Good Governance and Social REsponsibility Edited

Module
in
GOOD
SOCIAL
GOVERNANCE &
RESPONSIBILITY
Prepared
by:
Pascuala T. Barlis,
Fhrizz S. De Jesus,
MBA
Elizabeth
PhD.,S.LPT
Manuel,
ManuelLPT,
B. Manuel,
MPA LPT,
LLB,
Danilo PhD.
D. Pastorfide,
Ma.
Ma. Florisa
MPA,T.
Florisa T.
LPTQuijano,
Quijano,
Jeff AllenPhD.
LLB.,
LLB., Tuazon
PhD.
PREFACE
Many companies have now realized that if they are to be successful, they must have a
sense of responsibility not just for their corporate practices, but also for the entire world.
This policy is completely in accordance with the underlying principle of corporate social
responsibility (CSR). The new emphasis on corporate social responsibility raises the
responsibility and obligation of companies to their customers, gradually placing pressure on
themselves to develop corporate governance best practices with the aim of improving their
relationships with stakeholders. The content and features of this module make it a highly
effective resource for instructors, students, or any reader interested in the creative side of
advertising. Activities are provided at the end of every unit in order to evaluate the students’
comprehension and to enhance their knowledge regarding the subject.
PTB
FSDJ
ESM
MBM
DDP
MFTQ
JAT
TABLE OF CONTENTS
PAGE
Preface
UNIT I
ETHICS AND BUSINESS 1
Learning Objectives 1
Setting Up 5
Lesson Proper 1
What is Ethics? 2
Approaches to ethics 2
Business Ethics 4
Conscience 3
Individual Integrity and Responsibility 6
Understanding Relationship between business & ethics 7
The morality of Profit 8
References 9
Assessing Learning 9
UNIT II
THE DIFFERENT NORMATIVE ETHICAL THEORIES COMMONLY USED IN 10
BUSINEESS IN DECISION MAKING
Setting Up 10
Lesson Proper 12
Kohlberg’s Stages of Moral Development 12
The Machiavellian Principles 15
Utilitarianism 26
The Principle of Rights and Virtues: The Kantian Ethic 26
Prima Facie Principles 20
The Moral Positivism of Hobbes 21
Divine Command Ethics 22
References 23
UNIT III
CONSUMER BEHAVIOR: ECOLOGICAL CONSUMER 27
Setting Up 27
Lesson Proper 27
Corporate Governance 27
Corporate Governance and Agency Theory 31
Corporate Governance and Stakeholders Theory 31
Corporate Governance and Stewardship Theory 32
Individual and Situational Influences on Ethical Behavior 33
References 34
UNIT IV
THE WORK PLACE: TODAY’S CHALLENGES 37
Setting Up 37
Lesson Proper 37
New to the workplace 37
Problems with co-workers 38
Advancement concerns 40
References 44
UNIT V
ETHICS AND CORPORATE SOCIAL RESPONSIBILITY 45
Setting Up 45
Lesson Proper 46
The concept of Corporate Social Responsibility 46
Corporate Social Responsibility from a Historical Perspective 47
Historical Phases of Corporate Social Responsibility 49
Current Activities related to Corporate Social Responsibility 55
References 55
UNIT VI
CORPORATE GOVERNANCE AND CORPORATE SOCIAL RESPONSIBILITY 58
Setting Up 58
Lesson Proper 58
Definition of Governance 59
Definition of CSR 59
Relationship between Corporate Governance and CSR 60
Corporate Governance VS. CSR 60
Shareholder VS. Stakeholder 61
References 65
UNIT VII
ETHICAL ISSUES ANDPROBLEMS IN BUSINESS AND THE CORPORATE WORLD 68
Setting Up 68
Lesson Proper 68
Sexual Harassment 63
The problem of just wage and unfair compensation 71
Unjust dismissal 74
Gift giving and Bribery 75
Whistle blowing 77
Conflict of Interest 79
Money Laundering 80
Insider trading 81
Obligations to the firm 82
Loyalty to the company 83
References 84
UNIT VIII
DEVELOPING GOOD WORK ETHICS 87
Setting Up 87
Lesson Proper 87
The definition of work 87
The human perspective of work 88
How to enjoy work and create spiritual values in workplace 89
Basic duties of employer 89
Basic duties of worker 89
References 90
UNIT I. ETHICS AND BUSINESS
Overview
This unit discusses Ethics and Business and its relationship. An organization’s culture sets
standards for determining the difference between good and bad decision making. Ethics in
business is about knowing the difference between right and wrong and choosing to do what
is right. In this unit, conscience and its principle will be discussed including Individual
Integrity and Responsibility, and The Morality of Profit which will take place in the
development of personality of an individual.
Learning Objectives
At the end of this unit, I am able to:
1. Understand ethics and business and its relationship to one another;

2. Know and understand the importance of ethics in business.
3. Know what is conscience and its principles.
4. Recognize Individual Integrity and Responsibility
5. Understand the morality of profit
Setting Up
Name: _____________________ Date : _________________

Section: _____________________
Directions: The following grid contains terms associated with ethics. Find and encircle
them. Look for them in all directions including backwards and diagonally.
V H O N E S T Y I C O N S C I E N C E E
Z Q E P E R S U N S I O B S G H J I K T
D F A C R X B N T K L P G D R T Y D I H
C A D N L O V E E G H O M E S D C E C I
D F X W F R A N G H I S O R R S S S B C
A B X V B N M U R S S T C E V P B T Y S
P R N N T R X Y I U I D P M A E S I W C
V A L U E S D G T T A O Z A B R E F F F
Y A E M T J F H Y U I O N N B S S Y F G
R D M A P R O D U C S R U D B U A I A B
T M E T A E T H I C S F G G E E S E R B
N A N K M A R C O V E R T K E S T G I M
E S E E A R K E D R I A N M A I C B A E
T T D T G R A E C I R P C E P O I R G E
N E A O I N F O R M A T I O N N D A J R
M O R A L P R I N C I P L E M C O N A G
D F T F H R I Z Z D E J E S U S L P T A
Lesson Proper
What is ethics?
At its simplest, ethics is a system of moral principles. They affect how people make
decisions and lead their lives.
Ethics is concerned with what is good for individuals and society and is also described
as moral philosophy.
GOOD GOVERNANCE AND SOCIAL RESPONSIBILITY | 1

The term is derived from the Greek word ethos which can mean custom, habit,
character or disposition.
Ethics covers the following dilemmas:

 how to live a good life
 our rights and responsibilities
 the language of right and wrong
 moral decisions - what is good and bad?
Our concepts of ethics have been derived from religions, philosophies and cultures.
They infuse debates on topics like abortion, human rights and professional conduct.
Approaches to ethics
Philosophers nowadays tend to divide ethical theories into three areas: metaethics,
normative ethics and applied ethics.
 Meta-ethics deals with the nature of moral judgement. It looks at the origins and meaning of
ethical principles.
 Normative ethics is concerned with the content of moral judgements and the criteria for
what is right or wrong.
 Applied ethics looks at controversial topics like war, animal rights and capital punishment
Business Ethics
Business ethics, also called corporate ethics, is a form of applied ethics or professional
ethics that examines the ethical and moral principles and problems that arise in a business
environment. It can also be defined as the written and unwritten codes of principles and
values, determined by an organization’s culture, that govern decisions and actions within that
organization. It applies to all aspects of business conduct on behalf of both individuals and
the entire company. In the most basic terms, a definition for business ethics boils down to
knowing the difference between right and wrong and choosing to do what is right.
There are three parts to the discipline of business ethics: personal (on a micro scale),
professional (on an intermediate scale), and corporate (on a macro scale). All three are
intricately related. It is helpful to distinguish among them because each rests on a slightly
different set of assumptions and requires a slightly different focus in order to be understood.
Morality: Moral versus Non Moral Standards
Morality refers to the standards that a person or a group has about what is right and
wrong, or good and evil. Accordingly, moral standards are those concerned with or relating to
human behavior, especially the distinction between good and bad (or right and wrong)
behavior.
Moral standards involve the rules people have about the kinds of actions they
believe are morally right and wrong, as well as the values they place on the kinds of objects
they believe are morally good and morally bad. Some ethicists equate moral standards
with moral values and moral principles.
Non-moral-standards refer to rules that are

unrelated to moral or ethical considerations. Either these standards are not necessarily

linked to morality or by nature lack ethical sense. Basic examples of non-moral standards
include rules of etiquette, fashion standards, rules in games, and various house rules.
Conscience
Conscience is a faculty of the mind that motivates us to act morally—or at least

according to our most deeply held values. Most say it is a form of intuition and uses emotion,
although others have argued that it should be shaped by reason. It is a private experience,
and a form of self-knowledge; from one’s conscience one can learn one’s own values and
morals. This is the root of the word, from the latin con-scientia, perhaps translatable as
“together-with-knowing” – to be together with one’s knowledge (of morality).
1. Conscience as pluralistic, neutral and subjective

The concept of conscience does not bear any connection with any particular
substantial moral view (Broad 1940). The voice of conscience might suggest different
principles and different behaviors to different people. In other words, there is no
psychological or conceptual relation between conscience and any particular moral belief.
First, conscience is a pluralistic notion. To say that a person acted with conscience or
that something violates someone’s conscience does not entail anything about what this act
consists of or what this person’s moral values are (although it might tell us that conscience is
itself a value this person holds dear). To use a metaphor, conscience is like an empty box that
can be filled with any type of moral content. As put by Strohm, conscience has what might be
called an “identity problem”—that it possesses no fixed or inherited content of its own, and
that it can be hailed and mobilized in defence of one position or equally in defence of its rival.
(Strohm 2011: 120)
Second, conscience is typically a morally neutral concept. Appealing to conscience
does not usually add anything to the moral justification of any particular conduct or principle.
Unless one is committed to the relativistic idea that your belief (or your conscience)
about x being right or wrong is what makes it right or wrong for you to do x (Foot 1979),
something is not made morally better or worse, acceptable or unacceptable, simply by being a
matter of conscience. While appeals to conscience do not typically provide any moral reason
in defense of a certain moral stance (unless one is a relativist), they might ground political
reasons for respecting individuals’ moral beliefs, such as for example tolerance or pluralism.
Finally, conscience only concerns the subjective dimension of morality. Even assuming
that there are ethical values that, in some sense, can be considered objective, conscience only
refers to what individuals believe, independently of any external, objective proof or
justification. And when people state what they subjectively and conscientiously believe, they
acknowledge that other people might (and probably will) subjectively and conscientiously
hold different moral views.
2. Conscience as self-knowledge and self-assessment
When we talk about conscience, we often refer to reflection about ourselves as moral
persons and about our moral conduct. Through conscience we examine ourselves, as if we
were our own inner judge.
The role of conscience in this sense is not that of merely gaining knowledge about our
behavior or character. The knowledge in question is typically (though, as explained below,
not always) the ground for a moral assessment by conscience. When observing one’s
behavior, conscience is more like a judge (or sometimes it is identified with the judgment
itself) than like a disinterested observer. Thus, for instance, the impartial spectator with
which Adam Smith identified conscience, inspired by the Stoic’s notion of conscience as an

imagined admired philosopher judging one’s conduct, is not a morally and emotionally
neutral observer, but generates a sentiment of approval or disapproval of oneself (Smith
1759 and discussion in Raphael 2007: 34).
3. The epistemic function of conscience
The epistemic role of conscience does not necessarily coincide with the role of
epistemic faculties or functions such as reason, intuitions, or senses. In particular, that
conscience “brings” us moral knowledge or beliefs does not necessarily mean that it gives us
direct access to the source of this knowledge or of these beliefs, as might be the case with
reason, intuitions, or senses.
The knowledge we get from conscience, understood as possessing an epistemic
function, is often conceived as mediated knowledge. This is not surprising, since, as we have
seen, conscience is mostly understood as inward looking, which presupposes that the
knowledge to which it gives us access is already within us and that we acquired it through
some other process not involving conscience.
3.1 Conscience as a faculty for indirect moral knowledge

In Christian tradition, starting from Paul, the inward looking character of conscience
is emphasized by the metaphor of the witness (Romans 2: 14–15). Conscience does not allow
us acquire the knowledge of the moral law directly from an external source (God in this case),
but only to witness the presence of God’s laws within us. Conscience cannot directly
contemplate God. The idea of a faculty that gives us indirect, and therefore imperfect
knowledge of some external moral authority suits religious traditions very well. For example,
the idea that through conscience we discover the true divine laws can also be found in Islam
(Geaves 1999: 164).
It is important to note that also in this case, as in the previous understanding of
conscience as self-awareness and self-assessment, conscience can be conceived as fulfilling an
introspective function, i.e., as being directed towards the self and towards one’s own mental
states.
3.2 Conscience as a faculty for direct moral knowledge
Contrary to what Montaigne and Hobbes had claimed, Rousseau argued in Emile, or
Education that good education can free conscience from the corrupting influences of societies.
Actually, one of the aims of education is to render the young autonomous moral thinkers and
agents by teaching them how to critically examine and, if necessary, replace received norms
(Rousseau 1762; see Sorabji 2014, for a discussion). The idea here is that conscience is what
remains of our innate moral sense once we free it from “childish errors” and “prejudices of
our upbringing” (Rousseau 1921 [1762]: 253).
4. Conscience as motivation to act morally
Conscience can also be conceived as our sense of duty. According to this
understanding, conscience motivates us to act according to moral principles or beliefs we
already possess (e.g., D’Arcy 1963; Childress 1979; McGuire 1963; Fuss 1964). Conscience so
understood “establishes a general sense of moral obligation in the individual’s consciousness”
(Fuss 1964: 116). The subjective character of conscience implies that the motivational force
must come entirely from within the individual, as opposed to sanctions from an external
authority.
5. Conscience, self-identifying moral commitments, and moral integrity

The subjective character of conscience delimits a sphere of personal morality that is
an essential part of our sense of personal identity, understood as our sense of who we are and
of what characterizes qualitatively our individuality (for instance, our character, our
psychological traits, our past experience, etc.). My conscience is what makes
me this particular individual in a social and cultural context that I want to keep separate
from me.
This private space in which the individual finds her own sense of identity often
grounds the political use of the notion of conscience. Thus, many people claim the right to
stick to their conscience—particularly by advancing so called “conscientious objection”—
when social expectations or legal obligations would demand otherwise.
The concept of personal identity in the sense in which the notion is used here—i.e
what defines me as this particular person in a qualitative sense—is intimately related to the
notions of conscience (Wicclair 2011; Childress 1979) and of moral integrity, and more
specifically to the “identity view of integrity” (Cox et al. 2013; Williams 1973 and 1981).
According to this view, for people to have integrity means to remain faithful to “identity-
conferring commitments”, i.e., “commitments that people identify with most deeply, as
constituting what they consider their life is fundamentally about” (Cox et al. 2013). This
identity-conferring aspect of one’s morality is exactly what some people call “conscience”.
6. Freedom of conscience
Some people have suggested that appeals to freedom of conscience tend to be more
vigorously put forward and more effective in contexts where political or religious structures
lose power or moral authority. Thus, for instance, according to C.A. Pierce:
There are three main arguments that can be used to defend a principle of freedom of
conscience.
a) The argument from ineffectiveness or hypocrisy is based on the relevance of the
distinction between beliefs and acts for the definition of conscience. According to this
argument, it is not possible to compel someone to believe or to not believe something,
i.e., to change one’s conscientious beliefs. All we can do is compel people to act as
if they believed something, which would be a hypocritical behavior. Therefore, if some
authority aims to convert people or to change people’s moral views, prohibiting the
free expression, through actions, of one’s conscience would not serve this purpose.
b) The “argument from ignorance”, which might be better labeled “argument from
humility”, is based on a skeptical approach to the content of conscience. The
possibility exists that what we conscientiously believe is wrong and that those
holding conscientious beliefs opposite to ours are right. Therefore, there is a reason
for not forcing anyone to believe in something or to engage in behaviors that might
turn out to be morally wrong.
c) c) Finally, the third argument in defense of freedom of conscience is what I have
called above the “argument from legitimization”. John Stuart Mill (1859) defended
freedom of conscience by appealing to the idea that allowing the free expression of
any opinion, and particularly mistaken opinions, would allow truth to emerge more
clearly and would provide us with a justification for acting upon our own beliefs, once
they have been assessed against others’ opinions.
Individual Integrity and Responsibility

Integrity implies adherence to moral and ethical principles on the basis of which
people evaluate the 'soundness' (or consistency) of a person's moral character and,
ultimately, their honesty, accountability, and responsibility. Therefore, integrity is a value
system that carries expectations of other people's actions.
Integrity in the workplace comes in many forms, but above all refers to having
upstanding character traits and work ethics including sound judgement, honesty,
dependability, and loyalty.
Having a high degree of integrity at work means that:

● You are trustworthy and reliable
● You practice and encourage open and honest communication
● You are responsible for your actions
Maintaining integrity at work is crucial for employees at all levels, but especially as
you continue to move up the ladder. Having integrity helps foster an open and positive work
environment and an ethical approach to decision-making.
Not only is workplace integrity beneficial to businesses, but it is also beneficial to the
individual. By showing that you are an honest and dependable person, you’ll gain respect and
trust from your peers and managers.
How to demonstrate integrity in the workplace

● Respect and follow company policies – Workplace policies are created to
guide you on best practices for everything from conduct to dress code. Following your
company policy enables you to make informed decisions based on the business’
values and objectives.
● Be ready to work – Many of us know people who are willing to delegate but
hesitant to get their hands dirty. Employees with integrity, on the other hand, are
willing to go above and beyond with their own work and help others out if the
situation calls for it.
● Lead by example – Your working style and attitude towards others will help set
a solid foundation for what you value most in others, especially people who report to
you. Working to a high standard and maintaining professional conduct encourages
others to follow suit.
● Respect others’ opinions, even if you don’t agree with them – No matter
how great your working environment may be, chances are there will be times when
you simply don’t agree with someone else’s opinion. In these cases, it’s still important
to be respectful, listen, and take on board what the other person is saying.
● Be accountable for your mistakes – Everybody makes mistakes from time to
time. Owning up to and being accountable for your mistakes demonstrates that you’re
honest and open to constructive feedback – both traits that are common to people
with a high degree of workplace integrity.
Understanding the relationship between business & ethics

Businesses that exhibit and promote strong corporate codes of ethics are more
prosperous in the long run because they show a commitment to an expectation of sound
moral behavior. This demonstrates a dedication to society, customers, employees and the

business itself. It also enhances a company's reputation if they become commonly known as
an ethical company, and this brings more value to the organisation.
The highly competitive environment in today's global economy puts pressures on

company leaders to remain profitable and to show a good return to stakeholders. Often this
pressure can result in unethical decisions being made in order to deliver positive results.
When this occurs it usually results in a pattern that gets passed down through the
organization.
As leaders show unethical behaviour, and perhaps even justify such behaviour while
knowing it to be wrong, this eventually becomes a part of organizational culture. People
follow by example, and the lack of moral judgment will spread.
It's easy to blame "the system", yet many fail to realize "the system" is comprised of
decision making individuals. The relationship between business and ethics is inherently
linked, but there are some who fail to make this connection.
To say "business is business" is not justified, as responsible (ethical) decision making is an
important component of doing good business.
Today's society is an instant gratification one, and people expect immediate results.
This is perhaps part of the reason why some companies exhibit bad business practices. Not
the only reason, but perhaps a common one. Obviously one's individual moral compass
impacts choices made in a business, and when the cultural environment nurtures sound
moral philosophies and does not tolerate bad business practices, the immoral acts will
decline.
Granted the unethical companies may initially make significant gains financially and
deliver the profits, but at what cost? When companies make unethical decisions, it can result
in defective or rushed products, unsubstantiated firing of employees, and false presentations
of products to consumers.
Is this good for the company? The fact is the only thing it creates is an illusion. Yes,
these factors will all cut costs and give the appearance of profit, but it's inevitable that poor
choices will negatively impact the business and be more costly in the long run.
In the long run, managers and leaders who promote an atmosphere with low ethical
standards bring harm the business. While it may not necessarily shut the business down, it
will impact the opportunity to increase revenues to its fullest potential.
Good business practices starts with management setting standards of what's

expected, and they should lead by example. The establishment of higher levels of ethical
behaviour within a business benefits the company in many ways. It displays strong values
have been set for a commitment to company philosophy and mission.
There is no good reason why a company cannot make ethically sound decisions, and
still turn a profit. Cheating and/or lying do not bring value to a business, and it also affects
employee morale. Employees and reputation are two very valuable assets, and by promoting
a morally sound environment for both employees and customers; this can only enhance those
assets.
Consumer trust and confidence in a business can only serve to benefit the company.
Economic rules dictate that the larger a network, the more value is added to that network. If
customers can accurately rely on the fair treatment, expertise and knowledge of a company,

this will further expand their reputation as honest and as a result attract more customers.
This ultimately economically benefits the company as well, and their network will grow. This
being the case, it would be in a company's best interest to promote universal ethically good
behavior in the workplace.
A positive reputation leads to higher profits and provides better service for the public.
Ethics and business go hand in hand, and cannot effectively be separated. Ultimately
implementing a strong ethical policy is a win-win situation for all. In today's competitive
environment why wouldn't a company want to do all they can do to promote success on all
levels?
The Morality of Profit
The making of profits does more than make some people rich; it is the way our
economic system mobilizes people to provide for others as they respond to the demands of
the market (Younkins 1998). Profit is a here-and-now reward for doing something that is
beneficial to the actor and to other people. Whether we call it benefit, gain or advantage,
profit is a reward, an incentive - that which answers the ‘why’ question in any activity we
undertake. Is there anything intrinsically wrong with getting a reward for working hard and
fairly out doing a competitor? I do not think so. Neither do I think that there is anything
inherently wrong with pursuing honest profits in entrepreneurship. If anything, making
profits per se does not raise any moral issues. What we need to be concerned about is how
individuals and businesses realize profits. If they make profits through hard work, innovation
and quality service delivery, then they ought to be applauded. We should emulate them as we
seek prosperity for ourselves. Profits are the necessary evidence of good stewardship. If
earned through voluntary honest market exchanges, profits arise from morality and reinforce
morality. Profits add value to the world because they channel self-interest into activities that
promote the interests of others.
In an economy organized according to market principles, the only way to acquire
wealth is to satisfy the material needs of others: profits are the rewards business men and
women receive for successfully fulfilling the legitimate expectations of their employees,
customers and investors. Wealth accumulated through the market does not subtract from the
total volume of goods and services available through the market system: the consumer is no
worse off for having exchanged his or her money for a commodity than the merchant is
poorer because he or she now has fewer goods and more money. Thanks to the miracle of the
market, both are better off than they otherwise would have been, though not necessarily in
the same proportion (Vogel 1991).
An action is therefore right or wrong because of its inherent nature, irrespective of
the expected outcome. If we take the pursuit of profits at the personal, national or
international level, there is nothing intrinsically wrong with it. So then, deontologically, it is
the ‘howness’ of the pursuit of profit that raises moral issues, not the pursuit of profits per se.
Human beings are by nature utility/benefit oriented, and the pursuit of profits only raises
moral questions when it is thought that it negatively affects the interests of others to a
significant degree. So if an entrepreneur starts a business and it makes profits, his or her
action becomes a good action because it brings about desirable consequences. Profits in such
a case become a means to desirable ends - a means to building the business and rewarding
the entrepreneur and employees and serving the community better.
References:

http://www.bbc.co.uk/ethics/introduction/intro_1.shtml
https://courses.lumenlearning.com/boundless-business/chapter/business-ethics/
https://ourhappyschool.com/node/824
https://plato.stanford.edu/entries/conscience/
https://philosophyterms.com/conscience/
https://www.platinumessays.com/essays/What-Is-the-Relationship-Between-
Business-and-Ethics/13627.html
https://link.springer.com/chapter/10.1057/9781137427649_11
Thought and Practice: A Journal of the Philosophical Association of Kenya (PAK) New
Series, Vol.4 No.1, June 2012, pp.75-89
Assessing Learning Activity
Name: ________________________________________ Date:________________

