REVIEWER FOR GOOD GOVERNANCE Business Ethics and Social Responsibility
These companies employ PWD (deaf, mute, vision
ETHICS
• Ethics, simply put, is the study of right and
wrong, what is permissible, what is good and evil
in their moral contexts.
• It seeks to establish principles to right behavior
that may serve as action guides for individuals
and groups.
• It investigates which values and virtues are
paramount to the worthwhile life or society.
• It refers to the systematic endeavor to understand
moral concepts and justify moral principles and
theories.
ETHICS in life and business
BUSINESS ETHICS
• Ethics in business is just as important as ethics in
personal life.
• Business leaders have a unique role and a great
responsibility in shaping the ethical culture of
their businesses, and thereby influence their
broader communities as well.
• Business ethics refers to implementing
appropriate business policies and practices with
regard to arguably controversial subjects.
• Some issues that come up in a discussion of ethics
include corporate governance, bribery,
discrimination, social responsibility, etc.
• The law usually sets the tone for business ethics,
providing a basic guideline that businesses can
choose to follow to gain public approval.
Here are a few key questions to consider to bring ethics
into your business mindset:
➢ How do I define what is good for my business?
What does it mean for my customers, my
employees, the community where my business is
located, my investors, and my customers?
➢ How do I make good ethical decisions? How do I
analyze a situation and make a decision that
positively contributes to the common good?
➢ What kinds of company policies do I need to put
in place to create an ethical culture?
➢ How will I monitor the ethical culture of my
business?
➢ How will I address or correct unethical behavior
in my business?
impaired)
• Jollibee Group
• Lamoiyan Corporation. (Happy toothpaste).
• Bounty Agro Ventures, Inc. (Chooks to go)
• Caravan Food Group, Inc. (Down syndrome)
Business Ethics and Moral Principles
Why Is Business Ethics Important?
1. Brand recognition and growth.
2. Increased ability to negotiate
3. Increased trust in products and services
4. Customer retention and growth
5. Attracts talent
6. Attracts investors
Moral principles
• Moral principles are guidelines that people live
by to make sure they are doing the right thing.
These include things like honesty, fairness, and
equality.
• Moral principles can be different for everyone
because they depend on how a person was raised
and what is important to them in life.
Types of moral principles:
1. Absolute principles are unchanging and
universal.
• They are based on universal truths about the
nature of human beings.
• These are generally accepted by society.
Examples:
• Don't kill.
• Speak the truth.
• Be careful with what you say and do to others.
• Respect the property of others.
2. Relative principles change depending on the
situation.
• They are based on opinions and circumstances
that may change over time or from person to
person or for different situations.
• Depend on a person's beliefs, relative to what
people perceive as good or bad in relation to
themselves. When someone says something is
 good, it is good for them, or perhaps it contributes
to their well-being.
Examples:
• It is morally wrong to spend money on a luxury
item.
• It is morally right to care for our planet and
preserve it for future generations.
Approaches to the study of morality (major fields of
ethics)
1. Normative Ethics
• that branch of moral philosophy, or ethics,
concerned with moral standards (what is morally
right and wrong).
• It includes the formulation of moral rules that
have direct implications for what human actions,
institutions, and ways of life should be like.
• Essentially, normative ethics investigates
questions regarding how one ought to act, in a
moral sense.
NORMATIVE ethics has two important categories
concerned with how to determine what makes ethical
actions.
Two important categories of NORMATIVE ethics.
1. Deontology proposed by philosopher Immanuel
Kant.
• Deontology is an ethical theory that uses rules to
distinguish right from wrong. This approach
tends to fit well with our natural intuition about
what is ethical and what isn’t ethical.
• Deontology is simple to apply. It just requires that
people follow the rules and do their duty.
Examples; “Don’t lie. Don’t steal. Don’t cheat.”
BUT, it also means disregarding the possible
consequences of one’s actions when determining what is
right and what is wrong.
2. Consequentialism. An ethical theory that judges
whether or not something is right by what its
consequences are. Actions are right insofar as they
promote good consequences and wrong insofar as
they promote bad ones.
Example: Most people would agree that lying is wrong.
But if telling a lie would help save a person’s life,
consequentialism says it’s the right thing to do.
• A holdupper killing a drug lord.
Consequentialism is sometimes criticized because it can
be difficult, or even impossible, to know what the result
of an action will be ahead of time. No one knows the
future with certainty.
Also, in certain situations, consequentialism can lead to
decisions that are objectionable, even though the
consequences are arguably good. (2%)
Consequentialism has two forms: utilitarianism and
hedonism.
1. UTILITARIANISM:
• an ethical theory that asserts that right and wrong
are best determined by focusing on outcomes of
actions and choices. (the most ethical choice is
the one that will produce the greatest good
(greatest utility) for the greatest number.)
Example. Assume a hospital has four people whose lives
