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2018 1
 Ethics is defined as a set of moral principles that
governs the actions of an individual or a group.
 Ethics vary greatly from person to person and
situations to situation, as well as from culture to
culture
 They are based on society’s definition of right and
wrong
 We learn through families, friends, formal learning
and experiences e.g. children are punished for bad
acts
 Ethics are of great concern for businesses as the
society has expectations just as other stakeholders
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2018 2
 Not codified as it would  codified rules of
be impractical behaviour enforced by
 moral principles and courts
covers a wide area  Can’t cover every area of
 Principles never change human behaviour
 Focus on what one could  Always supported by
ethics and do change
do
 Focus on what one
 Doesn’t lead to severe
should/ shouldn’t do
punishment in some
 Severe punnishement
cases
even imprisonment
Ethics Law
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2018 3
 Managerial ethics are standards of conduct or moral
judgment used by managers of organizations in carrying
out their business.
 These come from general standards or rules of
behaviour which are acquired through:
 Experiences
 Family
 Religion
 Educational
 Interpersonal interactions with others

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2018 4
 Help us to understand which actions are ethical
 Ethical philosophers recognize four fundamental
approaches:
 Utilitarian Approach
 Moral Rights Approach
 Justice Approach
 Individualism Approach

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2018 5
 …judges the effects of a particular action on the people
directly involved and does so in terms of what provides
the greatest good for the greatest number of people.
 The end or consequences justify the action
 The premise is that ethical actions maximize goodness
 Features include:
 Maximization of Goodness
 Intrinsic Goodness
 Measurement of Goodness
 Based on concept of utility

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 Branches include:
 Act Utilitarian – argues that in all situations one
ought to perform that act which leads to the
greatest good for the greatest number.
 Rule Utilitarianism – states that ethical actions and
judgments should conform to firm and publicly
advocated moral rules.
 e.g. stealing tends to cause pain, so we should
have a rule against stealing

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2018 7
 It is difficult to measure truth, goodness, and virtue
 Comparison problem: It is difficult to quantify and
compare individual pleasures or units of
happiness.
 Utilitarianism has also been challenged on the
grounds that it can lead to injustice. The minority
suffer for the majority

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2018 8
 …holds that an action is good if it is done for the
sake of what is right.
 ..argues that every person has a duty to do what is
right, to respect others, and treat them as free,
rational beings.
 Employers have special relationships with
employees and customers and thus have a moral
obligation to them
 The rights identified by this include:

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2018 9
 Life and safety – an individual’s life ought not be
endangered
 Truthfulness –right not to be intentionally deceived by
another, especially on matters concerning an individual
 Privacy – right to control info about one’s private life and
to do as they please outside working hours.
 Freedom of conscience – right to refrain from carrying
out any order that injures one’s conscience.
 Free speech – right to criticize the ethics or legality of
corporate actions so long as it doesn’t violate others’
rights
 Private property – the individual has a right to hold
private property
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 …argues that managers have a duty to be guided by
equity, fairness, and impartiality in their interactions with
others
 ...argues that individuals have certain natural rights and
a just society must respect those rights
 Principles of justice identified by this approach include:
 Fair treatment: - (distributive Justices) persons who are
similar to each other in relevant respects should be
treated similarly; those different differently
 Fair administration of rules – (procedural justice) rules
should be administered consistently, fairly and
impartially.

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 Fair compensation - (compensatory justice) fair
compensation for injuries suffered
 Fair blame - individuals should not be held responsible
for matters over which they have no control
 Due process – right to a fair and impartial hearing when
they believe that their personal rights are being violated.

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 …states that acts are moral when they promote the
individual’s best long-term interests
 Rule: if action promotes individual’s interests = it is
ethical, if not = it is unethical
 …holds that human beings have a right and
responsibility to become all they are capable of
becoming
 Critics say:
 It is difficult to demonstrate that every human being has
some potentialities.
 In view of man’s inhumanity to man, it is not credible to
argue that human nature is basically good.

