MODULE OVERVIEW

In this Module

• Classical Philosophy Used in Business

• Foundations of the Principles of Business Ethics
• Filipino Values System in Business

Greetings, learner! How are you so far? Well then, welcome to the second module of this
course pack!

The world of business is oftentimes seen as an amoral world. It is viewed as a world

solely driven by the profit- motive and business people are often portrayed as ruthless, self-
interested individuals. The world of business is replete with examples of behavior that attempt to
circumvent society’s ethical standards because it does not recognize the good and bad.

At the completion of this module, you should be able to:

• identify the different classical philosophies in business;

• compare and contrast classical philosophies as they relate to business settings;
• give examples of how beliefs systems affect business practices; and
• distinguish what is good versus what is morally acceptable among the given Filipino
values.

Are you ready? Then start the lessons now!

Objectives:

At the end of this lesson, the students should be able to:

• Compare and contrast classical philosophies related to business settings.

Introduction:

Classical philosophers arose from the ideas of trade, statecraft and politics and become
the cornerstone of Western Civilization. The struggles of well-known philosophers are still
relevant today. Sadly, the technology and sophistication present these days seem do not
contribute to moral sophistication. Perhaps a lot of ethical problems facing modern business
could be easily solved if latter- day managers based their conduct using classical philosophies.

Activity: Read the quote and answer the questions after it.

“Without moral perception, man is only an animal. Without morality, man as a

rational being is a failure”
-Ramon Agapay

Analysis

1. What is the message of this quote?

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2. Why is morality useful in business?

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3. How does moral ethical issue affect business?

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Abstraction

SOCRATES: HAVE THE COURAGE TO DISAGREE #3 test I answer

Socrates was the first person to give a practical and political focus to philosophy and ethics. He
believed, to the contrary of many around him, that the most applicable questions that philosophy
had to deal with are related to how people should live their lives, what kinds of actions were
righteous, and how people should live mutually in communities and states.

Socrates equated knowledge with virtue, which eventually leads to ethical conduct. He
believed that the only live worth living was one that was carefully examined. Socrates definitely
believed that knowledge and understanding of virtue, or “the good”, was enough for someone to
be happy. To him, knowledge of the good was almost similar to an enlightened state that no
person could willingly decide to do something damaging or harmful if they were completely
aware of the value of life.

Application to business

In the business world, managers should not sleepwalk or simply go along with the crowd.
In order to live a virtuous life, morally unacceptable policies and practices must be prevented
even though “everyone else was doing it”. Managers should be responsible in their actions and
must be prepared to fired or demoted rather than go against their conscience. A good manager is
someone with a functionally relevant set of virtues with a view to personal success and moral
excellence. An organization must encourage independent thinkers and their employees to follow
their conscience. Employees too must provide critical feedback to managers. This is to create
opportunities for good people to “blow the whistle” in cases of bad behaviors.

PLATO: THE POWER TO RULE #1 test 1 answer

Beginning his early youth he had been fascinated in political affairs. Starting from his
associations with Socrates and as of his own observations, he had arrived at certain belief about
the suitable credentials for those whose duty was to rule the government. He believed that only
those persons who possessed scholarly as well as ethical qualities should be trusted with the
control to rule above others.

Plato was famous for his discussions on the subject of reality. He believed that
everything was founded in perception and the physical world is the lesser world in every way.
He believed that most of the greater world was not clear. He hated people who place all their
faith in their physical senses and not their intellectual senses for the intention of collecting
insight. The weight Plato put on the intellectual abilities indeed makes him one of the original
personal development authorities.

"More will be accomplished, and better, and with more ease, if every man does what he
is best fitted to do and nothing else". According to Plato each social class must happily perform
the function for which it is suited like the philosopher rules, the warrior fights, and the worker
enjoys the fruits of his labor.

Application to business

In business it is always important to know the strengths and weaknesses of everyone in

the organization, whether a top executive or an ordinary employee. This can only be achieved by
constant acts of examination and analysis. Any firm must be aware of the path it is taking and
make regular checks to be sure that things are going well.

There should be continues communication among the members of the organization. In

addition the company should solicit inputs from everyone in the company on the direction of
tasks and how well they think they are going. Having more accurate and updated information
available to the firm will allow management to make better decisions. It is also best to hire the
right people. Selection should be done carefully.

Companies must fit the exact natural talents of qualified applicants with the job
requirements and expectations. The person's instincts and habits will prompt them to do what
management wants them to do even without actual supervision. Each job has a set of behaviors
that let the right person to stand out because that person is so perfectly matched.

ARISTOTLE: LET PEOPLE SEEK FULFILLMENT

#9 test 1 answer
Aristotle was the most practical and business-oriented of all philosophers, although there
was never any mention of a large business or corporation during his time, It is also amazing that
the idea that a person who's been dead for nearly 2,400 years has a lot of sensible things to say
about modern organizations.

Aristotle remains relevant because he is chiefly interested in ethical principles of

leadership. Contained in his Nicomachean Ethics, Aristotle established that the role of the leader
as someone who must construct the environment in which all members of an organization have
the chance to recognize their own potential. He says that the ethical role of the leader is the
establishment of the conditions under which followers can attain their full potential and to
enhance his own power. #10 test 1 answer

Aristotle was a great biologist as well as a great philosopher. He based his ethics on a
psychological theory of human nature, claiming that people are by nature virtuous, rational,
social and happiness-seeking. Governments and organizations have to build the best systems to
allow humans carry out their natural drives.