depend upon receiving organ transplants: a heart, lungs, a
kidney, and a liver. If a healthy person sells his organs to
the hospital, (P2M) this means saving 4 lives. This means
his family (6 other members) will be paid 2M pesos. This
would arguably produce the greatest good for the greatest
number. But is the act acceptable course of action, is it
ethical?
2. HEDONISM:
• the belief that pleasure, or the absence of pain, is
the most important principle in determining the
morality of a potential course of action.
• all and only pleasure is intrinsically valuable and
all and only pain is intrinsically not valuable.
• hedonism considers happiness to be the most
important thing in life and emphasizes that
happiness can be achieved through fulfilling
personal needs and desires.
Example:
1. Someone who uses drugs for his own pleasure
without care for the harm done to others is a
hedonist.
2. fulfilling personal desires and enjoyment, such as
excessive consumption of food, drink, and
shopping, and spending time and money on
activities that only satisfy personal desires.
Types of HEDONISM:
1. Normative Hedonism
• Normative Hedonism (also called ethical
hedonism) is the idea that pleasure should be
people’s primary motivation. The theory that
happiness should be pursued and pain should be
avoided.
Examples:
• If one finds pleasure in murder, he would be
morally obligated to kill.
• If one finds satisfaction in cheating, he would
cheat no matter what.
2. Motivational Hedonism
• Motivational Hedonism says that only pleasure
and pain cause people to do what they do.
• human behavior is psychologically determined
by desires to increase pleasure and to decrease
pain.
Examples:
• A student prioritizes going to the beach with
friends over studying for an upcoming test
because he finds more pleasure in the former.
• Drinking wine rather than eating lunch or dinner.
• Buying new clothes instead of buying food to
eat.
3. Egotistical hedonism
• requires a person to consider only his or her own
pleasure in making choices.
• The goal of life for an egoistic hedonist is to
maximize pleasure, especially one’s own.
Example:
• A drug addict stealing money for his next fix. (the
resulting pleasure outweighed any moral
discomfort experienced through theft).
4. Altruistic Hedonism
• Altruistic Hedonism says that the creation of
pleasure for all people is the best way to measure
if an action is ethical.
Example:
• Pain-seeking acts performed out of a sense of
duty.
• A soldier jumping on a grenade to save his
comrades.
• A man trying to rescue a trapped dog only to be
bitten in the process.
Approaches to the study of morality (major fields of
ethics)
1. Normative ethics
2. Applied ethics.
• (also called practical ethics), is the application of
ethics to real-world problems.
• Practical ethics attempts to answer the question of
how people should act in specific situations.
• Medical ethics, business ethics, engineering
ethics, and the like are all branches of applied
ethics.
• It is a branch of ethics devoted to the treatment of
moral problems, practices, and policies in
personal life, professions, technology, and
government.
Examples.
• Is it ethical for a business owner to bluff during
negotiations with supplier?
• Is it morally permissible for a doctor to engage in
mercy killing when a terminal cancer patient begs
to be put out of her misery?
• Is it ok to perform abortion to a sick patient?
3. Metaethics.
• Metaethics is the study of moral thought and
moral language. It asks what morality actually is,
?”, “what goodness is?”, or “how to identify if
something is good or bad?”
• (It DOES NOT address questions about what
practices are right and wrong, and what our
obligations to other people or future generations
are – Domain of 'normative' ethics).
• Metaethics, seeks to understand the nature of
ethical properties, principles, judgments,
attitudes, etc.
In short, metaethics focuses on what morality itself is.
Examples: People make moral statements such as
“Abortion is morally wrong” or “Going to war is never
morally justified.” The metaethical question is not
necessarily whether such statements themselves are true
or false, but whether they are even the sort of sentences
that are capable of being true or false in the first place (that
is, whether such sentences are “truth-apt”) and, if they are,
what it is that makes them “true.”
Ethical Relativism
➢ For the ethical relativist, there are no universal
moral standards -- standards that can be
universally applied to all peoples at all times. The
only moral standards against which a society's
practices can be judged are its own.
➢ If ethical relativism is correct, there can be no
common framework for resolving moral disputes
or for reaching agreement on ethical matters
among members of different societies. (This
means that there are no absolute truths in ethics
and that what is morally right or wrong varies
from person to person or from society to society.)
Example: In the southern Indian state of Tamil Nadu,
the illegal practice of senicide – known locally as
thalaikoothal – is said to occur dozens or perhaps
hundreds of times each year. ..
ETHICAL EGOISM
➢ Ethical egoism is a philosophical concept
premised on the ethical justification to do what is
best for oneself.
➢ It is to prioritize the individual self above others.
➢ According to this concept, determining what
benefits the self will then determine ethical
justifications. In other words, an ethical
obligation to the individual self supersedes the
ethical considerations of others. (One who
practices Ethical egoism does not consider what
others will say or what will happen to
others)>>>>recall Egotistical hedonism
Three Types of Ethical Egoism
1. Personal Ethical Egoism

