BUSS 207 BUSINESS AND IT ETHICS

LECTURE NINE:
9.1 Introduction
Welcome to the ninth lecture in this course. In this lecture we shall discuss organisational
obligations to external customer, local and wider community , globalisation business and the role
of business in society.

5.2 Specific Objectives

At the end of the lecture you should be able to:
 Discuss the company obligation to society, investors, employee, customers and managers
 Describe how ethics are applied to corporate organisations
 Discuss the effect of globalisation, multinationals and technology

9.3 Lecture One Outline

9.3.1 Stakeholder Theories
9.3.2 Obligation to Society
9.3.3 Obligation to Investors
9.3.4 Obligation to Employees
9.3.5 Obligation to Customers
9.3.6 Managerial Obligation
9.3.7 Applying Ethics to Corporate Organisations
9.3.8 Globalisation, Multinational and Business Ethics
9.3.9 Business Ethics and Cultural Differences
9.3.10 Technology and Business Ethics
9.3.11 Role Of Business in society

9.3.1 Stakeholder Theories

The stakeholder theory of the firm is used as a basis to analyse those groups to whom the firm
should be responsible. In this sense, the firm can be described as a series of connections of
stakeholders that the managers of the firm attempt to manage. A stakeholder is any group or
individual who can affect or is affected by the achievement of the organisation’s objectives.
Stakeholders are typically analysed into primary and secondary stakeholders. A primary
stakeholder group is one without whose continuing participation the corporation cannot survive
as a going concern. A primary group includes shareholders and investors, employees, customers
and suppliers, together with what is defined as the public stakeholder group: the governments
and communities that provide infrastructures and markets, whose laws and regulations must be
obeyed, and to whom taxes and obligations may be due. The secondary groups are defined as
those who influence or affect, or are influenced or affected by the corporation, but they are not
engaged in transactions with the corporation and are not essential for its survival.

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9.3.1.1 Social Contract Theory

The social contract theory has a long tradition in ethical and political theory. In general, this
theory considers the society as a series of social contracts between members of society and
society itself. The social contact theory in business ethics argues that corporate rights and
responsibilities can be inferred from the terms and conditions of an imaginary contract between
business and society.
In the context of business ethics, an alternative possibility is not that business might act in a
responsible manner because it is in its commercial interest, but because it is part of how society
implicitly expects business to operate. An integrated social contracts theory, as a way for
managers to take decisions in an ethical context, has been developed. Here, distinction is
made between macro social contracts and micro social contracts. Thus, a macro social contract in
the context of communities, for example, would be an expectation that business provides some
support to its local community and the specific form of involvement would be the micro
social contract. Hence companies who adopt a view of social contracts would describe their
involvement as part of “societal expectation”.

9.3.1.2 Legitimacy Theory

Legitimacy is defined as a generalised perception or assumption that the actions of an entity are
desirable, proper, or appropriate within some socially constructed system of norms, values,
beliefs and definitions. There are three types of organisational legitimacy: Pragmatic, Moral and
Cognitive.
It should be pointed out that legitimacy management rests heavily on communication – therefore
in any attempt to involve legitimacy theory, there is a need to examine some forms of corporate
communications. Finally, an organisation may employ four broad legitimating strategies when
faced with different legitimating threats:
• Seek to educate its stakeholders about the organisation’s intentions to improve that
performance
• Seek to change the organisation’s perceptions of the event (but without changing the
organisation’s actual performance
• Distract (i.e. manipulate) attention away from the issue of concern
• Seek to change external expectations about its performance.

9.3.2 Obligation to Society

A corporation is a creation of law as an association of persons forming part of the society in
which it operates. Its activities are bound to impact the society as the society’s values would
have an impact on the corporation. Therefore, they have mutual rights and obligations to
discharge for the benefit to each other.
1. National Interest : A company (and its management) should be committed in all its actions to
benefit the economic development of the militate against such an objective. A company should
not undertake any project or activity detrimental to the nation’s interest or house that will have
an adverse impact on the social and cultural life patterns of its citizens. A company should
conduct its business in consonance with the economic development of the country and the
objectives and priorities of the nation’s government and must strive to make a positive
contribution to the realization of its goals.