Aristotle's philosophy was an influence on Edward Deci and Richard Ryan's Self-
Determination Theory, which suggests that employees will work harder for a company, and
perform better, if given tasks they find meaningful and morally worthwhile.

Application to business

In business, the organization must provide an environment that is conducive to human

growth and fulfillment. Employees will be inspired to work if they know that their contributions
to the company are significant and morally valuable. They will be more motivated also if they
are given the opportunity to nourish their innate curiosity through learning opportunities.
Management could offer vocational trainings and lecture. They can also be provided with time
and even money for evening classes and give credits to their accomplishment. In terms of
distribution of rewards, based on ethical principle, employees must be rewarded proportionate to
their contribution.

CONFUCIUS: LIVE A CONTENTED, MORAL AND HAPPY LIFE #2 test 1 answer

Confucius championed important principles of ethics and politics, in a time when the
Greeks were advocating identical things. His idea of democracy as written in his Analects is that
the best government is one that rules through rites and the people's natural morality, rather than
by using bribery and coercion. This is the same principle people are obviously familiar with
today. In democracy, the state is ruled by the people.

Virtue and morality are Confucius primary focus. He is concerned with teaching people
about benevolence, generosity, love, compassion, and sincerity in a straightforward manner. He
concentrated on developing morality and a sense of shame so people will conduct themselves in
harmonious ways. He also emphasized that in order to govern, one must govern themselves. In
addition, loyalty to family and family ancestry are central to uphold honor.

Confucius teaches his students how to live a contented, moral' and happy life. He wants
people to associate with others who can act as their teachers. He encourages people to live by
their principles and continue to build upon them. He tells others to love their work, because they
will realize that they are not really working at all. In this natural state of mind, all six of the
essential ethical principles of xi, zhi, li, yi, wen, and ren are automatically being assimilated into
the person's being.

Application to Business

Confucian values can aid in the creation of business leaders who are true leaders of society, and
who hold a sense of righteousness and moral power. Confucius believed that leaders were
expected to rule in a just and moral manner. This view of practice can potentially create business
leaders who perform ethical business practice. Using Confucian values, if businesses are
managed virtuously, they will succeed.

If righteousness and profitableness are balanced equally, moral values can be achieved
and may contribute positive role in shaping and maintaining ethical business practice. In this line
there will be more profitable business that could be created. Most importantly, ethical
obligations to family and society can also be realized.

Likewise, Confucius believes on the concept of self-discipline. He assumed that a leader

is required to practice self-discipline in order to stay humble and care for his followers with
compassion. In the case of employees, they must always take pride and honor with their job.

Read the case below and answer the case questions after it.

Rajat Gupta and Insider Trading

Pratik Patel (2013)

Rajat Gupta is an Indian American businessman who was the managing director of
management consultancy McKinsey & Company and a business leader in India and the United
States. Rajat Gupta also served as corporate chairman, board director or strategic advisor to
Goldman Sachs, Procter and Gamble and American Airlines, and non-profits organizations, The
Gates Foundation, The Global Fund and the International Chamber of Commerce.

Rajat Gupta was convicted in June 2012 on insider trading charges. He was sentenced in
October 2012 to two years in prison, an additional year on supervised release and ordered to pay
$5 million in fines. His trial began on May 22, 2012. On June 15, 2012, Gupta was found guilty
on three counts of securities fraud and one count of conspiracy.

The primary parties are affected are Rajat Gupta, McKinsley & Company, Goldman
Sachs, Raj Rajaratnam, Galleon Group, Warren Buffet, and the U.S. equity markets. Other
parties indirectly affected are family and friends of Rajat Gupta, employees at McKinsley &
Company and Galleon Group, investors in Goldman Sachs and its creditors, and government and
officials involved with the case.

In September 2008 Warren Buffet agrees to pay $5 billion to Goldman Sachs in exchange
for preferred shares in the company. This news is likely to raise the share price of Goldman
Sachs. The news is not supposed to be announced and made public until the end of day. Less
than a minute after the board approved the Buffet purchase, Rajat Gupta calls his longtime friend
Raj Rajaratnam, a hedge fund manager and billionaire founder of Galleon Group. Once
Rajaratnam gets this information, he immediately buys shares of Goldman Sachs. Next day when
the stock market opens, Raj Rajaratnam makes nearly $1.2 million in profits as Goldman Sachs
shares rose. The SEC estimates the tip leaked by Rajat Gupta generates profits and avoids losses
of more than $23 million.

Gupta was commended by people who knew him as a person who helped others. He was
very active in providing medical and humanitarian relief to the developing countries. Born to
humble circumstances, he became a pillar of the consulting community and a trusted advisor to
the world’s leading companies and organizations. A word that was used repeatedly in media
coverage for Rajat Gupta during his trial was “respected.” In the past, much less so now, we
assume people in leadership positions are virtuous. However, instances like the Rajat Gupta
insider trading case and other financial scandals remind us that the assumption is not well-
founded

Case Questions:

1. Is the case of Rajat Gupta showed a failure of character? Explain your answer.

2. According to Aristotle “The virtue of man also will be the state of character which makes a
man good and which makes him do his own work well”. How will you relate this to the story
of Rajat Gupta? Discuss.
3. Do you agree that business schools must provide future financing managers with a proper
ethical education for moral decision making? Defend your answer.

Refer to Appendix B for the rubric regarding case analysis.

Well done! You have just finished Lesson 1 of this module. Should there be some parts
of the lesson which you need clarification, please ask your instructor during your face-to-face
interactions.

Now if you are ready, please proceed to Lesson 2 of this module which will discuss about
Foundation of the Principle of Business Ethics.