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 Given the increasing concern about ethics, companies
are paying attention to provide guidance for managers
 Also, Ethics being moral principles differ from one
person to the next thus there is need for managing them
 Companies are employing the following strategies:
 Code of Ethics - written statement of a company’s
beliefs, values and norms of expected behaviour
 Whistle-blowing - when an employee discloses an
illegal, immoral, or unethical action committed by a
member of an organization

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 Committees or Groups oversee programs for
encouraging ethical behaviour, reviewing violations of
codes of ethics and taking action on whistleblowers
 Training Programs – seminars/workshops to train
managers on ethical behaviors as well as employees at
different levels

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 …centre on the potential conflict between economic and
social performance.
 Issues involve whose interests should be served first;
 Can the good of society be served and management still
operate a profit?
 How can the managerial dilemma of balancing economic
and social performances be resolved?
 Whatever the decision managers have to reconcile the
competing values and consequences for
 Themselves
 Organization
 Society

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 Organizations exist in a social network and can affect
others and in turn can be affected
 Therefore organizations, just like humans, should pay
attention to the impact their actions are to the
environment
 Definitely the actions have a an impact in the society and
thus can contribute to the economic development of the
society of operation

 What is CSR??

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 is the obligation of decision-makers to take actions,
which protect and improve the welfare of society as a
whole along with their own interests
 is the obligations of the organization's management to
make decisions, and take actions that will increase the
welfare and interests of society as well as the
organization
 is the commitment by organisations to ‘behave ethically
and contribute to economic development while
improving the quality of life of the workforce and their
families as well as the local community and society at
large’

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 What are the examples of CSR acts?

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 There are three major approaches to CSR namely;
 Traditional
 Stakeholder, and
 Affirmative

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 Associated with economist Milton Friedman
 They posit that the purpose of an organization is to
produce goods and services and maximise profits
 The proponents argue that:
 Business are accountable to shareholders
 Govt. is best equipped to decide social improvements to
which businesses contribute by paying taxes
 Allocation of resources to social improvements is abuse
of authority (no right to misuse profits)
 Maybe unworkable because managers are trained to
make economic decisions
 Action may hurt society as the cost will be passed to
customer inform of increased prices
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 managers must be responsible to certain groups that are
affected by, or can affect, the company’s objectives and
interests
 It includes the groups referred to as stakeholders (next
unit) which include shareholders, customers,
government agencies, competitors, unions, employees,
trade associations, important suppliers, protest groups
and others.
 The argument is that what is good for the company, is
good for society
 …also makes the accumulation of capital a management
priority which is the essential for job creation

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 …holds that managers have a responsibility to promote
the mutual best interests of the firm and its various
stakeholders, including the general public
 …involves a diverse group rather than the stakeholders
 Management that adopts this philosophy must address
the concerns of a wide range of groups as well as plan
for the future needs of society

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 Businesses contribute to many of society’s problems
 The long-run benefit is great although short-run costs
maybe high
 Business involvement can greatly reduce society’s
problems and improve quality of life
 Leads to enhanced public image which results in more
customers
 Society’s needs and expectations are changing because
of environmental changes and as such businesses need
to be involved
 Businesses are part of the society just like any other
citizen
 Businesses have large amounts of power
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 Businesses contribute to many of society’s problems
 The long-run benefit is great although short-run costs
maybe high
 Business involvement can greatly reduce society’s
problems and improve quality of life
 Leads to enhanced public image which results in more
customers
 Society’s needs and expectations are changing because
of environmental changes and as such businesses need
to be involved
 Businesses are part of the society just like any other
citizen
 Businesses have large amounts of power
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 May reduce Govt’s surveillance on firm
 Businesses have substantial pools of financial,
human, and material resources necessary to carry
out civil activities
 If businesses don’t engage in CSR, they may be
entangled in consumer protests, lawsuits, and
close Govt. surveillance

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2018 28
 Business are socially responsible because forced
by competition they better their offerings for the
benefit of society
 Engaging in CSR may hurt society through
increased pricing
 Social programmes may make firms less
competitive as a result of increased costs, prices
etc
 Combining social and economic programmes may
lead to conflicting goals within businesses

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 Social programmes may harbour unrealistic
expectations impossible to accomplish
 Businesses may not work effectively with social
issues as their objective is primarily economic
 A combination of social and economic activities
will give businesses excessive power

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