Course/Year/Section: _____________________ Score: ______________
Learning Activity 1
Directions: On the space provided, answer the case study with honesty and integrity.
Rubrics for Essay: *50% Content *30% Organization of Ideas *20% Grammar and Use of Words = 100%
A manufacturing company provides jobs for many people in a small town where
employment is not easy to find. The company has stayed in the town even though it could find
cheaper workers elsewhere, because workers are loyal to the company due to the jobs it
provides. Over the years, the company has developed a reputation in the town for taking care
of its employees and being a responsible corporate citizen.
The manufacturing process used by the company produces a by-product that for
years has flown into the town river. The by-product has been considered harmless but some
people who live near the river have reported illnesses. The by-product does not currently
violate any anti-pollution laws.
What are the issues of integrity, ethics and law posed in the case study? What options
does the company have, and what should it do and why?
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UNIT II. THE DIFFERENT NORMATIVE ETHICAL THEORIES

COMMONLY USED IN BUSINESS IN DECISION MAKING

Overview
This unit discusses about the different normative ethical theories commonly used in
business in decision making. It has been said that decision-making is an integral part of
modern management. These normative ethical theories represent the viewpoints from which
individuals seek guidance as they make decisions. Each theory emphasizes different points –
a different decision-making style or a decision rule. In order to understand ethical decision
making, it is important to realize that not everyone makes decisions in the same way, using
the same information, neither employing the same decision rules.
Learning Objectives
At the end of the unit, I am able to:

1. Understand Kohlberg’s stages of moral development;
2. Know the Machiavellian principles and its application to business;
3. Learn the Utilitarianism’s relevance in business and commerce as well as in the
corporate workplace;
4. Explain the Kantian Ethics’ basic argument for freedom;
5. Get familiarized about the different prima facie duties;
6. Acquire important ideas about the moral positivism of Hobbes and
7. Assess what is moral and immoral according to the Divine Command Ethics.
Setting Up
Name: ____________________________________________ Date: ________________

Course/Year/Section: _____________________
Direction: Read the scenario and answer the questions provided below. Write legibly.
In Europe, a woman was near death from cancer. One drug might save her, a form of radium
that a druggist in the same town had recently discovered. The druggist was charging $2,000,
ten times what the drug cost him to make. The sick woman’s husband, Heinz, went to everyone
he knew to borrow the money, but he could only get together about half of what it cost. He told
the druggist that his wife was dying and asked him to sell it cheaper or let him to sell it cheaper
or let him pay later. But the druggist said, “No.” The husband got desperate and broke into the
man’s store to steal the drug for his wife.
1. Should Heinz steal the drug? Why or why not?
ANSWER:
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2. If Heinz doesn't love his wife, should he steal the drug for her? Why or why not?
ANSWER:

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3. Suppose the person dying is not his wife but a stranger. Should Heinz steal the drug for a
stranger? Why or why not?
ANSWER:
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4. Suppose it is a pet animal he loves. Should Heinz steal to save the pet animal? Why or why
not?
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5. Why should people do everything they can to save another's life?
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6. Is it against the law for Heinz to steal? Does that make it morally wrong? Why or why not?
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7. Why should people generally do everything they can to avoid breaking the law? How does
this relate to Heinz's case?
ANSWER:
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Lesson Proper
THE DIFFERENT NORMATIVE ETHICAL THEORIES COMMONLY USED IN BUSINESS IN

DECISION MAKING INCLUDE THE FOLLOWING:
A. Kohlberg’s Stages of Moral Development

B. The Machiavellian Principles
C. Utilitarianism
D. The Principle of Rights and Virtues: The Kantian Ethics
E. Prima Facie Principles
F. The Moral Positivism of Hobbes
G. Divine Command Ethics
A) KOHLBERG’S STAGES OF MORAL DEVELOPMENT
Lawrence Kohlberg expanded on the earlier work of cognitive theorist Jean Piaget to explain
the moral development of children. Kohlberg believed that moral development, like cognitive
development, follows a series of stages. He used the idea of moral dilemmas—stories that
present conflicting ideas about two moral values—to teach 10 to 16 year-old boys about
morality and values. The best known moral dilemma created by Kohlberg is the “Heinz”
dilemma, which discusses the idea of obeying the law versus saving a life. Kohlberg
emphasized that it is the way an individual reasons about a dilemma that determines positive
moral development.
After presenting people with various moral dilemmas, Kohlberg reviewed people’s responses
and placed them in different stages of moral reasoning. According to Kohlberg, an individual
progresses from the capacity for pre-conventional morality (before age 9) to the capacity for
conventional morality (early adolescence), and toward attaining post-conventional morality
(once Piaget’s idea of formal operational thought is attained), which only a few fully achieve.
Each level of morality contains two stages, which provide the basis for moral development in
various contexts.
 Lawrence Kohlberg expanded on the earlier work of cognitive theorist Jean Piaget to
explain the moral development of children, which he believed follows a series of
stages.
 Kohlberg defined three levels of moral development: preconvention, conventional,
and post conventional. Each level has two distinct stages.
 During the preconvention level, a child’s sense of morality is externally controlled.
Children accept and believe the rules of authority figures, such as parents and
teachers, and they judge an action based on its consequences.

 During the conventional level, an individual’s sense of morality is tied to personal and
societal relationships. Children continue to accept the rules of authority figures, but
this is now because they believe that this is necessary to ensure positive relationships
and societal order.
 During the post conventional level, a person’s sense of morality is defined in terms
of more abstract principles and values. People now believe that some laws are unjust
and should be changed or eliminated.
KOHLBERG’S STAGES OF MORAL DEVELOPMENT
Kohlberg identified three levels of moral reasoning: pre-conventional, conventional, and post-
conventional. Each level is associated with increasingly complex stages of moral
development.
LEVEL 1: PRE CONVENTIONAL
Throughout the pre conventional level, a child’s sense of morality is externally controlled.
Children accept and believe the rules of authority figures, such as parents and teachers. A
child with pre-conventional morality has not yet adopted or internalized society’s
conventions regarding what is right or wrong, but instead focuses largely on external
consequences that certain actions may bring.
Stage 1: Obedience-and-Punishment Orientation
Stage 1 focuses on the child’s desire to obey rules and avoid being punished. For example, an
action is perceived as morally wrong because the perpetrator is punished; the worse the
punishment for the act is, the more “bad” the act is perceived to be.
Stage 2: Instrumental Orientation
Stage 2 expresses the “what’s in it for me?” position, in which right behavior is defined by
whatever the individual believes to be in their best interest. Stage two reasoning shows a
limited interest in the needs of others, only to the point where it might further the
individual’s own interests. As a result, concern for others is not based on loyalty
or intrinsic respect, but rather a “you scratch my back and I’ll scratch yours” mentality. An
example would be when a child is asked by his parents to do a chore. The child asks “what’s in
it for me?” and the parents offer the child an incentive by giving him an allowance.
LEVEL 2: CONVENTIONAL
Throughout the conventional level, a child’s sense of morality is tied to personal and societal
relationships. Children continue to accept the rules of authority figures, but this is now due to
their belief that this is necessary to ensure positive relationships and societal order.
Adherence to rules and conventions is somewhat rigid during these stages, and a rule’s
appropriateness or fairness is seldom questioned.
Stage 3: Good Boy, Nice Girl Orientation

In stage 3, children want the approval of others and act in ways to avoid disapproval.
Emphasis is placed on good behavior and people being “nice” to others.
Stage 4: Law-and-Order Orientation
In stage 4, the child blindly accepts rules and convention because of their importance in
maintaining a functioning society. Rules are seen as being the same for everyone, and obeying
rules by doing what one is “supposed” to do is seen as valuable and important. Moral
reasoning in stage four is beyond the need for individual approval exhibited in stage three. If
one person violates a law, perhaps everyone would—thus there is an obligation and a duty to
uphold laws and rules. Most active members of society remain at stage four, where morality
is still predominantly dictated by an outside force.
LEVEL 3: POST CONVENTIONAL
Throughout the post conventional level, a person’s sense of morality is defined in terms of
more abstract principles and values. People now believe that some laws are unjust and
should be changed or eliminated. This level is marked by a growing realization that
individuals are separate entities from society and that individuals may disobey rules
inconsistent with their own principles. Post-conventional moralists live by their
own ethical principles—principles that typically include such basic human rights as life,
liberty, and justice—and view rules as useful but changeable mechanisms, rather than
absolute dictates that must be obeyed without question. Because post-conventional
individuals elevate their own moral evaluation of a situation over social conventions, their
behavior, especially at stage six, can sometimes be confused with that of those at the pre-
conventional level. Some theorists have speculated that many people may never reach this
level of abstract moral reasoning.
Stage 5: Social-Contract Orientation
In stage 5, the world is viewed as holding different opinions, rights, and values. Such
perspectives should be mutually respected as unique to each person or community. Laws are
regarded as social contracts rather than rigid edicts. Those that do not promote the general
welfare should be changed when necessary to meet the greatest good for the greatest number
of people. This is achieved through majority decision and inevitable compromise. Democratic
government is theoretically based on stage five reasoning.
Stage 6: Universal-Ethical-Principal Orientation
In stage 6, moral reasoning is based on abstract reasoning using universal ethical principles.
Generally, the chosen principles are abstract rather than concrete and focus on ideas such as
equality, dignity, or respect. Laws are valid only insofar as they are grounded in justice, and a
commitment to justice carries with it an obligation to disobey unjust laws. People choose the
ethical principles they want to follow, and if they violate those principles, they feel guilty. In
this way, the individual acts because it is morally right to do so (and not because he or she
wants to avoid punishment), it is in their best interest, it is expected, it is legal, or it is
previously agreed upon. Although Kohlberg insisted that stage six exists, he found it difficult
to identify individuals who consistently operated at that level.
B) MACHIAVELLIAN PRINCIPLES AND MODERN BUSINESSES

When you embark on your treacherous journey into the realms of entrepreneurism, there’s
just one thing you know for sure; it won’t be easy. It should come as no great shock that 50%
of new businesses fail within the first four years, according to the Bureau of Labor Statistics.
So how do you achieve success and build an empire that’s secure?
You might want to look into using a somewhat Machiavellian system. Before you gasp with
sheer horror, you should understand that the late political writer was not the moustache-
twirling villain he’s portrayed to be. Instead, he was a visionary who set out the key
principles for a stable government in his book, The Prince.
So, how does that apply to the world of business? Well, in essence, the foundations of a
powerful government and a successful enterprise are the same. On reading Machiavelli’s
work, many have gleamed priceless knowledge, which they have then applied directly to their
own endeavors.
So let’s look at 10 Machiavellian business lessons.
1. A feared or a loved leader – which works better? A grave mistake that many CEOs make
is desperately seeking approval from their employees. When Machiavelli set out the bold
phrase that it ‘is much safer to be feared than loved’, it was a controversial statement, but it
also applies to the modern-day entrepreneur. This principle is not about instilling fear in the
hearts of your employees. It’s about creating clear boundaries and aims for them, rather than
pandering in attempts to be ‘loved’.
There’s been research to this effect. According to a 2016 study published in Personnel
Psychology, whether a manager is perceived to be a ‘good boss’ or a ‘bad boss’ has absolutely
no effect on staff retention levels. Quite the contrary; the study found that workers left these
two opposing types of manager in equal measure.
2. Encourage criticism and frankness: Overlooking the significance of employee feedback

is a mistake, but a far worse one is neglecting to ask for upward criticism. It’s just as crucial
for managers to understand their own weaknesses as it is for employees. ‘There is no other
way of guarding oneself from flatterers except letting men understand that to tell you the
truth does not offend you,’ writes Machiavelli.
To excel in any field, you have to expect criticism and, once you have it, use it to your
advantage. One five-year long study into upward feedback found that it’s how managers use
this information that’s crucial. Those who met their employees to discuss the feedback after
receiving it were far more likely to improve their working style than other managers.
3. Make a choice – any choice: There are times when every entrepreneur has to make
decisions on behalf of their companies. But what if none of the available options is without
disadvantage? In such a case, simply remember this quote; ‘Prudence consists in knowing
how to distinguish the character of troubles, and for choice to take the lesser evil.’
As the director of a company or a CEO, you have to take the bull by the horns. This is actually
an area in which men, in particular, must improve since a recent study found that women are
more decisive in a business world. So, when you’re next faced with undesirable options, be
clear and decisive.
4. Don’t micromanage, but focus on one goal: Micromanagement is the bane of many a
would-be successful business. Don’t be mistaken; business is war. If you take your eyes off the

battlefield, you will be ruined. As Machiavelli put it, one ‘ought to have no other aim or
thought, nor select anything else for his study, than war.’ In terms of business, this can be
translated into the notion that your entire focus should be on your core goal. Trust those
below you to do their jobs and focus only on your role in the company.
The dangers of micromanagement have been well documented and it’s something of an
epidemic. ‘A micromanager can be much more than just a nuisance in today’s complex
organization,’ wrote Dr. Richard White in his review, The Micromanagement Disease:
Symptoms, Diagnosis, and Cure, before going on to explain that this type of management style
is rarely effective, if ever.
5. Let passion be the foundation of your business: Perhaps one of the most critical ideas
put forward in The Prince can be summed up as ‘where the willingness is great the difficulties
cannot be great.’ This cardinal rule is true in many areas of life but none more than in the cut-
throat world of business. Creating a marketplace out of something you already love means
that your life’s work will be meaningful and fruitful.
If you want to help the economy grow – ‘build a nation of passionate business people’.
6. Capture the zeitgeist: Fashions come and go, but your enterprise must remain strong and
stable. ‘He will be successful who directs his actions according to the spirit of the time’ stated
by Machiavelli. In truth, to become an industry leader, you need to keep your finger on the
pulse when it comes to the sectors that are declining and those that are set to soar.
You must always be on the lookout for the next area of significant growth. A relevant example
right now is that of the UAE retail industries. According to a report by the Dubai Chamber of
Commerce and Industry, this area of business is set to grow by a whopping 5% each year.
Simply being ‘in the know’ on matters like this one means that you can capitalize on the
trends of the time.
7. Make friends in high places: Above all else, business is about connections. This was a
topic on which Machiavelli was crystal clear. One of his principles was that you should
‘endeavor with the utmost diligence to avoid the hatred of the most powerful’. So what’s the
next step for avoiding bad relationships with senior figures? - Building good ones.
Positioning this in a modern context, social media is your greatest tool. You now have access
to entrepreneurs all around the globe at your fingertips. A colossal 80% of LinkedIn members
believe that networking is essential to their success. They’re not wrong. Creating bonds with
people who can help you further down the line is a wise business move.
8. Beware of ‘yes’ men: ‘The servant thinking more of his own interests than of yours, and
seeking inwardly his own profit in everything, such a man will never make a good servant,’
stated Machiavelli and in this instance, anyone below you can take the place of that figurative
servant. Needless to say, you can easily transform your employees into ‘yes’ men, but that
doesn’t mean that you should believe them when they tell you that you’re in the right. After
all, perhaps they have their own motives for doing so.
9. Deal with business threats swiftly: When something threatens the stability of your
business, the sooner you defend it, the better. Machiavelli gave this example: ‘The Romans,
foreseeing troubles, dealt with them at once, and, even to avoid a war, would not let them
come to a head, for they knew that war is not to be avoided, but is only put off to the
advantage of others‘.

So, how should a leading entrepreneur respond when their business meets a threat? Well,
research in the Harvard Business Review identifies three essential action points. First of all,
you need to practice teamwork within your business, then you also have to inquire inwardly
about the problem at hand, and finally, you need to experiment with various solutions. The
more you practice these three small actions, the tougher your barrier against threats will be.
10. Learn from the greats: ‘A wise man ought always to follow the paths beaten by great
men and to imitate those who have been supreme’ wrote Machiavelli, and it’s a message that
should be at the heart of every entrepreneur’s ideals. Learning from the great businessmen
that have come before you is a sign of strength. One way to do this is by enlisting the help of a
mentor.
The business mentorship trend has been going strong for decades now with proven results.
Despite this, research published in the Mentoring & Tutoring: Partnership in Learning journal
stresses the importance of finding the ‘right’ mentor for you. That is to say that you ought to
seek out a businessperson who aligns not only with your field, but also with your business
style and code of ethics.
C) UTILITARIANISM
Utilitarianism is a theory of morality, which advocates actions that foster happiness or

pleasure and opposes actions that cause unhappiness or harm. When directed toward making
social, economic, or political decisions, a utilitarian philosophy would aim for the betterment
of society as a whole. Utilitarianism would say that an action is right if it results in the
happiness of the greatest number of people in a society or a group.
Utilitarianism is a tradition of ethical philosophy that is associated with Jeremy Bentham

and John Stuart Mill, two late 18th- and 19th-century British philosophers, economists, and
political thinkers. Utilitarianism holds that an action is right if it tends to promote happiness
and wrong if it tends to produce sadness, or the reverse of happiness—not just the happiness
of the actor but that of everyone affected by it. At work, you display utilitarianism when you
take actions to ensure that the office is a positive environment for your co-workers to be in,
and then make it so for yourself.
The Three Generally Accepted Axioms of Utilitarianism State That:
 Pleasure, or happiness, is the only thing that has intrinsic value.

 Actions are right if they promote happiness, and wrong if they promote unhappiness.
 Everyone's happiness counts equally.
Jeremy Bentham describes his "greatest happiness principle" in Introduction to the Principles
of Morals and Legislation, a 1789 publication in which he writes: "Nature has placed mankind
under the governance of two sovereign masters, pain and pleasure. It is for them alone to
point out what we ought to do, as well as to determine what we shall do."
John Stuart Mill had many years to absorb and reflect on Jeremy Bentham's thoughts on
utilitarianism by the time he published his own work, Utilitarianism, in 1863. The key
passage from this book: "The creed which accepts as the foundation of morals utility, or the
greatest happiness principle, holds that actions are right in proportion as they tend to
promote happiness, wrong as they tend to produce the reverse of happiness. By happiness is
intended pleasure, and the absence of pain; by unhappiness, pain, and the privation of
pleasure."

UTILITARIANISM'S RELEVANCE IN BUSINESS AND COMMERCE
Utilitarianism holds that the most ethical choice is the one that will produce the greatest good
for the greatest number. As such, it is the only moral framework that can justify military force
or war. Moreover, utilitarianism is the most common approach to business ethics because of
the way that it accounts for costs and benefits.
The theory asserts that there are two types of utilitarian ethics practiced in the business
world, "rule" utilitarianism and "act" utilitarianism.
 Rule utilitarianism helps the largest number of people using the fairest methods
possible.
 Act utilitarianism makes the most ethical actions possible for the benefit of the
people.
"Rule" Utilitarian Ethics

An example of rule utilitarianism in business is tiered pricing for a product or service for
different types of customers. In the airline industry, for example, many planes offer first-,
business-, and economy-class seats. Customers who fly in first or business class pay a much
higher rate than those in economy seats, but they also get more amenities—simultaneously,
people who cannot afford upper-class seats benefit from the economy rates. This practice
produces the highest good for the greatest number of people. And the airline benefits, too.
The more expensive upper-class seats help to ease the financial burden that the airline
created by making room for economy-class seats.
"Act" Utilitarian Ethics
An example of act utilitarianism could be when pharmaceutical companies release drugs that
have been governmentally approved, but with known minor side effects because the drug is
able to help more people than are bothered by the side effects. Act utilitarianism often
demonstrates the concept that “the end justifies the means”—or it's worth it.
UTILITARIANISM'S RELEVANCE IN THE CORPORATE WORKPLACE

Most companies have a formal or informal code of ethics, which is shaped by their corporate
culture, values, and regional laws. Today, having a formalized code of business ethics is more
important than ever. For a business to grow, it not only needs to increase its bottom line, but
it also must create a reputation for being socially responsible. Companies also must endeavor
to keep their promises and put ethics at least on par with profits. Consumers are looking for
companies that they can trust, and employees work better when there is a solid model of
ethics in place.
On an individual level, if you make morally correct decisions at work, then everyone's
happiness will increase. However, if you choose to do something morally wrong—even if
legal—then your happiness and that of your colleagues, will decrease.
D) THE PRINCIPLE OF RIGHTS AND VIRTUES: THE KANTIAN ETHICS
Immanuel Kant’s most basic presupposition regarding ethics was his belief in human
freedom. While the natural world operates according to laws of cause and effect, the moral
world operates according to self-imposed “laws of freedom.”

