GOOD GOVERNANCE AND

SOCIAL RESPONSIBILITY
MODULE 1
For Module 1, the students are expected to achieve the
following Learning Outcomes:
1. Ability to describe the Ethical and current Social
Responsibility issues and the influence of these issues on
society, management decision making, behavior, policies,
and practices.
2. Internalize in themselves that ethical behavior is the best
long-term business strategy for a company amidst the
growing global business changes.
 The foregoing Learning Outcomes shall be realized
through lecture and interactive discussion of the following
Topics: Week 1 and Week 2

I. The Role of Business Ethics

II. Moral Development and Reasoning

III. The Pros and Cons of Business Ethics

IV. Moral Responsibility and Blame

 Learning Methods will be, as follows:
1. Lecture / Discussion / Group Presentations - for the
Synchronous sessions
2. Seatwork: Reflections on learning in class; Reflections and
Insights on videos relative to Ethics, Morality, Good
Governance, and Social Responsibility; and Case Analyses -
for the Asynchronous Sessions
3. Readings on relevant papers, journals, Laws / Acts and
Issuances of the Philippine Government on Corporate
Governance – for the Asynchronous Sessions

Assessment of the Reflections and Insights; and of the

Case Analyses will be guided by the Five-point Rubric,
which has been published in the Files Link / Index Page.
Reflections and Insights on the following videos:

1. River Blindness
2. Aaron Feurestein’s Malden Mills
3. Child Slavery in the Chocolate Industry
Analysis of the Case Study: River Blindness – Merck & Co., Inc.
The videos and Case Study are published in the Files Link /
Index Page.

Reference Materials have been specified in the course syllabus,

which has been published in the FILES Link / Index Page.
I. FUNDAMENTAL PRINCIPLES OF
BUSINESS ETHICS
BUSINESS ETHICS IS APPLIED ETHICS.

IT IS THE APPLICATION OF OUR UNDERSTANDING OF

WHAT IS GOOD AND RIGHT TO THAT ASSORTMENT
OF INSTITUTIONS, TECHNOLOGIES, TRANSACTION,
ACTIVITIES, AND PURSUITS THAT WE CALL
BUSINESS.
1.THE ROLE OF BUSINESS ETHICS

BUSINESS ETHICS AND ITS ISSUES

ETHICS – the principles of conduct governing an

individual or a group.

- the study of morality.

1.THE ROLE OF BUSINESS ETHICS

BUSINESS ETHICS AND ITS ISSUES

MORALITY – the standards set by an individual or a

group about what is right and wrong or good and
evil.

MORAL STANDARDS – the norms about the kinds

of actions believed to be morally right and wrong as
well as the values placed on the kinds of objects
believed to be morally good and morally bad.
FIVE CHARACTERISTICS OF MORAL
STANDARDS:

1. Involved with serious injuries or benefits.

2. Not established by law or legislature.
3. Should be preferred to other values including
self-interest.
4. Based on impartial consideration.
5. Associated with special emotions and
vocabulary.
MORAL NORMS CAN BE EXPRESSED AS
GENERAL RULES OR STATEMENTS:

1. Always tell the truth.

2. It is wrong to kill innocent people.
3. Actions are right to the extent that they produce
happiness.
4. Honesty is the best policy.
5. Injustice is bad.
ORIGINS OF MORAL STANDARDS:

As a child – from family, friends, and various societal

influences: church, school, television, magazines, music,
and associations.
As the person grows – experience, learning, and
intellectual development.

NONMORAL STANDARDS – the standards by which we

judge what is good or bad and right and wrong in a nonmoral
way.

NONMORAL STANDARDS:

1. Standards of etiquette by which we judge manners as

good or bad.

2. Standards we call the law by which we judge legal right

and wrong.
3. Standards of language by which we judge what
is grammatically right and wrong.

4. Standards of aesthetics by which we judge good

and bad art.

5. Standards of Athletic by which we judge how well

a game is being played.
NORMATIVE STUDY – An investigation that
attempts to reach conclusions about what things are
good or bad or about what actions are right or
wrong.

DESCRIPTIVE STUDY – An investigation that

attempts to describe or explain the world without
reaching any conclusions about whether the world is
as should be.

