerging social issues (pp. 75–76.).
Leaders of those business organizations choosing to pursue a corporate
strategy of obstruction or defense would likely hold that the law is a sufficient
measure of business morality, while those striving to pursue an accommodative or
proactive strategy would argue that the law is certainly necessary for this purpose,
but not sufficient. Higher standards than the law may be needed.
For taking leadership roles in society, it is worth to adopt the proactive
strategy for their businesses, and thus to seek voluntarily to identify and avoid any
personal or business actions which might lead to societal harm. This places upon
them a higher level of moral expectation than those business persons who ‘‘settle
for’’ strategies lower on the taxonomy of corporate social responsibility.
Leadership is all about: striving to meet the higher standards.
THE ROLE OF RELIGION
Might religion play a part in determining ethical standards beyond ‘‘the
law?’’ Zinbarg (2001) makes an excellent case for ‘‘bringing religion into the
picture’’ with respect to understanding business ethics more fully: ‘‘Since moral
understandings are derived from religious traditions as well as from secular
education, the voices that speak to the issue should be religious as well as secular’’
(p. 33).
Similarly, Stackhouse (1995b) presents a convincing argument that religion
has much to offer the field of business ethics, particularly with respect to issues of
vocation, moral law, liberation, sin, covenant, and creation.
5
 Baelz (1977) adds this contribution to the argument that religion has a role in
understanding and applying ethical concepts in business. He says that religion
might exercise a coordinating and integrating function by holding before men’s
eyes the vision of an ultimate universal order in which the needs of the individual
and the needs of humanity were harmonized. It could bind human beings to one
another by binding them all to something even more inclusive, whether this were
conceived in terms of an impersonal order or in terms of a personal God (p. 65.).
Zinbarg (2001) presents an excellent summary of the ethical principles of the
Jewish, Christian, Islamic, Hindu, Buddhist, and Confucian traditions, and shows
how they converge to provide guidance for behaviour in the economic sector. He
summarizes his review as follows: «If the mosaics of the West and the East were
joined, I doubt that a member of any one of the six faith communities would be
uncomfortable looking at it. For the marketplace, the mosaic would portray a
coherent religious vision of an ideal economic setting. Economic efficiency would
not require a sacrifice of human dignity. Economic actors would exhibit mutual
compassion, and individual achievement would not be at the expense of communal
solidarity. Steady economic and moral improvement would be pursued with
humility and patience.» (p. 77.).
In a similar vein, Stackhouse (1995c) provides a concise summary of the
guidance the Christian faith provides for ethical behaviour in economic life. Many
of these principles are shared across the great religious traditions of the world: do
not lie, cheat, steal, or covet; deal as equitably with the foreigner and the stranger
as with the family member and the beloved neighbour; if authority is given to
someone, it must not be used to extort or gain advantage; all bounty is to be treated
as a trusted and trustworthy steward treats that which is the Lord’s. Honor is not to
go to the rich and the powerful because they are rich and powerful but accordingly
as they love mercy, do justice, and walk humbly with God. Further, the greedy
accumulation of wealth which removes some from accountability to all others is
contrary to God’s justice but damaging to the community. Forced poverty is
equally contrary to God’s justice and destructive of viable economic development.
Thus, efforts to call the greedy to account, to relieve the needs of the distressed,
and to convert both to a disciplined life, are always necessary (p. 112.).
When one holds fast to such religious beliefs, then one seeks to exhibit
behaviour in daily life and work which conforms to them. In a theological sense,
this is considered one’s ‘‘vocation’’ or ‘‘calling’’ (McKim, 1996, p. 36). Says the
National Conference of Catholic Bishops (1995), ‘‘Business people, managers,
investors and financiers follow a vital Christian vocation when they act responsibly
and seek the common good’’ (p. 446). This concept may easily be generalized to
other faith traditions as well. Sullivan (1995) says, ‘‘I think of business as a
vocation’’ (p. 676), and summarizes his effort to respond to his calling as a
business leader as follows: ‘‘What we have tried to do is establish a positive
environment for individual and company growth which emphasizes placing
responsibility on individuals, operating in a decentralized setting dedicated to
helping the customer and our company in the long term. Finally, we ask our people
to go beyond themselves and get involved in their own communities.’’ (p. 674.)