Here is his basic argument for freedom:
1. Without freedom, morality is not possible.

2. Morality exists, thus
3. Freedom exists.
The first premise is true because, according to Kant, determinism undermines morality. The
second premise Kant took as self-evident, and the conclusion follows from the premises. Kant
also believed that freedom came from rationality. Here is his argument:
1. Without reason, we would be slaves to our passions (lust, envy, avarice, etc.)
2. If we were slaves to our passions, we would not be free; thus
3. Without reason, we would not be free.
We now have the basis upon which to connect between reason and morality.
1. Without reason, there is no freedom

2. Without freedom, there is no morality, thus
3. Without reason, there is no morality.
Kant believed moral obligation derived from our free, rational nature. But how should we
exercise our freedom? What should we choose to do?
Kant’s ethics is the study of our duty. Since we are free, rational beings we can choose
between actions, unlike non-human animals who are guided by instinct. Moral actions are
actions where reason leads rather than follows. Such actions must take into account other
beings that act according to their own conception of the law. Put simply, to be moral we ought
to conform our free will to the moral law; that is our duty.
Kant says the only thing that is completely good is a good will—the desire to conform itself to
the moral law. But what is the moral law? Kant assumes that there is a moral law, and that
there is some rational representation of the moral law that we can understand. And
exemplars of laws are laws of nature which are characterized by their universality. So the
moral law, he argued, must be characterized by universality too. Just as an equation of the
form a (b+c) = ab + ac is universally applicable and needs only to be filled in by numbers, the
moral law must have an abstract formulation by which to test actions.
Kant had seized upon the idea of universalization as the key to the moral law. To universalize
a principle of our action we ask, “what if everybody did this?” According to Kant, we should
act according to a principle which we can universalize with consistency or without
inconsistency. This is what he calls the categorical imperative. By testing the principle of our
actions in this way, we determine if they are moral. If we can universalize our actions without
any inconsistency, then they are moral; if we cannot do so, they are immoral.
For example, there is no logical inconsistency in universalizing the maxim, whenever we need
a car we will work hard to earn the money. However, there is something inconsistent about
universalizing the maxim, whenever we need a car we will steal it. A world where everyone
stole cars would be a world where there were cars to steal but no cars to steal—since they
would all already be stolen! (This is the basic idea, this is actually quite complicated.)
Of course, we can act contrary to reason because we are free, just like we can say that 2 + 2 =
6 or we can say that there are round squares. But we violate reason when we say these things

just as, for example; bank robbers violate reason when they rob banks. Why? A bank robber
wills a world where:
1. Banks exists as the necessary prerequisite of the bank robbery intended and
2. Banks don’t exist as the obvious consequence of bank robberies.
Kant’s basic idea is something like this. If I say you can taste my wine, I should be able to taste
yours. Moral actions are rational, immoral actions are irrational.
In short, we act ethically if we freely conform our will to the moral law which it understands
as the categorical imperative. The imperative prescribes action that is rationally consistent. If
we act in this way, we may not be happy, but we will be moral. We will have done our duty.
E) THE PRIMA FACIE PRINCIPLES (THE PRIMA FACIE DUTIES OR MORAL GUIDELINES)
According to W. D. Ross (1877-1971), there are several prima facie duties that we can use to
determine what, concretely, we ought to do. A prima facie duty is a duty that is binding
(obligatory) other things equal, that is, unless it is overridden or trumped by another duty or
duties. Another way of putting it is that where there is a prima facie duty to do something,
there is at least a fairly strong presumption in favor of doing it. An example of a prima facie
duty is the duty to keep promises. "Unless stronger moral considerations override, one ought
to keep a promise made."
By contrast with prima facie duties, our actual or concrete duty is the duty we should perform
in the particular situation of choice. Whatever one's actual duty is, one is morally bound to
perform it. Prima facie duties relate to actual duties as reasons do to conclusions of
reasoning.
Note: The term "duty" in "prima facie duty" is slightly misleading. The prima facie duties are
understood as guidelines, not rules without exception. If an action does not correspond to a
specific guideline, one is not necessarily violating a rule that one ought to follow. However,
not following the rule one ought to follow in a particular case is failing to do one's (actual)
duty. In such cases it makes sense to talk about violating a rule. The rule might be the same in
words as a prima facie duty (minus the phrase "unless other moral considerations override"),
but it would no longer be merely a guideline because it describes what one concretely should
do.
The prima facie duties include:
1. Fidelity. Duties of fidelity are duties to keep one’s promises and contracts and not to
engage in deception. Ross describes them as "those resting on a promise or what may fairly
be called an implicit promise, such as the implicit undertaking not to tell lies which seems to
be implied in the act of entering into conversation . . . or of writing books that purport to be
history and not fiction".
2. Reparation. This is a duty to make up for the injuries one has done to others. Ross
describes this duty as "resting on a previous wrongful act".
3. Gratitude. The duty of gratitude is a duty to be grateful for benefactions done to oneself
and if possible to show it by benefactions in return.
4. Non-injury. The duty of non-injury (also known as non-maleficence) is the duty not to
harm others physically or psychologically: to avoid harming their health, security,
intelligence, character, or happiness.

5. Harm-Prevention. Once again, this is the prima facie duty of a person to prevent harm to
others from causes other than him- or herself.
6. Beneficence. The duty to do good to others: to foster their health, security, wisdom, moral
goodness, or happiness. This duty, says Ross, "rests upon the fact that there are other beings
in the world whose condition we can make better in respect of virtue, or of intelligence, or of
pleasure".
7. Self-Improvement. The duty of self-improvement is to act so as to promote one’s own

good, i.e., one’s own health, security, wisdom, moral goodness, and happiness. Ross himself
mentions "virtue" or "intelligence" in this connection.
8. Justice. The duty of justice requires that one act in such a way that one distributes benefits
and burdens fairly. Ross himself emphasizes the negative aspect of this duty: he says that this
type of duty "rests on the fact or possibility of a distribution of pleasure or happiness (or the
means thereto) that is not in accord with the merit of the persons concerned; in such cases
there arises a duty to upset or prevent such a distribution". Thus the duty of justice includes
the duty, insofar as possible, to prevent an unjust distribution of benefits or burdens.
F) THE MORAL POSITIVISM OF HOBBES
Thomas Hobbes is one of the philosophers of the law whose concepts are classified
differently. He is considered to be a supporter of natural law or a positivistic, depending
which of the threads of his work is closely considered or particularly exposed. His name is
mentioned in every natural law handbook, where he is presented as a classic of natural laws
and, at the same time, regarded by many as forerunner of legal positivism, a doctrine which
took its mature shape only in the 19th century.
The works of Hobbes do not however ‘reconcile’ the two mentioned trends, it seems that the
‘natural law – positive law’ opposition does not have a raison d’être according to the
philosopher. Positivism is from the Latin root posits, which means to posit, postulate, or
firmly affix the existence of something. Legal positivism is a school of jurisprudence whose
advocates believe that the only legitimate sources of law are those written rules, regulations,
and principles that have been expressly enacted, adopted, or recognized by a governmental
entity or political institution, including administrative, executive, legislative, and judicial
bodies.
The basic question to be asked when talking about this theory is “What is law?” Is it written?
Where does it come from? Legal positivism is a theory which answers these questions. Legal
positivism is the legal philosophy which argues that any and all laws are nothing more and
nothing less than simply the expression of the will of whatever authority created them. Thus,
no laws can be regarded as expressions of higher morality or higher principles to which
people can appeal when they disagree with the laws. It is a view that law is a social
construction. The creation of laws is simply an exercise in brute force and an expression of
power, not an attempt to realize any loftier moral or social goals. Therefore, from a positivist
perspective, it can be said that “legal rules or laws are valid not because they are rooted in
moral or natural law, but because they are enacted by legitimate authority and are accepted
by the society as such”.
Legal positivism has ancient roots. Christians believe that the Ten Commandments have
sacred and pre-eminent value in part because they were inscribed in stone by God, and
delivered to Moses on Mount Sinai. When the ancient Greeks intended for a new law to have
permanent validity, they inscribed it on stone or wood and displayed it in a public place for

all to see. In classical Rome, Emperor Justinian (483-565 A.D.);developed an elaborate system
of law that was contained in a detailed and voluminous written code. Prior to the American
Revolution, English political thinkers John Austin and Thomas Hobbes articulated the
command theory of law, which stood for the proposition that the only legal authorities that
courts should recognize are the commands of the sovereign, because only the sovereign is
entrusted with the power to enforce its commands with military and police force. Thomas
Hobbes argued that “it is improbable for any statute to be unjust”. According to him, “before
the names of just and unjust can take place, there must be some coercive power to compel
men equally to the performance of their covenants … and such power there is none before the
creation of the commonwealth”. In this, he meant that “laws are the rules of just and unjust,
nothing being reputed unjust that is not contrary to some law.
For Hobbes, the sovereign is not subject to laws for having the power to make and repeal
laws; he may, when he pleases, free himself from their subjection.” What he stressed is that
“to the care of the sovereign belongs the making of good laws.” Furthermore, he concludes
that “all that is done by such power is warranted and owned by every one of the people, and
that which everyman will have so, no man can say is unjust.”
In Thomas Hobbes’ and John Austin’s legal positivism, the state is perceived as the creator
and enforcer of the law who is therefore, vested with the power to “inflict an evil or pain in
case its desire is disregarded”. Therefore, the law is the expression of the will of the state
laying down the rules of action upheld by force. But this does not mean that the state can do
no wrong in the expression and enforcement of its will, however, even if a wrong is done by
the state, no right can be claimed against it.
From the concept of law of the positivists, the supreme political superior is the state, as a
collective legal association under the rule of the majority. The legal doctrine of non-suability
was derived from this concept. But it must be remembered that the exercise of the will of the
supreme political superior by the government is not absolute. When there is a deliberate and
unrelenting disregard of the will of the supreme political superior in the exercise of
governmental powers, the majority members of the society may blunt, curb, or even deny by
response the adverse governmental challenges.
There are two ways of manifesting the popular response of the people. One is by an electoral
response, which is a peaceable type. An electoral response is set not too far apart nor too
closes to each other. The second type is the revolutionary response, which is an uprooting
type. The second type is not easily provoked. It happens or arises only in situations or
circumstances in which the people are having special difficulty and arouses them to engage in
this kind of response in order to check and contain the excesses in the exercise by the
government of the powers delegated to it. Depending on the intensity or graveness of the
governmental challenge, the people may decide to resort to this response or not. The natural
law reflects how rational human beings, seeking to survive and prosper, would act. Thomas
Hobbes (1588—1679) argues that the only way natural law can prevail is if mankind submits
to the commands of the sovereign. Since the ultimate source of law is the sovereign, the
sovereign’s decisions need not be grounded in universal morality (this is, “legal positivism”).
From Hobbes’ Leviathan, we get the Social Contract Theory of Law. Society is a population
beneath an authority, to whom all individuals in that society covenant just enough of their
natural rights to the authority to be able to ensure internal peace and common defense.
G) DIVINE COMMAND ETHICS
Divine Command Theory (DCT) of ethics holds that an act is either moral or
immoral solely because God either commands us to do it (“Be Holy as I am Holy”) or prohibits
us from doing it (“Do not steal”). On DCT, the only thing that makes an act morally wrong is

that God prohibits doing it, and all that it means to say that torture is wrong is that God
prohibits torture. Some argue that DCT is implausible for reasons best illustrated by the
Euthyphro dilemma, which is based on a discussion of what it means for an act to be holy in
Plato’s Euthyphro. Substituting “moral wrongness” for “holiness” raises the dilemma: Is
torture wrong because God prohibits it, or does God prohibit torture because it
is already wrong?
While DCT takes the first route, Euthyphro takes the last one: If a good God prohibits torture
he does so because torture is intrinsically wrong, not merely because he declares torture to
be wrong by fiat. But if torture is intrinsically wrong, then it is wrong regardless of whether
or not God exists. Either certain acts are wrong regardless of anyone’s opinions or commands
(including God’s), or else all that we mean by “torture is wrong” is “God prohibits torture.”
Rather than grounding the objectivity of ethics, DCT completely undermines it by insisting
that God’s commands (like those of individuals or societies) do not require justification in
terms of any external principles.
So it can be argued: DCT is a kind of moral relativism: what’s right or wrong is what one’s
God (like one’s self or one’s society) says is right or wrong—and there are no moral
standards apart from this. Yet if God said that 2+2=100, 2+2=100 would nonetheless be false
because 2+2=4 is true regardless of what God says. The same point holds for moral
propositions like “inflicting unnecessary suffering solely for fun is wrong.” If that proposition
is true, then it could be argued, it is true regardless of whether God commands or prohibits
inflicting such suffering.
If there is no standard of “being morally right” apart from God’s commands, then God could
literally command us to do anything and it would be right for us to do it by definition. In the
book of Joshua, for example, God commands Joshua to annihilate all people in the city of
Jericho and Ai. This genocide is therefore morally acceptable. Whatever God commands
becomes the standard of moral rightness, and there are no moral values external to God to
constrain what he would or would not command. So if God commanded one person to kill
another, DCT entails that that killing would be moral because “doing the right thing”
is logically equivalent to “doing what God commands.”
A highly implausible implication is that it is impossible to even imagine God commanding a

wrong act. What counts as moral or immoral behavior in DCT is completely subjective—
dependent upon God’s fiat—and thus arbitrary.
Others might argue that the proposal that God doesn’t command according to an independent
moral standard needn’t entail his commands are arbitrary – e.g., perhaps he commands as he
does out of love; and a loving God might not have been capable of issuing abhorrent
commands. And perhaps a divine command theorist could hold that if God had not been
loving, his commands would not have given rise to moral obligations…? (But why think this, if
not because we think only a loving God’s commands would live up to independent standards
of goodness?)
References
https://courses.lumenlearning.com/teachereducationx92x1/chapter/kohlbergs-stages-of-
moral-development/#:~:text=Kohlberg%20defined%20three%20levels%20of,level%20has
%20two%20distinct%20stages.&text=During%20the%20conventional%20level%2C
%20an,to%20personal%20and%20societal%20relationships .

https://www.iccb.org/iccb/wp-content/pdfs/adulted/healthcare_curriculum/
curriculum&resources/context_social_studies/F.%20HC%20Context%20Social%20Studies
%20Resource%20File/84.pdf
https://www.vz.ae/blog/machiavellian-principles-and-modern-businesses-top-10-lessons-
for-entrepreneurial-success
https://www.investopedia.com/terms/u/utilitarianism.asp#:~:text=Utilitarianism%20is
%20a%20theory%20of,of%20society%20as%20a%20whole .
https://reasonandmeaning.com/2015/03/29/finally-kants-ethics-in-two-pages/
https://people.wku.edu/jan.garrett/ethics/rossethc.htm#:~:text=According%20to%20W.
%20D.,concretely%2C%20we%20ought%20to%20do.&text=The%20prima%20facie
%20duties%20are,guidelines%2C%20not%20rules%20without%20exception .
https://www.coursehero.com/file/p5nded8/Discuss-briefly-the-moral-positivism-of-
thomas-hobbes-Make-positive-laws-as/
https://peped.org/philosophicalinvestigations/summary-divine-command-theory-ethics/
Assessing Learning
Name: ________________________________________ Date: ________________

Course/Year/Section: _____________________ Score: ______________
Learning Activity 2. 1
Direction: Encircle the letter of the correct answer.
1. He believed that moral development, like cognitive development, follows a series of

stages.
A. Jean Piaget C. Lawrence Kohlberg

B. Niccolo Machiavelli D. Thomas Hobbes
2. What is the best known moral dilemma created by Kohlberg?
A. Ethical dilemma C. Moral dilemma

B. Heinz dilemma D. Euthyphro dilemma
3. According to Kohlberg, how many stages of moral development are there?

A. One C. Three
B. Two D. Four
4. During this level, a child’s sense of morality is externally controlled.
A. Preconvention level C. Post-conventional level

B. Conventional level D. Early stage level
5. During this level, a person’s sense of morality is defined in terms of more abstract
principles and values.

6. During this level, an individual’s sense of morality is tied to personal and societal
relationships.

7. At this stage, children want the approval of others and act in ways to avoid disapproval.
A. Stage 1 C. Stage 3
B. Stage 2 D. Stage 4
8. During this level, a person’s sense of morality is defined in terms of more abstract
principles and values. People now believe that some laws are unjust and should be changed
or eliminated.
A. Post conventional level C. Conventional level
B. Pre conventional level D. Law and Order Orientation level
9. According to Machiavelli, Business is all about what?
A. Money C. Competition
B. Leadership D. Connections
10. He emphasized that: It is the way an individual reasons about a dilemma that determines
positive moral development.
A. Niccolo Machiavelli C. Lawrence Kohlberg

B. Immanuel Kant D. Jean Piaget
Direction: Identify which word or words that do not belong to the group. Write the letter of
the correct answer.
__________1. a. Pre conventional c. Post conventional

b. Conventional d. Beneficence
__________2. a. Without freedom, morality is not possible c. Morality exists

b. Capture the zeitgeist d. Freedom exists
__________3. a. A feared or a loved leader c. Act utilitarianism

b. Learn from the greats d. Beware of ‘yes’ men
__________4. a. Moral c. God commandments

b. Justice d. Immoral
__________5. a. Freedom c. Gratitude

b. Fidelity d. Reparation

__________6. a. Good Boy, Nice Girl Orientation c. Law-and-Order Orientation
b. Morality exists d. Universal-Ethical-Principal Orientation
__________7 a. Positivism c. Reparation

b. What is law? d. Thomas Hobbes
__________8. a. Legal positivism c. W. D. Ross

b. Prima Facie d. Harm-Prevention
__________9. a. Deal with business threats swiftly c. Self-Improvement

b. Niccolo Machiavelli d. Make friends in high places
__________10. a. Lawrence Kohlberg c. Immanuel Kant

b. Niccolo Machiavelli d. Utilitarianism
Direction: Rank the 10 Machiavellian Business Lessons based on their importance.

Number 1 being the most important and number 10 being the least important.
1. ________________________________________
2. ________________________________________
3. ________________________________________
4. ________________________________________
5. ________________________________________
6. ________________________________________
7. ________________________________________
8. ________________________________________
9. ________________________________________
10. _______________________________________
Question: Why did you choose that Machiavellian Business Lesson as the MOST important?
Explain briefly.
YOUR ANSWER:
___________________________________________________________________________________________________________
___________________________________________________________________________________________________________
___________________________________________________________________________________________________________
______________________________________________________________________________________________
Question: Why did you choose that Machiavellian Business Lesson as the LEAST important?
Explain briefly.
YOUR ANSWER:
___________________________________________________________________________________________________________
___________________________________________________________________________________________________________
___________________________________________________________________________________________________________
______________________________________________________________________________________________

UNIT III. CORPORATE GOVERNANCE AND ETHICAL CONSIDERATIONS
Overview
Corporate governance requirements continue to be of increasing importance in these
unsettled times of blurred legislative directives, global business boundaries and increased
regulatory oversight. Business ethics apply to all aspects of business conduct and is relevant
to the conduct of individuals and entire organizations. This session examines the roles of
boards, corporate management and employees in in various governance structures and the
ethical principles and moral and ethical problems that arise in a business environment.
Learning Objectives:
1. Use ethical theories and frameworks to analyze ethical dilemmas in business and
resolve practical problems;
2. Define corporate governance
3. Describe the application of corporate governance principles around the world
4. Provide information on the future of corporate governance
Setting Up
Explain in your own word.
1. Give and explain in your own understanding the meaning of corporate
governance.
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
______________
2. Explain the statement “ Drive customers to your business with a purpose
beyond profit and cite your idea how is it related to corporate governance?
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
________

Lesson Proper
Definition of Corporate Governance
Corporate governance in the business context refers to the systems of rules, practices,
and processes by which companies are governed. In this way, the corporate governance
model followed by a specific company is the distribution of rights and responsibilities by all
participants in the organization.
Governance ensures everyone in an organization follows appropriate and transparent
decision-making processes and that the interests of all stakeholders (shareholders, managers,
employees, suppliers, customers, among others) are protected.
Corporate Governance deals with the way the investors make sure they get a fair return on
their investment. In Corporate Governance, there is a clear distinction between the role of the
owners of a company (the shareholders) and the managers (the executive board of directors)
when it comes to making effective strategic decisions.
Guiding Principles of Corporate Governance
Business Roundtable supports the following core guiding principles:
1. The board approves corporate strategies that are intended to build sustainable long-
term value; selects a chief executive officer (CEO); oversees the CEO and senior
management in operating the company’s business, including allocating capital for
long-term growth and assessing and managing risks; and sets the “tone at the top” for
ethical conduct.
2. Management develops and implements corporate strategy and operates the

company’s business under the board’s oversight, with the goal of producing
sustainable long-term value creation.
3. Management, under the oversight of the board and its audit committee, produces
financial statements that fairly present the company’s financial condition and results
of operations and makes the timely disclosures investors need to assess the financial
and business soundness and risks of the company.
4. The audit committee of the board retains and manages the relationship with the
outside auditor, oversees the company’s annual financial statement audit and internal
controls over financial reporting, and oversees the company’s risk management and
compliance programs.
5. The nominating/corporate governance committee of the board plays a leadership

role in shaping the corporate governance of the company, strives to build an engaged
and diverse board whose composition is appropriate in light of the company’s needs
and strategy, and actively conducts succession planning for the board.
6. The compensation committee of the board develops an executive compensation

philosophy, adopts and oversees the implementation of compensation policies that fit
within its philosophy, designs compensation packages for the CEO and senior

management to incentivize the creation of long-term value, and develops meaningful
goals for performance-based compensation that support the company’s long-term
value creation strategy.
7. The board and management should engage with long-term shareholders on issues
and concerns that are of widespread interest to them and that affect the company’s
long-term value creation. Shareholders that engage with the board and management
in a manner that may affect corporate decision making or strategies are encouraged
to disclose appropriate identifying information and to assume some accountability for
the long-term interests of the company and its shareholders as a whole. As part of this
responsibility, shareholders should recognize that the board must continually weigh
both short-term and long-term uses of capital when determining how to allocate it in
a way that is most beneficial to shareholders and to building long-term value.
8. In making decisions, the board may consider the interests of all of the company’s
constituencies, including stakeholders such as employees, customers, suppliers and
the community in which the company does business, when doing so contributes in a
direct and meaningful way to building long-term value creation.
Principles of Corporate Governance

