Theories in Business

Ethics
Session # 1
Business Ethics and
Corporate Leadership
The Nature of Business Ethics

What does ethical mean to you?

 Interview Results
 50% defined ethical as “what my
feelings tell me is right.”
 25% defined it in religious term as
what is “in accord with my religious
beliefs.”
 18% defined ethical as what
“conforms to ‘the golden rule’.”
 Meaning of Ethics
 The principles of conduct governing an
individual or group.
 The rules by which an individual lives his
or her personal life. (Personal Ethics)
 Refers to the code that guides the
professional conduct. (Code of Ethics for
Professionals)
 The study of morality.
 Ethics and Morality

 Are they the same?

 Ethics is a kind of investigation – and
includes both the activity of
investigating as well is the results of
that investigation.
 Morality is the subject-matter that
ethics investigates.
 Morality

 Thestandards that an individual or

a group has about what is right or
wrong, or good and evil.
 Moral Standards
 Includes the norms we have about
the kinds of actions we believe are
morally right or wrong
 Values we place on the kinds of
objects we believe are morally good
and morally bad.
 Moral Norms
Can be expressed as general rules or
statements such as
 “Always tell the truth”

 “It is wrong to kill innocent people.”

 “Actions are right to the extent that

they produce happiness.”
 Moral Values
Can be expressed as statements
describing objects or features of
objects that have worth
 “Honesty is good.”

 “Injustice is bad.”
 Sources of Moral Standards

 Where do they come from?

 As a child – from family, friends, and
various societal influences such as church,
school, television, magazines, music, and
associations.
 As the person grows up –experience,
learning, and intellectual development.
 Dilemmas
 We do not always live up to the moral
standards we hold.
 We do not always do what we believe is
morally right nor do we always pursue
what we believe is morally good.
 We sometimes choose nonmoral standards
over our moral standards.
 Characteristics of Moral
Standards
1. Moral standards deal with matters that we think
can seriously injure or seriously benefit human
beings.
2. Moral standards are not established or changed
by the decisions of particular authoritative
bodies. The validity of moral standards rests on
the adequacy of reasons that are taken to
support and justify them, and so long as these
reasons are adequate the standards remain
valid.
 Characteristics of Moral
Standards
3. Moral standard should be preferred to other
values including self-interest.
4. Moral standards are based on impartial
considerations. Example: the fact that you will
benefit from a lie and that I will be harmed is
irrelevant to whether or not lying is morally
wrong.
5. Moral standards are associated with special
emotions and a special vocabulary.
 Moral Standards are standards
that
 Deal with matters that we think are of
serious consequence
 Based on good reasons and not on
authority
 Override self-interest
 Based on impartial considerations, and
whose transgression is associated with
feelings of guilt and shame and with a
special moral vocabulary.
 ETHICS
 The activity of examining one’s moral
standards or the moral standards of
society
 Asking how these standards apply to our
lives
 Whether these standards are reasonable
or unreasonable
 Whether they are supported by good
reasons or poor ones.
 Business Ethics
 A specialized study of moral right and
wrong.
 A study of moral standards and how these
apply to the system and organizations
through which modern societies produce
and distribute goods and services, and to
the people who work within these
organizations.
Three Issues in Business Ethics

 Systemic Issue
 Corporate Issue

 Individual Issue
 Systemic Issues

 Ethical questions raised about the

economic, political, legal, and other social
systems within which businesses operate.
 Example: morality of capitalism, laws,
regulations, industrial structures and
social practices.
 Application: remember when the Lopezes
won the bid to supply and distribute
water.
 Corporate Issues
 Ethical questions raised about a particular
company.
 Questions about the morality of the
activities, policies, practices, or
organizational structure of an individual
company taken as a whole.
 Application: battle over government
ownership of San Miguel Corporation
 Individual Issues
 Ethical questions raised about a particular
individual or particular individuals within
the company.
 Questions about the morality of decisions,
actions, or character of an individual.
 Application: issues of retrenchment,
termination, imposing disciplinary actions
 Kohlberg’s Stages of Moral
Development
Level One: Preconventional Stages
1. Punishment and Obedience Orientation
2. Instrument and Relativity Orientation
Level Two: Conventional Stages
3. Interpersonal Concordance Orientation
4. Law and Order Orientation
 Kohlberg’s Stages of Moral
Development

Level Three: Postconventional,

Autonomous, or Principled Stages
5. Social Contract Orientation
6. Universal Ethical Principles
Orientation
7 Step Process to Solve
Ethical Dilemmas and
Make Ethical Decisions
 7 Steps
 Define the problem
 Identify stakeholders and get the facts

 Identify alternatives

 Evaluate alternatives

 Make a decision

 Implementation plan of the decision

 Method of evaluation