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2. Political Non-alignment: A company should be committed to and support a functioning

democratic constitution and system with a transparent and fair electoral system and should not
support directly or indirectly any specific political party or candidate for political office. The
company should not offer or give any of its funds or property as donations directly or industry to
any specific political party candidate or campaign.
3. Legal Compliances: The management of a company should comply with all applicable
government laws, rules and regulations. The employees and directors should acquire appropriate
knowledge of the legal requirements relating to their duties sufficient to recognize potential
dangers. Violations of applicable governmental laws, rules and regulations may subject them to
individual criminal or civil liability as well as disciplinary action by the company apart from
subjecting the company itself to civil or criminal liability or even the loss of business. Legal
compliance will also mean that corporations should abide by the tax laws of the nations in which
they operate such as corporate tax, income tax, excise duties, sales tax and other levies imposed
by respective governments. These should be paid on time and as per the required amount.
4. Rule of Law: Good governance requires fair, legal frameworks that are enforced impartially.
It also requires full protection of rights, particularly those of minority shareholders. Impartial
enforcement of laws require an independent judiciary and regulatory authorities.
5. Honest and Ethical Conduct : Every officer of the company including its Directors,
executive and non-executive director, managing director, CEO, CFO and CCO should deal on
behalf of the company with professionalism, honesty, commitment and sincerity as well as high
moral and ethical standards. Such conduct must be fair and transparent and should be perceived
as such by third parties as well.
The officers are also expected to act in accordance with the highest standards of personal and
professional integrity and ethical conduct at their place of work or while working on offsite
locations where the company’s business are located or at social events or at any other place
where they represent the company. Honest conduct is a conduct that is free from fraud or
deception. Ethical conduct is an ethical handling of actual or apparent conflicts between personal
and professional relationship.
6. Corporate Citizenship : A corporations should be committed to be a good corporate citizen
not only in compliance with all relevant laws and regulations, but also by actively assisting in the
improvement of the quality of life of the people in the communities in which it operates with the
objective of making them self-reliant and enjoy a better quality of life.
Such social commitment consists of initiating and supporting community initiatives in the field
of public health and family welfare, water management, vocational training, education and
literacy and encourages application of modern scientific and managerial techniques and
expertise. The company should review its policy, in this respect, periodically in consonance with
national and regional priorities.
The company should strive to incorporate them as an integral part of its business plan and not
treat them as optional and something dispensed with when inconvenient. It should encourage
volunteering amongst its employees and help them to work in the communities. The company
should develop social accounting systems and carry out social audit of its operations towards the
community, employees and shareholders.
7. Ethical Behaviour : Corporations have a responsibility to set exemplary standards of ethical
behaviour, both internally within the organization, as well as in their external relationships.
Unethical behaviour corrupts organizational culture and undermines stakeholders value. The