A company which applies the core principles of good corporate governance; fairness,
accountability, responsibility and transparency, will usually outperform other companies and
will be able to attract investors, whose support can help to finance further growth.
Fairness
Fairness refers to equal treatment, for example, all shareholders should receive equal
consideration for whatever shareholdings they hold. However, some companies prefer to
have a shareholder agreement, which can include more extensive and effective minority
protection.
In addition to shareholders, there should also be fairness in the treatment of all
stakeholders including employees, communities and public officials. The fairer the entity
appears to stakeholders, the more likely it is that it can survive the pressure of interested
parties.
Accountability
Corporate accountability refers to the obligation and responsibility to give an
explanation or reason for the company’s actions and conduct.
In brief:
The board should present a balanced and understandable assessment of the company’s
position and prospects;
The board is responsible for determining the nature and extent of the significant risks it is
willing to take;
The board should maintain sound risk management and internal control systems;

The board should establish formal and transparent arrangements for corporate reporting and
risk management and for maintaining an appropriate relationship with the company’s
auditor, and
The board should communicate with stakeholders at regular intervals, a fair, balanced and
understandable assessment of how the company is achieving its business purpose.
Responsibility
The Board of Directors are given authority to act on behalf of the company. They
should therefore accept full responsibility for the powers that it is given and the authority
that it exercises. The Board of Directors are responsible for overseeing the management of
the business, affairs of the company, appointing the chief executive and monitoring the
performance of the company. In doing so, it is required to act in the best interests of the
company.
Transparency
A principle of good governance is that stakeholders should be informed about the
company’s activities, what it plans to do in the future and any risks involved in its business
strategies.
Transparency means openness, a willingness by the company to provide clear
information to shareholders and other stakeholders. For example, transparency refers to the
openness and willingness to disclose financial performance figures which are truthful and
accurate.
Elements of Corporate Governance
While best practices are still emerging, corporate governance has a few key elements.
1. Shareholders
Shareholders don't play a direct role in corporate governance but they have a vested
interest in its outcome.
The indirect role that shareholders play is that of gatekeepers. In most organizations
they vote for members of the board of directors and, when necessary, they appoint corporate
auditors.
2. Board of Directors
The board of directors, as noted above, makes corporation-wide decisions. This
includes choosing executives and setting their compensation, major strategic initiatives and
changing ownership structures.
The details of a board's role can change depending on both the organization and
circumstances. While a board of directors may not get involved in social media strategy, for
example, it might meet in response to a perceived crisis of the brand.
3. Executives

Officers of the corporation are responsible for daily operation and ensuring that the
decisions of the board are faithfully executed. Typical executive roles include the Chief
Executive Officer, Chief Financial Officer, President, Vice President and other similarly
situated personnel. Not every firm will have every common executive position and others will
combine some into one. (It's common, for example, for the same person to hold both the
position of President and CEO.)
Corporate Governance and Agency Theory

Corporate governance can be used to change the rules under which the agent
operates and restore the principal's interests. The principal, by employing the agent to
represent the principal's interests, must overcome a lack of information about the agent's
performance of the task. Agents must have incentives encouraging them to act in unison with
the principal's interests. Agency theory may be used to design these incentives appropriately
by considering what interests motivate the agent to act. Incentives encouraging the wrong
behavior must be removed, and rules discouraging moral hazard must be in place.
Understanding the mechanisms that create problems helps businesses develop better
corporate policy.
Agency theory examines the relationship between the agents and principals in the
business. In an agency relationship, two parties exist – the agent and principal, whereby the
former acts and takes decisions on behalf of the latter. The theory revolves around the
relationship between the two and the issues that may surface due to their different risk
perspectives and business goals. In finance, the most talked about agency relationship exists
between shareholders and executives of a corporation where the top brass is elected to act in
the interest of the true owners of the company.
Agency theory in corporate governance is an extension of the agency theory discussed
above. It relates to a specific type of agency relationship that exists between the shareholders
and directors/management of a company. The shareholders, true owners of the corporation,
as principals, elect the executives to act and take decisions on their behalf.
The aim is to represent the views of the owners and conduct operations in their
interest. Despite this clear rationale of electing the board of directors, there are a lot of
instances when complicated
issues come up and the
executives, knowingly or
unknowingly, take decisions
that do not reflect
shareholders’ best interest. In
the dynamic business
environment, agency theory of
corporate governance has
garnered a lot of attention and
is seen and evaluated from
different points of view.
Corporate Governance and

Stakeholders Theory

Stakeholder theory, states that a company owes a responsibility to a wider group of
stakeholders, other than just shareholders. A stakeholder is defined as any person/group
which can affect/be affected by the actions of a business. It includes employees, customers,
suppliers, creditors and even the wider community and competitors.
Edward Freeman, the original proposer of the stakeholder theory, recognised it as an
important element of Corporate Social Responsibility (CSR), a concept which recognises the
responsibilities of corporations in the world today, whether they be economic, legal, ethical
or even philanthropic. Nowadays, some of the world’s largest corporations claim to have CSR
at the centre of their corporate strategy. Whilst there are many genuine cases of companies
with a “conscience”, many others exploit CSR as a good means of PR to improve their image
and reputation but ultimately fail to put their words into action.
Corporate Governance and Stewardship Theory

The manager’s role in stewardship theory is to maximize the potential of the firm and
to pursue long-term wealth acquisition with organizational and individual desires best
accomplished by assessing collective ends. The goal is on assuming accountability and
responsibility for the organizational community. The model of a manager should be as a
steward whose behavior is ordered and organizational; whose collectivistic behavior is of
higher reverence than individualistic, self-serving conduct. They exemplify that man being
intelligent makes rational, not irrational decisions, unlike agency proposers who dispute
stewardship. Stewardship theory view employees as assets of the firm as the agency did but
they differ in their treatment of the human nature’s motivation and ability of control. A true
steward is driven by his need of self-actualization, growth and achievement without being
opportunistic and self-interested in his performance.
The steward theory states that a steward protects and maximises shareholders
wealth through firm Performance. Stewards are company executives and managers working
for the shareholders, protects and make profits for the shareholders. The stewards are
satisfied and motivated when organizational success is attained. It stresses on the position of
employees or executives to act more autonomously so that the shareholders’ returns are
maximized. The employees take ownership of their jobs and work at them diligently.
Stewardship ideology proposes that corporate governance structures should exercise
advanced authority and prudence. The proponents discussed that high-level of authority and
discretion is attained when the Chief Executive Officer (CEO) also assume the position of
Chairman of the Board. Stewardship principle argues that the issue is whether or not the
ownership structure assists and facilitates in the management achievement of high corporate
and firm performance.
The Goal of Stewardship Governance

A steward is defined as someone who protects and takes care of the needs of others.
Under the stewardship theory, company executives protect the interests of the owners or
shareholders and make decisions on their behalf. Their sole objective is to create and
maintain a successful organization so the shareholders prosper. Firms that embrace
stewardship place the CEO and Chairman responsibilities under one executive, with a board
comprised mostly of in-house members. This allows for intimate knowledge of organizational
operation and a deep commitment to success.

The Board of Directors
A board of directors is essentially a panel of people who are elected to represent
shareholders. Every public company is legally required to install a board of directors;
nonprofit organizations and many private companies – while not required to – also
name a board of directors.
Individual and Situational Influences on Ethical Behavior

Ethical behavior is that accepted as morally "good" and "right," as opposed to "bad"
or "wrong," in a particular setting. Is it ethical to hide information that might discourage a job
candidate from joining your organization? Is it ethical to ask someone to take a job you know
will not be good for his or her career progress? Is it ethical to ask so much of someone that
they continually have to choose between "having a 'career' and having a 'life'?" The list of
questions can go further more, but an important point remains: The public is increasingly
demanding that people in organizations and the organizations themselves all act in
accordance with high ethical and moral standards. The purpose of ethics in business is to
direct business men and women to abide by a code of conduct that facilitates, if not
encourages, public confidence in their products and services.
Different Factors Influencing Ethical Behavior at The Workplace

Have you ever taken credit for something someone else did at work? For example,
your boss stops by your office to tell you that your work on the marketing report was
excellent, and he is rewarding you with a promotion. The problem is that most of the report
was based on the hard work of your co-worker. Should you tell your boss that the co-worker
really deserves the promotion? What makes you confess to your boss?
Usually, the answer is your business ethics. Business ethics refers to the moral
principles or values that generally govern the conduct of an individual or group. In this
lesson, you will learn about the different factors that affect ethical behavior in the workplace.
Ethical behavior is acting in ways that are consistent with how the business world views
moral principles and values. Business ethics determine employees' everyday conduct. Let's
take a look at some of the factors that affect your ethical behavior in the workplace. How
would you answer when faced with an ethical dilemma?
1. Personal Code of Ethics

A man’s personal code of ethics that is what one considers moral is the foremost responsible
factor influencing his behavior.
2. Legislation
It is already stated that the Government will intervene and enact laws only when the
businessmen become too unethical and selfish and totally ignore their responsibility to the

society. No society can tolerate such misbehavior continuously. It will certainly exert
pressure on the Government and the Government consequently has no other alternative to
prohibit such unhealthy behavior of the businessmen.
3. Government Rules and Regulations

Laws support Government regulations regarding the working conditions, product safety,
statutory warning etc. These provide some guidelines to the business managers in
determining what are acceptable or recognized standards and practices.
4. Ethical Code of the Company

When a company grows larger, its standard of ethical conduct tends to rise. Any unethical
behavior or conduct on the part of the company shall endanger its established reputation,
public image and goodwill. Hence, most companies are very cautious in this respect. They
issue specific guidelines to their subordinates regarding the dealings of the company.
5. Social Pressures
Social forces and pressures have considerable influence on ethics in business. If a company
supplies sub-standard products and get involved in unethical conducts, the consumers will
become indifferent towards the company. Such refusals shall exert a pressure on the
company to act honestly and adhere strictly to the business ethics. Sometimes, the society
itself may turn against a company.
6. Ethical Climate of the Industry
Modern industry today is working in a more and more competitive atmosphere. Hence only
those firms, which strictly adhere to the ethical code, can retain its position unaffected in its
line of business. When other firms, in the same industry are strictly adhering to the ethical
standards, the firm in question should also perform up to the level of others. If the company’s
performance is below than other companies, in the same industry, it cannot survive in the
field in the long run.
7. Individual Factors
Many individual factors affect a person's ethical behavior at work, such as knowledge, values,
personal goals, morals and personality. The more information that you have about a subject,
the better chance you will make an informed, ethical decision.
8.Social Factors
Cultural norms, the Internet and friends and family are three social factors that can affect
ethical behavior. Different cultures have norms that vary from place to place in the business
world. For example, you might have to face a request for a bribe in order to conduct business
in certain countries in South America. This might be unethical to you but considered an
acceptable norm in their workplace.
Reference
https://chapters.theiia.org/Philadelphia/Events/ChapterDocuments/March
%207%202014%20Descriptions%20and%20Learning%20Objectives%20as%20of%202-5-
14.pdf

https://youmatter.world/en/definition/corporate-governance-definition-purpose-and-
benefits/
https://www.pearse-trust.ie/blog/bid/108866/the-core-principles-of-good-corporate-
governance#:~:text=A%20company%20which%20applies%20the,help%20to%20finance
%20further%20growth.
https://www.thestreet.com/markets/what-is-corporate-governance-14761397
https://corpgov.law.harvard.edu/2016/09/08/principles-of-corporate-governance/
https://www.investopedia.com/ask/answers/031815/what-role-agency-theory-corporate-
governance.asp#:~:text=What%20Is%20the%20Role%20of%20Agency%20Theory%20in
%20Corporate%20Governance%3F&text=Agency%20theory%20is%20used%20to,without
%20regard%20for%20self%2Dinterest.
https://efinancemanagement.com/financial-management/agency-theory
https://bizfluent.com/about-6729036-agency-theory-corporate-governance.html
https://blog.corplaw.ie/bid/317212/Shareholder-Stakeholder-Theories-Of-Corporate-
Governance
https://businessteacher.org/assignments/significance-of-stakeholder-theory-in-corporate-
governance.php
https://www.papertyari.com/general-awareness/management/theories-corporate-
governance-agency-stewardship-etc/#:~:text=The%20steward%20theory%20states
%20that,when%20organizational%20success%20is%20attained.
https://www.mbaknol.com/financial-management/the-difference-between-agency-theory-
and-stewardship-theory/
https://yourbusiness.azcentral.com/stewardship-theory-corporate-governance-29164.html
https://corporatefinanceinstitute.com/resources/careers/jobs/board-of-directors/
https://www.writework.com/essay/discuss-different-factors-influencing-ethical-behavior-
wor
https://study.com/academy/lesson/factors-that-affect-ethical-behavior-in-the-
workplace.html#:~:text=There%20are%20three%20major%20factors,Internet%20and
%20friends%20and%20family
https://accountlearning.com/factors-influencing-business-ethics-what-affects-business-
ethics/
Assessing Learning
Name________________________________________ Score_______________________
Year & Section_________________ Date_______________________
Learning Activity 3.1

True or False. Write True if the statement is correct and False if the statement is wrong.

_______1. The common accepted definition of corporate governance is that “ it is a set of
relationship between a company’s management, its shareholders and the society within an
institutional framework.
_______2. The relationship among the participants of the governance system and the role
played by each participant vary from company to company.
_______3. Institutional framework is abroad term used to refer to the processes, policies
regulations, and customs by which a corporation is directed, administered, and controlled.
_______4. The concept of corporate governance is one of the core areas of economic sociology.
_______5. Corporate governance is an economic discipline that focuses on the strategic
management of corporations with the aim of improving financial performance.
_______6. Corporate citizenship as one of the corporate purpose encompasses a business’s
accountability to each of its stakeholder groups.
_______7. Making strategic decisions and discussing current and future concerns of the
company are tactics of oversight as, one of the element of corporate purpose.
_______8. Integrity should be a fundamental requirement in choosing corporate officers and
board members.
_______9. One of the corporate purposes is the rights and equitable treatment of shoulders.
_______10. One of the main concerns of successful corporate governance is the implementation
of policies and procedures designed to eliminate bias and conflicts of interest.

UNIT 4:THE WORKPLACE: TODAY’S CHALLENGES
Overview
Today’s workplaces look very little like your parents’ work environments. Cubicles
have given way to flexible office layouts and work pods are on their way in. The 9-to-5 has
swollen to always-on connectivity with mobile technology, and is making a further
adjustment to remote work and flexible scheduling. Automation continues to disrupt
processes, industries, and sectors. Some challenges workers face have shifted over the same
period, while others have simply taken on a different aspect.
1. To prepare students to meet the varying and challenging needs of the job and
organization.
2. To provide knowledge and skills to new entrants and to help them to perform their
role and job well.
3. To coach students for more complex and higher level jobs.
Setting Up
Name_________________________________________ Score__________
Year & Section_____________ Date__________
Essay. In your own opinion. ( 20 points)
What challenges do you face when working in groups?
___________________________________________________________________________________________________________
___________________________________________________________________________________________________________
___________________________________________________________________________________________________________
___________________________________________________________________________________________________________
__________________________________________________________________________________________________________
Lesson Proper
Whether you are new to the workplace or a seasoned employee, problems occur at work.
The following are some workplace challenges and how to deal with them.
New to the Workplace
Fitting In
Figuring out how to be part of a new work culture can at times be frustrating. Get to know
your coworkers by working on team projects. This promotes common interests, builds trust,
and allies. Ask questions if you don't understand something. Be friendly and respectful. Your

good attitude, manners, and work habits will show that you are a professional. Don't
contribute to office gossip.
Being Heard
It takes time to gain the trust of coworkers to get them on board with your ideas. Listen and
observe before suggesting changes. Bring solutions to the table. Engage your coworkers by
knowing what you are talking about. Build a reputation of being clear-headed, objective, and
reasonable.
Making Mistakes
They happen to everyone at some point. Admit them and apologize. Don't offer excuses or try
to cover them up. Instead, offer solutions as soon as possible and fix the problem on your own
time. Forgive yourself, and move on.
Time Management
It can be difficult when you're settling into a new job and adjusting to your new
responsibilities. Create a daily "to do" or goals list. Breaking down your tasks will make them
seem more manageable, keep you organized, and help you to be more productive and
efficient. If you are still having difficulty managing your workload, ask a coworker for advice,
or speak with your supervisor to prioritize your work.
Problems with Coworkers
Slackers
Slackers lower productivity. If a coworker's poor work habits are affecting your job
performance, explain respectfully to them how their behavior is affecting you and what you
would like to see changed. But keep in mind that it is your (or the coworker's) supervisor's
responsibility to deal with problem workplace behavior. Unless this person has authority to
delegate work to you, you can say "no" to their requests to do their work. Concentrate on
being a good employee. Don't fall into their poor work routine.
Disagreeable Coworkers
They create an unpleasant work situation. Avoid them if possible, be pleasant when
you have to work with them, and stand up to them when necessary. Even if they need to be
dealt with, don't get into a fight with them. Talk with them calmly, in private, about how their
behavior makes you feel. Avoid involving your supervisor unless it's absolutely necessary.
Office Bullies
They cause anxiety and stress. And they often target those they see as a threat. Don't
let them isolate you or make you feel bad about yourself. Stand up for yourself. Never sink to
their level. Discuss the problem with a mentor to find the best way to handle them. If they are
threatening you, report it to your supervisor.
Gossipers and Trouble Makers

They can be especially disruptive to the workplace and cause misunderstandings. Be
friendly, but act busy and they will get the message that you have better things to do. While
this person can serve as your ears to the office grapevine and workplace dynamics, don't
comment or add fuel to their behavior.
Whiners and Complainers
They tend to see the negative side to everything. This attitude can be harmful to
morale. Be empathetic, but put the problem back on them. Ask them what they intend to do
about solving it. Complaining may be their attempt to avoid conflict, relieve stress about
things they feel they have no control over, or simply to get attention. Do not try to solve their
problem for them. Do not turn their complaints into office gossip either.
Saboteurs and Backstabbers
They cause distrust by spreading rumors or withholding important information from

those they see as rivals. This can affect your career goals and reputation. Confront them
calmly about their behavior. Do not play their game. When you have a good idea or assisted
on a project, tell your supervisor so you get the credit you deserve. If someone is trying to
make you look bad, check in regularly with your supervisor on your job performance.
Workplace Ethics and Integrity Issues
Poor business and workplace ethics can be hazardous to your job security. It can
cause people to lose respect for you and follow you for the rest of your career. Stay clear of
those who ask you to compromise your integrity. Say "no" to requests that make you feel
uncomfortable. Review your employer's workplace ethics and proper business ethics. In
some cases, these issues need to be reported to your supervisor, human resources, or legal
representatives.
Getting Along with Your Boss
Problems with a boss are emotionally and physically draining. They can often stem
from work style or personality differences. The first step is to figure out what specifically they
are doing that is upsetting you. Then ask yourself why. It helps to look at the problem from
both your perspective AND your supervisor's. Next, decide how best to discuss it with them.
Avoid blaming, accusing, or venting. Try to use the "we" approach:
"WE seem to be missing deadlines because tasks aren't started on time. How can WE
fix this?"
Offer a solution that will help the both of you meet your goals and look good. If the
problem can't be resolved, contact their supervisor and human resources for assistance.
Dealing with Harassment or Discrimination
Harassment and discrimination are illegal and come in many forms. You do not have
to put up with it. Ask the person to stop, and don't put yourself in compromising situations. If
you feel unsafe or need help, report it to your supervisor and human resources. Keep a

detailed log of the other person's behavior. The Equal Employment Opportunity Commission
can also offer assistance with these issues. In some cases, you may require legal assistance.
Workplace Bullying
Bullying in the workplace can include anything from condescending behavior and
gossiping to exclusion or violence. Both coworkers and bosses can be bullies. If you are being
bullied at work, you are not alone. You didn't cause this to happen and have options for how
to handle the situation:
Try to deal with it yourself by confronting the bully in a calm, confident manner. Tell
the bully that their comments or actions are offensive and give them an opportunity to
correct his or her behavior.
Prepare for consequences. Bullying often escalates once they are exposed.
Make sure your superiors are aware of your good work. Bullies often try to spread the
word that you aren't doing your job well.
Avoid situations where bullying is most likely to occur. Unfortunately, bullying cases
are often hard to prove through legal action. You may choose to leave the hostile
environment instead.
Fear of dismissal or retaliation keeps many employees from reporting bullying to

their employers. Some employers dismiss the bullying as a personality conflict. Keep a
detailed log of the bully's behavior and speak with someone in human resources or within the
company that you trust.
Advancement Concerns
Being Passed Over for Promotion
It never feels good to be turned down for something, but be gracious about the news.
Don't complain to others. Request a meeting with your supervisor to find out why and what
you can do differently to gain a promotion. Below are a few other things you can do to help
you get that next promotion:
Document your past successes and practice self-promotion so that your coworkers
and networking contacts know about your accomplishments.
Acquire new knowledge and skills or update your current ones to keep yourself up to
date and marketable.
Show initiative and leadership by actively look for ways to improve your company.
Be proactive and ask for more projects and responsibilities.
Find a person higher up in your company to serve as your mentor.
Be on good terms with your boss, and let him or her know you are interested in moving up.