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 In Business as a Calling, a fascinating book written ‘‘for Jews, Christians,
Muslims, and others who take the inner life seriously’’ (p. 1), Novak (1996)
describes the benefits that would accrue to all business leaders if they viewed their
work as a calling in this sense: It would give them a greater sense of being part of a
noble profession. It would raise their own esteem for what they do – and no doubt
stimulate their imaginations about how they might gain greater and deeper
satisfactions from doing it. It would help tie them more profoundly to traditions
going far back into the past, in seeing their own high place in the scheme of things.
The human project is a universal project. We are involved in bringing the Creator’s
work to its intended fulfilment by being co-creators in a very grand project, indeed.
In this, we are tied to the whole human race (p. 37.).
How might those who accept business as a calling translate their passion into
action? In their compendium of thought on moral business, Stackhouse (1995)
present a number of thoughtful essays and position statements from a variety of
religious, historical, economic, and philosophical perspectives across the globe.
For practical suggestions coming from the world’s great religions, these essays and
documents provide a rich source of study.
Another impressive document – written by persons from a variety of faith
traditions throughout the world – is the ‘‘Universal Declaration of Human Rights,’’
adopted and proclaimed by the United Nations on December 10, 1948. What
ultimate good might accrue if business leaders across the world took it upon
themselves as their calling to implement the terms of this declaration in every
workplace on the globe?
Below are described three other types of action which leaders, who view
business as a calling, can undertake to improve the moral climate of the workplace:
(a) create an ethical culture within the organizations they lead,
(b) demonstrate corporate social responsibility,
(c) provide servant leadership.
Before turning to this discussion, however, it is necessary to gain a
perspective on the scope of the problem we face as we seek to change the current
corporate bureaucratic culture which seems to be stifling moral behaviour in
business.
CORPORATE BUREAUCRATIC CULTURE
In 1956 William H. Whyte published The Organization Man, a
groundbreaking expose of the pressures for conformity found in the typical
bureaucratic organization of the 1950s. Whyte’s book, a best seller, has become a
classic text for study of the sociological problems of large bureaucracies – whether
they be for-profit corporations, not-for-profit foundations, military units, hospitals,
churches, or voluntary associations – and is still in print today. Says Nocera in his
foreword to the 2002 paperback edition of Whyte’s classic, ‘‘Simply for being so
far ahead of the curve, Whyte deserves enormous credit’’ ’ (p. 25). It is true, as
Nocera asserts, that many of the problems inherent in large bureaucracies are now
understood and are being addressed. However, a more recent sociological
examination of for-profit bureaucracies indicates that there remains a number of

7
conditions in these organizations that affect the exhibition of positive ethical
behaviour on the part of those individuals labouring within them.
In the early 1980s Robert Jackall undertook indepth case studies of three
large American for-profit corporations. In the course of his research, Jackall
conducted over 180 interviews with corporate executives in an effort to uncover
the social context of their work. His resulting report, Moral Mazes: The World of
Corporate Managers (Jackall, 1988), is a worthy successor to The Organization
Man and provides a rich resource for answering this question.
Here are some of the concerns expressed by Jackall in his book:
1. Corporations are persons only in a legal sense.
Under the law, corporations have rights, privileges, and obligations as
‘‘persons.’’ However, corporations are not human beings, and one should be very
circumspect in attributing to them anthropomorphic characteristics. It may be
useful at times to speak of corporations as having such traits as loyalty, honesty,
character, ethicality, concern for stakeholders, and similar attributes, but it must
always be remembered that the corporation exists only on paper under the rule of
law (Cragg, 2002, p. 126).
Says Friedman, (1970) ‘‘What does it mean to say that ‘business’ has
responsibilities? Only people can have responsibilities’’ (p. 32). While it may be
true that individuals within the corporate structure possess these human character
traits, one should never make the assumption that a corporate entity has a
conscience or a soul. Jackall (1988) speaks of a public relations ploy known as the
‘‘corporate persona, a kind of fictive reality, known colloquially in the field as a
‘front’’’ (p. 174). One must always look beyond ‘‘the front’’ to understand what
truly is happening within the organization.
2. Business organizations are typically established to make a profit, and this
can affect their moral culture.