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board of directors have a great moral responsibility to ensure that the organization does not derail
from an upright path to make short-term gains.
8. Social Concerns : Corporations exist beyond time and space. So they have to set an example
to their employees and shareholders. New paradigm is that the company should not only think
about its shareholders but also think about its stakeholders and their benefit. A corporate should
not give undue importance to shareholders at the cost of small investors. They should treat all of
them equally and equitably. The company should have concerns towards the society. It can help
the needy people and show its concerns by not polluting the water, air and land. The waste
disposal should not affect any human or other living creatures.
9. Corporate Social Responsibility : Accountability to stakeholders is a continuing topic of
divergent views in corporate governance debates. In line with the developing trends towards an
integrated model of governance towards the creations of an ideal corporate, the emphasis should
be laid on corporate social responsiveness and ethical business practices seeking what might well
turn out to be not only the first small steps for better governance on this front but also the
promise of a more transparent and internationally respected corporates of the future.
10. Environment-friendliness : Corporations tend to be intervening in altering and transforming
nature. For corporations engaged in commodity manufacturing, profit comes from converting
raw materials into saleable product and vendible commodities. Metals from the ground are
converted into consumer durables. Trees are converted into boards, houses, and furniture and
paper product. Oil is converted into energy. In all such activities, a piece of nature is taken from
where it belongs and processed into a new form. So companies have a moral responsibility to
save and protect the environment. All the pollution standards have to be followed meticulously
and organizations should develop a culture having more concern towards environment.
11. Healthy and Safe Working Environment : A company should be able to provide a safe and
healthy working environment and comply with the conduct of its business affairs with all
regulations regarding the preservation of environment of the territory it operates in. It should be
committed to prevent the wasteful use of natural resources and minimize the hazardous impact of
the developments, production, use and disposal of any of its products and services on the
ecological environment.
12. Competition : A Company should play its role in the establishment and support a
competitive, open market economy and co-operate to promote the progressive and judicious
liberalization of trade and investment by a country. It should not covertly or overtly engage in
activities, which lead to or support the formation of monopolies, dominant market positions,
cartels and similar unfair trade practices. A company should market its products and services on
its own merits and should not resort to unethical advertisements or include unfair and misleading
pronouncements on competitors product and services. Any collection of competitive information
shall be made only in the normal course of business and shall be obtained only through legally
permitted sources and means.
13. Trusteeship : Corporate have both a social purpose and an economic purpose. They
represent a coalition of interest, namely, those of the shareholders, other providers of capital,
business associates and employees. This belief, therefore, casts a responsibility of trusteeship on
the company’s board of directors. They are to act as trustees to protect and enhance shareholder
value, as well as to ensure that the company fulfills its obligations and responsibilities to its other
stakeholders. Inherent in the concept of trusteeship is the responsibility to ensure equity, namely,

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that the rights of all shareholders, large or small, foreign or local, majority or minority, are
equally protected.
14. Accountability : Accountability is a key requirement of good governance. Not only
governmental institutions but also the private sector and civil society organizations must be
accountable to the public and to their institutional stakeholders. Who is accountable to whom
varies depending on whether decisions or actions taken are internal or external to an organization
or institution. In general, an organization or institution is accountable to those who will be
affected by its decisions or actions. Accountability cannot be enforced without transparency and
the rule of law.
15. Effectiveness and Efficiency : Good governance means that process and institutions
produce results that meet the needs of society while making the best use resources at their
disposal. The concept of efficiency in the context of good governance also covers the sustainable
use of natural resources and the protection of the environment.
16. Timely Responsiveness: Good governance requires that institutions and processes try to
serve all stakeholders within a reasonable timeframe. They should also address the concerns of
all stakeholders and the society at large.
17. Corporations Should Uphold the Fair Name of the Country : When companies export
their products or services, they should ensure that these are qualitatively good and are delivered
in time. They have to ensure that the nation’s reputation is not sullied abroad during their deals,
either as exporters or importers. They have to ensure maintenance of the quality of their
products, which should be the brand ambassadors for the country.

