Dr. FE R.

OCHOTORENA, CPA , DBA

 • Ethics – is a discipline of dealing with what is good and
bad, with moral duty and obligation. It is set of moral
principles and or values. It is a principle of conduct
governing an individual or group.

• Principles: Specific boundaries for behavior that often

Concepts become the basis for rules (e.g., human rights, freedom of
speech).
• Values: Enduring beliefs and ideals that are socially
enforced (e.g., trust and integrity, accountability).

• Morals: standards of behavior or beliefs of a person

concerning what is and is not acceptable for them to do.

• Morality: Actual practice of living according to certain

rules of conduct or moral behavior.
 Branches of Ethics
▪ Normative – study of ethical actions and judgments. It creates the moral standards
and how people should act. It tells us the good or bad of an action; and “what we
can and what we can’t do”

▪ Metaethics (beyond ethics)– It is sometimes called philosophical ethics. It is the

study of ethical concepts and focus on what morality is. It analyzes the meaning
of moral language. It is concerned with “What exactly does it mean when something
is good or bad , right or wrong , moral or immoral?”; and how moral claims be
justified?

▪ Descriptive – it is a morals of a society describing how people behave. It describes

what sorts of moral standards they claim to follow.

▪ Applied – it is an ethics of real world (applying normative and metaethics) which

deals with analysis of specific controversial issues –business, social , political, and
moral issues. (abortion, animal rights, euthanasia, sex before marriage, death
penalty, drug abuse)
 Ethics vs. Morals

Ethics Morals
Are the An individual’s own
rules/principles of code of behavior
right and wrong that based on cultural/
are accepted and religious principles. It
provided by the may or may not be
social system rational.
(society/s views)

Ethics are not always moral and

Morals are not always ethical.
 Morals Ethics

Always tell the Do not destroy

Be altruistic
truth property 1. Respect (refrain from rape,
murder, assault, slander, fraud)
Treat others as 2. Compassion
Do not cheat you want to be Be forgiving
treated 3. Charity
4. Responsibility
Respect our Take 5. Empathy
lives and lives responsibility Have patience
of others for your actions 6. Equality
7. Integrity
Have respect To live
Be loyal for yourself and according to
8. Justice
others the will of God 9. Transparency
10.Ethics of his profession
Be generous Have humility Do not envy
 Normative Ethical Theories

Ethics of Conduct Ethics of Character

What sort of actions should we perform? What sort of people should we be?

Teleological
(came from Greek telos, “end”
Consequential Non-Consequential and logos, “science”)
“Means justify the end” Duty to Others

Utilitarianism
Egoism Deontological Ethics of Divine Law Virtue Ethics
(Consequences
Rights and
(Consequences (Ethics of Duties & Natural (Emphasizes
for greater good
for greatest or Justice Law moral
for oneself) character)
number) Duty-oriented)
 Theories of Business Ethics
Shareholder Theory
Shareholder theory pushes the
idea that the only responsibility of
managers is to serve in the best
possible way the interests of
shareholders, using the resources
of the corporation to increase the
wealth of the latter by seeking
profits (Friedman, 1970).
Stakeholder Theory
Stakeholder theory is an
ethical concept that claims
that the purpose of a business
is to create value and to serve
the interest of all stakeholders
not just shareholders(Freeman,
1984).
APPROACHES:
▪ Descriptive approach
▪ Instrumental approach
▪ Normative approach
Social Contract
Theory
Social contract theory
defines the permissible scope
of business conduct and goes
beyond the purely economic
issues. If society wants more
from business than profits,
business must accept this
mandate in order to survive in
society. To do otherwise is to
breach the social contract.
Shareholder Theory vs. Stakeholder Theory

Stakeholders

Shareholders
 Approaches of Stakeholder Theory

Instrumental Descriptive approach Normative approach

approach assumes explains how managers, assumes that managers
that for managers firms and stakeholders should consider
to maximize the interact. The purpose of stakeholders' interests
objective function the descriptive approach is despite the effects of
of the firm, they mainly to improve the these actions on the firm
must consider the understanding of the because doing so is an
interests of the complex relationships ethical duty of being
stakeholders. among the different responsive to the
stakeholder groups. legitimate claims of
stakeholders
 Business Ethics Defined

▪ Business ethics refers to moral principles and social values that business
should adopt in its code of conduct. These are rules that businesses must
accept and follow in its day to day operations for the welfare of society and
all its stakeholders.

▪ Business ethics refers to the standards for morally right and wrong
conduct in business

▪ Business ethics- are organizational principles, values, and norms that may
originate from individuals, organizational statements, or from the legal system
that primarily guide individual and group behavior in business.