On occasion businesses are created for purposes other than making a profit
(such as tax shelters), but most proprietorships, partnerships, and corporations are
in business to make a profit. In fact, leaders of for-profit corporations have a
fiduciary obligation to increase the value of the money invested in the corporation
by its shareholders (Cragg, 2002, p. 125). Competition is fierce in today’s global
marketplace, so making a profit year after year is no easy matter. The need to make
a profit puts considerable pressure on business managers, and leads to many
temptations to ‘‘cut corners’’ ethically (Sauser, in press a).
Managers know that in the organization right and wrong get decided by
those with enough clout to make their views stick. A manager who is seeking to
‘‘get ahead at all costs’’ might be tempted to cut ethical corners in order to gain a
reputation as someone who can make money for the organization (Jackall, 1988,
p.105).
3. Most large business corporations are organized as bureaucracies; this
tends to distribute authority in ways that may be counterproductive.
In Jackall’s (1988) blunt words, ‘‘It is characteristic of this authority system
that details are pushed down and credit is pulled up. Superiors do not like to give
detailed instructions to subordinates’’ (p. 20).
8
 This can result in considerable role ambiguity on the part of employees of
the firm. What precisely is to be done, by whom, using what procedures? In
ambiguous circumstances like these, moral behaviour can become compromised,
especially given the organizational culture issues discussed above. This can lead to
what Jackall describes as a related problem, avoidance of responsibility: ‘‘As a
result, many managers become extremely adept at sidestepping decisions
altogether and shrugging off responsibility leaving those who actually do decide to
carry the ball alone in the open field’’ (p. 80). For these reasons, Jackall refers to
bureaucratic businesses as ‘‘vast systems of organized irresponsibility’’ (p. 95).
4. Business managers, particularly those at the middle levels and below,
have little control over their own time.
Jackall notes that this lack of economy over one’s time results from
‘‘continual interruption from one’s subordinates, telephone calls from customers
and clients, and necessary meetings with colleagues’’.
As a consequence of this time pressure, many managers do not have the
luxury to ponder their decisions and actions in terms of ethicality. They often go
with their ‘‘gut response,’’ and in a milieu of ethical relativism, they sometimes
make decisions which, upon reflection, they recognize as morally insufficient.
5. Many corporate managers have a very short-term time perspective.
This is true because managers are typically rewarded for short-term financial
gains; the ‘‘quarterly report’’ is their major measure of performance. Jackall
(1988) attributes this short-term perspective in part to the training many managers
receive: The training of professional managers increasingly focus on the
techniques of financial wizardry – for example, leveraged buyouts, arbitrage, stock
protection and stock kiting – on quantitative measures of organizational progress.
Many of these tools reflect and illustrate the short-term mentality that
characterizes most managerial training. Similarly, accounting systems that place a
premium on bare-bones inventory reflect the same pressure for short-run profit
maximization (p. 82.). Such a strategy may improve one’s chances for upward
mobility within the firm while simultaneously eroding the organization’s
competitiveness in the long run.
6. Problems of psychological distance and multiple stakeholders also diffuse
responsibility within the bureaucratic business firm.
Suffice it to say here that multiple stakeholders complicate the job of the
corporate manager: Managers must address a multiplicity of audiences, some of
whom are considered rivals, and some outright adversaries. These audiences are
the internal corporate hierarchy with its intricate and shifting power cliques and
competing managerial circles, key regulators, local and federal legislators, special
publics that vary according to the issues, and the public at large, whose goodwill
and favourable opinions are considered essential for a company’s free operation
(Jackall, 1988, p. 156.). The key stakeholders to please, of course, are the owners
of the corporation – the stockholders. But more and more frequently these persons
are distanced considerably from the operations of the firm for reasons that the
capital markets are increasingly dominated by big institutional investors – among
them, large corporations, the insurance companies, the investment funds, and the
9
brokerage houses –whose ‘‘quick in, quick out’’ philosophy wreaks havoc with
corporate stocks (p. 83.). May (1995) concurs with this point: Stockholders are
important stakeholders in a company, but by no means the only ones. Workers,
customers, neighbours, and the public at large have in varying way a stake in its
performance, sometimes indeed a larger stake than stockholders who may dart in
and out of their investments more readily than workers and neighbours can
disengage themselves from a company and its fortunes (p. 696.).
In addition to increasing stockholder detachment from the companies they
own, there is also the problem within some organizations of a growing
psychological distance between corporate leaders and their ‘‘rank-and-file’’
employees. ‘‘Bureaucracies create many mechanisms that separate men and
women from the consequences of their actions,’’ comments Jackall (1988).