9.3.3 Obligation to Investors

That the investors as shareholders and providers of capital are of paramount importance to a
corporation is such an accepted fact that it need be overstressed here. A company has the
following obligations to investors:
1. Towards Shareholders : A company should be committed to enhance shareholders value and
comply with all regulations and laws that govern shareholder’s rights. The board of directors of
the company shall and fairly inform its shareholders about all relevant aspects of the company’s
business and disclose such information in accordance with the respective regulations and
agreements. Every employee shall strive for the implementations of and compliance with this in
his professional environment. Failure to adhere to the code could attract the most severe
consequences including termination of employment or directorship as the case may be.
2. Measures Promoting Transparency and Informed Shareholder Participation: A related
issue of equal important is the need to bring about greater levels of informed attendance and
meaningful participation by shareholders in matters relating to their companies without,
however, such freedom being abused to interfere with management decision. An ideal corporate
should address this issue and relate it to more meaningful and transparent accounting and
reporting.
3. Transparency : They means that decisions taken and their enforcement are done in a manner
that follows rules and regulations. It also means that information is freely available and directly
accessible to those who will be affected by such decisions and their enforcement. It also means
that enough information’s is provided and that it is provided in easily understandable forms and
media.

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4. Financial Reporting and Records : A company should prepare and maintain accounts of its
business affairs fairly and accurately in accordance with the accounting and financial reporting
standards, laws and regulation of the country in which the company conducts its business affairs.
Likewise, internal accounting and audit procedures shall fairly and accurately reflect all of the
company’s business transactions and disposition of assets. All required information’s shall be
accessible to the company’s auditors, non-executive and independent directors on the board and
other authorized parties and government agencies. There shall be no willful omissions of any
transaction from the books and records, no advance income recognition and no hidden bank
accounts and funds. Such, willful material misrepresentation of and/or misinformation’s of the
financial accounts and reports shall be regarded as a violation of the firm’s ethical conduct
ethical conduct and also will invite appropriate civil or criminal action under the relevant laws of
the land.

9.3.4 Obligation to Employees

For too long, corporate in free societies had been adopting a “Hire and Fire” policy in
employment of men and women in their work places and hardly treated them humanely taking
advantage of the fact that workers had a commodity, namely, labour that was highly perishable
with little bargaining power. But in the context of enhanced awareness of better governance
practices, managements should realize that they have their obligations towards their works too.
1. Fair Employment Practices : An ideal corporate should commit itself to fair employment
practices, and should have a policy against all forms of illegal discrimination. By providing equal
access and fair treatment to all employees on the basis of merit, the success of the company will
be improved while enhancing the progress of individuals and communities. The applicable
labour and employment laws should be followed scrupulously wherever it operates. That
includes observing those laws that pertain to freedom of association, privacy, and recognition of
the right to engage in collective bargaining, the prohibition of forced, compulsory and child
labour, and also laws that pertain to the elimination of any improper employment discrimination.
2. Equal Opportunities: A company should provide equal opportunities to all its employees and
all qualified applicants for employment without regard to their race, caste, religion, colour,
ancestry, marital status, sex, age, nationality, disability and veteran status. Its employees should
be treated with dignity and in accordance with a policy to maintain a conducive work
environment free of sexual harassment, whether physical, verbal or psychological. Employee
policies and practices should be administered in a manner that ensure that in all matters equal
opportunity is provided to those le and the decisions are merit-based.
3. Encouraging Whistle Blowing : It is generally felt that if whistle blower concerns have been
addressed to some of the recent disasters could have been avoided, and that in order to prevent
future misconduct, whistle blowers should be encouraged to come forward. So an ideal corporate
is one that deals proactively with whistle blowers and to make sure employees have comfortable
reporting channels and are confident that they will be protected from any form of retribution.
Such an approach will enhance the company’s chances to become aware of, and to appropriately
deal with, a concern before an illegal act has been committed rather than after the damage has
been done.
4. Humane Treatment : Now corporations are viewed like humans and similar kind of
behaviour is expected from them like a man with good sense. Companies should treat their
employees as their first customers and above all as human. They have to meet the basic needs of

