Business Law and Ethics

Course Coordinator:
Dr. Shima Zaman
Professor in Law
Dhaka University
Business Law and Ethics

• Ethics & Business

 Business Ethics
• Business ethics are moral principles that
guide the way a business behaves. The same
principles that determine an individual”s
actions also apply to business.
• Acting in an ethical way involves
distinguishing between “right” and “wrong”
and then making the “right” choice.
 Ethical theories

• Theories represent the viewpoints from

which individuals seek guidance as they make
decisions.
• Each theory emphasizes different points, a
different decision-making style or a decision
rule such as predicting the outcome and
following one’s duties to others in order to
reach what individual considers an ethically
correct decision.
 Ethical Theories
• In order to understand ethical theory, there
must be some understanding of a common
set of goals that decision makers seek to
achieve in order to be successful.
 GOALS ARE:

• Beneficence
• Least harm
• Respect for autonomy
• Justice
 BENEFICENCE
• It guides the decision maker to do what is
right and good.
• The decision maker should attempt to
generate the largest ratio of good over evil
possible in the world.
• This principle states that ethical theories
should strive to achieve the greatest amount
of good because people benefit from the
most good.
 LEAST HARM
• Least harm deals with situations in which no
choice appears beneficial.
• In such cases, decision makers seek to
choose to do the least harm possible and to
do harm to the fewest people.
• Opposite view: One may argue that people
have a greater responsibility to “do no harm”
than to take steps to benefit others.
 RESPECT FOR AUTONOMY
• Decision making should focus on allowing
people to be autonomous – to be able to
make decisions that apply to their lives.
• Thus, people should have control over their
lives as much as possible because they are
the only people who completely understand
their chosen types of lifestyle.
 Respect for autonomy
• Each individual deserves respects because only he/
she has had those exact life experiences and
understands his emotions, motivations, and
physical capabilities in such an intimate manner.
• In essence, this principle is an extension of the
ethical principles of beneficence because a person
who is independent usually prefers to have control
over his life experiences in order to obtain the
lifestyle that he/she enjoys.
 JUSTICE

• The decision makers should focus on actions

that are fair to those involved.
 Ethical Theories

• Deontology
• Utilitarianism
 Deontology
• People should adhere to their obligations
and duties when engaged in decision making.
• A person will follow his or her obligations to
another individual or society because
upholding one’s duty is considered ethically
correct.
• A person who adheres to this theory will
produce very consistent decisions as they
will based on individual’s set duties.
 Flaws of Deontology
• There is no rationale or logical basis for
deciding individual’s set duties.
• What would happen if a person’s duties are in
conflict?
• How would he rectify the conflicting
obligations to arrive at an a clear ethically
correct resolution?
 UTILITARIANISM
• This theory is based on one’s ability to
predict the consequences of an action.
• The choice that ensures the greatest benefit
to the most people is the one that is ethically
correct.
• Act utilitarianism and rule utilitarianism
 Act Utilitarianism
• One performs the acts that benefit the
most people, regardless of personal
feeling or societal constraints such as
laws.
• An act utilitarian decision maker is
concerned with achieving the maximum
good.
 Act Utilitarianism: Criticism
• One individual’s rights may be infringed
upon in order to benefit greater number
of people.
• Act utilitarianism is not always
concerned with justice, beneficence or
autonomy for an individual if oppressing
the individual leads to the solution that
benefits a majority of people
 Rule Utilitarianism
• Takes into account the law and is concerned
with fairness.
• Rule Utilitarian seeks to benefit the most
people but through the fairest and most just
means available
• Added benefits to rule utilitarianism are that
it values justice and include beneficence at
the same time.
 Rule Utilitarianism
• There is possibility of conflicting rules.
• Example: CEO of a company believes that it is
ethically correct to arrive at important
meetings on time as the members of the
company will benefit from this decision. If he
is running late, how he or she is supposed to
drive? He believs both: he should follow the
law as it benefits society; it is ethically correct
to be on time for his meeting that also
benefits society.
 Flaws: Utilitarianism
• Although people can use their life
experiences to attempt to predict outcomes,
no one can be certain that his/her prediction
will be accurate.
• Uncertainty can lead to unexpected results
making the utilitarian decision maker appear
unethical as time passes, as the choice made
did not benefit the most people as predicted.
 Application of theories
• A hospital administrator has been asked to
set up an Ethics Task Force in the hospital.
This force will deal with ethical dilemmas that
may confront hospital staff and advise in
establishing ethical guidelines for treatment
of patients. (a) What values would you want
them to hold? What type of ethical sensitivity
would you be looking for? (b) What basic
ethical principles would you advise the Force
to follow?
 Task 2
• An undergraduate student published ‘A
Student’s Guide to Good Grades10. This book
was written to help students learn how to
cheat.
• What ethical issues do you see associated
with publishing such a book? Should the
campus book store carry it? Should the
campus newspaper carry advertisements for
the book?
 Ethics in Business
• Do Business be guided by morality? Or
• Do business be guided by legality?
• As long as the actions are supported by the
legal system we call it legally ethical.
• Can positive law be a guide? Or, legal realism
can also be considered?
 unethical business practices
• Companies:
• should not use child labour.
• should not unlawfully use copyrighted
materials and processes.
• should not engage in bribery.
 good ethical practice
• not always easy to create similar hard-and-
fast definitions of good ethical practice
• WHY?
• A company must make a competitive return
for its shareholders and treat its employees
fairly (Primary Responsibility)
 Other Responsibilities?
• It should minimise any harm to the
environment and
• work in ways that do not damage the
communities in which it operates.
• This is known as corporate social
responsibility (CSR)
 Ethics in CSR
• Main object: returns for our shareholders
• But do not believe that these can or should
be achieved at the expense of social,
environmental and moral considerations.
• Indeed a long-term business will only thrive if
it also takes into account the needs of other
stakeholders such as governments, employees,
suppliers, communities and customers.