BUSINESS ETHICS

PHILOSOPHY

PHILOSOPHY
- Systematized study of general and fundamental questions, such as those about existence, reason,
knowledge, values, mind, and language
- "Love of wisdom."

PURPOSE:
 Understand fundamental truths about themselves, the world in which they live, and their
relationships to the world and to each other.

DIVIDED INTO:
1. Metaphysics
- The study of the nature of reality, of what exists in the world, what it is like, and how it is ordered
QUESTIONS ASKED:
 Is there a God?
 What is truth?
 What is a person? What makes a person the same through time?
 Is the world strictly composed of matter?
 Do people have minds? If so, how is the mind related to the body?
 Do people have free wills?
 What is it for one event to cause another?

2. Epistemology
- Study of knowledge.
- It is primarily concerned with what we can know about the world and how we can know it
QUESTIONS ASKED:
 What is knowledge?
 Do we know anything at all?
 How do we know what we know?
 Can we be justified in claiming to know certain things?

3. Ethics
- The study of ethics often concerns what we ought to do and what it would be best to do
ANDREA GAIL L. CALLEJA BUSINESS ETHICS 11-MIKHELSON
 QUESTIONS ASKED:
 What is good?
 What makes actions or people good?
 What is right?
 What makes actions right?
 Is morality objective or subjective?
 How should I treat others?

4. Logic
- Arguments or reasons given for people’s answers to these questions
- Study the nature and structure of argument

QUESTIONS ASKED:
 What constitutes "good" or "bad" reasoning?
 How do we determine whether a given piece of reasoning is good or bad?
ETHICS OR MORAL PHILOSOPHY
- is a branch of philosophy that involves systematizing, defending, and recommending concepts of
right and wrong behavior
BUSINESS ETHICS (also known as corporate ethics)
- Form of applied ethics or professional ethics
- Examines ethical principles and moral or ethical problems that can arise in a business environment
- Applies to all aspects of business conduct and is relevant to the conduct of individuals and entire
organizations

CLASSICAL GREEK AND ROMAN PHILOSOPHERS

- According to Greek philosophers, man has to achieve a good, prosperous life called EUDAIMONIA.

1. SOCRATES
- “HAVE THE COURAGE TO DISAGREE”
- “DO NOT GO WITH THE FLOW, JUST BECAUSE EVERYBODY IS DOING IT, DOES NOT
MEAN THAT YOU WILL GO WITH THE FLOW.”

 SOCRATIC METHOD
- Way of thinking that allows individuals to define their own purpose for learning
- Set to draw the truth out of the individual

2. PLATO
- “THE POWER TO RULE”
- A person must study themselves in order to find out their level of character
ANDREA GAIL L. CALLEJA BUSINESS ETHICS 11-MIKHELSON
 - Moral values are objective, absolute, or eternal
- They never change, they are universal as they apply to all rational creatures around the world and
throughout the time
- Suggests that the right people be in the right position and in what ways his thought can inform
leadership

3. ARISTOTLE
- “LET PEOPLE SEEK FULFILLMENT”
- “KEEP PEOPLE MOTIVATED”
- Most practical and business oriented of all philosophers
- Virtues are good habit that we acquire which regulate our emotions
- Natural for humans to be rational, sociable, and virtuous

4. CONFUCIUS
- “DO NOT DO UNTO OTHERS WHAT YOU DO NOT WANT OTHERS DO UNTO YOU”
- “LIVE A CONTENTED, MORAL AND HAPPY LIFE”

5. PLUTARCH
- ‘BE A GOOD ROLE MODEL”
- Understood that humans are incredibly social creatures, who constantly observe the people around
them and imitate them
- Published the biographies of famous Greek and Roman heroes such as Cicero, and Alexander the
Great

6. EPICURUS
- “THE ART OF HAPPINESS”
- Fourth century Greek philosopher
- Aim of life was simply to be as happy as possible here on Earth
- Warned that humans are very bad at being happy, and very good at inventing reasons to be
miserable

7. EPICTETUS
- “HAVE A RESILIENT MIND”

8. RUFUS
- “ACT WHAT YOU LEARN”

9. IMMANUEL KANT
- One of the most influential philosophers in the history of Western philosophy

ANDREA GAIL L. CALLEJA BUSINESS ETHICS 11-MIKHELSON

 - He advances the theory of deontology
- Emphasize a single principle of duty, that we have moral duties to one self and others

 The theories of the three major Greek philosophers, Socrates, Plato, and Aristotle shaped western
thought in areas such as persuasion and negotiation, the structure of political society, and virtue
ethics. Their philosophical principles can be applied in management and leadership.