‘‘Impersonality provides the psychological distance necessary to make what
managers call ‘hard choices’’’ (p. 127).
Unfortunately, this psychological distance, coupled with stockholder
detachment, can also result in decisions which devastate the lives of many
corporate employees. Jackall acknowledges the stress which results from ‘‘periods
of organizational upheaval, a regular feature of American business where mergers,
buyouts, divestitures, and especially ‘organizational restructuring’ have become
commonplace occurrences’’ (p. 24).
These six complex organizational features explored by Jackall (1988) – and
others too numerous to describe here – have led to a prevailing organizational
culture in many business organizations where, according to Jackall, ‘‘one must
learn to streamline oneself shamelessly, learn to wear all the right masks, learn all
the proper vocabularies of discourse, get to know all the right people, and cultivate
the subtleties of the art of self-promotion’’ (p. 74). Such an organizational culture
hardly leads to the promotion of morality and ethicality!
This is why creating an ethical culture within the workplace is one of the
most important tasks of the modern manager (Sauser, in press b).
CREATING AN ETHICAL ORGANIZATIONAL CULTURE
How might a leader in business go about creating an organizational culture
where ethics can flourish? The Ethics Resource Center (Joseph, 2003, p. 5) offers
four elements as a beginning point:
– written standards of ethical conduct;
– training on standards of conduct;
– an ethics office or telephone advice line;
– a means to report misconduct anonymously.
Here are some suggestions shared recently at a conference for South African
entrepreneurs (Sauser, in press b):
1. Adopt a code of ethics.
The code need not be long and elaborate with flowery words and phrases. In
fact, the best ethical codes are stated simply in language anyone can understand. A
good way to produce such a code is to ask all employees of the firm (or a
representative group of them) to participate in its creation (Kuchar, 2003). Identify
the commonly held moral beliefs and values of the members of the firm and codify
10
them into a written document, which all can understand, and support. Post the code
of ethics in prominent places around the worksite. Make certain that all employees
subscribe to it.
2. Provide ethics training.
From time to time the ethical business leader should conduct ethics training
sessions. These may be led by experts in business ethics, or they may be informal
in nature and led by the manager and/or employees themselves.
3. Hire and promote ethical people.
This, in concert with step four below, is probably the best defence against
putting the business at risk through ethical lapses made by employees with
character flaws. When making human resources decisions it is critical to reward
ethical behaviour and punish unethical behaviour. Investigate the character of the
people you hire, and do your best to hire people who have exhibited high moral
standards in the past. Base promotional decisions on matters of character in
addition to matters of technical competence. Demonstrate to your employees that
high ethical standards are a requirement for advancement in the firm.
4. Correct unethical behaviour.
This is the complement of step three. When the organization’s ethical code is
breached, the employee(s) responsible must be punished. Many business
organizations use ‘‘progressive discipline,’’ with an oral warning (intended to
advise the employee of what is and is not acceptable behaviour) used as the first
step, followed by a written reprimand, suspension without pay, and termination as
further disciplinary action if unethical behaviour persists. Of course, some ethical
lapses are so egregious that they require suspension – or even termination –
following the first offense. Through consistent and firm application of sanctions to
correct unethical behaviour, the manager will signal to all employees that
substandard moral behaviour will not be tolerated.
5. Take a proactive strategy.
Businesses that wish to establish a reputation for ethicality and good
corporate citizenship in the community will often organize and support programs
intended to ‘‘give something back’’ to the community. Programs that promote
continuing education, wholesome recreation, good health and hygiene, nutritious
diet, environmental quality, adequate housing, and other community benefits may
be undertaken in an effort to demonstrate the extent to which the business
promotes care and concern for human welfare. Seeking out and adopting ‘‘best
practices’’ from other businesses in the community is also a proactive strategy.
6. Conduct a social audit.
Most businesses are familiar with the process of financial audits. This
concept can be employed in the context of ethics and corporate responsibility as
well. From time to time the business might invite responsible parties to examine
the organization’s product design, purchasing, production, marketing, distribution,
customer relations, and human resources functions as well, with an eye toward
identifying and correcting any areas of policy or practice that raise ethical
concerns. Similarly, programs of corporate responsibility should be reviewed for
effectiveness and improved as needed.
