Chapter One:

Ethics and
Business

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 Chapter Objectives
After reading this chapter, you will be able to:
1. Explain three levels at which ethical decisions get made in business.
2. Explain the nature of business ethics as an academic discipline.
3. Describe ethical decision making as a form of practical reasoning.
4. Distinguish the ethics of personal integrity from the ethics of social
responsibility.
5. Distinguish ethical norms and values from other business-related norms
and values.
6. Explain why ethics is important in the business environment.
7. Explain why ethical responsibilities go beyond legal compliance.

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 Ethics and Business 1

It takes 20 years to build a reputation and five minutes to ruin it.

If you think about that you’ll do things differently.
Warren Buffett

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 Business Ethics 1

At its most basic level, ethics is concerned with how we should

act and how we should live our lives.

Business ethics examines responsibilities we owe to ourselves

and to each other.

• How should I act within business?

• How should a business act?

• What responsibilities do I have as a businessperson?

• What responsibilities does a business have to employees, to customers,

and to society?

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 Business Ethics 2

For business students, ethics is an important field of study.

Business ethics is a process of decision making.
• Business must take ethics into account and integrate ethics into its
organizational structure.

Scandals are brought about by ethical failures and unethical

decisions.
• This text provides a decision-making model that can help analyze avoid
future ethical failures.

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 Levels of Ethical Decision Making
Business ethics involves making decisions at :
(1) the individual, at
(2) the organizational, and at a broader
(3) social and governmental level.

• As individuals, each person interacts with businesses as customers, as

employees, and as citizens of the countries in which they operate.

• Organizational culture and corporate leadership have important roles to

play in decision making.

• Individual businesses' and industries' decisions are influenced by social,

economic, and political environments.
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 Goals of Business Ethics
• Developing the knowledge base and skills needed to identify
ethical issues.

• Understanding how and why people behave unethically.

• Deciding how one should act, what one should do, and the
type of person one should be as an individual.

• Creating ethical organizations.

• Thinking through the social, economic, and political policies

that we should support as citizens.

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 Ethics and Business 2

Never go into business purely to make money. If that’s your

motive, you are better off doing nothing.

Richard Branson

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 Business Ethics as Ethical Decision Making
• Ethical decision making and deliberation will result in more
responsible behavior.
• One perspective believes that ethics is no more than personal opinion
and feelings.
• One perspective is that ethics can offer clear, absolute, and
unambiguous truths.

• The authors’ approach finds a middle ground. The

fundamental assumption is that:
a process of rational decision making can and will result in
behavior that is more reasonable, accountable, and ethical.
• Teaching ethics must challenge students to think for
themselves.

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 Business Ethics as a Type of Reasoning
• Practical reasoning involves reasoning about
what one ought to do.
• Ethics is a part of practical reason
• Practical reasoning focuses on what we should do, and how we
should act and behave.

• Theoretical reasoning is aimed at

establishing truth and what one should believe.
• According to most western philosophers, humans are rational and
should believe only that which is reasonable, and act only in ways
that are reasonable.
• Theoretical reasoning is the pursuit of truth, the highest standard for
what we should believe.

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 How Should “We” Live? 1

If defining “we" individually: Ethics is based on our value

structures:
• Defined by our moral systems;

• and, sometimes referred to as morality.

• Sometimes referred to as "personal integrity.“

• Morality is distinguished from questions of social justice, which addresses

issues of how communities and social organizations should be structured.

If morals refer to the underlying values on which decisions are

based, ethics refers to the application of those morals to the
decisions themselves.
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 How Should “We” Live? 2

If defining "We" collectively: Refers to how we live together in a

community.

• This area is sometimes referred to as social ethics.

• Here, we judge companies from a social perspective; for their corporate

social responsibility.

• Managerial decisions involve the following aspects of ethics:

1. Personal integrity.

2. Social responsibilities.

3. Legal and political environments.

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 Ethics as Practical Reason
Ethics is a vital element of practical reasoning—reasoning about
what we should do.
• Distinguished from theoretical reasoning, which is reasoning about what
we should believe.
• Theoretical reason is the pursuit of truth.

There is no single methodology for ethics that works in

all situations, but guidelines provide direction and
criteria for decisions.
• Ethical theories explain and defend various norms, standards,
values, and principles used in ethical decision making.
• The next chapter introduces a model for making ethically
responsible decisions.

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