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all employees in the organization. There should be a friendly, healthy and competitive
environment for the workers to prove their ability.
5. Participation : Participation by both men and women is a key cornerstone of good
governance. Participation could be either direct or through legitimate intermediate institutions or
representatives. Participation needs to be informed and organized. This means freedom of
association and expression on the one hand and an organized civil society on the other.
6. Empowerment : Empowerment is an essential concomitant of any company’s principle of
governance that management must have the freedom to drive the enterprise forward.
Empowerment is a process of actualizing the potential of its employees. Empowerment
unleashes creativity and innovation throughout the organization by truly vesting decision-making
powers at the most appropriate levels in the organizational hierarchy.
7. Equity and Inclusiveness : A corporation is a miniature of a society whose well-being
depends on ensuring that all its employees feel that they have a stake in it and do not feel
excluded from the mainstream. This requires all groups, particularly the most vulnerable, have
opportunities to improve or maintain their well-being.
8. Participative and Collaborative Environment : There should not be any form of human
exploitation in the company. There should be equal opportunities for all levels of management in
any decision making. The management should cultivate the culture where employees should feel
they are secure and are being well taken care of. Collaborative environment would bring peace
and harmony between the working community and the management, which in turn, brings higher
productivity, higher profits and higher market share.

9.3.5 Obligation to Customers

A corporation’s existence cannot be justified without its being useful to its customers. Its success
in the marketplace, its profitability and its being beneficial to its shareholders by paying
dividends depends entirely as to how it builds and maintains fruitful relationships with its
customers.
1. Quality of Products and Services : The company should be committed to supply goods and
services of the highest quality standards, backed by efficient after sales service consistent with
the requirements of the customers to ensure their total satisfaction. The quality standards of the
company’s goods and services should meet not only the required national standards but also
should endeavour to achieve international standards.
2. Products at Affordable prices : Companies should ensure that they make available to their
customers quality goods at affordable prices. While making normal profit is justifiable,
profiteering and fattening on the miseries of the poor consumers is unacceptable. Companies
should constantly endeavour to update their expertise, technology and skills of manpower to cut
down costs and pass on such benefits to customers. They should not create a scare in the midst of
scarcity or by themselves create an artificial scarcity to make undue profits.
3. Unwavering Commitment to Customer Satisfaction : Companies should be fully
committed to satisfy their customers and earn their goodwill to stay long in the business. They
should respect in letter and spirit warranties and guarantees given on their products and call back
from markets, goods found to be sub- standard or harmful and replace them with good ones.

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9.3.6 Managerial Obligation

1. Protecting Company’s Assets : The assets of the company should not be dissipated or
misused but invested for the purpose of conducting the business for which they are duly
authorized. These include tangible assets such as equipment and machinery, systems, facilities,
resources as well as intangible, assets such as proprietary information, relationships with
customers and suppliers, etc.
2. Behaviour Towards Government Agencies : A company’s employees should not offer or
give any of the firm’s funds or property as donation to any government agencies or their
representatives directly or through intermediaries in order to obtain any favourable performance
of official duties.
3. Control : Control is a necessary principle of governance that the freedom of management
should be exercised within a framework of appropriate checks and balances. Control should
prevent misuse of power, facilitate timely management response to change, and ensure that
business risks are pre-emotively and effectively managed.
4. Gifts and Donations: The company’s employees should neither receive nor make directly or
indirectly any illegal payments, remuneration, gifts, donations or comparable benefits, which are
intended to or perceived to obtain business or uncompetitive favours for the conduct of its
business. However, the company and its employees may accept and offer nominal gifts, which
are customarily given and are of a commemorative nature for special events provided the same is
disclosed on time to the management.
5. Role and Responsibilities of Corporate Board and Directors : The role of the corporate
board of directors as stewards of their stakeholders has gained significant importance in recent
decades. Successive corporate failures, scams, debacles and other disasters have strengthened the
demand for more transparency and accountability on the part of corporations. An ideal Corporate
Calls for a greater role and influence for non-executive independent directors, a tighter
delineation of independence criteria and minimization of interest-conflict potential and some
stringent punitive punishments for executive directors of companies failing to comply with
listing and other requirements.
6. Managing and Whole-time Directors : Managing and other whole-time directors are
required to devote whole or substantially whole of their time to the affairs of the company. And
yet many of them serve as non-executive directors on several other boards. An ideal corporate
affords the shareholders and stakeholders of the company the benefit of having their chosen
executive’s full attention in the matters of the company. An ideal corporate must necessarily
limit the nature and number of their other non-executive directorships.