11
 7. Protect whistle blowers.
A ‘‘whistle blower’’ is a person within the firm who points out ethically
questionable actions taken by other employees – or even by managers – within the
organization. (The term is borrowed from the athletic arena, where referees ‘‘blow
the whistle’’ when a foul is committed.) Too often corporate whistle blowers are
ignored – or even punished – by those who receive the unfortunate news of
wrongdoing within the business. All this does is discourage revelation of ethical
problems. Instead the whistle blower should be protected, and even honored. When
unethical actions are uncovered within a firm by one of its own employees, that is
the time for managers to step forward and take corrective action. Employees
observe one another’s actions and learn from one another’s consequences.
If the owners and managers of a business turn a blind eye toward
wrongdoing, a signal is sent to everyone within the firm that ethicality is not
characteristic of that organization’s culture. A downward spiral of moral behaviour
is likely to follow.
8. Empower the guardians of integrity.
The business leader’s chief task with respect to establishing a culture of
ethicality is to lead by example and to empower every member of the organization
to take personal action that demonstrates the firm’s commitment to ethics in its
relationships with suppliers, customers, employees, and shareholders. Turn each
employee of the firm, no matter what that individual’s position in the
organizational hierarchy, into a guardian of the firm’s integrity. When
maliciousness and indifference are replaced with a culture of integrity, honesty,
and ethicality, the business will reap long-term benefits from all quarters.
DEMONSTRATING CORPORATE SOCIAL RESPONSIBILITY
There are many different viewpoints on the meaning of the term ‘‘corporate
social responsibility,’’ and thus different strategies for meeting this goal.
Friedman’s (1970) admonition to attend solely to making a profit for the
shareholders within the law would likely be labelled as a defensive or
accommodative strategy using Schermerhorn’s (2005) typology.
Stakeholder theorists typically recommend an accommodative or even
proactive strategy. Desjardins (2003), for example, suggests that ethical businesses
‘‘produce a high quality product that consumers value, treat employees with
decency and fairness, and give back to the community that supports your
business’’(p. 13).
Novak (1996) provides a very comprehensive definition of ‘‘business
ethics’’ from the proactive point of view: Business ethics means a great deal more
than obeying the civil law and not violating the moral law (p. 133).
It means imagining and creating a new sort of world based on the principles
of individual creativity, community, realism, and the other virtues of enterprise. It
means respecting the right of the poor to their own personal economic initiative
and their own creativity. It means fashioning a culture worthy of free women and
free men—to the benefit of the poor and to the greater glory of God. To illustrate
his proactive definition of business ethics, Novak (1996) lists what he believes to
be seven internal and seven external responsibilities of ethical firms.
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 Respectively, they are: Seven Internal Responsibilities:
1. To satisfy customers with goods and services of real value.
2. To make a reasonable return on the funds entrusted to the business
corporation by its investors.
3. To create new wealth.
4. To create new jobs.
5. To defeat envy through generating upward mobility and putting empirical
ground under the conviction that hard work and talent are fairly rewarded.
6. To promote invention, ingenuity, and in general ‘‘progress in the arts and
useful sciences’’ (Article I, Section 8, U. S. Constitution).
7. To diversify the interests of the republic.
Seven Responsibilities from Outside Business:
1. To establish within the firm a sense of community and respect for the
dignity of persons.
2. To protect the political soil of liberty.
3. To exemplify respect for law.
4. To make manifest social justice.
5. To communicate often and fully with their investors, shareholders,
pensioners, customers, and employees.
6. To contribute to making its own habitat, the surrounding society, a better
place.
7. To protect the moral ecology of freedom. (pp. 134–159.)
Thus, those who labour within the business corporation have many moral
responsibilities and a richly various moral agenda, of which the fourteen
responsibilities mentioned here are basic but not exhaustive. Any business leader
who embraces Novak’s (1996) vision of the business corporation as a moral
institution, and who takes the necessary actions to create an ethical culture within
her or his organization, is making a truly significant contribution to society (pp.
158–159.)
PROVIDING SERVANT LEADERSHIP
Magoni (2002/03) describes a new paradigm for leadership, a paradigm
which is gaining the attention of theologians, business leaders, and educators alike:
In leadership literature, two paradigms we often read about are the pyramid and the
inverted pyramid.