Volunteer to work on teams.
Network with people inside and outside your company.
Glass Ceiling
If you feel like you have advanced as far as you can go with your present employer,
you have probably reached what is called the "glass ceiling." You can see through that ceiling
to the next career level, but you can't seem to reach it. In addition to working toward any
promotion (see above), there are ways to combat the glass ceiling:
Prove your value to your employer and identify which traits and skills they are
looking for when they promote people.
Discuss your career goals with your supervisor and how to accomplish them.
Nurture your relationships with other people where you work.
Pigeon-Holed
This means you have been categorized as someone who is skilled in only certain areas
and not considered for any other type of work. This prevents you from moving up or in a new
career direction. When this happens, you may feel stuck in your present role at work. Taking
the following steps can help:
Speak with your supervisor about the issue to find out why you are parked in your
present position. Express your desire to do something different.
Volunteer to take on new responsibilities and projects to prove you can do other
things. This will increase your value and visibility.
Get some additional training if necessary.
Train a replacement for yourself so management won't feel they are losing the only
person that can do your job well.
Looking for Other Work
Before you make a hasty decision to quit (especially in a tight job market), try to make
your current job work. Pinpoint the problem, change your routine, take on more
responsibility, or pursue an interest outside of work. Speak to your supervisor about ways to
add challenge to your current position.
If the issues can't be resolved, then it may be time to look for a new job. This can be
tricky if you are still employed. Do your job search on your own time. Network with those you
trust to be discreet, and set job search goals for yourself. If possible, schedule interviews
before or after work. Choose an employer that will help you achieve your career and personal
goals. When you find a new job, give your current employer ample notice that you are taking
another position, and don't burn bridges.

Monitoring employees on the job – Many employers monitor the performance of
their employees through video surveillance and the employee’s use of computers or
telephones (251). Monitoring employees should not be done without the employee’s consent,
and many employers “confuse notification of such practices with employee consent” (ibid.).
Monitoring should generally be avoided even when consent is attainable because sensitive
and personal information can often be attained, threatened, and violated; and employees
could feel coerced to agree to being monitored to keep their job.
Again, justifying monitoring requires the same kinds of justification as polygraph

tests. Monitoring employees must be relevant to job performance and the best interests of the
company, and there must not be a better alternative available.
Drug testing – Drug testing tends to be used to check if employees are using illegal
drugs (ibid.). This is often done because it is widely believed that employees taking illegal
drugs have worse job performance, greater absenteeism, and higher rates of theft. Drug
testing is unjustified without informed consent or sufficient relevance to job performance.
Additionally, it’s not always clear when drug testing is relevant to job performance (251-
252). Steroids could be relevant to to performance of football players, but it’s probably not
relevant to the performance of accountants. Finally, the proper response to drug addiction is
not obvious. Shaw suggests that addiction warrants “medical and psychological assistance
rather than punitive action” (252).
Working Conditions
Working conditions involve health and safety concerns on the job, styles of
management, maternity policies, and day-care.
Health and safety
Health and safety precautions must be taken by businesses (ibid.). There are already
laws protecting employees from working in dangerous work conditions, and businesses must
take those laws seriously even when it would be profitable to ignore them. Companies should
also keep an eye out for dangerous working conditions that are not yet covered by the law.
Safety laws tend to only be passed after people are injured or killed. Finally, workers have a
right to be informed about dangers on the job and workers should give informed consent
before they are assigned dangerous work.

Management styles
Morality requires that bosses respect their workers, but a study found that “millions
of workers suffer from bosses who are abusive, dictatorial, devious, dishonest, manipulative,
and inhumane” (256). Additionally, almost no contemporary management theorists agree
that bosses should try to bully workers to maximize productivity. Instead, they advocate
more respectful management styles. Finally, no single management style should be rigidly
adhered to because employees all have unique personalities and needs that should be taken
into consideration.
Day care and maternity leave
The number of women in the workforce has dramatically increased despite that they
continue to usually bear the primary responsibility over their children, so the need for day
care and maternity leave is increasingly important (257). Additionally, “[m]any families are
unable to make satisfactory child-care arrangements, either because the services are
unavailable or for the simple reason that the parents cannot afford them” (258). Many people
think that it would be morally preferable for businesses to do what they can to make sure
that children aren’t neglected, even if it’s not morally required; but “very few companies do
much to help with employee child care” (ibid.). Moreover, companies can do much to help
with child care, such as set up child care facilities, and it’s cost-effective large businesses to do
so.
Although a company could provide child care facilities with the assumption that it’s
the moral thing to do, employers who offer child care can be benefited from doing so because
it can decrease absenteeism, boost morale, and increase loyalty.
Job Satisfaction & Redesigning Work
Many people are dissatisfied with their job. They might feel that the work is
unfulfilling, they might feel alienated, and they might feel exploited or unappreciated. It is
possible for companies to try to make jobs more satisfying, and many people think it is
morally good to do so.
Job satisfaction is not just a moral issue, but also a pragmatic one. Workers who are
more satisfied are likely to be more productive. “As early as the 1920s, researchers began to

realize that workers would be more productive if management met those needs that money
can’t buy” (260).
Quality of work life
Solutions to job dissatisfaction generally involve an attempt to improve the quality of

work life, and QWL programs are attempts to do so (261-262). QWL programs often attempt
to increase worker participation in the production process by seeking their ideas. For
example, companies can use “quality-control circles” where workers meet with supervisors
to discuss quality improvement (262). Such circles made suggestions that saved
Westinghouse millions of dollars. QEL programs could be morally preferable, and they are
believed to be able to “improve attendance, motivation, and performance” (ibid.). There is no
guarantee that QEL improvements will increase productivity, but it does at least some of the
time (263).
References
https://careerwise.minnstate.edu/careers/workplace-challenges.html
https://slideplayer.com/slide/4663799/
Assessing Learning
Name______________________________________ Score_____________
Year & Section__________ Date_____________
Learning Activity 4.
Essay ( 20 points)
What do you think will be the workplace challenges for you? Why?
___________________________________________________________________________________________________________
___________________________________________________________________________________________________________
___________________________________________________________________________________________________________
___________________________________________________________________________________________________________
___________________________________________________________________________________________________________
___________________________________________________________________________________________________________

UNIT V. ETHICS AND CORPORATE SOCIAL RESONSIBILITY
"America's greatest moral failure is that we still don't abide by the basic precept that
whatever you do for the least of my brothers, you do for me. That basic principle applies to
our country's poverty, to racism, to sexism."
- Barack Obama
OVERVIEW
The business community is confronted with a great deal of challenges and opportunities.
Being part of the social order and as society expects, business are prodded, asked or
encouraged to improve their business practices in ways that respect ethical values, people,
communities and the environment. In response to these challenges, business recognize that,
aside from making profit, they are morally obliged to become more innovative, competitive,
productive, and responsible members of the society. It is morally obligatory even if not legally
required for business to protect and uphold the interests of their stakeholders and meet the
tests of good corporate citizenship.
LEARNING OBJECTIVES:
At the end of this chapter the students are expected to:
1. Evaluate the arguments - pros and cons of corporate social responsibility
2. Examine the distinction between ethics in business and corporate social
responsibility
3. Justify the long-term effect of corporate social responsibility to the stakeholders of
the business
4. Appreciate the history of the development of corporate social responsibility.
SETTING UP
NAME______________________________________________ SCORE____________________
YEAR&SECTION___________ DATE_____________________
ESSAY ( 10 POINTS EACH )

1. Is it possible for a company to be profitable and socially responsible at the same time?
2. What do you think is the business organization's primary responsibility to its
stakeholders and why?
3. Cite some example of companies engaged in projects and activities geared toward the
promotion of the quality of life of people.
4. Mention some examples of philanthropic responsibilities.

5. Which is more important-philanthropic responsibility or economic responsibility?
Why?
6. Is the Christian view on CSR applicable to business?
LESSON PROPER
1. The Concept of Corporate Social Responsibility
Again we say, the fundamental reason for examining the activities of business from the
moral perspective is for the promotion of the common good, protection of the individual's
interests and the preservation of the human society in general. Without ethics, business will
be chaotic because there will be no understanding and agreement about what is wrong and
right in the human conduct. Ethics in any field must be rooted in a sense of morality and
justice that is associated with human action. Social responsibility is a moral obligation of each
and every individual, institution, business and organization since they all compose the
society.
In a lot of instances, business are beset with the challenge to advocate more
collaboration, with pressures to become more transparent with stakeholders, deliver more
value for shareholders, and provide more opportunities, and security for employees.
Similarly, they are prodded by the fact that society expect them to perform a great level of
social responsibility with respect to ethical values, people, communities and the environment.
To meet these challenges, businesses especially big corporations not only do business by
maximizing profit but also incorporate social responsibility as an integral part of their
business operations and strategies. A firm's embrace of a set of business ethics is an
affirmation that it promotes the dignity of employees, that it acts justly with shareholders,
customers and competitors and that it plays a role for the protection and well-being of the
community and the environment.
In this chapter are several definitions of corporate responsibility. One is from the author
Bauer who claims that " corporate social responsibility means seriously considering the
impact of the company's actions on society." Davis and Blomstrom, on the other hand, define
corporate social responsibility as "the obligation of decision makers to take actions which
protect and improve the welfare of the society as a whole along with their own interests."
McGuire, on his part, corporation has not only economic and legal obligations, but also certain
responsibilities to society which extend beyond these obligations." While Epstein maintains
that corporate social responsibility is that which "relates primarily to achieving outcomes
from organizational decisions concerning specific issues upon pertinent corporate
stakeholders. The normative correctness of the results of corporate actions has been the
focus of corporate social responsibility." Among the different definitions of social
responsibility, two more definitions are given emphasis-Professor Keith Davis of Arizona
State University defines social responsibility as "the response of the of the corporation to
issues beyond its narrow economic, technical and legal requirements. It is the obligation of

the corporation to evaluate the effects of its decisions on the external social system. “Peter
Drucker, on the other hand, says that "one of the responsibilities of business to society is to
operate at profit... Business is the wealth-creating organ of society. But what is important is
that the managent realizes that it must consider the impact of every business policy and
business action on society. It has to consider whether the action is likely to promote the
public good, to advance the basic beliefs of society, to contribute to its stability, strength and
harmony... The ultimate responsibility of management to itself, to our heritage, to our society
and to our way of life."
Corporate social responsibility, while it doesn't have a universal definition, is a concept
that has developed an emerging prevalence around the globe. It is said that the business is as
old as the human civilization; conversely, corporate social responsibility is an evolving term
that does not have a standard definition. Yet with the understanding that businesses play a
key role in job creation in society and in addressing stakeholder expectations, corporate
social responsibility is generally understood to be the private sector's way of integrating
compliance with economic, environmental and social imperatives with the imperatives of
their own business activities. Corporate social responsibility means extending beyond the
business' compliance with the laws and other legal requirements. It means fulfilling the moral
obligations of the business by involving itself with commitments and activities that
contribute to and help improve the condition of the society, the community and the
environment.
2. Corporate Social Responsibility from a Historical Perspective

2.1 The Ancient and Medieval Period
During the ancient times, people believed that businessmen and wealthy people
should do business to the community as part of public or social service. To make
money or to lend money is an activity greatly despised. The Greeks and Romans
treated businessmen next to slaves. Businessmen were pressured by society that even
Plato, the Greek philosopher and follower of Socrates, who taught wrote and
presented his ideas in the form of dramatic dialogues, recommended that such
activities be prohibited. The elite of the society condemned businessmen, criticizing
them for utilizing their money for profit and not for the service to the community.
Furthermore, in the absence of a standard of morality to follow, they were denounced
by the upper classes of society. Criticisms against the evil of business came far and
wide during the medieval period when the Catholic Church became the most powerful
Institution in Europe. The Catholic Church did not trust the business system and
deemed profit-motive as anti-Christian, believing that the merchant never or seldom
pleases God. It was St. Thomas Aquinas who justified that business could exist as long
as it was used for the good of the community. During this period, the practice of
social responsibility in business produced good results. St. Thomas Aquinas was
responsible for introducing the concept of compensatory justice which maintains that
prices and wages should be fair. Because of this and despite the poverty experienced.
2.2 Period of Mercantilism

The power of the Catholic Church as the most influential institution in Europe
diminished at the onset of mercantilism, a politicos economic philosophy. European

government actively participated in business activities and established monopolies.
To them, the main source of power and prestige among nations is the acquisition of
gold and silver through trade. Colonization of more territories became rampant as
these territories were used as sources of raw materials and cheap if not free labor.
The galleon trade or kalakalang galyon is an example of this practice which shows
that the Philippines was not spared. It was in 1521 when the Philippines was
discovered by the Spanish conquistadores who came to the shores and occupied the
islands. The Spaniards initial objective is navigating the oceans was to look for spices
for the production and marketing of tobacco monopolized by the Spanish
government.
The medieval and mercantilism period showed several violations of social
responsibility. Colonies were exploited by the European colonial masters. Millions of
Africans were sent to work as slaves in the North, South, and Central Americas. The
Color Purple, is a movie starred by the actress Whoopi Goldberg, which also gave the
now equally famous Oprah Winfrey a break into the limelight when she was
introduced as a co-star in the 1980s, is an award-winning and touching movie that
depicts the life of an African forced into slavery. Yet, during that time, no moral issue
was raised in Europe and in fact, it was a time when pirates could become heroes
capturing foreign ships was a practice of countries with strong fleets. At the time of
the famous English Pirate Francis Drake, The strength of a country's fleet was shown
when they were able to conquer the ships of other countries.
The power of the Catholic Church as the most influential body in Europe did not
only diminished because European governments became active but also due to the
influence brought about by the philosophy and doctrines introduced to the society.
Max Weber's (pronounced as Vay-bur) philosophy was one of those. He claimed in
his most recognized work an essay entitled Protestant Ethics and the Spirit of
Capitalism, that protestant values encouraged thrift, industry and materialism,
making Protestant countries more progressive than Catholic countries. John Calvin,
on of the Proponents of Protestant work Ethic likewise glorified the thrifty and
industrious businessmen. The promotion and growth of business as well as the
regard for social responsibility was regarded and supported by the government. The
Harmony of Interest Theory of England states that " business should act in
accordance with national interest because the state supported it." Special privileges
were granted to businessmen for performing outstanding public service in the
conduct of their business. On the other hand, those who failed and were not able to
contribute were fined and punished.
2.3 The Industrial Revolution

The industrial revolution is the time when machines were introduced, thus
contributing to improved production and business growth. Along with these
improvements was the change in the businessmen's attitude and values towards
business. Representing absolute virtue businessmen regarded wealth as a symbol of
moral excellence. Absolute free enterprise became an argument rejecting the concept
of social responsibility and promoting the individualist philosophy that the
government must not interfere with the activities of the business. Businessmen
reasoned out that the role of the government should be to encourage the growth of
unregulated business to which the government responded and quickly favored. Not

surprisingly, their activities became free, making big businesses powerful. The
capitalist in England were the ones who thoroughly enjoyed this prerogative. They
were given the free hand to run their business and all their activities became
unrestrained. Workers, including children and the aged were exploited and forced to
work, leaving only six hours in a day for rest and sleep but wages given to the
workers were extremely low. Workers were left without a choice because inasmuch
as they needed enough rest, they had to work longer hours so they could satisfy their
most basic needs. Furthermore, capitalists abused unrestrained business activities by
cheating and selling their poor quality products at very high prices. Karl Marx and
Robert Owen, fighting against the capitalists were both responsible in exposing these
abuses, thereby earning for them the titles "social reformists". The emergence of big
corporations also happened during this time. Corporate social responsibility was
totally absent as big corporations acted above the law. They created their own and
government and used their wealth to bribe and cheat so that they would remain
untouched by the long arms of the law.
2.4 After the Period of Depression ( 1930's to the present )
At the onset of the 1930's, the government, especially in progressive countries,

protected the welfare of the public against the abuses of businesses. Thereon, up to a
decade ago, businesses viewed social responsibility as an adherence to rules and
regulations and compliance with admintrative and legal standards. But on the rise
across the globe is the mandate to create a more competitive, productive and
knowledge based economy. Ethics in business and social responsibility are now given
serious attention by more and more companies as they realize that their success lies
in earning the confidence and respect of the society. Being held morally responsible
for their actions, on the rise are individuals, firms and companies who continually
strive to improve their business practices, emphasizing both legal and ethical
behavior where they are held increasingly accountable. As the growing demands for
higher social responsibility emerge, approaches this moral obligation has now
become a business pursuit. Businesses have started to integrate corporate social
responsibility as part of their corporate structures and processes. This then has
resulted to the creation of innovative and proactive solutions to societal and
environmental concerns. Similarity, businesses have started to involve internal and
external stakeholders to collaborate and participate in the improvement of the
standards of their corporate social responsibility policies, procedures and practices.
3. Historical Phases of Corporate Social Responsibility

Social Responsibility has gone through three phases, each phase corresponding
to particular characteristics, according to Professor Robert Jay and Ed Gray, as
presented in the following illustration.
Phase 1: Profit Maximizing Management
(1880s to early 1900s)
Phase 2: Trusteeship Management

(Early 1990s)
Phase 3: Quality of Life Management

(1930s)
Three Phases of Corporate Social Responsibility
Characteristics:
Phase 1
 Management must maximize profit.

 Individual drive for profit maximization would ultimately create wealth for the
nation.
 Business systems as profits maximizers are used of tools for the elimination of
economic scarcity.
 Business ignored unsafe working conditions, paid starvation wages and used child
labor in order to maximize profit.
 Problems of cultural minorities, unsafe products, unfair advertising and urban poor
problems were given little if no attention at all.
 Abuses of capitalism were extremely rampant and the government tolerated these
deplorable business practices.
Phase 2
 Management was considered both as an instrument of stockholders and as a trustee

for all groups who contribute to the business enterprise.
 Aside from profit maximization, management's concern was also to maintain a fair
balance in the interests of employees, customers, creditor's, stockholders and the
community.
Phase 3
 Security of basic goods and services was no longer a principal problem.

 Social and economic problem brought about by economic growth expanded the
concept of social responsibility management.
 Society demanded management's active participation in helping solve social and
environmental problems in view of the vast resources ( funds, manpower, materials,
management skills and technology) of businesses.
 Business is expected to contribute to the improvement of the quality of life which
involves cultural, social, educational, political factors and economic security.
 Society is unstable if the quality of life of the people is poor. Businesses contribute for
a good quality of life and society.

 A prosperous society is the best environment for a business to thrive. Businesses will
benefit from its self-investment in society.
4. Perspective on Corporate Social Responsibility
People's attitudes, values and management culture differ. Consequently, each
has a social responsibility in society since every individual, body or institution makes
up a society. Businesses have different viewpoints on social responsibility as well.
CLASICAL VIEW MANAGERIAL VIEW PUBLIC VIEW CHRISTIAN VIE

> The primary > Does not > Includes the needs > Excess wealth
responsibility of emphasize profit and interests of the should be given to
business is profit maximization and whole society in the less fortunate.
maximization. interests of contrast with the Wealthy individuals
> Obligation of stockholders. classical and have a responsibility
management is to > To balance the managerial views. to share their
satisfy stockholders interests of > Establishes blessings with the
for their investments. employees, harmony with both poor.
> Supported by customers, suppliers, business operations > A successful
Milton Friedman, one and the local plant and public interest. corporation should
of the most effective community is the perform its social
advocates of role of managers of responsibility more
economic freedom big businesses. by returning a fair
and free enterprise. portion of its profits
to the people in the
form of social
services.
> Based on the
teachings of Jesus
Christ as taught in
the Bible.
Four Views on Corporate Social Responsibility
5. Assessment on the Practice of Corporate Social Responsibility

5.1 Arguments in Support of Corporate Social Responsibility
( F. Fajardo. (2000). Management, pp. 103-109 )
5.1.1 Long-run self-interest- in the long run, business enterprises will benefit
from their own investment by using their resources in reducing or eliminating

social problems. A good social and economic condition will offer an
encouraging environment for businesses.
5.1.2 Business Resources- businesses could use their huge resources to the
improvement of societal and environmental conditions. Some of these
business resources are manpower, funds, materials, management skills and
technology.
5.1.3 Viability of Business- as embodied in the deed of a corporations,
businesses are granted power and privileges by the government due to their
contributions to the economy and valuable services to the society. The
government can also revoke the charter of business once it fail to meet the
social expectations. For this reason, businesses have to perform their social
responsibilities.
5.1.4 Public Image- charitable, civic and socio economic projects are some of
the activities where business take part. As they become active with such
projects, their public image is also enhanced. They leave to the society a very
good impression of their corporate image that attracts more competent
recruits and a greater number of customers.
5.1.5 Profit from Social Problems- businesses can the problem into profit by
being creative and resourceful. An example is recycling of waste materials into
other valuable goods.
5.2 Arguments Against the Practice of Corporate Social Responsibility

5.2.1 Profit Maximization- corporate executives and managers are primarily
responsible to the investors and stockholders. It is their duty to maximize the
profit of their business, not the concerns of the society.
5.2.2 Lack of Social Skills- Businessmen lack the appropriate skills in solving
social concerns. Social problems should be the concern of the government, not
the businessmen's who are honed with the disciplines involved in business.
5.2.3 Lack of Social Accountability- the social needs and problems should not
depend on businessmen. Businesses cannot be expected to solve social
problems. This must be left to the government.
5.2.4 Higher Product Cost- businesses active participation in social, charitable
or civic projects leads to additional expenses and wastes man-hours of the
company. In order to recover from such losses, businesses increase the cost of
products that may also cause them a disadvantage from the cost of the
products of their competitors.
6. The Four Corporate Responsibilities

Taking it from the Pyramid of Social Responsibility a four-part model developed by
Archie B. Carroll and published in the July-August 1991 issue of the Business Horizons,
the corporate social responsibilities of a business can be classified into four as can be
seen in the following figure.