SOCIOLOGY: Do Americans believe that bribery is

wrong?

ETHICS: Is bribery wrong?

INSTITUTIONS:

1. Familial
2. Economic
3. Legal
4. Political
5. Educational

MOST INFLUENTIAL INSTITUTION: Economic

1. Production of the goods and services the
members of society want and need.

2. Distribution of these goods and services to the

various members of society.
BUSINESS ETHICS STUDIES:

1. Moral standards
2. How moral standards apply to social systems and
organizations that produce and distribute goods and
services.

KINDS OF ETHICAL ISSUES:

1. Systemic – social systems or institutions within which
businesses operate.
2. Corporate – an individual company taken as a whole.
3. Individual – a particular individual or individuals
within a company and their behaviors and decisions.
APPLYING ETHICS TO CORPORATE
ORGANIZATIONS: two views

1. Corporate organizations are morally responsible

for their actions and that their actions are moral
or immoral in exactly the same sense that
human beings are.
APPLYING ETHICS TO CORPORATE
ORGANIZATIONS: two views

2. Corporate organizations are the same as

machines whose members must blindly and
undeviatingly conform to formal rules that have
nothing to do with morality.
WORK OF PHILOSOPHER JOHN SEARLE:

1. A corporate organization exists only if there exists

certain human individuals who are in certain
circumstances and relationships; and our linguistic
and social conventions lay down that when those
kinds of individuals exist in those kinds of
circumstances and relationships, they shall count as
a corporation.

2. A corporate organization acts only if certain human

individuals in the organization performed certain
actions in certain circumstances; and our linguistic
and social conventions lay down that when those
kinds of individuals perform those kinds of actions in
those kinds of circumstances, this shall count as an
act of their corporate organization.
GLOBALIZATION, MULTINATIONALS, AND BUSINESS
ETHICS

GLOBALIZATION – The worldwide process by which the

economic and social systems of nations have become
connected.

MULTINATIONAL CORPORATIONS – A company that

maintains manufacturing, marketing, services, or
administrative operations in many different countries.
Example: General Electric

Founded by Thomas Edison

Headquartered in New York
Operates in over 100 countries
Derives almost half of its income from outside the
United States
Metallurgy plants in Prague
Software operations in India
Product design offices in Budapest, Tokyo, and
Paris
Assembly operations in Mexico
SIGNIFICANT HARMS OF GLOBALIZATION ON THE
WORLD

- Many poorer nations were left behind due to cheap

primary commodities to trade.
- Gives Multinationals too free a hand.
- Result is a “race to the bottom”: a global decline in
labor, environmental and wage standards.
- Transfer of technologies or products into developing
nations that are not ready to assimilate them.
- Multinationals covertly engage in practices that violate
the norms and standards that we should respect.
BUSINESS ETHICS AND CULTURAL DIFFERENCES

ETHICAL RELATIVISM – A theory that there are no

ethical standards that are absolutely true and that
apply or should be applied to the companies and
people of all societies.
There are numerous practices that are judged immoral by
some societies that other societies have deemed morally
acceptable:

- Polygamy
- Abortion
- Infanticide
- Slavery
- Homosexuality
- Racial and sexual discrimination
- Genocide - the deliberate killing of a large group of
people, especially those of a particular ethnic group or
nation.
- Patricide - the killing of one's father.
- Torture of animals
ALL SOCIETIES HAVE NORMS AGAINST INJURING OR KILLING OTHER
MEMBERS OF SOCIETY, NORMS ABOUT USING LANGUAGE
TRUTHFULLY WHEN COMMUNICATING WITH MEMBERS OF ONE’S
SOCIETY, NORMS AGAINST TAKING THE PERSONAL GOODS OF OTHER
MEMBERS OF ONE’S SOCIETY.

TECHNOLOGY AND BUSINESS ETHICS

TECHNOLOGY – consists of all those methods, processes, and tools

that humans invent to manipulate their environment.
THE AGRICULTURAL REVOLUTION
THE INDUSTRIAL REVOLUTION
THE REVOLUTIONS IN BIOTECHNOLOGY

THE INFORMATION TECHNOLOGY – The use of

extremely powerful and compact computers, the
internet, wireless communications, digitalization,
and numerous other technologies that have
enabled us to capture, manipulate, and move
information in new and creative ways.
CYBERSPACE – A term used to denote the
existence of information on an electronic network of
linked computer systems.

