FOUNDATION OF THE PRINCI

OF BUSINESS ETHICS
 In this chapter, you will trace the
foundations of good business principles
through philosophical teachings. You know
of so many great thinkers, like Plato, Aristotle,
and Confucius, but how can their teachings
be applied in business? How does your own
values system affect the way you operate
business? How can you undertake these
challenges?
 CLASSICAL PHILOSOPHERS

Ethics is the branch of philosophical thinking that

investigates the set of questionnaires that arrives when
one considers how to act. It is a system of moral
standards that distinguishes right and wrong. Its
objectives is to evaluate practices by calling upon
principles and giving advice on how to act morally in a
given situation. To arrive at good judgments and
recommendations, people study both moral and
immoral behaviors to reach an ethical choice.
BUSINESS BASICS

The word “ethics” evolved from the

Greek word ethos which means
“showing moral character”
 Three distinct ethical
theories
1. Virtue ethics emphasizes virtuous, or moral character. It focuses on the
desirable characteristics that a virtuous person should embody. One’s
action is a mere reflection of one’s inner morality.

2. Deontological ethics, often referred to as duty ethics, emphasizes on

adhering to ethical principles or duties and obedience to some higher
moral absolute. It assumes the existence of moral absolutes that make
an action moral regardless of circumstances.