6.1 Philanthropic Responsibilities- DESIRED of business by society.
6.2 Ethical Responsibilities- EXPECTED of business by society.
6.3 Legal Responsibilities- REQUIRED of business by society.
6.4 Economic Responsibilities – REQUIRED of business by society.
The Pyramid of Corporate Social Responsibility
7. Social Responsibility Towards Consumers
Consumers are considered to be the most important stakeholders of the business

besides its own employees. Companies are duty-bound to fulfill and be conscientious
of their social responsibility towards the customers of their business. Not only
workers experience abuses and exploitation, cheating and abuse. These also
happened to customers in as early as the beginnings of the history of social
responsibility when workers were forced to work longer hours and treated as slaves.
Although aware of the poor quality of their, avaricious businessmen during the early
periods cheated their customers by selling the same poor quality products with very
expensive prices. As more and more customers become aware of their rights,
businesses in turn have to take care not to violate these rights.
8. Social Responsibility Towards the Community and the Environment
All living things are dependent on the earth's natural resources. Therefore, man
has the moral obligation to preserve the environment and respect the natural order of
things. Off all the living things created by God, man is the only living things given the
responsibility of taking care of all the rest of the creatures on earth. It is a clear order

from God as written in the bible. Only man is given authority over all the other
creatures in the same way that he is the only one given the ability to protect the
environment, not to intervene with the forces of nature.
The business industry is no doubt the primary user of the earth's natural
resources. In the everyday course of a business, an enormous quantity of energy and
raw materials are being used in the manufacturing of products and services. Energy is
both employed and discharged into the environment. When resources and energy is
used, the earth's natural resources are depleted. Businesses benefit so much from the
environment in order to produce the products, goods, and services they need for their
businesses to prosper. They primarily rely on the benefits provided by the
environment. In turn, businesses have the corporate social responsibility of
preserving and maintaining the balance of nature because once natural resources are
depleted, these can never be replaced no matter how magnificent the power of man's
brain is.
9. Current Activities Related to Corporate Social Responsibility

The response of the business industry to the call to become more socially
responsible encompasses a great deal of activities in recent years. Across the globe, teams
and organizations were created as part of making corporate social responsibility an
integral part of business operations and strategies. These teams provide information,
tools, training and advisory services that businesses use to collaborate and develop
business performance towards higher standards of corporate social responsibility. Some
of these activities involve the following:
 Establishment of certifying bodies to develop standards, programs and to train

and certify employees, managers and businesses with quality programs,
certifications and accreditations. e.g., ISO Certifications; Total Quality
Management; 5s of Good Housekeeping; Self-evaluating and Product Teams;
Occupational Health and Safety; Health, Safely and Environmental Accreditations
that will ensure continual improvement of all aspects of the business.
 Training their employees for customer care and people skills with the application
of Customer Relationship Management standards. Training of employees for
continuous improvement and development of skills.
 Improvement of compensation and benefits packages for employees to enjoy from
hiring to retirement while a number of benefits are also rewarded to families of
the employees such as health and medical assistance, hospitalization benefits,
scholarship grants, among others.
 Establishment of programs for the protection and preservation of the
environment, some of which include tree-planting activities, recycling of waste
materials segregation of hazardous, infectious, biodegradable and non-
biodegradable waste materials, among others.
 Active participation sociocivic and charitable activities, adopt-a-community
programs, adopt-a-school programs, books and toys donation to government
agencies and NGOs, scholarship grants, volunteer work to communities and those
who affected by calamities and the like.
 Development of customer complaint desks or hotlines, a large number of which
are impressively using state-of-the-art technology or sub-contract with call

centers in order to reach customers wherever they are across the globe 24 hours
a day, seven days a week.
 Recruitment of competent and technical employees to ensure manufacturing of
their products follows the strictest standards.
 Training quality people that will handle all aspects of the business processes
including accreditation of suppliers, third party contractors, standardization for
the requirements of raw materials, calibration of machines , handling of product
complaints, and after sales service.
 Application of good manufacturing practices and advance quality assurance
standards for safe and good quality products including handling and packaging.
 Strengthening of ties with agencies and creating organizing bodies that aim at the
promotion, monitoring and recognition of companies that adhere to their moral
obligation in order that they will have a standard of corporate responsibility to
follow.
Several of these commitments and activities fulfill the firms' moral obligation to
societal, economic and environmental concerns. In general, they act in response to these
key elements and issues:
9.1 Stakeholder rights;
9.2 Supplier relations;
9.3 Human rights;
9.4 Human resource management practices;
9.5 Consumer rights and protection;
9.6 Labor protection and security;
9.7 Environmental protection;
9.8 Corporate governance;
9.9 Community development; and
9.10 Health and safety.
The way businesses engage employees, shareholders, consumers, suppliers, the
government and its agencies, non-governmental organizations, international
organizations and other stakeholders form a progressive prospective of corporate social
responsibility of businesses at the present time. Many of these firma believe that it
stimulates corporate innovation and provides them a clear competitive advantage.
Companies worldwide have been motivated to respond favorably because many of them
have proven that responding to the call of being responsible businesses has given them
better financial performance and profitability, accountability to and assessment from the
investment community, enhanced employee commitment, decreased vulnerability
through stronger relationships with communities and improved reputation and corporate
image building
REFERENCES
Agapay, Ramon B. ( 1991). Ethics and the Filiipino. Manila: National Bookstore

Montemayor, Felix M. (1994) Ethics: The Philosophy of Life. Manila : National Book Store.
Roa, Fr. Florencio C. (2011) Business Ethics and Social Responsibility, rex Book Store
Assessing Learning
NAME________________________________________________ SCORE_____________
YEAR & SECTION______________ DATE______________
Learning Activity 5
Case for Analysis
Case 1: Prudence Comes with Fortitude
The pain reliever medicine, Analgesia-T manufactured by CPC Company, is well-

know analgesic known to provide relief from pain and serves as a palliative to people
worldwide. However, in the early 1980s, several person died after taking capsules of
the well-know medicine. It was found out, that the medicines contained cyanide, a
highly poisonous, white crystalline element accidentally mixed with the medicines
because of factory defect. The sister company of CPC, the Jackson Company took the
initiative and without delay, made steps to resolve the problem. It readily ordered the
retrieval of the product from the market. Be that as it may, the company lost about
$100 million dollars by recalling more than 31 million bottles of Analgesia-T. The
Jackson Company made all efforts to launch an information campaign in order to allay
the fears of the consumer. The company ran a continuous media campaign and a toll-
free consumer care hotline. Millions of capsules were tested by reliable agencies, and
the company offered reimburse the amount of the medicine throw away by the
customers. Even the company president made an appearance on television in an
effort to assure customers that the company has taken several steps to ensure that
the medicines reach them safe and free of poison. The company likewise pioneered in
introducing the temper-proof medicine seal that has become the standard in the
pharmaceutical industry, most of which now has “temper resistant for your
protection” printed on its blister packs. Of all of these actions, the means of recalling
the medicines from the market has been the most effective actions taken by the
Jackson Company. It may have lost millions of dollars, but the attention gave the
consumers and its employees across the world clear indication of how the company
upholds its doctrines, "that they are primarily responsible for their customer". It is
this credo that made them believe that they have taken the best actions necessary.
And truly, after only two months since the crisis, the company was able to recover 80
percent sales of the medicine.
Questions:

1. Why do you think it is important for the Jackson Company to hold on to its
credo?
2. The actions taken by the Jackson Company support many areas of Corporate
social responsibility. What are these?
3. What other suggestions can you give the Jackson Company in order to assist
its sister company CPC?
Case 2: Where Is After-Sales Services?
Spidermart is a shop in Celia's Neighborhood. It is well-known for being very
spacious, well supplied and for its enticing advertisements. Celia bought a shower
nozzle at the store and was assured by the salesman that despite the product's being
quite expensive, Celia for more value for her money because the product is
guaranteed to last a lifetime and was imported from one of the largest sanitary
product manufacturers in the world. However, when Celia's plumber was installing
the nozzles, he discovered that the nozzles were defective. The plumber showed her
the newly installed nozzles and she saw how the water kept gushing out from the
wrong places even if they were properly installed. She was convinced that it is a
factory defect so she went back to Spidermart and told the salesman about it. The
salesman would not believe her story but Celia's insisted until the store manager was
summoned. The manager sides with the salesman right away and kept convincing
Celia that it must be because of wrong installation. The commotion then resulted to
Celia claiming that the shop was only violating its catchphrase and that she had been
deceived. The manager still maintained not to replaced the defective nozzles. Celia
told her friends about it and one of them suggested that she raise this issue to the
Consumers' Union. The Consumers' Union met with the director of Spidermart and
warned that they will publicize the issue if the shop will not do anything about the
matter. The shop director, out of fear of having the issue blown out of proportion by
the Consumers' Union, agreed to have the nozzles replaced. Only then was the issue
resolved.
Questions:
1. In what instances in the case were violations of corporate social responsibility.
2. Was it right for the store manager to immediately side with the salesman? Why or
why not? Justify your answer.
3. Celia's case may only be one of the many unpleasant episodes that happened and
remained uninvestigated at Spidermart. Replacing the defective nozzles does not
totally resolve the core of the matter as the Consumers' Union has given
Spidermart a warning and many customers may suddenly come out in the open
upon hearing the news about the case of Celia. As a shop director, what are the
next steps that you must do? However, when Celia's plumber was installing the
nozzles, he discovered that the nozzles were defective. The plumber showed her
the newly installed nozzles and she saw how the water kept gushing out from the
wrong places even if they were properly installed. She was convinced that it is a
factory defect so she went back to Spidermart and told the salesman about it. The
salesman would not believe her story but Celia's insisted until the store manager
was summoned. The manager sides with the salesman right away and kept
convincing Celia that it must be because of wrong installation. The commotion
then resulted to Celia claiming that the shop was only violating its catchphrase
and that she had been deceived. The manager still maintained not to replaced the

defective nozzles. Celia told her friends about it and one of them suggested that
she raise this issue to the Consumers' Union. The Consumers' Union met with the
director of Spidermart and warned that they will publicize the issue if the shop
will not do anything about the matter. The shop director, out of fear of having the
issue blown out of proportion by the Consumers' Union, agreed to have the
nozzles replaced. Only then was the issue resolved.
UNIT VI. CORPORATE GOVERNANCE AND CORPORATE SOCIAL RESPONSIBILITY

Overview
This unit differentiated the principles of corporate governance and corporate social
responsibility as well as the terms stakeholder and shareholder. In addition, this unit also
discussed the relevance of CSR disclosure, Corporate Moral Agency and how to
institutionalize ethics in corporations. It is now becoming a culture in which businesses
incorporate social and environmental issues and relationships with their stakeholders in
their business operations.
Learning Objectives
At the end of this unit, I am able to:
1. Understand the concept of corporate governance and corporate social responsibility;
2. Know and understand the difference between stakeholder and shareholder.
3. Know about the CSR disclosure.
4. Know the importance of Corporate Moral Agency
5. Know and understand how to institutionalize ethics in corporations.
Setting Up
Name: _____________________ Date : _________________
Section: _____________________
Directions. Here are some companies known in the Philippines. Mention some of their
programs/projects you are aware of in addressing our social and environmental problems.
Jollibee Corporation National Bookstore SM Group

Lesson Proper
Introduction
Corporate Governance and Corporate Social Responsibility (CSR) are conceptualised by the
Western countries, where their practices have developed tremendously in the last decade.
During these periods the idea has been exported to other parts of the globe largely through
the activities of multinational companies.
It may be noted that Corporate Governance and CSR are two related and interwoven business
concepts that are deeply embedded in business practices. In this context, this unit attempt to
make a discussion of the concept of CSR and Corporate Governance, and their
interrelationship, within legal and regulatory framework in the country.
Definition of Corporate Governance

Corporate Governance is concerned with holding the balance between economic and social
goals and between individual and communal goals. The corporate governance framework is
there to encourage the efficient use of resources and equally to require accountability for the
stewardship of those resources. The aim is to align as nearly as possible the interests of
individuals, corporations and society.
Corporate governance is also termed as the rules, practices and processes that govern
corporations. Board directors and managers are the major players in corporate governance,
but employees, vendors and other stakeholders also have a stake in corporate governance.
Compliance requirements, regulations and laws ensure that corporations are fair to their
shareholders, consumers and employees. Corporate governance also provides a process for
corporations to compete fairly within their industries.
Corporate governance encourage the companies to:
 Promote ethics and fairness
 Practice transparency and accountability in the dealings of the company
 Expect the generation of profit
 Maintain the highest standards of governance in the company
Definition of Corporate Social Responsibility
Corporate social responsibility is concerned with treating the stakeholders of the firm
ethically or in a socially responsible manner. Stakeholders exist both within a firm and
outside. Consequently, behaving socially responsibly will increase the human development of
stakeholders both within and outside the corporation.
CSR as Perceived by the World Business Council for Sustainable Development (1999)

CSR is the ethical behavior of a company towards society; management acting responsibly in
its relationship with other stakeholders who have a legitimate interest in the business, and it
is the commitment by business 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.
CSR as Perceived by the European Union (2004)
CSR is a concept whereby companies integrate social and environmental concerns in their
business operations and in their interaction with their stakeholders on a voluntary basis. In
simple words, CSR may be defined as obligations and accountability of a company towards all
of its stakeholders in its all operations.
CSR as Perceived by the World Bank
According to the World Bank, “Corporate Social Responsibility is the commitment of
business to contribute to sustainable economic development by working with employees,
their families, the local community and society at large to improve their lives in ways that are
good for business and for development
Relationship between Corporate Governance and CSR
The conceptualization of CSR was, initially, purely in terms of philanthropy or charity.
However, the post-liberalization phase has seen a fundamental shift from this philanthropy-
based model of CSR to a stakeholder- participation based model. Furthermore, CSR is
gradually getting fused into companies’ Corporate Governance practices. Both Corporate
Governance and CSR focus on the ethical practices in the business and the responsiveness of
an organization to its stakeholders and the environment in which it operates. Corporate
Governance and CSR results into better image of an organisation and directly affects the
performance of an organization.
Corporate Governance VS Corporate Social Responsibility
The terms corporate governance and corporate social responsibility sound similar, but
there is a very important difference between them. Both processes are important for
corporations, industries and society at large. Both can have a positive or a negative impact on
corporations and societies. The diagram below enlightened us with the difference between
the two terms.

Corporate
Corporate
Social vs
Responsibility Governance
Focuses on the impact
Focuses on how to obey
of the company on
rules and policies of the
environment, humans
company
and the economy
Looking on the welfare of

Deals with corporate
the management and the
imagemanagement employees of the firm
Generally has an Generally has an

external focus internal focus
Diagram 1.1 Difference between Corporate Governance and Corporate Social

Responsibility
Corporations and industries differ in many ways. Size, assets, ownership and other issues
make it impossible to enact exact rules and laws for every situation that corporations face.
Corporate best practices evolved as a standard of basic principles for corporations to strive
for to demonstrate that they’re governing themselves well, and that they’re operating with
honesty, integrity and accountability. All these are linked to corporate governance.
Corporate social responsibility occupies a prominent position for many companies under the
umbrella of good corporate governance, despite the distinction between corporate
governance and corporate social responsibility. Corporate social responsibility is not a
prerequisite for corporate boards, or even an assumption. Yet, several corporate boards feel
that it is in the best interests of the company to participate on some level with corporate
social responsibility. By investing in financial resources, promoting social messages and, in
some cases, becoming bold activists, corporations may display their support with the CSR
principles.
Self-regulatory principles being practice through Corporate Governance when linked to
social and environmental concerns and other external factors the organization also
perform its Corporate Social Responsibility.
SHAREHODER VS STAKEHOLDER
The words stakeholder and shareholder are often used loosely in business. The two words
are commonly thought of as synonyms and are used interchangeably, but there are some key
differences between them. These differences reveal how to appropriately manage
stakeholders and shareholders in your organization.

For example, a shareholder is always a stakeholder in a corporation, but a stakeholder is not
always a shareholder. The distinction lies in their relationship to the corporation and their
priorities. Different priorities and levels of authority require different approaches in
formality, communication and reporting.
It’s important that these terms are well-defined to avoid confusion.
What Is a Shareholder?
A shareholder is a person or an institution that owns shares or stock in a public or private
operation. They are often referred to as members of a corporation, and they have a financial
interest in the profitability of the organization or project.
Depending on the applicable laws and rules of the corporation or shareholders’ agreement,
shareholders have the right to do the following (and more):
 Sell their shares

 Vote on those nominated for the board
 Nominate directors
 Vote on mergers and changes to the corporate charter
 Receive dividends
 Gain information on publicly traded companies
 Sue for a violation of fiduciary duty
 Buy new shares
Shareholders have a vested interest in the company or project. That interest is reflected in
their desire to see an increase in share price and dividends, if the company is public. If they’re
shareholders in a project, then their interests are tied to the project’s success.
The money that is invested in a company by shareholders can be withdrawn for a profit. It
can even be invested in other organizations, some of which could be in competition with the
other. Therefore, the shareholder is an owner of the company, but not necessarily with the
company’s interests first.
What Is a Stakeholder?
A stakeholder can be either an individual, a group or an organization impacted by the
outcome of the business or project. Therefore, they have an interest in the success of such
business or project.
Therefore, stakeholders can be internal, such as employees, shareholders and managers—but
stakeholders can also be external. They are parties that are not directly in a relationship with
the organization itself, but still the organization’s actions affect it, such as suppliers, vendors,
creditors, the community and public groups. Basically, stakeholders are those who will be
impacted by the business when in progress and those who will be impacted by the product or
service when completed.
Differences between Stakeholders and Shareholders
Before getting into the differences, there is a similarity between stakeholders and
shareholders. That similarity is their importance: in recent years, corporations have begun to
be answerable to their stakeholders and shareholders alike. Unlike in the past, where
corporations were mostly interested in issues related to their shareholders.
There has been a rise in something called corporate social responsibility (CSR), which
encourages companies to take the interest of all stakeholders into consideration when

making decisions, rather than just the interests of its shareholders. Businesses should
not solely focused on increasing profits but also give priorities on their ethical, social
and environmental responsibilities.
CSR and Disclosure

CSR disclosure can be defined as the information that a company discloses about its
environmental impact and its relationship with its stakeholders by means of relevant
communication channels
Firms nowadays are now preparing their corporate social responsibility or sustainability
report periodically (usually annually) published by companies with the goal of sharing their
corporate social responsibility actions and results.
The report synthesizes and makes public the information organizations decide to
communicate regarding their commitments and actions in social and environmental areas. By
doing so, organizations let stakeholders (i.e., all parties interested in their activities) aware of
how they are integrating the principles of sustainable development into their everyday
operations.
Currently, companies spend a great deal of effort on Corporate Social Responsibility (CSR)
disclosures.
What Is the Purpose of a CSR Report?
The main intention of a CSR or sustainability report is to improve the transparency of
organizations’ activities. The goal is twofold:
On one hand, CSR reports aim to enable companies to measure the impact of their activities
on the environment, on society and on the economy (the famous triple-bottom-line). In this
way, companies can get accurate and insightful data which will help them improve their
processes and have a more positive impact in society and in the world.
On the other hand, a CSR or sustainability report also allows companies to externally
communicate with their stakeholders what are their goals regarding sustainable
development and CSR. This allows stakeholders such as employees, investors, media, NGOs,
among other interested parties, to get to know better what are the short, medium and long-
term goals of companies and make more informed decisions. These decisions can spread
from investing in a business, buying its products, writing positive (or negative) reviews,
protesting in the streets against the intentions or actions of an organization
The Internal Organizational Benefits of CSR Report
Internally speaking, CSR reports are important because they allow companies to estimate the
impact their operations have on the environment, society, and the economy. Through the
(supposedly) detailed and meaningful data collected (or simply gathered) for the
sustainability report, companies have a chance to improve their operations and to reduce
operational costs. Not only do they become better prepared to optimize and reduce their
energy consumption; as a result of reviewing their waste cycles product innovation strategies
or circular economy opportunities can be found.
At the same time, collecting this data requires joint efforts from different departments. As a
result of the hype that’s created, employees often end up becoming more conscious the

company is focusing on CSR and sustainability, which leaves them proud – increasing
employee retention and decreasing turnover.
The External Organizational Benefits of CSR Report
When it comes to external benefits, CSR reports can help companies engage better with their
interested parties. By letting their stakeholders know about the organization’s short, medium
and long-term project decisions, companies can be better understood which may have
positive financial outputs.
For instance, a sustainability report helps stakeholders become aware of whether a
company is positively contributing to minimizing the negative impacts of an
environmental hazard or that it is only focused on growing profits for its managers
and investors.
In this way, consumers can decide whether they want to buy from a brand that
protects orangutans by sourcing sustainable palm oil or one that produces clothes
locally with little environmental harm and paying fair wages. Investors can anticipate
if companies are becoming more resilient to face consequences of climate change and
decide whether to invest in them or not. Journalists can share best case practices from
companies leading the way on topics such as microplastics pollution or ocean
acidification. NGOs can exert pressure and expose irresponsible practices.
Corporate Moral Agency

Like a person, a corporation has both rights and duties. It implies that there are things that a
corporation should do and things that it should not do.
A basic assumption of business ethics is that the same moral theories and principles that we
use to evaluate an individual’s actions can also be applied to evaluate the acts and practices of
business organizations.
From the standpoint of business ethics, corporations should take responsibility for the effects
of their acts and practices on individuals, society and the environment
It means that we can apply moral theories and principles to evaluate a corporation’s activities
to see whether such activities are desirable, acceptable or questionable.
Examples of questionable, unacceptable or unethical business practices include
selling dangerous or harmful products to customers, treating employees unfairly,
neglecting workplace safety, ignoring the environmental impact of business activity,
and so on.
Debatable Issues on Corporate Moral Agency
If the corporation is a legal person, is it also a moral person? Can corporations act like
moral agents? Can corporations be held morally responsible in the same way that individuals
can be held morally responsible for their actions?
Opposing Arguments on Corporate Moral Agency
 Many people reject the notion of corporate moral agency by arguing that the
corporation is an artificial entity designed for a single purpose – the pursuit of profit