VIOLATION OF THE RIGHT TO PRIVACY: the

right to prohibit others from knowing things about
us that are private.
- Use of computers: tracking users in the
internet, gathering information on customers at
cash registers, collecting information on credit
card purchases, retrieving information from
applications for licenses, bank accounts, credit
cards, e-mail, monitoring employees working at
computers.
- Financial information, purchase histories,
addresses, phone numbers, driving record,
arrest records, credit history, medical and
academic records, membership.

- Can quickly sift, sort, or retrieve part of

information for anyone with access to the
computer.
NANOTECHNOLOGY – A new field that
encompasses the development of tiny artificial
structures only nanometers (billionths of a meter) in
size.

GENETIC ENGINEERING – A large variety of new

techniques that allows change in the genes of the
cells of humans, animals, and plants.
1.1 MORAL DEVELOPMENT AND REASONING

KOHLBERG’S THREE LEVELS OF MORAL

DEVELOPMENT:

LEVEL ONE: PRECONVENTIONAL STAGES

- The child can see situation only from his own

point of view.

STAGE ONE: Punishment and Obedience

Orientation
STAGE TWO: Instrumental and Relative
Orientation
LEVEL TWO: CONVENTIONAL STAGES

- Maintaining the expectations of one’s own family,

peer group, or nation is now seen as valuable in
its own right, regardless of the consequences.

STAGE THREE: Interpersonal

Concordance Orientation

STAGE FOUR: Law and Order Orientation

LEVEL THREE: POSTCONVENTIONAL,
AUTONOMOUS, OR PRINCIPLED STAGES

The person now tries to see situations from a point

of view that impartially takes everyone’s interests
into account. Fair to everyone, or in terms of justice,
human rights, or society’s overall welfare.

STAGE FIVE: Social Contract Orientation

STAGE SIX: Universal Ethical Principles Orientation
MORAL REASONING – The reasoning process by
which human behaviors, institutions, or policies are
judged to be in accordance with or in violation of
moral standards.
1.2 THE PROS AND CONS OF BUSINESS ETHICS

THREE OBJECTIONS TO BRINGING ETHICS INTO

BUSINESS:

- To be profitable, each firm has to produce only

what the members of society want and has to do
this by the most efficient means available.
- That any steps taken to increase profits will
necessarily be socially beneficial.
- That by producing whatever the buying public
wants, firms are producing what all the members
of society want, when in fact the wants of large
segments are not necessarily met because they
cannot participate fully in the marketplace.
LAW OF AGENCY – A law that specifies the duties
of persons who agree to act on behalf of another
party and who are authorized by an agreement so to
act.

PRISONER’S DILEMMA – A situation where two

parties must choose to cooperate or not, and where
both gain, when both cooperate, but if only one
cooperates the other one gains even more, while if
both do not cooperate both lose.
ARGUMENTS SUPPORTING BUSINESS ETHICS

- Ethics applies to all human activities

- Business cannot survive without ethics
- Ethics is consistent with profit seeking
- Prisoner’s dilemma argument
- Customers and employees care about ethics
1.3 MORAL RESPONSIBILITY AND BLAME

ELEMENTS OF MORAL RESPONSIBILITY

A person is morally responsible for an injury or a wrong if:
- The person caused or helped cause it, or failed to prevent it
when he could and should have; and
- The person did so knowing what he or she was doing; and
- The person did so of his own free will.

CORPORATE RESPONSIBILITY – Within the modern corporation,

responsibility for a corporate act is often distributed among a
number of cooperating parties.
Depending on the seriousness of the act, the
mitigating factors of uncertainty, difficulty, and
minimal involvement can also diminish a
person’s responsibility for a corporate act.

SUBORDINATES’ RESPONSIBILITY - In a
corporation, employees often act on the basis
of their superiors’ orders.

When a superior orders an employee to carry

out an act that both of them know is wrong, the
employee is morally responsible for that act if
the employee carries it out.