9.3.7 Applying Ethics to Corporate Organisations

The statement that corporate organisations can be ethical or unethical raises a puzzling issue.
Can we really say that the acts of organisations are moral or immoral in the same sense that the
actions of human individuals are? Can we say that corporate organisations are morally
responsible for their acts in the same sense that human individuals are?
Or must we say that it makes no sense to apply moral terms to organisations as a whole but only
to the individuals who make up the organisation? Can moral notions like responsibility,
wrongdoing and obligation be applied to groups such as corporations, or are individual people
the only real moral agents?

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Two views have emerged in response to this problem. At one extreme is the view of those who
argue that, because the rules that tie organisations together allow us to say that corporations act
as individuals and have “intended objectives” for what they do, we can also say that they are
“morally responsible” for their actions and that their actions are “moral” or “immoral” in exactly
the same sense that a human being’s are. The major problem with this view is that organisations
do not seem to “act” or “intend” in the same sense that individual human do, and organisations
differ from human beings in morally important ways: Organisations feel neither pain nor
pleasure and they cannot act except through human beings. At the other extreme is the view of
philosophers who hold that it makes no sense to hold business organisations “morally
responsible” or to say that they have “moral” duties. These philosophers argue that business
organisations are the same as machines whose members must blindly and undeviatingly conform
to formal rules that have nothing to do with morality. Consequently, it makes no more sense to
hold organisations “morally responsible” for failing to follow moral standards than it makes to
criticise a machine for failing to act morally. The major problem with this second view is that,
unlike machines, at least some of the members of organisations usually know what they are
doing and are free to choose whether to follow the organisation’s rules or not or even to change
these rules. When an organisation’s members collectively, but feely and knowingly, pursue
immoral objectives, it ordinarily makes perfect good sense to say that the actions they perform
for the organisation are “immoral” and that the organisation is “morally responsible” for this
immoral action.

9.3.8 Globalisation, Multinational and Business Ethics

Many of the most pressing issues in business ethics today are related to the phenomenon of
globalisation. Globalisation is the worldwide process by which the economic and social systems
of nations have become connected together so that goods, services, capital, knowledge and
cultural artifacts are traded and moved across national borders at an increasing rate. This process
has several components, including the lowering of trade barriers and the rise of worldwide open
markets, the creation of global communication and transportation systems such as the Internet
and global shipping, the development of international financial institutions such the World Bank
and the International Monetary Fund that have facilitated the international flow of capital, and
the spread of multinational corporations. Globalisation has resulted in a phenomenon that is
familiar to anyone who travels outside their country: The same products, music, foods, clothes,
inventions, books, magazines, movie, brand names, stores, cars and companies that we are
familiar with at home are available and enjoyed everywhere in the world. Multinational
corporations are at the heart of the process of globalisation and are responsible for the enormous
volume of international transactions that take place today. A multinational corporation is a
company that maintains manufacturing, marketing, service or administrative operations in many
different host countries.
Corporations increasingly operate in a global environment. The globalization of business appears
to be an irreversible trend, but there are many opponents to it. Critics suggest that globalization
leads to the exploitation of developing nations and workers, destruction of the environment, and
increased human rights abuses. They also argue that globalization primarily benefits the wealthy
and widens the gap between the rich and the poor.
Proponents of globalization argue that open markets lead to increased standards of living for
everyone, higher wages for workers worldwide, and economic development in impoverished

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nations. Many large corporations are multinational in scope and will continue to face legal,
social, and ethical issues brought on by the increasing globalization of business. Whether one is
an opponent or proponent of globalization, however, does not change the fact that corporations
operating globally face daunting social issues. Perhaps the most pressing issue is that of labor
standards in different countries around the world. Many corporations have been stung by
revelations that their plants around the world were “sweatshops” and/or employed very young
children. This problem is complex because societal standards and expectations regarding
working conditions and the employment of children vary significantly around the world.
Corporations must decide which is the responsible option- adopting the standards
of the countries in which they are operating or imposing a common standard world-wide.

