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Introducing Business Ethics
Introducing Business Ethics
Introducing
Business Ethics
Lecture 1
Overview
What is business ethics?
Why is business ethics important?
Globalization: a key context for business
ethics?
Sustainability: a key goal for business ethics?
grey
area
Law
to
produce
ethical
theory
Ethics
rationalize
s morality
Morality
Ethics
Ethical
theory
that can
be applied
to any
situation.
Potential
solutions to
ethical
problems
20
25%
24%
24%
22%
21%
20%
21%
19%
10
30
Nonprofit
Business
Government
0
Putting own interests
Lying to
employees
Abusive behavior
ahead of org
57%
57%
52%
56%
52%
55%
50%
46%
55%
46%
49%
43%
75%
Nonprofit
25%
Business
Government
0%
2000
2003
2005
2007
Large
corporations
Financial integrity,
employee/customer
issues
Formal, public
Approach to
managing ethics relations and/or
Small
businesses
Civil society
organizations
Public sector
organizations
Financial integrity,
employee/customer
issues
Delivery of mission
to clients; integrity of
tactics; legitimacy
and accountability
Rule of law,
corruption, conflict of
interest; procedural &
accountability issues
Informal, trustbased
Informal, valuesbased
Formal, bureaucratic
Owners
Lack of resources
and attention
Lack of resources
and formal training
Inertia, lack of
transparency
systems-based
Responsible
and/or
accountable to
Shareholders and
other stakeholders
What is globalization?
According to Scholte (2005) globalization is not:
not
internationalization
liberalization
universalization
westernization
Globalization is:
is a process which diminishes the
necessity of a common and shared territorial
basis for social, economic, and political
activities, processes, and relations.
deterritorialization
Consumers
Global products provide social benefits to consumers across the globe, but may also meet
protests about cultural imperialism and westernization. Globalization can bring cheaper
prices to customers, but vulnerable consumers in developing countries may also face the
possibility of exploitation by MNCs.
Suppliers &
competitors
Suppliers in developing countries face regulation from MNCs through supply chain
management. Small scale indigenous competitors exposed to powerful global players.
Civil society
(NGOs, etc)
Global business activities brings the company in direct interaction to local communities
with possibility for erosion of traditional community life; globally active pressure groups
emerge with aim to police the corporation where governments are weak and tolerant.
Government &
regulation
Globalization weakens governments and increases the corporate responsibility for jobs,
welfare, maintenance of ethical standards, etc. Globalization also confronts governments
with corporations from different cultural expectations about issues such as bribery,
corruption, taxation, and philanthropy.
International perspectives on
business ethics
N. America
Asia
The individual
Top management
Government, trade
unions, corporate
associations
The corporation
Government,
corporations
Negotiated legal
framework of business
Corporate codes of
ethics
Managerial
discretion
Social issues in
organizing the
framework of business
Misconduct and
immorality in single
decisions situations
Corporate
governance and
accountability
Formalised multiple
stakeholder approach
Focus on shareholder
value
Implicit multiple
stakeholder
approach, benign
managerialism
Defining sustainability
Sustainable development is development
that meets the needs of the present without
compromising the ability of future generations
to meet their own needs. (World Commission
on Environment and Development 1987)
Sustainability refers to the long-term
maintenance of systems according to
environmental, economic and social
considerations
Economic Social
Environmental
Corporate commitments to
sustainability
Company
Sustainability statement
Source
BP
Sustainability
Report, 2007
DeBeers
www.debeersgr
oup.com, 2009
Nokia
CSR Report,
2007
Toyota
Volkswagen
Sustainability
Report, 2008
www.volkswag
enag.com, 2009
Summary
Definition of business ethics
Business ethics is vital for business in
contemporary capitalism
Global view is essential to understand ethical
issues
Different regions have distinctly different
perspective on business ethics issues
Sustainability is an important goal for
business ethics