The pyramid model represents the old school, militaristic, top-down,
hierarchical leadership style. The CEO is at the top, and all policy and ideas flow
from the top down. In the inverted pyramid, the leader or CEO is seen on the
bottom, serving the organization. He or she is there to serve the company and
remove all of the obstacles that would prevent the team from getting the job done.
This paradigm is often used when describing servant leadership (p. 14.).
The late Robert Greenleaf, founder of the Greenleaf Center for Servant
Leadership, is often credited with coining the term, ‘‘servant leadership’’. Autry
(2002/2003) summarizes six ideas about servant leadership made popular by
Greenleaf and his disciples:

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 1. Leadership is not about controlling people; it’s about caring for people
and being a useful resource for people.
2. Leadership is not about being a boss; it’s about being present for people
and building a community at work.
3. Leadership is not about holding on to territory; it’s about letting go of
ego, bringing your spirit to work, being your best and most authentic self.
4. Leadership is less concerned with pep talks and more concerned with
creating a place in which people can do good work, can find meaning in their
work, and bring their spirits to work.
5. Leadership, like life, is largely a matter of paying attention.
6. Leadership requires love. (p. 5.)
This final statement about leadership made by Autry is very similar to the
highest ethic identified by Baelz (1977): love. Says Baelz: Man’s essential nature
is in accordance with love. In acting out of love men are being true to what they
really are. Love is not only a force in human nature, it is the source and spring of
personal well-being. Those who love are acting as ‘real’ persons; in responding to
the nature with which and for which they have been created they have already
discovered what it is to ‘come alive’ (p. 108) . Servant leadership, then, can be
seen as the application of the ethic of love to the management of the work
enterprise.
Here are ten characteristics of the servant leader as envisioned by Greenleaf
(2002/2003):
– listening, – conceptualization,
– empathy, – foresight,
– healing, – stewardship,
– awareness, – commitment to the growth of people,
– persuasion, – building community.
Nowadays the concept of servant leadership is beginning to move into
the mainstream literature for business education. The corporate community
is struggling to find leaders committed to the mission and the margin, people
and profit, organizational growth and family stability. Leaders with ethical
perspectives that are able to gain the trust of the employees, the customers
and the community are now in great demand. Structures and organizations
are looking for leaders who care for people, rather than control people,
individuals concerned about building community more than being boss,
leaders who empower people rather than use people.

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 SUMMARY in English
The system of moral and ethical beliefs that guides the values,
behaviours, and decisions of a business organization and the individuals
within that organization is known as business ethics. Some ethical
requirements for businesses are codified into law; environmental
regulations, the minimum wage, and restrictions against insider trading
and collusion are all examples of the government setting forth minimum
standards for business ethics.
The management team sets the tone for how the entire company runs
on a day-to-day basis. When the prevailing management philosophy is based
on ethical practices and behaviour, leaders within an organization can direct
employees by example and guide them in making decisions that are not only
beneficial to them as individuals, but also to the organization as a
whole. Building on a foundation of ethical behaviour helps create long-
lasting positive effects for a company, including the ability to attract and
retain highly talented individuals, and building and maintaining a positive
reputation within the community. Running a business in an ethical manner
from the top down builds a stronger bond between individuals on the
management team, further creating stability within the company.
When management is leading an organization in an ethical
manner, employees follow in those footsteps. Employees make better
decisions in less time with business ethics as a guiding principle; this
increases productivity and overall employee morale. When employees
complete work in a way that is based on honesty and integrity, the whole
organization benefits. Employees who work for a corporation that demands
a high standard of business ethics in all facets of operations are more likely
to perform their job duties at a higher level and are also more inclined to
stay loyal to that organization.
The importance of business ethics reaches far beyond employee
loyalty and morale or the strength of a management team bond. As with all
business initiatives, the ethical operation of a company is directly related
to profitability in both the short and long term. The reputation of a business
in the surrounding community, other businesses, and individual investors is
paramount in determining whether a company is a worthwhile investment. If
a company is perceived to not operate ethically, investors are less inclined to
buy stock or otherwise support its operations.
Companies have more and more of an incentive to be ethical as the
area of socially responsible and ethical investing keeps growing. The
increasing number of investors seeking out ethically operating companies to
invest in is driving more firms to take this issue more seriously.