• People who maintain that they are going to act in

their own self-interest and that anything else is
irrelevant to them.
• Only I should act from the motive of self-
interest, nothing is stated about what motives
others should act from.
• They actually have no interest in telling other
people how to act at all, and in this sense, their
position is hardly a moral theory at all. They are
simply saying “ This is how I am going to act.”

2. Individual Ethical Egoism

• individual egoism. Individual egoists claim that

“I ought to act in my own self-interest, and
everyone else should act in my self-interest. If
person X is an individual ethical egoist he would
insist that all people should do whatever benefits
satisfy his own self-interest.

3. Universal Ethical Egoism

• a universal ethical egoist would argue that

everyone should act in ways that are in their self-
interest.
Main Topic 4: Moral and Ethical Systems as applied
to the Corporate Setting
CORPORATE WORLD FROM THE LEGAL
PERSPECTIVE
FORMS OF BUSINESS ORGANIZATIONS
1. Sole Proprietorship
2. Partnership
3. Corporation
FORMS OF BUSINESS ORGANIZATIONS
1. Sole Proprietorship. This popular form of
business structure is the easiest to set up. Sole
proprietorships have one owner who makes all of
the business decisions, and there is no distinction
between the business and the owner.
Advantages of a sole proprietorship include:
• Total control of the business: As the sole
owner of your business, you have full control of
business decisions and spending habits.
• No public disclosure required: Sole
proprietorships are not required to file annual
reports or other financial statements with the
state or federal government.
• Easy tax reporting: Owners don't need to file
any special tax forms. Taxpayers with
proprietorships need to file an Annual Income
Tax Return (BIR Form 1702Q) along with
supporting documents such as financial
statements, bank certificates, etc., before April
15th of each year.
• Low start-up costs: While you may need to
register your business and obtain a business
occupancy permit in some places, the costs of
maintaining a sole proprietorship are much less
than other business structures.
Disadvantages of a sole proprietorship include:
• Unlimited liability: You are personally
responsible for all business debts and company
actions under this business structure.
• Lack of structure: Since you are not required to
keep financial statements, there is a risk of
becoming too relaxed when managing your
money.
• Difficulty in raising funds: Investors typically
favor corporations when lending money because
they know that those businesses have strong
financial records and other forms of security.
2. Partnership. A partnership is a formal arrangement by
two or more parties to manage and operate a business and
share its profits.
Partnership are either:
GENERAL PARTNERSHIP or LIMITED
LIABILITY PARTNERSHIP.
1. GENERAL PARTNERSHIP.
• a business arrangement by which two or more
individuals agree to share responsibilities, assets,
profits, and financial and legal liabilities of a
jointly-owned business.
• partners agree to be personally responsible for
potentially unlimited liability.
• Partners are responsible for the debts, and the
seizure of an owner's assets is a possibility.
• Furthermore, any partner may be sued for the
business's debts.
• general partnership is a pass-through entity
where income flows straight to the owners, each
partner reports their share of partnership profits
or losses on their personal tax returns. The
partnership itself is not taxed.
• general partnerships are unincorporated
businesses. Those who form a general
partnership don’t need to register their business
with a state to function legally.
• general partnership allows for more swift and
decisive management action compared to
corporations, which must often deal with
multiple levels of bureaucracy and red tape,
complicating and slowing down the
implementation of new ideas.
Requirements of a partnership:
➢ It must include a minimum of two people.
➢ All partners must agree to be personally liable for
any and all liabilities that their partnership may
incur.
Aspects of a General Partnership
1. Partnership Agreement.
➢ The partnership should have a formal, written
partnership agreement, though oral agreements
are valid.
➢ The partnership agreement details such things as
the business's governing structure, the partners'
rights and responsibilities, and how profits should
be allocated.
➢ It can also state what should happen when a
partner leaves, dies, or otherwise becomes unable
to function as a partner.
Example: The agreement may stipulate that a deceased
partner's interest is transferred to the surviving partners or
a successor.
Aspects of a General Partnership
2. Management
• the partnership must create its own agreement
that addresses among other things: management
and control.
Law of partnership in the Philippines.
ARTICLE 1767. By the contract of partnership two or
more persons bind themselves to contribute money,
property, or industry to a common fund, with the intention
of dividing the profits among themselves.
Aspects of a General Partnership