 Unlike natural persons (human persons), corporations cannot function as moral
agents, and thus cannot be held responsible for what they do.
 Corporations cannot be moral agents because they can only function as a result of
human interactions.
 Corporations do not have the status of moral agents who can act independently or
take responsibility for their actions. On this view, only those individual members who
make up the corporations can possess moral agency and function as bearers of moral
responsibilities.
Positive Viewpoints on Corporate Moral Agency
 Some argue that groups or organizations, like individuals, can be held responsible for
their actions and decisions.
 According to Peter French corporate moral agency implies that corporations can be
the proper bearers of moral responsibilities in a manner that is distinct from their
human members
Peter French suggests that the

corporate internal decision (CID)
structures within corporations
allow them to function as
responsible moral agents.
French argues that the capacity for intentionality (capacity for intentional action) is a
sufficient condition for moral agency and personhood status. Because corporations
are intentional agents, they can be held responsible for their actions.
A corporate internal decision (CID) structure is defined by French as a system of rules
and procedures specifying the respective roles and responsibilities of board
members, executives, managers, and employees; and thereby allowing their
intentions to be interwoven or synthesized into a corporate decision
Corporate actions, as French points out, are often the result of collective, not
individual, decision making. The nature and structure of a modern corporate
organization allows nearly everyone in it to share moral responsibility for what it
does.
In practice, however, this ‘diffusion of responsibility’ can mean that no particular
person or persons are held morally responsible. Indeed, each of these individuals
may have been only following established procedures and decision-making
guidelines. Inside a corporation it may often be difficult, even impossible, to assign
responsibility for a particular outcome to any single individual because so many
different people are acting and contributed to it in small ways
Institutionalizing Ethics within Corporations

Have you been to the Honesty Coffee Shop in Batanes? The store has no cashier. Just get what
you want to buy and leave your payment in the cash box. This shows that a business can
operate with the ethical principle of honesty.
On 22 September 2016, the Securities and Exchange Commission issued the draft Code of
Corporate Governance for publicly listed companies for public comments. Its goal is to help
companies develop and sustain an ethical corporate culture. One of its recommendations is to
establish a code of business conduct and ethics that would “provide standards for
professional and ethical behavior, as well as articulate acceptable and unacceptable conduct
and practices.” It is the job of the company’s board of directors to implement the code and
make sure that management and employees comply with internal policies.
Many companies in the Philippines today are in the process or have already developed their
code. The real challenge is in its implementation and monitoring compliance.
Integrated Approach to Ethics Programs
Implementing a Code of Business Conduct and Ethics is a strong safeguard provided by the
regulatory environment. The real challenge is how to live the Code. Bribery and corruption
continue to be the focus in current ethical discussions because of the higher risks associated
with these and the problems they pose in our society. However, living the Code on a daily
basis is something that should merit equal attention.
Having an integrated approach in implementing the Code is one of the solutions. This
approach is based on a greater awareness of the sense of purpose of the company and the
corporate values that guide its existence. The Code then comes to life with the ethical
corporate and individual actions of those charged with corporate governance and its people
moving towards realizing this purpose.
References
https://www.powershow.com/MjVkO/Ethics_Moral_Agency_and_Moral_Leadership
https://ukdiss.com/social-responsibility-and-social-responsibility-disclosure.php
https://bizfluent.com/infodifferences-governance-corporate-social-responsibility.htm
Assessing Learning Activity
Name: _____________________ Date : _________________

Section: _____________________
Learning Activity 6.
Directions. Create a colorful poster showing why businesses should be socially, ethically and
environmentally responsible. Explain your work in the next sheet.
Poster Rubric
Category 100 90 80 70
Graphic All graphics are Most graphics All graphics Graphics do not
relevance related are related relate to the relate
(70%) to the topic and to the topic and topic. to the topic
make it most

easier to make it easier to
understand. understand.
Attractiveness The poster is The poster is The poster is The poster is
(30%) exceptionally attractive acceptably distractingly messy
attractive in terms of attractive or
in terms of design, though it may very poorly
design, layout, and be a bit designed. It
layout, and neatness messy. is not attractive.
neatness.
Poster
Explanation

CHAPTER VII. ETHICAL ISSUES AND PROBLEM IN BUSINESS AND THE
CORPORATE WORLD
Overview
This chapter examines an array of ethical issues and problems that affect the flow of
business as a dynamic yet complex human activity.
Business is a productive human activity that brings beneficial contributions to both
people and society. The business produces employment, fair deals, creativity, the
advancement of technology, customer’ satisfaction, among others. Ironically, however,
business is also an activity that provides an opportunity for some unscrupulous people to
take advantage of others, e.g., the abuse of fiduciary relationship between employers and
employees as well as between buyers and sellers.
At the end of this chapter, the students are expected to:

1. Examine the different issues and problems in business and the business
enterprise from the moral perspective
2. Develop a framework for analysis and resolution of ethical dilemmas and problems
affecting business
3. Acquire basic information about questionable business practices and their impact on
its stakeholders
4. Develop problem-solving skills using the philosophical-qualitative approach to
resolve ethical problems in the business and corporate world
Setting Up
Name: ____________________________________ Date: _______
Course/Year/Section: ____________ Score: _
Write down an example of an ethical dilemma that you faced in your own personal
environment.
_
Lesson Proper
SOME OF THE ETHICAL ISSUES AND PROBLEM IN BUSINESS AND THE CORPORATE WORLD
ARE THE FOLLOWING:
1. Sexual Harassment
2. The Problem of Just Wage and Unfair Compensation
3. Unjust Dismissal
4. Gift-giving and Bribery
5. Whistle Blowing
6. Conflict of Interest
7. Money Laundering
8. Insider Trading
9. Obligations to the Firm
10. Loyalty to the Company
1. SEXUAL HARASSMENT
Sexual Harassment is an issue in the corporate world that must be looked into
because it can create a hostile and unhealthy workplace for the employees. Consequently, the
Congress of the Philippines enacted the Anti-Sexual Act of 1995 or R.A. 7877 declaring sexual
harassment unlawful in the employment, education, or training environment, the other
purpose.

“The state shall value the dignity of every individual, enhance the development of its
human resources, guarantee full respect for human rights, and uphold the dignity of workers,
employees, applicants for employment, students or those undergoing training, instruction or
education.
Towards this end, all forms of sexual harassment in the employment, education, or
training environment are hereby declared unlawful.
The Civil Rights Act of 1964 (Title VII) of the United States of American, from our law,
was patterned, defines sexual harassment as “Unwelcome sexual advances, request for sexual
favors, and other verbal or physical conduct of a sexual nature constitute sexual harassment
when submission to or rejection of this conduct explicitly or implicitly affects an individual
employment, unreasonably interferes with an individual’s work performance or creates an
intimidating, hostile or offensive work environment.”
Republic Act No. 7877 defines sexual harassment as, “Employer, employee, manager,
supervisor, an agent of the employer, teacher, instructor, professor, coach, trainer or any
other person who, having authority, influence or moral ascendancy over another in a work or
training or education environment demands, request or otherwise requires any sexual favor
from the other, regardless of whether the demand, request or requirements for submissions
is accepted by the object of said act.”
Why Does Sexual Harassment Occur?
Sexual harassment occurs due to the power struggle between men and women as a
response to a real or imagined loss of power or as an expression of retaliation or flexing of
the new power. This also happens because some organizations and managers allow it to
happen. Historically, sexual harassment has always occurred but there used to be no label for
such behavior. The industrial revolution brought about changes in the traditional function of
men and women which greatly increased gender specialization and formed a new kind of
workplace in the western world. Men and women no longer work together on the farm or in
the family business. The responsibility of each is more specialized.
The workforce has been continuously joined by more and more women as things
continued to change in the past decades. Some moved into jobs traditionally held by men.
Because of these changes, the balance is shifting. Sexual harassment is one effect of this shift.
When harassment is committed by a male against a female, it may be a response to the real or
imagined loss of power. When committed by a woman towards a man, it may be an
expression of retaliation or flexing of the new power.
Sexual harassment falls into two general categories:
1. The “Quid Pro Quo” Harassment
“Quid pro quo” means “this for that” (something for something) and is defined as
requiring a sexual favor or interaction as a condition of employment or in exchange for an
employment benefit (such as promotion, transfer, pay raise, and the like). A manager uses his
authority to grant pay increases and promotions as a means to extort sexual favors from an
employee, e.g., “Go to bed with me and you will get that promotion you want.”
2. A harassment that creates a hostile environment.
In the hostile environment type of harassment, abuses include verbal, physical, and
visual conducts that create an intimidating, offensive, or hostile environment in the

workplace that interferes with work performance. This type of harassment must be based on
race, religion, national origin, sex, age, marital status, veteran status, sexual orientation, or
disability. Some examples of a hostile environment are as follows.
 Unwanted touching, patting, pinching, or brushing up against the person;
 Comments about your body, leering, wolf-whistling, catcalls, insults of a sexual
nature, persistently pestering
 Displaying or circulation of pornographic pictures with the intention of harassing
someone or posting or explicitly sexual materials;
 Workplace blackmails, e.g., suggestions that sexual favors may further your career (or
refusal may hinder it):
 Green jokes;
 Obscene letters;
 Sexual proposition; and
 Suggestive looks.
The Profiles of the Victim and the Harasser
1. The Victim as well as the harasser may be a woman or a man. The victim does not
have to be of the opposite sex.
2. The harasser can be the victim’s supervisor, an agent of the employer, or a supervisor
in another area, a coworker, or a non-employee.
3. The victim does not have to be the person harassed but could be anyone affected by
the offensive conduct.
4. The harasser’s conduct must be unwelcome.
It is helpful for the victim to directly inform the harasser that the conduct is
unwelcome and must stop. The victim should use any employer complaint mechanism or
grievance system available. Although the victim of sexual harassment and the person accused
of sexual harassment may be peer, more frequently, the victims are in a position than the
accused. The most common example is the boss-subordinate relationship. Harassment also
occurs between customer/client and provides.
How Does Sexual Harassment Affect the Workplace?

In the study made by Redbook Magazine (1981), the data have shown that 80 percent
of the persons interviewed believed they have been sexually harassed out of 140,000
respondents (men and women). The study also tackled different types of harassment such as
usage of words, jokes, and different gestures creating a hostile and offensive work
environment. It affected the individuals harassed and the persons accused, who may be
innocent. Such cases can generate costly lawsuits, unfavorable publicity, or the invasion of
privacy. It can also affect the bottom line of the employer, managers, and co-workers, and
affect the entire life of an organization and its members.
How to Prevent Sexual Harassment in the Workplace
A strong sexual harassment policy can serve as a significant step an organization can
take in preventing sexual harassment in the workplace and can be a tool to ensure a safe,
secure, and positive work environment. Some examples of policy development are the
following:

 A broad anti-harassment/positive environment policy that includes a statement that
specifically addresses sexual harassment;
 A separate sexual harassment policy that covers all organization member; and
 Separate sexual harassment policy, one the addresses non-management employees
and one that addresses management.
Sexual harassment is very costly and causes low morale among employees and a
decrease in productivity. Annoyed, scared disgraced people are incapable of performing well.
If not dealt with, sexual harassment may result in costly lawsuits, dreadful publicity, and ruin
of an organization's image that took years to establish.
The possibility of sexual harassment being completely stopped will only come
through with the commitment of the organization and employees. Everyone, male or female,
wants a secure office to work in harmony, free of threats and apprehension.
Communicating the Sexual Harassment Policy
Communication is the key to make a policy an effective one. A well-written policy is
not enough, regular actions must also be made such as permanent posting on bulletin boards,
memos, articles in the organization’s newsletters, meetings, and training. Training programs
may come up with various topics to support the anti-harassment programs and to assure
each employee of a safe and harassment-free workplace environment.
Legal Penalties of R.A. 7877
 Imprisonment of not less than one (1) month but not more than six (6) months.
 Fine of not less than Ten Thousand Pesos (P10,000) but not more than Twenty
Thousand Pesos (P20,000).
2. THE PROBLEM OF JUST WAGE AND UNFAIR COMPENSATION

WORK AND COMPENSATION
Work is said to be for the purpose of obtaining economic gain for the laborer. Most
agree that work is directed to the promotion of life. The duty to preserve one’s life implies the
duty to work and that each has a personal duty to take care of himself and not to be a burden
to others.
Compensation for an accomplished work or for services rendered is part of the
essence of ‘work’. One is willing to work in exchange for remuneration or rewards he will
receive from working. It can be in the form of wages, shares of profit, harvest or commercial
goods, in-kind payments, and other remunerative fringe benefits. Such remuneration or
reward, including both financial and non-financial, will be received by a person from working.
It is believed that by properly compensating, an equitable system for the employer
and employee will be created which is the main objective. Thus, the general concern mainly
revolves around justice being the substance of compensation.
The Question of Just Wage
The definition of wage and the fair wage has a long history as a lot of people have
already argued on the appropriate criteria to consider in setting the so-called just wage. A
just wage is defined as the remuneration which is enough to support the wage-earner in

reasonable and frugal comfort. The Catholic Church teaches us that “a just wage is the
legitimate fruit of labor.”
The Issue of Just Wage Has Also Been Discussed by Other Agencies
Universal Declaration of Human Rights
The 1948 Universal Declaration of Human Rights protects the basic rights of the
workers, more specifically:
“The right to work, to free choice of employment, to just and favorable conditions of
work, and to protection against unemployment (Art 23 [1]) and the right ‘to equal pay for
equal work (Art 23 {2}”
International Convention on Economic, Social and Cultural Rights
The1966 International Convention on Economic, Social, and Cultural Rights states in
Article 7:
“The right to fair wages and equal remuneration for work of equal value"
The International Labor Office Conventions has adopted ILO Convention No. 100
“Equally pay for men and women workers.”
The Philippine Constitution and Republic Act 6727
Spread in various parts of the 1987 Philippine Constitution are specific
pronouncements and mandates on the protection and promotion of the rights of workers in
the public and private sectors, as indicated in letter “g” of Sec. 3 of Art. XIII
"That the workers are entitled to a living wage.”
Republic Act No. 6727
The Wage Rationalization Act declared the policy of the State to rationalize the fixing
of minimum wages and to promote productivity-improvement and gain-sharing scheme to
ensure a decent standard of living for the workers and their families. The minimum wage
rates shall be adjusted in a fair and equitable manner, considering existing regional
disparities in the cost of living and other socioeconomic-factors.
Government Agencies Involved
Equitability and being just must always be considered in determining wages in our
country. The ones primarily responsible for determining the minimum wage for Filipino
workers are The National Wage and Productivity Commission (NWPC) and the Regional
Tripartite Wages and Productivity Boards (RTWPB). They handle the minimum wage rates of
the workers of each and every region of the country. It is their duty that wage shall be as
nearly adequate as is economically feasible to maintain the minimum standards of living
necessary for the health, efficiency, and general well-being of the workers.
Factors to Consider in the Formulation of Fair Wages

Setting wage rates and salaries were some of the problems being faced by every
employer. Others may find it easy to say that companies should pay a fair and just wage.
However, there are so many variables that no one can say how much a person should be paid

for a job. Factors such as workers’ contribution to the firm, the market for labor, the
competitive position of the organization, the bargaining power of both firms and unions, and
individual needs all conspire to make a simple answer impossible. Further, that simple
answer may become more complicated by the fact that remuneration also includes health
care, retirement plans, bonuses, commissions, and other incentives. The following more
specific factors should be taken into consideration to provide a clearer picture of what a just
and fair wage should be.
1. External Market Factors. These refer to the supply and demand for labor and so-
called economic conditions and underemployment. The principle behind this is that
wages are relatively high if there is a scarce supply of labor, and the same is low if
there are more opportunities for labor.
2. Laws and Regulation. It is stated that workers should be paid in accordance with
laws and regulations issued by the government. It requires that employers pay at
least the minimum wage. The government usually determines the minimum wage for
its country. In our country, the National Wage and Productivity Commission (NWPC)
and the Regional Tripartite Wages and Productivity Boards (RTWPB) determine the
minimum wage. But still, the minimum wage is not always acceptable as fair and just.
3. Cost of Living. The cost of living relates to basic maintenance needs and it must be
seriously considered in the formulation of wages. A fair wage should be sufficient to
meet the increase in the cost of living. Thus, if the cost of living goes up by 10%, the
wage should also go up by 10%. Unfortunately, it is a fact that the majority of the
employers cannot automatically adjust wages with the increase in cost of living
means jeopardizing the welfare workers.
4. Prevailing Industry Rate. Some claim that paying workers the average of what other
companies are paying for the same job results in affair wage. However, such a claim is
not universally valid because not all companies have a minimum wage high enough to
maintain a decent standard of living.
5. Organizational Factors. These factors are involved with the assessment of what type
of industry the organization operates, the size of the company, and the organization’s
profitability to justify its ability to provide fair wages to its workers. Likewise,
determining if the organization is unionized or not and if the company is capital or
labor-intensive could contribute to the establishment of a fair wage.
6. Job Factors. The nature of the job itself entails the formulation of a just wage. Duties,
responsibilities, and the skill requirements of the job are probably the most
considerable determinants of a fair wage. An employee should be paid based on the
complexity and difficulty of his job. The concept, however, is not perfectly similar and
true to all employers due to differences in interpretation of skills and tasks.
7. Individual Performances. The trend suggests that individual performances or

productivity ratings affect the determination of wage/salary increases. One who
performs well in his job deserves to receive a proportionate increase in pay. However,
this doesn’t justify providing unfair wages to workers with low-performance ratings.
Some Issues on Just Wage

 The minimum wage mandated by the government is not a guarantee of a just and fair
wage.

 Organizations and businesses usually conclude that they are legally and morally right
when they fulfill their ‘mutual agreement’ with the employees. It is objected that the
mutually agreed upon wages may not be advantageous to the workers.
 Geographic differences hinder the formulation of a perfectly common definition of a
fair wage. Some communities have a higher cost of living than others.
 Wage indexation to the cost of living, where the wage is automatically adjusted with
the increases in the cost of living, is not usually met by the majority of employers. One
valid reason is the organizations’ insufficient financial resources for the obvious fact
that they are unfavorably affected by such economic fluctuations.
 Companies have different interpretations of the justifiable pay for certain job
positions, skills, and tasks. Thus, the prevailing rate in the industry alone could not
perfectly establish a just wage.
 The law of supply and demand on labor, e.g. the more the supply of labor the less the
compensation being given to workers.
 Inflation rate as one of the major economic indicators, the inflation rate also dictates
the formulation of just wages as it affects the price of commodities.
3. UNJUST DISMISSAL
Unjust dismissal is when an employee is dismissed from their job in a harsh, unfair, or
unreasonable manner.
Applying for unjust dismissal
Employees have to apply to the Commission within 21 days of the dismissal taking
effect. If you think you have been unfairly dismissed you need to contact the Commission as
soon as possible.
Minimum employment period
Employees have to be employed for at least 6 months before they can apply for unfair
dismissal. Employees working for a small business have to be employed for at least 12
months before they can apply. If there was a change of business ownership, service with the
first employer may count as service with the second employer when calculating the minimum
employment period.
4. GIFT-GIVING AND BRIBERY

Gift-giving is merely an act of extending goodwill to an individual to share something
with them. Giving gifts to the customer, clients, and business partners is a common practice in
the business community. It is normally observed during Special occasions like Christmas,
New Year, and sometimes even during birthdays.
Businesses usually engage in gift-giving for the following reasons:
 To show appreciation for a favor receives:
 To effectively establish goodwill with business partners;
 To advertise: end
 To compete effectively against competitors.
The following are the common forms of gift-giving;

 Samples
 Raffle coupons/certificates
 Rebates/cash refunds
 Padding
 Premiums
 Prices
 Patronage awards (rewards)
 Tie-up promotions
 Allowance
 Free goods
 Tips
Is Gift-Giving Ethical or Unethical?

Gift-giving between clients and business associates can raise conflict-of-interest
problems and knowing where to draw the line between what is right and wrong, is not
always easy. The clear point is that those who cross that line, intentionally or not, end up in
big trouble.
Examples
Supposing you are a lawyer by profession and,
Leila, a former client, has steered a half dozen prospective clients your way this year,
and several of them have become valued clients of your firm. Would it be an appropriate
gesture, to thank her by inviting her and her husband out of dinner?
Mateo, your former classmate in law school (now an established lawyer practitioner)
has referred a case that in a significant settlement. Would there be anything wrong with
sending him a pair of concert tickets as a “thank you" gesture?
It is indeed difficult to determine the morality of giving gifts. Most agree that
accepting and receiving a bribe is a violation of professional ethics, but we may not always
find “easy to determine what is and is not a bribe. Certainly not all examples of giving and
accepting gifts and amenities qualify as bribery. Just as not all cases of taking another’s
should be considered theft.
For professionals and for people in the business world, the rules are not so dear and
identified, but a number of considerations can help one determine the morality of giving and
receiving gifts in business situations.
Factors in Determining the Morality of Gift-Giving

[Of William Show 1999 Business Ethics. (San Jose, Cal., USA Wadsworth Publishing) pp. 292-
294 and A. Gorospe. 1995. Philippine Business Ethics. (Manila: GIC Enterprises Inc.) p.36]
1. Value of the Gift. Is the gift of nominal value, or is it substantial enough to influence a
business decision? The term “nominal” or "substantial" in this point of view is
relative. It varies on beliefs and culture of a particular group of people and society
from the majority point of view, a valuable gift is definitely unethical. It is for this
main reason that the “goodwill” motives of the giver are open to doubt.