9.3.9 Business Ethics and Cultural Differences

When faced with the fact that different cultures have different moral standards, the managers of
some multinationals have adopted the theory of ethical relativism. Ethical relativism is the theory
that, because different societies have different ethical beliefs, there is no rational way of
determining whether an action is morally right or wrong other than by asking whether the people
of this or that society believe it is morally right or wrong. To put it another way, ethical
relativism is the view that there are no ethical standards that are absolutely true and that apply or
should be applied to the companies and people of all societies. Instead, relativism holds that
something is right for the people or companies in one particular society if it accords with their
moral standards and wrong for them if it violates their moral standards. The multinational
company or businessperson who operates in several different countries, then, and who
encounters societies with many different moral standards is advised by the theory of ethical
relativism in this way: In one’s moral reasoning, one should always follow the moral standards
prevalent in whatever society one finds oneself.
Considered clearly, there are numerous practices that are immoral by some societies which other
societies have deemed morally acceptable, including polygamy, abortion, infanticide, slavery,
homosexuality, racial and sexual discrimination, genocide, patricide and the torture of animals.
Yet critics of ethical relativism have pointed out that it does not follow that there are no moral
standards that are binding on people everywhere.
9.3.10 Technology and Business Ethics
Technology consists of all those methods, processes, and tools that humans invent to manipulate
their environment. To an extent never before realised in history, contemporary business is being
continuously and radically transformed by the rapid evolution of new technologies that raise new
ethical issues for business. This is not the first time that new technologies have had a
revolutionary impact on business and society. Several thousand years ago, during what is
sometimes called the Agricultural Revolution, humans developed the farming technologies that
enabled them to stop relying on foraging and on the luck of the hunt and to develop, instead,
reasonably constant supplies of food. The invention of irrigation, the harnessing of water and
wind power, and the development of levers, wedges, hoists and gears during this period
eventually allowed humans to accumulate more goods than they could consume, and out of this
surplus grew trade, commerce and the first businesses.
The result was the large corporations that came to dominate our huge economies and that
brought with them a host of ethical issues for business, including the possibilities of exploiting

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the workers who laboured at the new machines, manipulating the new financial markets that
financed these large enterprises, and producing massive damage to the environment.
New technologies developed in the closing decades of the 20th century and the opening years of
the 21st century are again transforming society and business and creating the potential for new
ethical problems. The developments include the use of extremely powerful and compact
computers, the development of the Internet, wireless communications, digitalisation and
numerous other technologies that have enabled us to capture, manipulate and move information
in new and creative ways.
Almost all ethical issues raised by new technologies are related in one way or another to
questions of risk: Are the risks of a new technology predictable? How large are the risks and are
they reversible? Are the benefits worth the potential risks, and who should decide? Does the
person on whom the risks will fall know about the risk, and have they consented to bear these
risks? Will they be justly compensated for their losses? Are the risks fairly distributed among the
various parts of society, including the poor and the rich, the young and the old, future
generations and present ones?
Information technologies have also raised difficult ethical issues about the nature of the right to
property when the property is computer software, computer code, or any other kind of data-text,
numbers, pictures, sounds-that have been encoded into a computer file or computer services
access to a computer. Computerised information can be copied perfectly countless times without
in any way changing the original. What kind of property rights does the original creator of the
information have and how does it differ from the property rights of someone who buys a copy?
Is it wrong for me to make a copy without the permission of the original creator when doing so
in no way changes the original? What, if any, harm will society or individuals suffer if the people
are allowed to copy any kind of computerised information at will? Will people stop creating
information? Is it wrong to use my company’s computer system for personal business, such as to
send personal e-mail? Is it wrong for me to electronically break into another organisation’s
computer system if I do not change anything on the system but merely “look around”?
Another contemporary social issue relates to technology and its effect on society. For example,
the Internet has opened up many new avenues for marketing goods and services, but has also
opened up the possibility of abuse by corporations. Issues of privacy and the security of
confidential information must be addressed.
Biotechnology companies face questions related to the use of embryonic stem cells, genetic
engineering, and cloning. All of these issues have far-reaching societal and ethical implications.
As our technological capabilities continue to advance, it is likely that the responsibilities of
corporations in this area will increase dramatically.