With consistent ethical behavior comes an increasingly positive public
image, and there are few other considerations as important to potential
investors and current shareholders. To retain a positive image, businesses
must be committed to operating on an ethical foundation as it relates to the

15
treatment of employees, respecting the surrounding environment and fair
market practices in terms of price and consumer treatment.

SUMMARY translation
Система моральних та етичних переконань, що визначають
цінності, поведінку та рішення організації та окремих осіб у цій
організації, відома як ділова етика. Деякі етичні вимоги до бізнесу
визначено в законі; екологічні норми, мінімальна заробітна плата та
обмеження щодо інсайдерської торгівлі та змов – все це приклади того,
як уряд встановлює мінімальні стандарти ділової етики.
Менеджери задають тон того як вся компанія повинна працювати
на щоденній основі. Коли філософія управління заснована на етичній
поведінці, лідери всередині організації можуть направляти
співробітників своїм прикладом на прийняття рішень, які вигідні не
тільки їм як окремим людям, а й організації в цілому. Опора на
фундамент етичної поведінки допомагає створювати довгострокові
позитивні ефекти для компанії, включаючи здатність залучати і
утримувати талановитих людей, а також створювати і підтримувати
позитивну репутацію в суспільстві. Управління бізнесом в етичній
манері зверху вниз створює більш міцний зв'язок між окремими
особами в управлінській команді, що ще більше зміцнює стабільність
всередині компанії.
Коли керівництво керується етичними принципами,
співробітники наслідують їх. Працівники приймають кращі, швидші
рішення в якості керівного принципу; це підвищує продуктивність
праці і загальний моральний дух співробітників. Коли співробітники
виконують свою роботу засновану на чесності і сумлінності, вся
компанія отримує вигоду. Працівники корпорації, яка вимагає високих
стандартів ділової етики у всіх аспектах діяльності, з більшою
ймовірністю виконують свої посадові обов'язки краще, а також більш
схильні залишатися лояльними до цієї організації.
Важливість ділової етики є далеко за рамками лояльності і
морального духу, а також за рамками міцності зв'язків в управлінській
команді. Як і у всіх бізнес-ініціативах, етична діяльність компанії
безпосередньо пов'язана з прибутковістю як в коротко-, так і в
довгостроковій перспективі. Репутація бізнесу має першорядне
значення для визначення того, чи є компанія вартісною інвестицією.
Якщо компанія сприймається як неетична, інвестори менш схильні
купувати акції або іншим чином підтримувати її діяльність.
У компаній з'являється все більше і більше стимулів бути
етичною, оскільки область соціально відповідального та етичного
інвестування продовжує зростати. Зростаюча кількість інвесторів, які
шукають етичні компанії для інвестування, спонукає все більше
ставитися до цього питання серйозно. Послідовна етична поведінка
16
призводить до позитивного суспільного іміджу, і є настільки ж
важливою для потенційних інвесторів та нинішніх акціонерів. Щоб
зберегти позитивний імідж, підприємства повинні бути віддані роботі
на етичній основі, оскільки це стосується поводження з працівниками,
поваги навколишнього середовища і справедливої ринкової практики з
точки зору цін і ставлення до споживачів.
GLOSSARY
Adversary – an enemy.
Alignment – an arrangement in which two or more things
are positioned in a straight line or parallel to each other.
Ambiguous – having or expressing more than one possible meaning,
sometimes intentionally.
Brokerage – an organization that buys and sells foreign money, shares
in companies, etc. for other people.
Bureaucratic – involving complicated rules and processes that make
something slow and difficult; relating to a system of controlling or managing
a country, company, or organization that is operated by a large number of
officials
Circumspect – careful not to take risks.
Circumstance – a fact or event that makes a situation the way it is.
Clique – a small group of people who spend their time together and
do not welcome other people into that group.
Commitment – a promise or firm decision to do something.
Communal – belonging to or used by a group of people rather than
one single person.
Compendium – a short but complete account of a particular subject,
especially in the form of a book.
Concise – short and clear, expressing what needs to be said without
unnecessary words.
Congruent – similar to or in agreement with something, so that the
two things can both exist or can be combined without problems.
Contrary – the opposite.
Covenant – a formal agreement or promise between two or more
people.
Defence – protection or support against attack, criticism, or infection.
Detachment – a feeling of not being emotionally involved; a group of
soldiers who are separated from the main group in order to perform a
particular duty.