3. Individual Decision-Making
• In a general partnership, each partner has the
agency to unilaterally enter into binding
agreements and business deals, and all other
partners are bound by the terms.
Aspects of a General Partnership
4. Compensation
• No salary, partners receive distributions from the
partnership’s profits. These distributions should
be in accord with the allocation of profits detailed
in the partnership agreement.
• Money that the partnership does not distribute to
partners can be used for other purposes (e.g.,
reinvested in the business).
Aspects of a General Partnership
5. Joint Liability
• Partners in a general partnership have shared
liability for the debts and obligations of the
business. Every partner agrees to unlimited
personal liability for their actions, the actions of
all other partners, and those of any and all
employees.
• Therefore, partners have shared responsibility—
also known as joint liability—for damages
awarded in a legal action taken against the
partnership.
Advantages of a General Partnership
• A general partnership is less expensive and easier
to set up than a corporation or limited liability
partnership (LLP).
• As a pass-through entity, the partnership pays no
taxes.
• No external financial reporting/annual report is
required.
• A general partnership is simple to dissolve.
Disadvantages of a General Partnership
• Personal liability is unlimited. A partner's
personal property can be seized to pay
partnership debts.
• With shared liability, partners must deal with the
financial and legal consequences of each other's
(and employees') actions.
• Disputes may be difficult to address and
disastrous for the business (unless properly
planned for in the partnership agreement).
• Over time, a business can become complicated,
encounter greater risks, increase potential
personal liability, and outgrow the general
partnership structure.
2. Limited Liability Partnership. Art 1843
➢ A limited partnership is one formed by two or
more persons under the provisions of Art 1843.
➢ members can be one or more general partners and
one or more limited partners. The limited partners
as such shall not be bound by the obligations of
the partnership.
➢ Limited liability partnerships (LLPs) allow for a
partnership structure where each partner’s
liabilities are limited to the amount they put into
the business.
➢ Limited liability means that if the partnership
fails, then creditors cannot go after a partner’s
personal assets or income.
➢ Having business partners means spreading the
risk, leveraging individual skills and expertise,
and establishing a division of labor.
Roles: General partner
• A general partner can be an individual person or
a corporation and can financially own as little as
2% of the partnership.
• The general partner has full control of the
business and behaves like the owner-operator,
making decisions that affect the organization on
a daily basis.
• They maintain full liability for the partnership,
which means they’re personally responsible for
any lawsuits or debts the partnership may incur.
Limited partner (or the Silent Partner)
• provides capital but doesn’t make day-to-day
business decisions.
• Financially, a limited partner is only liable for
the amount they’ve invested in the business.
• If a limited partner takes a more active
managerial role in the business, they can become
liable for more of the company’s debts and
financial responsibilities.
LLC or corporation as general partner
• Since the general partner holds most of the
responsibility for any losses, all assets that the
general partner holds could be at risk in case of a
lawsuit. To prevent this a GP may form a
Limited Liability Company (LLC) to shield their
personal assets.
• If the general partner forms an LLC or a
corporation to act as that general partner
formally, then only the assets belonging to that
LLC or corporation are at risk.
3. Corporation
• A corporation is a legal entity that is separate
and distinct from its owners.
• Under the law, corporations possess many of the
same rights and responsibilities as individuals.
• They can enter contracts, loan and borrow
money, sue and be sued, hire employees, own
assets, and pay taxes.
• A distinguishing characteristic of a corporation
is limited liability. Shareholders profit comes
from dividends and stock appreciation but they
are not personally liable for the company's debts.
• A corporation is created when it is incorporated
by a group of shareholders with a common goal
who share ownership represented by their
holding of stock shares.
• A corporation is formed upon the issuance of a
Certificate of Registration by the Philippine
Securities and Exchange Commission (“SEC”)
together with the approval of the applicant's
Articles of Incorporation and By-Laws.
• A corporation must have not less than five nor
more than fifteen directors.
Examples:
Business Ethics
• By definition, business ethics refers to the
standards for morally right and wrong conduct in
business. (Because, businesses have stakeholders
to deal with). Business ethics enhances the law
by outlining acceptable behaviors beyond
government control.