CONFUCIANISM
- is a philosophy and belief system from ancient China, which laid the foundation for much of
Chinese culture
- Believes in ancestor worship and human-centered virtues for living a peaceful life

CONFUCIUS
- a philosopher and teacher who lived from 551 to 479 B.C.E.
LUNYU
- Thoughts on ethics, good behavior, and moral character were written down by his disciples

The Ethics of Aristotle:

VIRTUE THEORY
- Doesn't judge actions as right or wrong but rather the character of the person doing the actions.
- Emphasis on the development of human values and moral character
- Turns out to be the most promising representative of the pre-modern category of moral theory
- Instead of trying to form specific rules for everyone to follow, it proposes to build a virtuous
character
- Four virtues stand out, courage, moderation, justice, and prudence

The Ethics of Bentham and Mill

- Jeremy Bentham, an attorney, a consultant to the British Parliament in the late eighteenth century.
Bentham found a ready supporter and lieutenant in James Mill (1773–1836), a Scottish lawyer who
came to assist Bentham in championing utilitarianism as a political philosophy.
UTILITARIANISM
- Based on one’s ability to predict the consequences of an action
- Advised to select that action which produces the greatest amount of good for the greatest number
of people
- Balance of good or happiness or usefulness outweighs that of evil, harm, or unhappiness, then the
choice is a moral one

ANDREA GAIL L. CALLEJA BUSINESS ETHICS 11-MIKHELSON

 - Classified as a consequentialist theory

The Ethics of Kant:

DEONTOLOGY
- The deontological class of ethical theories states that people should adhere to their obligations and
duties when engaged in decision making.
- The term deontology stems from the Greek deon—duty, obligation, or command.
- For Kant, we should treat people as an end, and never a means to an end.

HISTORY OF BUSINESS ETHICS

 Many ethical practices found in the Holy Scriptures include honesty, stewardship, and truthfulness.
Aside from the moral teachings of the Catholic Church, other religions have their own interpretations
of ethics which have guided people's behavior. Ethics has its application in many areas of life,
including business transactions.
EARLY LIFE
 Business ethics can be traced back to the ancient Greek philosopher Aristotle, who described greed
as the ''unnatural use of one's capabilities in the pursuit of wealth for its own sake He also had the
first recorded definition of the term fair treatment for all parties in any transaction.
 John Locke, Adam Smith, Immanuel Kant and John Stuart Mill contributed to the emergence of
business ethics. Distributive justice can be equated to Adams' Equity Theory. Employees believe
that whatever they contribute to an organization could be commensurate to what they will receive as
outcomes.
o Six psychological motives and that each individual has to produce for the common good:
prosperity, prudence, reason, sentiment, and promoting the happiness of mankind
 One of the greatest contributors to business ethics in the early years is John Rawls. Rawls propagated
the Difference Principle, which emphasizes equality in society. The principle allows inequality in the
distribution of goods and services only if it will benefit the lowest class. This principle holds that
each person has a set of equal basic rights.
NEW GENERATION ETHICS
 In 1937, the first managerial textbook in business ethics was Business Ethics by Frank Chapman
Sharp and Philip D. Fox. The book distinguishes between right and wrong transactions common in
business organizations. Some of the issues discussed are fair trade practices and dishonest selling and
advertising. It also points out that ethics and laws are not the same.
 In the 1960s, there was wide interest in business ethics and it emerged as an academic field. Several
textbook writers followed Sharp and Fox such as Norman Bowie, Thomas Donaldson and Patricia
Werhane.
 Ethical decisions are based on the characteristics of the individual such as religion, personal values
and strength of moral character. In addition, the culture of the organization can influence ethical
decision. One of the ethical decision-making models was developed by Hunt and Vitel in 1986.
 Three British sociologists have written books on business ethics - Ferrel, Fraedrich and Trevino,
and Gresham, Jones and Nelson - which outline how managers can comply ethically and legally
ANDREA GAIL L. CALLEJA BUSINESS ETHICS 11-MIKHELSON
 from a managerial point of view. Their models emphasize that co-employees and peers are most
influential in ethical decision making.
 Bentley University's Center for Business Ethics pioneered activities that supported business ethics
and research. It helped in founding the Ethics and Compliance Officers Association, the largest
ethics organization in the United States. Around the world, ethical organizations have been put up to
standardize ethical practices in their professions.
 Other journals in marketing, management, accounting, and finance publish articles related to business
ethics. Business Ethics Quarterly and Business Ethics: A European Review were published in 1991
and 1992 respectively.
 The Defense Industry Initiative on Business Ethics and Conduct of the United States Government
was established in 1986. It acted as a guide in the practice of ethical standards in organizations.
There were 18 defense contractors who drafted principles for guiding business ethics. Best practices
were also discussed among members.
 The 1990s saw the development of business ethics as an academic discipline. As business ethics grew
rapidly toward the 2000s, massive scandals became widespread around the globe. In the US, the
Sarbanes-Oxley Act was passed in 2002 to affress the loss of confidence in financial recording.

ANDREA GAIL L. CALLEJA BUSINESS ETHICS 11-MIKHELSON