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Business Ethics is the behavior that a business stay

attached to in its daily dealings with the world. The ethics of a particular business can be
diverse. Many businesses have gained a bad reputation just by being in business. For
some people, businesses are just making money, and that is only the bottom line. Making
money is not wrong at all.

introduction to business ethics

What is meant by ethics?

- Consists of moral principles governing the right and wrongs of human conduct
- Is about the principles of right and wrong accepted by individuals or social groups
- A code of behaviour considered morally correct
- Code of moral principles that guide the action of people and groups
- Ethical behaviour is doing what is morally right

Business ethics
Business ethics are the principles and standards that:
- Define acceptable conduct in business
- Should underpin decision making

An alternative definition is: ”the moral values which govern business behaviour and
restrains companies from pursuing the interest of the shareholder at the expense of all
other considerations”

- Some activities might be profitable and legal but nevertheless are considered to be
- An ethical decision is one that is both legal and meets the shared ethical standards of
the community

Is ethics the same as the law?

- No - although the law should reflect the ethical views of society there are certain
activities permitted by law which some individual or groups in society or individual
might regard as unethical.
- Ethical considerations are about what is right and what is wrong
- The law is about what is lawful and what is unlawful

The following business activities are legal but might pose ethical dilemmas for
Profiting from gambling
Selling goods manufactured by low wage in developing countries
Engaging in the fur trade
Experimenting on animals

Is it the same as corporate social responsibility?

- There is clearly an overlap between CSR and business ethics
- A socially responsible firm should be an ethical firm
- An ethical firm should be socially responsible

However there is a distinction:

- CSR is about responsibility to all stakeholders and not just shareholders

- Ethics is about morally correct behaviour

Ethics - decision models

- When faced with an ethical question, what guides our decision making? There are
different ways of looking at the issue:

Moral principles
- Evaluate decisions on whether it is consistent with accepted moral principles

- Looks at decisions from the perspective of who gains
- What is good for the greatest number is right
- The test is whether or not it is consistent with the greatest happiness of the greatest

Justice model
- The test is does it distribute benefits and penalties in a fair and equitable way?

Human rights
- People have fundamental human rights and liberties - consent, privacy, conscience, free
speech, fair treatment, life, safety
- The test is: does it violate human rights?
- An ethically correct decision is one that best maintains the human rights of those
- Decisions that violate human rights are unethical
- Is it in the individual’s best interest?
- This is the ethics of self interest

Spectrum of firms
- It would be naïve to believe that all business organisations behave in an ethical, moral
- We can classify firms in terms of their ethical stance in the following ways:

The amoral firm

- Seeks to win at all costs
- Anything is acceptable

The legalistic firm

- Will obey the law but no more than that

The responsive firm

- Accepts that being ethical can pay off
- Ethical behaviour is enlightened self interest

The ethically engaged firm

- Wants to do the right thing
- Has a code of ethics
- But ethical behaviour is not fully integrated into the culture

The ethical firm

- Ethics are a core value and permeate the whole organisation