Universal ethical principles that apply across all
professions.
➢ is being able to identify the difference between
right and wrong and then consciously choosing to
do the right thing.
➢ is written guidelines or standards used to hold a
company accountable to moral actions and just
decisions.
➢ is an extremely valuable part of every company
and can impact a company’s reputation and the
community in which it serves.
➢ How companies choose to practice and enforce
business ethics can differ from one company to
the next, however, there is no denying that an
ethical work environment is an essential key to
success.
Johnson and Scholes provide the different levels of
business ethics, as it has evolved over time:
1. the individual level (personal level)
• Personal ethics refers to the ethics that a person
identifies with in respect to people and situations
that they deal with in everyday life.
• Personal ethics are determined by each
individual.
• may be determined by religious practices or how
someone was raised.
• is the most diverse level of business ethics
because each individual person has a different
set of values and beliefs.
• Since personal ethics differ from person to
person, professional and organizational ethics
help to establish parameters and guidelines for
individuals to follow in the workplace.
• Personal ethics are deeply rooted in an
individual's sense of right and wrong.
• play a crucial role in shaping their character of
the individual.
• define an individual's attitudes, mindset, and
personal accountability.
• Personal ethical behavior tends to be self-
reflective, by examining actions against one's
own moral standards.
▪ Doing any form of malicious harm to another
person.
▪ Not practicing thoughtful self-control when
responding to others.
2. the corporate level (professional level)
• Ethical principles underpin all professional codes
of conduct. Ethical principles may differ
depending on the profession; (teachers’
professional ethics that relate to medical
practitioners etc)
➢ Honesty, trustworthiness, loyalty, respect for
others, adherence to the law, doing good and
avoiding harm to others, accountability.
3. the macro level (organizational level)
• Organizational ethics are established and then
implemented company wide.
• These are the values, principles, and standards
that guide the individual and group behavior of
the people in an organization.
• These are set up to steer and manage activities
and business situations to proactively avoid
harmful behavior. They are often laid out in a
code of conduct, which establishes the moral and
ethical requirements that employees and the
organization must follow.
• Organizational values are external indicators
used to ensure a company is behaving ethically.
However, the foundation of organizational
 values is grounded within the internal culture of
the company.
• Organizational values can positively or
negatively impact productivity, morale, the
community, and the list goes on and on.
Examples:
• Discrimination. Unfair treatment due to
example, their age, religion, race, religion, or
sex.
• Compensation. The gender pay gap.
• Recruitment and selection. biases creeping in the
hiring processes.
• Performance appraisals.
• Privacy and confidentiality.
• Reputational damage is the negative impact on
an organization’s reputation caused by actions or
inactions.
• Unethical practices, poor customer service,
negative reviews, or online defamation can
cause it.
• Reputational damage can have severe
consequences for a company, including lower
customer loyalty and trust, declining sales, and
even legal action.

What is the difference between personal and

Organisational ethics?

• Personal ethics might be shared with a family or

social group, depending on how those groups
develop shared values. Business ethics are often
integrated into the structure of an organization
and formally required of all team members.

Exercising ethical behavior in business is important

for the following reasons:
1. It can help build trust and credibility with
stakeholders
➢ People buy from those they trust;
➢ investors allot capital to companies they believe
will not squander their hard-earned money;
➢ distributors deal with corporations of respectable
standing.
With good reputation comes trust and confidence, which,
can boost one's marketability among its
stakeholders (customers, employees, suppliers,
distributors, investors, creditors, communities,
governments, etc.). Enhancing public repute can be
achieved by either maintaining a good moral standing
through its policies and practices, or by participating in
the resolution of social and economic predicaments.

2. Promote long-term sustainability and profitability

By protecting the company from legal issues, reducing
any risk to the brand, and by improving the overall
reputation of the company, business ethics can actually
improve a company's profitability.

When a company chooses to prioritize profits over doing

the right thing they may actually inflict huge
reputational damage on the company and even invite
legal repercussions.

3. Prevent reputational damage, legal problems and

loss of business