MODULE 3 II.
Six Most Important Business Ethical Issues
ENTREPRENEURIAL ETHICS
I. What is Entrepreneurial ETHICS?
Business ethics are moral principles that guide the
way a business behaves. Business ethics as defined is
a form of applied ethics or professional ethics that
examines ethical principles and moral or
ethical problems that arise in a business environment.
It applies to all aspects of business conduct and is
relevant to the conduct of individuals and entire
organizations. It is the study of proper business policies
and practices regarding potentially controversial
issues, such as corporate governance, bribery,
discrimination, corporate social responsibility and
fiduciary responsibilities.
Task (3.1)
Sample Case. When Martin decided to increase the
price overnight of a lifesaving HIV drug from $13.50 to
$750 per pill, the public immediately characterized his
actions as unethical. However, he viewed his position
as responsible behavior that served the best interests
of his company and his shareholders.
In a clean short bond paper, written by hand, justify
the actions of Martin as to:
a. it was proper
b. it was not proper.
Be conscious with the basic principles of ethics.
A. Conflict of Interest
A conflict of interest exists when a person must
choose whether to advance his or her own personal
interests or those of others.
As an example, a manager in a corporation is
supposed to ensure that the company is profitable so
that its stockholder-owners receive a return on their
investment. In other words, the manager has a
responsibility to investors. If she instead makes
decisions that give her more power or money but do
not help the company, then she has a conflict of
interest. She is acting to benefit herself at the expense
of her company and is not fulfilling her responsibilities.
To avoid conflicts of interest, employees must be able
to separate their personal financial interests from their
business dealings. It is considered improper to give or
accept bribes such as payments, gifts, or special
favors intended to influence the outcome of a
decision.
A bribe is a conflict of interest because it benefits an
individual at the expense of an organization or
society.
B. Fairness and Honesty
Fairness and honesty are at the heart of business
ethics and relate to the general values of decision
makers.
Business persons are expected to follow all
applicable laws and regulations. But beyond
obeying the law, they are expected not to harm
customers, employees, clients, or competitors
knowingly through deception, misrepresentation,
coercion, or discrimination. Another aspect of
fairness and honesty relates to disclosure of potential
harm caused by product use.
C. Communications
Communications is another area in which ethical
concerns may arise. False and misleading
advertising, as well as deceptive personal-selling
tactics, anger consumers and can lead to the failure
of a business. Truthfulness about product safety and
quality are also important to consumers.
Another important aspect of communications that
may raise ethical concerns relates to product
labelling. Health warnings on cigarette packages
were first imposed by federal law in 1989. Now, they
have imposed more stringent measures requiring
even more graphic warnings on 50 percent of the
package panels, combined with inside package
messages about health damage caused by
tobacco and information about quitting, has also
been challenged in court. In the Philippines, we have
imposed sin tax on these leisurely commodities.
D. Business Relationships
Ethical behavior within a business involves keeping
company secrets, meeting obligations and
responsibilities, and avoiding undue pressure that
may force others to act unethically. Managers, in
particular, because of the authority of their position,
have the opportunity to influence employees’
actions.
For example, a manager can influence employees to
use pirated computer software to save costs. The use
of illegal software puts the employee and the
company at legal risk, but employees may feel
pressured to do so by their superior’s authority.
E. Plagiarism
Taking someone else’s work and presenting it as your
own without mentioning the source is another ethical
issue. As a student, you may be familiar with
plagiarism in school, for example, copying someone
else’s term paper or quoting from a published work
without acknowledging it. In business, an ethical issue
arises when an employee copies reports or takes the
work or ideas of others and presents them as his or her
own. A manager attempting to take credit for a
subordinate’s ideas is engaging in another type of
plagiarism.
F. Pay Equality
Pay equality represents one of the longest-running
ethical issues facing the business community. The
principle is equal pay for equal work.
III. Strategies to create ethical culture in business
(1) Setting the ethical standards
The ethical standards of an organization need to be
clearly defined via the company’s values and rules,
including the code of conduct and policies. The
values should identify the desired behavioral
parameters, which should be translated into
acceptable and unacceptable behaviors in the
company’s code of conduct and supporting
policies.
Task (3.2)
You are an owner of a MULTI-MILLION BUSINESS,
called “ ________”. In this task, you will have to draft a
10-key policy in your business to ensure an ETHICAL
CULTURE. Place your answers in a clean sheet of short
bond paper. Handwritten.
(2) Setting up an ethics committee
An ethics committee can be a valuable facet of an
ethics strategy. The value of this committee’s
contribution will rest on its composition: members
need to be senior enough that they can make
decisions and authorize necessary actions. However,
the ethics committee should not assume the role of
the sole custodian of ethics in the workplace. Instead,
each and every member of the organization should
recognize their role and contribution to the
company’s ethical status – and the committee’s
success will rest on the extent to which they achieve
this buy-in.
(3) Measuring and monitoring ethical status
The measurement and monitoring of a company’s
ethical status is also a crucial part of an effective
ethics strategy. The dictum that if you can’t measure
something, you can’t manage it applies to ethics as
much as any other area of a business. A positive
ethical status lends itself to many benefits, among
others, for customer retention, corporate reputations
and brand equity, while a negative status can be
very damaging on many fronts.
(4) Taking action
Improving workplace ethics is optimally addressed by
a dual approach which includes actions to improve
ethical behavior and actions to reduce unethical
behavior.
If an ethics survey has been conducted, the results
will indicate what actions should be taken in what
area of the organization. The most likely areas to
increase ethical behavior will be via values,
leadership, organizational culture, communication
and training, while reducing unethical behavior will
largely be via laws, rules and regulations (including a
code of conduct and policies), systems and In the interests of institutionalizing measures to protect
procedures and transparency. confidentiality, companies are advised to establish
and adhere to a common regulation stipulating that
IV. Two Ethical Principles in dealing with ethical issues any information received in the course of the
professional activity of a beneficial owner, director,
• Professionalism, Competency and Awareness. manager or employee that relates to the business of
Professionalism can be defined as having the the company or its contracting parties shall be
business qualities and abilities required for the treated as confidential.
successful performance of one's professional
duties. Professionalism is a key principle in ethics for
business. Decisions made without due professional
care harm the interests of all parties and damage
both the corporation and all parties to corporate
relations. Therefore, professionalism is a key
prerequisite for people responsible for making
complex business decisions such as the board of
directors’ members and managers.
• Confidentiality and Professional Secrecy .
Confidentiality is the term used to refer to respect
for and the protection of the secrecy of the affairs
of a company, its shareholders, directors,
managers, and other stakeholders. The principle
of confidentiality should be disregarded with
respect to information on mala fide and unlawful
conduct. Situations involving incompetence or
the concealment of information that should be
disclosed demand adherence to the principle of
information disclosure, even if this involves
informing the executive bodies of a company or
the competent official authorities of the unlawful
or unethical conduct.