▪ Business Ethics deals with corporate governance, whistleblowing, corporate

culture, and corporate social responsibility. It emphasizes standard principles
prescribed by governing bodies. Non-compliance with business ethics leads to
unnecessary legal actions. Business ethics, therefore, educates businessmen and
employees about ethical procedures and penalties for non-compliance.
Types of Business Ethics
 Ethical Awareness

Thus, the FIRST STEP toward understanding business ethics is

to develop ethical issue awareness.

Ethical issues involve a situation, a problem, or even an opportunity that

requires introspection(reflection/thought) discussion and investigation
before a decision can be made.

Ethical issues typically arise because of conflicts among individual’s

personal moral philosophies and values, the values and culture of the
organization in which they work, and those of the society in which they live.

Characteristics of the job, the culture of the organization, and the society in
which one does business-- can also create ethical issues.
 Ethical Issues in Business
▪ Misuse of Company Time and Resources (Using ▪ Workplace Discrimination (race, color,
company computer software and Internet services for personal
religion, sex, marital status, age, disability)
business)
▪ Abusive or Intimidating Behavior (physical threats, false ▪ Sexual Harassment (any repeated, unwanted
accusations, profanity, insults, yelling, harshness, being
behavior of a sexual nature perpetrated upon one
annoying)
individual by another)
▪ Lying – Lying relates to distorting the truth. The point at which ▪ Fraud (Any purposeful communication that
a lie becomes unethical in business is based on the context of
deceives, manipulates, or conceals facts in order
the statement and its intent to distort the truth. A lie becomes
to create a false impression)
illegal if it is determined by the judgment of courts to damage
others.
▪ Poor Working Conditions- inappropriate
safety measures
▪ Conflicts of Interest - A conflict of interest exists when an
individual must choose whether to advance his or her own ▪ Unethical Accounting- “Cooking the books,
interests, those of the organization, or those of some other conducting unethical accounting practices is a
group serious problem

▪ Bribery (offering something (usually money) in order to ▪ Social Media Ethics

gain an illicit advantage)
 Ethical Issues-(Conflict of Interest)
The business environment presents many potential *ethical
conflicts.

▪ A company’s efforts to achieve its organizational objectives

may collide with its employees’ endeavors to fulfill their own
personal goals.

▪ Consumers’ desires for safe and quality products may conflict

with a manufacturer’s need to earn adequate profits.

▪ The ambition of top executives to secure sizable increases in

compensations may conflict with the desires of shareholders to
control costs and increase the value of the corporation
 Ethical Issues-(Lying)
1. Omission lying is intentionally not informing others of any differences,
problems, safety warnings, or negative issues related to the product or
company that significantly affects awareness, intention, or behavior.
Q: Where were you yesterday? A: I went to the office (neglecting to tell you he also visited his mistress)

2. Commission lying is creating a perception or belief by words that

intentionally deceive the receiver of the message
Q: How much money are you making? A: AboutP50,000 a month (While actually
making P20,000)
3. Influence lying
Q: Are you having an affair? A: I’ve been happily married for 20 years!
 Importance and Functions of Business Ethics
• Enhance relationship with employees- retain good employees, positive
work environment, cultivate strong teamwork and productivity, supports greater
consistency in standards and quality of products)

• Protect the rights of consumer and clients - improve customer confidence/

satisfaction/ happiness

• Increase social responsibility- Develop good relation between business and

society; enhance business reputation/create good image/promote strong public
image

• Boost investor loyalty and trust – protect the shareholders

• Enhance the strength of management - lead to better decision making

 Bottom Line for Business Ethics

Investor
Loyalty

Enhanced
Employee
Relationship
Enhanced
Business
Protection of
BUSINESS Reputation,
Consumer
ETHICS Profitability,
Rights
and Survival
of Business
Protection of
Society

Strengthened
Management
 Terminologies

▪ Dilemma – state of uncertainty or perplexity especially as

requiring a choice between equally unfavorable options.
▪ Ethical dilemma -arises when a person is forced to decide between two
morally sound options, but they may conflict with the established
boundaries of a business, a governmental agency, or the law.

▪ Moral dilemma - A moral dilemma is a situation in which a person is torn

between right and wrong and looks at the very core of a person's
principles and values. The choice the person makes may leave them
feeling burdened, guilty, relieved, or questioning their values.
 Ethical Dilemma

Ethical dilemmas are situations

in which the decision-maker
must consider two or more
moral values or duties but can
only honor one of them; thus,
the individual will violate at least
one important moral concern,
regardless of the decision. Thus,
A situation in which, whatever
choice is made, the decision
maker commits a moral wrong
 The first condition occurs in
situations when an individual,
called the “agent,” must make a
decision about which course of
action is best.

Conditions to
be Considered The second condition for ethical
dilemma is that there must be
different courses of action to
Ethical choose from.

Dilemma
Third, in an ethical dilemma, no
matter what course of action is
taken, some ethical principle is
compromised. In other words,
there is no perfect solution.
Thank you!!!