3. Consequentialism bases the morality of an action upon the

consequences of the outcome. However, the main contention of this
branch is what outcomes can be identified as objectively desirable.
John Stuart Mill asserts that the desirability of an action determines the
net amount of happiness it brings.
Socrates, Philosopher
(c. 470 bce-c. 399 bce)
 Most of what people know of Socrates’ life is through
Plato’s writings.
Socrates was a great thinker. He believed that
philosophy should achieve practical results for the
greater good of society. He attempted to establish an
ethical system based on human reason. He pointed out
that choices are motivated by the person’s desire for
happiness ad that ultimate wisdom comes from
knowing oneself. The more a person knows, the greater
his/her ability to reason and make choices that bring
happiness.
“true knowledge exists
in knowing that you
know nothing.”
- Socrates
 He is quoted to say he was ignorant because he
had no ideas, but wise because he recognized his own
lack of knowledge. Instead of lecturing on what he
knows, he asked questions. This is called dialectic
method which compels the audience to think through a
problem to a logical conclusion. This Socratic method is
the groundwork for Western system of logic and
philosophy.
 Many admired him but more were offended by the
way Socrates attacked Athenian values and
conventional wisdom. A jury of peers sentenced him to
death. He was found guilty of denying the existence of
Athen’s gods and for corrupting the Athenian youth by
teaching his students to disobey their elders. The jury
offered Socrates a chance to pay a small fine impiety,
but he rejected this offer. Known for his courage and
fearlessness in battle, he refused to go on exile and
instead chose to face his execution by hemlock potion.
Before he died, he described death as the release of the
soul trapped from the body.
plato, Philosopher, writer
(c. 428 bce-c. 348 bce)
 Plato, an enthusiastic student of Socrates, wrote
out the dialogues he had with his teacher. He
explored the concepts of justice, beauty, and
equality.
Born in aristocracy, he was taught by the best
educators and he learned the doctrines of
Pythagoras and Parmenides, which would have
helped develop the foundation for him to study
sciences and philosophy (specifically metaphysics
and epistemology).
“knowledge is virtue.”
- plato
 According to Plato, one can be taught a
virtue or qualities every person should have.
Education teaches the appropriate virtues,
produces the ideal government, and brings forth
morality.
 His writings are distinguished in three periods.
The early periods focused on conveying Socrates’
philosophy and teachings. Similar to his mentor, he
believed in the pre-existence and immortality of the
soul and that it is imprisoned in the body. He wrote
The Republic, a treatise that discusses what
knowledge, illusion, and reality are. Plato distinguishes
between realities presented by the senses (touch,
sight, taste, sound, and smell) and the essence or
“Form” of that reality.
“all the gold which is under
or upon the earth is not
enough to give in exchange
for virtue.”
- plato
 The foundation of modern democracy is largely
based on Plato’s work on the use of reason to develop
a fair and just society focused on the equality of
individuals.
He founded The Academy in Athens. The curriculum
included Astronomy, Biology, Mathematics, Political
Theory, and Philosophy. Plato had hoped the Academy
would provide a place for future leaders to build a
better government in the states.
aristotle, Philosopher
(c. 348 bce-c. 322 bce)
 Aristotle was an exemplary student in Plato’s
Academy for 20 years. However Aristotle did not
inherit the position as the director of the Academy
because he disagreed with some of Plato’s
philosophical treatises. Later on, he founded his own
school and spent most of the remainder of his life
working as a teacher, researcher, and writer at the
Lyceum.
 The research of Aristotle as a scientist in Biology
classified animal into species. It was used as the
standard for hundreds of years; but, was later on,
refuted. He also studied Marine Biology, which means
considerably more accurate. He worked on Earth
Sciences, specifically Meteorology. Many of his views
on Earth were controversial, but they were
popularized during the late Middle Ages.
 “we are not studying in
order to know what virtue
is, but to become good, for
otherwise there would be no
profit in it.”
- Aristotle
 His main focus in philosophy was his systematic
concept of logic through inference and deduction. His
theory is the basis for syllogism, a logical argument
where the conclusion is inferred from two or more other
premises. In his writing, Prior Analytics, he defined the
main components of reasoning in terms of inclusive and
exclusive relationship. At present, this is visually shown
through the use of Venn diagrams.
Criticisms for virtue ethics point out that virtue
ethics do not provide clear guidance on what to
do in moral dilemmas. There is no general
agreement on what the virtues are since they
may be relative to the culture.
confucius, Philosopher
(c. 551 bce - 479 bce)
 During the 6th century BC, Confucius saw the
moral decline that has resulted from the deterioration
of Chinese principles. He believed it was his
obligation to reinforce the societal values and
comparison. He envisioned a better society where
moral principles are based on the Golden Rule,
“what you do not wish for yourself, do not do to
others.”
 His reciprocity ethics were based on the
concept of self-discipline. A leader must set a positive
example, remain humble, and treat his people with
compassion. He also believed that he must teach
people to live with integrity, diligence, and
obedience. One has to focus on the highest concept
of behavior even if it is impractical or foolish. He also
considered harmony of highest importance,
between ruler and subject, father and son, husband
and wife, elder brother and younger brother, and
relationship between friends. Harmony brings
prosperity and ultimately good relationships.
 By the second BC, the foundation of Han
Dynasty’s state ideology was based on his
philosophies, which emphasized personal and
governmental morality, correctness of social
relationships, justice, and sincerity.
 Classical philosophies In the
business setting

Business professionals face challenges daily. How do

they apply virtue ethics in business decision-making?
In business, virtue ethics provides the organization a set
of desirable characteristics for each member to follow.
Business ethics makes specific judgments on what is right and
wrong, what ought to be and ought not to be done, what is
just and what is unjust. The attention is focused on duties and
compliance. However, one should also consider whether an
action is consistent with being a virtuous person.
 The classical philosophers raised
relevant ethical questions that can
be directed in an organizational
context.
For example:
• Am I behaving in a virtuous way?
• How can we allow all members to develop full potential for
the good of the whole?
• How can the organization provide an environment that is
conducive to each employee’s growth and, ultimately,
happiness?
• Does the distribution of monetary gain preserve the happiness
of the community?
 While the philosophers cannot answer these
questions for an organization, they provide a space
for corporate leaders to engage in ethical analysis
and find a range of right actions in exercising
business judgment. Ethics and behavior at work can
help or break a company because virtues help
maintain order and assist the business in operating
smoothly, thereby affecting the company’s
profitability.
 When the leaders of the organization utilize
good governance and the code of ethics, they
become examples for each member of the
organization to follow. In the later chapters, you shall
learn how to apply the same to the larger community
through social responsibilities.