9.3.11 Role Of Business

The role of business in society and the accompanying responsibilities that transpire from that role
is a highly contentious and debated topic. The economist Milton Friedman famously contended
that it has only one responsibility and that is to generate profit for shareholders while adhering to
the law. Contrary to that argument is thinking that recognizes business as a system in society that
is affected by and affects other systems in society such as the surrounding community,
government bodies, other types of organizations, the natural environment . Thus business needs
to work with these systems to attain its economic goals in a way that will also benefit the system
(society) as a whole.

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Business in society has evolved to include the description, analysis and evaluation of business’
complex societal and ecological relations. These relations and impacts, and the management
thereof are popularly referred to as the field of corporate citizenship also known as corporate
social responsibility, sustainability or a number of variations on these.

For business the changing social contract implies purposeful involvement with stakeholders to
achieve improved economic, environmental and social performance. The nature and extent of
this involvement, however, varies depending on company size, industry or business scope. The
most evident difference is the utilization of reactive/defensive means vs. proactive/offensive
strategies. Consequently, corporate citizenship management, practice and behavior differ. The
emergence of new stakeholder engagement strategies, including strategic alliances and
partnerships, social partnerships and multi-sector collaborations, means that collaborative
strategies as opposed to purely competitive strategies have become a critical means for the
private sector to proactively engage society.

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9.4 Activities
This lecture poses various questions – answer them based on the ethical theories you read in
previous lectures.

9.5 Summary
 The stakeholder theory of the firm is used as a basis to analyse those groups to whom the
firm should be responsible. In this sense, the firm can be described as a series of
connections of stakeholders that the managers of the firm attempt to manage. A
stakeholder is any group or individual who can affect or is affected by the achievement of
the organisation’s objectives
 Companies have obligations to Society, to Investors, to Employees, to Customers and
Managerial
 Many of the most pressing issues in business ethics today are related to the phenomenon
of globalisation.
 Globalisation is the worldwide process by which the economic and social systems of
nations have become connected together so that goods, services, capital, knowledge and
cultural artifacts are traded and moved across national borders at an increasing rate.
 When faced with the fact that different cultures have different moral standards, the
managers of some multinationals have adopted the theory of ethical relativism.
 Ethical relativism is the theory that, because different societies have different ethical
beliefs, there is no rational way of determining whether an action is morally right or wrong
other than by asking whether the people of this or that society believe it is morally right or
wrong.
 Contemporary business is being continuously and radically transformed by the rapid
evolution of new technologies that raise new ethical issues for business.
 Business in society has evolved to include the description, analysis and evaluation of
business’ complex societal and ecological relations. These relations and impacts, and the
management thereof are popularly referred to as the field of corporate citizenship also
known as corporate social responsibility, sustainability or a number of variations on these

Notes Extracted from:

1. MBA 818 Business Ethics And Corporate Governance : National Open University Of
Nigeria
2. MP-402 Business Ethics: Vardhaman Mahaveer Open University, Kota
3. MGT- 610 Business Ethics: Virtual University of Pakistan
4. Various internet sources

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