Disobedience – the quality of being disobedient (= refusing to do
what someone in authority tells you to do).
Distribute – to give something out to several people, or to spread or
supply something.
Egregious – extremely bad in a way that is very noticeable.
Equitably – in a way that treats everyone fairly and in the same way.
Essential – necessary or needed.
17
 Exploitation – the use of something in order to get an advantage from
it.
Faith – great trust or confidence in something or someone.
Fiduciary – relating to the responsibility to take care of someone
else's money in a suitable way.
Fierce – physically violent and frightening; strong and powerful;
showing strong feeling or energetic activity; difficult.
Framework – a system of rules, ideas, or beliefs that is used to plan or
decide something; a supporting structure around which something can be
built.
Fulfilment – the fact of doing something that is necessary or
something that someone has wanted or promised to do.
Guidance – the process of directing the flight of a missile or rocket;
help and advice about how to do something or about how to deal with
problems connected with your work, education, or personal relationships.
Guidelines – information intended to advise people on how something
should be done or what something should be.
Havoc – confusion and lack of order, especially causing damage or
trouble.
Healing – the process of becoming well again, especially after a cut or
other injury, or of making someone well again; the process in which a bad
situation or painful emotion ends or improves.
Hierarchy – a system in which people or things are arranged
according to their importance; the people in the upper levels of an
organization who control it.
Humbly – in a way that shows that you do not think you are
important.
Impact – the force or action of one object hitting another; a powerful
effect that something, especially something new, has on a situation or
person.
Insufficient – not enough.
Justice – fairness in the way people are dealt with.
Labouring – workers, especially people who do practical work with
their hands; practical work, especially when it involves hard physical effort.
Lapses – a temporary failure; a period of time passing between two
things happening.
Liberation – an occasion when something or someone is released or
made free; used to refer to activities connected with removing the
disadvantages experienced by particular groups within society
Long-lasting – continuing for a long period of time.
Margin – the amount by which one thing is different from another;
the profit made on a product or service.
Mercy – kindness that makes you forgive someone, usually someone
that you have authority over.

18
 Mutual – (of two or more people or groups) feeling the same emotion,
or doing the same thing to or for each other.
Obey – to act according to what you have been asked or ordered to do
by someone in authority, or to behave according to a rule, law, or
instruction.
Obstacle – something that blocks you so that movement, going
forward, or action is prevented or made more difficult.
Paramount – more important than anything else.
Per se – by or of itself.
Prevailing – existing in a particular place or at a particular time.
Privilege – a right or advantage that only a small number of people
have ; an advantage that only one person or group of people has, usually
because of their position or because they are rich; the special right that some
people in authority have that allows them to do or say things that other
people are not allowed to.
Proprietorship – the situation of owning something; a particular legal
form for a small company in some countries.
Provision – the act of providing something; a statement within an
agreement or a law that a particular thing must happen or be done, especially
before another can happen or be done.
Raging – very severe or extreme; very strong or violent.
Relativism – the belief that truth and right and wrong can only be
judged in relation to other things and that nothing can be true or right in all
situations.
Reprimand – to express to someone your strong official disapproval
of them.
Sanguine – (of someone or someone's character) positive and hoping
for good things.
Shareholder – a person who owns shares in a company and therefore
gets part of the company's profits and the right to vote on how the company
is controlled.
Sin – the offence of breaking, or the breaking of, a religious or moral
law.
Stance – a way of thinking about something, especially expressed in a
publicly stated opinion.
Stewardship – someone's stewardship of something is the way in
which that person controls or organizes it.
Strive – to try very hard to do something or to make something
happen, especially for a long time or against difficulties.
Sufficiency – an amount of something that is enough, or the quality of
being good enough.
Surrounding – that is everywhere around something.
Taxonomy – a system for naming and organizing things, especially
plants and animals, into groups that share similar qualities.

19
 Temptation – the wish to do or have something that you know you
should not do or have; something that makes you want to do or have
something that you know you should not.
Theologian – a person who studies or is a specialist in religion.
Trait – a particular characteristic that can produce a particular type of
behaviour.
Treatise – a formal piece of writing that considers and examines a
particular subject.
Upheaval – a great change, especially causing or involving much
difficulty, activity, or trouble.
Violation – an action that breaks or acts against something, especially
a law, agreement, principle, or something that should be treated with respect.

20
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