2. Purpose of the Gift. As long as the gift is not intended or received as a bribe and
remains nominal, there doesn’t appear to be any serious problem. What is important
to this question is the consideration of whether the gift is directly tied to accepted
business practice or not. For example, gifts like appointment books, calendars, or
pens and pencils with the donor’s name clearly imprinted on them may be perceived
as a form of advertisement.
3. Circumstances under Which the Gift Was Given or Received. A gift given during
the holiday season, for a store opening, or one attached to a special event is
circumstantially different from one unattached 0 any special event or occasion.
Another question is whether the gifts were given openly or secretly. Openly given
gifts raise fewer questions than those gifts known only to the donors and recipients.
4. Position between or Relationship of the Giver and Receiver. Could the recipient’s
opinion, influence, or decision result in preferential treatment in favor of the donor?
In a superior and subordinate relationship, for instance, the donors or the recipients
have to make it clear that they don't intend to allow the gift to influence their actions
and decisions.
5. Acceptable Business Practice in the Industry. Could the act be considered

acceptable in this kind of business? Monetary gifts and tips are usually practiced in
numerous service industries. When gratuities are an integral part of customary
business practice, they are far less prone to pose moral questions.
6. Company Policy. If firms explicitly forbid the practice of giving and receiving gifts to
its customers, vendors or suppliers, associates, or corporate directors. Then gift-
giving would normally be wrong.
7. Laws and Regulations. Certain federal, state, or local government institutions may
impose laws that forbid accepting gifts from firms with which they do business. When
these gift transactions violate the law, they are clearly unacceptable.
Still, the ultimate moral judgment hinges on whether an objective party could
reasonably suspect that the gift might lead the recipient to sacrifice the interest of the firm for
his/her own personal gain.
BRIBERY
Bribery is defined as a practice of giving remuneration for the performance of an act
that is inconsistent with the work contract or the nature of the work one has been hired to
perform. It is intended to induce people inside the business or other organization to make
decisions that would not be justifiable according to normal business or other criteria. It was
then identified to be a form of corruption and is generally immoral and for most is illegal.
Remuneration; termed as bribes, can be in the form of monetary gifts, entertainment, or
preferential treatment.
Examples of bribery:
 A motorist offers a certain amount of money to a police officer in order not to be
issued a ticket for over speeding.
 A citizen seeking paperwork or utility line connections gives an expensive gift to a
functionary in exchange for faster service;

 A construction company sharing a percentage of its income to a civil servant in order
to win a contract; and
 A narcotics smuggler bribes a judge to lessen criminal penalties.
In some cases, the briber holds a powerful role and controls the transaction; In other
cases, a bribe may be effectively extracted from the person paying it.
Bribery is unethical because of the following reasons:
 It is generally used as an instrument to gain a personal or corporate advantage;
 It corrupts the concept of justice and equality;
 Bribery produces cynicism and a general distrust of Institutions;
 It destroys people’s trust in the Integrity of professional services, of government and
the courts, of law enforcement, religion, and anything It touches; and
 It treats people as commodities whose honor can be bought and sold. It thus tends to
degrade the respect we owe to other human beings.
5. WHISTLEBLOWING
Whistleblowing is the disclosure by an employee or confidential information related
to some danger, fraud, or other illegal or unethical conduct connected with the Workmate be
it of the employer or of his fellow employees.
A whistleblower is someone in an organization who witnesses behavior by a member
that is either contrary is the mission of the organization, or threatening to the public interest,
and who decides to speak out publicly about it.
A person, employee, or officer of any institutions (profit or non-profit. private or
public) who believes that he or she has been ordered to perform some act or she/he obtained
knowledge that the institution is engaged in activities which;
 Are believed to cause unnecessary harm to both parties;
 Are in violation of human rights;
 Or run counter the defined purpose of the institution or organization; and
 Who informs the public of this fact
If the employee just complains to someone inside the company, that is not
whistleblowing, and the employee is not protected by the whistleblower laws. However, the
employee may be protected under other laws. For example, it is illegal to fire someone for
complaining of sexual harassment or discrimination.
Four Elements that Encompass Whistleblowing:
 The disclosure of information, be it internal or external, must be made in good faith;
 The disclosure must be made by a current, former, or prospective employee;
 The information must be linked with misconduct on the part of the employer; and
 Evidence of the misconduct should exist as well as information regarding the identity
of the wrongdoer.
TYPES OF WHISTLEBLOWING
1. Internal whistleblowing occurs within the organization It is going “over the head of
immediate supervisors to inform higher management of the wrongdoing."

2. External whistleblowing occurs outside the organization. It is revealing to outside
individuals or groups such as media men, public interest groups, regulatory bodies, or
nongovernment organizations.
3. Current- those who blow the whistle on present employers.
4. Alumni- those who blow the whistle on former employers.
5. Open -the whistleblower discloses his identity.
6. Anonymous-the whistleblower does not disclose his identity.
Another important facet of whistleblowing involves the potential for retaliation by
management. Lack of support from management and supervisors, external whistleblowing
has been shown to be consistently related to retaliation. Studies also revealed that
whistleblowers experience each of the following retaliation:
 Lost their job or were forced to retire;
 Received negative job performance evaluations;
 Had work more closely monitored by supervisors;
 Were criticized or avoided by co-workers;
 Were blacklisted from getting another job in their field;
 They were considered traitors to their organizations.
On the contrary, internal whistleblowing produces less retaliation than external
whistleblowing. Along with the management retaliation, the majority of the whistleblowers
also experience severe emotional effects of their whistleblowing activity:
 Severe depression or anxiety;
 Feelings of Isolation or powerlessness;
 Distrust of others;
 Declining physical health;
 Severe financial decline; and
 Problems with family relations.
It is important to note the negative effects of whistleblowing. Every year, thousands of
employees, managers, corporate executive officers, and officials witness wrongdoing on the
job. Some speak out. Their actions may ultimately save ethics and millions of pesos. But
rather than receive praise for their integrity, these whistleblowers are often targeted for
harassment, intimidation, demotion, and dismissal. In the context of corruption and bribery,
this situation has particular relevance. Unless people are enabled and encouraged to blow the
whistle when a bribe is solicited, the fight against corruption has little chance to succeed. The
primary aim of whistleblowing is that concerns about corruption and bribery can be properly
raised and addressed in the workplace or with the person responsible.
6. CONFLICT OF INTEREST
Conflict of interest in the business context occurs when a person acts in a way that is
to his/her advantage at the expense of the employing organization. At the time of hiring,
when an employee agrees to the terms of a contract, there is also an implicit agreement that
the employee will not sacrifice the interest of the organization for his or her personal interest.
Conflict of interest violates the principles of impartiality. The “interest" may be financial or
not.
The common factors that create a conflict of interest are commercial bribes and gifts.
A commercial bribe can be in the form of money, tangible goods, or services. An employee

receives something from a person outside the firm with the understanding that when there is
a transaction between that person of the firm he or she represents and the employee’s firm,
the employee will intervene in favor of that person or firm. Commercial extortion occurs
when an employee demands consideration from a person outside the firm as a condition to
intervene in favor of that person or firm when a transaction occurs. Such a consideration
affects the judgment of the employee and prevents him/her from acting objectively in the
transaction. In either case, the employee’s firm is the loser.
Accepting a gift is unethical it acts as a bribe or extortion in that it influences the'
impartial judgment of the employee. The value of the gift, its purpose, the circumstances
surrounding the actual presentation of the gift, the accepted business practice in the region,
and the company policy regarding gifts should all be taken into consideration when
evaluating whether or not ethical issues are involved.
General Principles
 The term "conflict of interest” means something more than individual bias. There
must be an interest, ordinarily financial, that could be directly affected by the work of
the committee.
 The term “conflict of interest” applies only to current interests. It does not apply to
past interests that have expired, no longer exist, and cannot reasonably affect current
behavior. Nor does it apply to possible interests that may arise in the future but not
currently exist, because such future interests are inherently speculative and
uncertain. For example, a pending formal or informal application for a particular job
is a current interest, but the mere possibility that one might apply for such a job in the
future is not a current interest.
 The term “conflict of interest” applies not only to the personal financial interest
individual but also to the interest of others with whom the individual has a
substantial common financial interest if these interests are relevant to the functions
to be performed.
Type of Conflict of Interest

1. Self-dealing. For example, you work for the government and use your official
position to secure a contract for a private consulting company you own. Another
instance is using your government position to get a summer job for your daughter.
2. Accepting benefits. Bribery is one example; substantial (no-token) gifts are another.
For example, you are the purchasing agent of your department and you accept a case
of liquor from a major supplier.
3. Influence peddling. Here, the professional solicits benefits in exchange for using her
influence to unfairly advance the interest of a particular party.
4. Using your employer's property for private advantage. This could be as obvious
as stealing office supplies for home use. Or it might be a bit more subtle, say, using
software that is licensed to your employer for private consulting work of your own. In
the first case, the employer’s permission eliminates the conflict; while in the second, it
doesn’t.

5. Outside employment or moonlighting. An example would be setting up a business
on the side that is in direct competition with your employer. Another case would be
taking on so many outside clients that you don’t have the time and energy to devote to
your regular employer. combination with influence peddling, it might be that a
professional employed in the public service sells private consulting services to an
individual with the assurance that they will secure benefits from the government. ”If
you use my company, I am sure that you will pass the environmental review."
6. Post-employment. Here, a risky situation can be one in which a person resigns from
public or private employment and goes into business in the same area. For example, a
former public servant sets up a practice lobbying the former department in which she
was employed.
7. MONEY LAUNDERING
Money laundering is the process used to disguise the source of money or assets
derived from criminal activity. Profit-motivated crimes span a variety of illegal activities from
drug trafficking and smuggling to fraud, extortion, and corruption.
Money laundering facilitates corruption and can destabilize the economies of
susceptible countries. It also compromises the integrity of legitimate financial systems and
institutions and gives organized crime the funds it needs to conduct further criminal
activities. It is a global problem, and the techniques used are numerous and can be very
sophisticated. Technological advances in e-commerce, the global diversification of financial
markets, and new financial product developments provide further opportunities to launder
illegal profit and obscure the money trail leading back to the underlying crime.
Money Laundering Process
Money laundering is a diverse and often complex process. It basically involves three
independent steps that often occur simultaneously:
1. Placement - puts the "dirty money" into the legitimate financial system
2. Layering - conceals the source of the money through a series of transactions
and bookkeeping tricks.
3. In the final step, integration, the now-laundered money is withdrawn from
the legitimate account to be used for whatever purposes the criminals have in
mind for it.
FINTRAC's financial intelligence plays a critical role in helping to combat money
laundering. This financial intelligence is used to assist money laundering and terrorist
financing investigations in the context of a wider variety of criminal investigations, where the
origins of the suspected criminal proceeds are linked to drug trafficking, fraud, tax evasion.
corruption, and other criminal offenses.
8. INSIDER TRADING
Insider trading refers to significant facts that have not yet made public and are likely
to affect stock prices. It is being prohibited by the rules and regulations of the Securities and
Exchange Commission (SEC). SEC defines insider as (a) insider meaning, the issuer, (b) a

director or officer (or any person performing similar functions), or a person controlling the
issuer; gives or gave him access to material information about the issuer or the security that
is not generally available to the public; (c) a government employee, director, or officer of an
exchange, clearing agency and/or self-regulatory organization who has access to material
information about an issuer or a security that is not generally available to the public; or (d) a
person who learns such information by a communication from any of the forgoing insiders.
The Securities and Exchange Commission considers an “insider” to be anyone who
has pertinent information that is not publicly available, and that gives the trader an
advantage over the public. Thus secretaries, lawyers, consultants, financial partners, and
others who have access to inside information and who might ordinarily be considered
outsiders become insiders because of their knowledge as do all others who are given the
pertinent information (De George, 1990)
Moral Arguments
Since insider trading involves the use of insider information, a lot of moral problems
are related to the employee's (insider) use of such information while he or she is still a
member of the firm. De George cites two aspects of this particular problem:
1. One is that of someone within the firm using information for his or her own private
gain, at the expense of the firm (conflict of interest)
2. The other is the use of information by someone within the firm to secure a personal
advantage over those, not in the firm (breach of loyalty)
Obviously, in these two cases, the insider information has been used to take
advantage of others which makes the act morally questionable.
Ethical Issues Related to Insider Trading
 It violates fiduciary relationships between insiders and outside clients
 It promotes greed and personal gain at the expense of others.
 It renders the transaction between two contracting parties as unfair
9. OBLIGATIONS TO THE FIRM

Rights and Obligations of Employees and Employers
In order to maintain industrial peace and work in the spirit of harmony and
cooperation, worker-employer relations should be governed by law. The basic rights of
employees should be respected by the employers and the employees should render their
obligations to the employers.
There are certain obligations that are imposed on an employer. Such obligations may
serve as the rights of the employers by default. Let us see them one by one.
A. Obligations of an Employer
Any employers in addition to special stipulations in the contract of employment have
the following obligations:
1. To provide work to the worker according to the contract of employment.
2. To provide him with materials and implements necessary for the performance of the
work.

3. To pay the worker wages and other necessary payments that should be made.
4. To respect the worker’s human dignity.
5. To take all the necessary occupational safety and health measures and to abide by the
standards and directives given by the appropriate authorities in respect of these
measures.
6. To cover the cost of the medical examination of the worker whenever such medical
examination required.
7. To give the worker, weekly rest days’ public holidays and leave.
8. When the contract of employment is terminated or whenever the worker so requests,
to provide the worker, free of charge, with a certificate stating the type of work he
performed, the length of service, and the salary he was earning.
B. Obligations of Workers
Every worker shall have the following obligations:
1. To perform in person the work specified in his contract of employment
2. To follow instructions given by the employer based on the terms of the contract and
work rules
3. To handle with due care all instruments and tools entrusted to him for work.
4. To report for work always to fit mental and physical conditions
5. To give all proper aid when an accident occurs or an imminent danger threatens life
or property in his place of work without endangering his safety and health.
6. To inform the employer immediately of any act which endangers himself or his fellow
workers or which may prejudice the interests of the undertakings.
7. To observe the provisions of this proclamation, collective agreements, work rules,
and directives issued in accordance with the law.
It is unlawful for a worker to intentionally commit, in the place of work, any act which
endangers life and property and to take away property from the workplace without the
express authorizations of the employer. If an employee report for work in a state of
intoxication or getting drunk he is trespassing employment law.
The employee should be voluntary to submit himself for a medical examination when
required by law or by an employer for reasonable cause except for HIV/AIDS test.
The employer should not impede the worker in any manner in exercise of his rights
or take any measure against him because he exercised his right. It is also unlawful to
discriminate against female workers, in matters of remuneration on the ground of their sex.
Actually, the employer cannot discriminate between workers on the basis of nationality, sex,
religion, political outlook, or any other conditions. Any employer cannot coerce any worker
by force or in any other manner to join or not to join or cease to be a member of a trade union
or to vote for or against any given candidate in elections for trade union offices. Every
employee has the right to work in a safe workplace. So, the employer should not require any
worker to do any work which is hazardous to his life.
C. Working Conditions of Women

Even if every employee is entitled to every right mentioned above, women workers
need some additional rights due to many factors. Women used to be discriminated on the
basis of their sex as regards employment and payment. But labor proclamation states that

women should not be discriminated. It is also prohibited to employ women on types of work
that is listed by the labor minister to be particularly hazardous or harmful to their health.
There are some exceptions for pregnant women. Any pregnant woman shall not be assigned
outside her permanent place of work, provided, however, she shall be transferred to another
place of work if her job is dangerous to their health or pregnancy.
The employment contract of a pregnant woman shall not be terminated during her
pregnancy and until days of her confinement (1 to 2 months after giving birth). But it may be
terminated for some reasons if they are not related to giving birth and pregnancy.
A pregnant woman worker shall be granted a period of 30 consecutive days of leave
with a bar preceding the presumed date of her confinement and a period of 60 consecutive,
days of leave after her confinement. If necessary, upon recommendation of a medical doctor,
she may i.e. entitle to a leave (sick leave) with pay.
10. LOYALTY TO THE COMPANY

Employees’ Loyalty Corporate vs. Personal
Loyalty implies sticking with someone or something even if it goes against your own
self-interest. Especially in business, loyalty carries the expectation that you will be rewarded
for this allegiance.
Essentially, as a company we would define an employee as loyal when at the decision
crossroad he or she will always choose the company’s interests over any others, even making
sacrifices on a personal note to some extent (be It something as small as working late, or
something more serious, such as turning down a competitor’s tempting offer). The question
is: why would someone do it?
Well, need to understand several important aspects of the problem in order to answer
this question.
First of all, you should remember that people of different age groups or better said of
different generations, have completely different attitudes towards loyalty. For example, the
older employees, being close to the end of their career, will naturally tend to hold on to their
working place and would also be interested in different social benefits. The younger people
on today’s job market are known to pay much more attention to promotion opportunities
than to long-term benefits. And employees in their 30’s and 40’s will usually prefer to get
more money right now instead of any long-term benefits or career opportunities.
Naturally, if you’ll be able to provide employees of different age groups with what
they're interested in - you'll earn some loyalty points from their perspective.
More experienced workers can benefit from opportunities, retraining, recognition,
and flexibility. Loyalty may not be what it once was, but most companies will still be better
with at least a core of people who stay with them across decades.
In short, if loyalty is seen as a commitment to keep workers of all ages fulfilled,
productive and involved, it can continue to be cultivated in the workplace -to the benefit of
both employer and employee.
Will it be enough, though?

One more thing to understand about loyalty is that it should be mutual. If you are
seeing your employees as replaceable parts of a mechanism, why would they feel any other
way? If they live in constant fear of being fired, why wouldn’t they think about moving to a
new piece before it happens?
If you want your employees to be loyal to you, they should be convinced that you’re
loyal to them. It could be something as small as showing interest in their lives outside of the
workplace or something as direct as letting them in on how you plan to fight for more
resources for your department. They should know that when they have a problem, they
would not be talking to a faceless corporative representative, but to THEIR BOSS.
My point here is that in our time's loyalty is much better served for small entities,
Such as a leader or a close-knitted group, than too big entities such as companies and
corporations. People can and will act in the interests of the company not out of loyalty to the
company, but out of loyalty to their manager or their department. In the military, they call it a
“buddy system". People today are not easily encouraged to die for their country, but they do it
for their buddies and commanders.
References
Roa, Floriano C. Business Ethics and Social Responsibility 2nd Edition: Rex Book Store
Pascual, Manuel, and Savellano. Study Guide in Good Governance and Social Responsibility
Electronic Sources
https://www.investopedia.com/terms/m/moneylaundering.asp#:~:text=The%20process
%20of%20laundering%20money,of%20transactions%20and%20bookkeeping%20tricks.
https://www.hg.org/legal-articles/rights-and-obligations-of-employees-and-employers-as-
per-the-labor-law-of-ethiopia-23972
https://anyaworksmart.com/2012/12/10/employees-loyalty-corporate-vs-personal/
Assessing of Learning
Activity 1
Name: ____________________________ Score:_ Course/Year/Section: ___________
Date:

1. Explain why the quid pro quo sexual harassment is illegal and immoral.
2. Differentiate bribery from gift-giving.

_
3. Discuss why money laundering is illegal and immoral.

_
_
4. What is your definition of fair wage?
Name: ____________________________ Score:_______
Course/Year/Section: ___________ Date: ____
Case Analysis: The Case of the Malicious Manager

Strike Inc. is a well-known company in the field of Information Technology (IT). It has
been the main and primary producer of educational software and business operational
progress like database filing, computerized payroll system, and hardware designed swipe
machine and bar code system. Jeffrey Jacobs, the manager, has been working for the company
for almost 25 years. His expertise in system application and development made him the best
and the most competent in the managerial position. He is aggressive and hardworking but at
times unpredictable and bossy. His personal attachment and close professional interaction
with female employees of the company have been noticed by many.
One day, Bernadette Ryan, the head of the system developers, went to Jeffrey’s office
for product consultation. The meeting went on and Jeffrey’s comment about the new project
is its marketability and user-friendly functionality. Bernadette, on the other hand, continued
to explain the advantages of the system when Jeffrey stood up and approached the door. She
just continued discussing the features of the new system being developed. Without her
knowing it Jeffrey suddenly appeared at her back, sort of listening to her discussion. Jeffrey

started to make sleek moves; he intentionally put his hands, touched, and sort of massaged
Bernadette’s shoulders. Bernadette was surprised about the action of her boss. She stood up
and said, ”I better go.” As she was walking out of the room, Jeffrey got hold of her arms and
said, “I know you like what I‘m doing. Come on, try me.” Bernadette felt that she was being
harassed and exclaimed, “Stop or I’ll scream! This is sexual harassment.” Jeffrey felt more
aggressive and told Bernadette that being the manager, he has the right to be the boss and
handle his subordinates his own way. Jeffrey further imposed that if she would not submit
herself to his personal aggression, he would tell other employees about the incident.
Moreover, he would definitely fire her and tell everyone that it was Bernadette who did the
first move of flirting. Bernadette was shocked. She ran out of the door to get out of Jeffrey’s
malicious and questionable disposition.
Questions:
1. Is the action of Jeffrey Jacob considered sexual harassment? If so, what type of sexual
harassment?
2. What appropriate actions should Bernadette do in order to prove that the incident
happened?
3. State the implications of sexual harassment to Bernadette and to the organization.
UNIT VIII. DEVELOPING GOOD WORK ETHIC

Overview
The attitude of a person to work enhances the effectiveness or failure of a company or
a personal endeavor. Work will either encourage or de-motivate a worker, depending on his
or her understanding and attitudes towards work itself. This unit examines the human,
philosophical and theological nature of the work and its implications for the worker himself.
Objectives
At the end of this unit, the students are able to:
1. Understand the value of developing a right attitude to work.
2. Developing a personal work ethic
3. Examine the difference between the human and the divine aspects of work;
4. Find ways and means to enjoy work in person and with others
5. Become a productive worker and worker
Setting Up

Name: _____________________________________________________ Date:_________________________
Course/Year/Section: ___________________________________
Directions: Think one of the most famous lines or quotations about Developing Good Work
Ethic and interpret its meaning and its impact on our lives today.
___________________________________________________________________________________________________________
___________________________________________________________________________________________________________
___________________________________________________________________________________________________________
___________________________________________________________________________________________________________
___________________________________________________________________________________________________________
___________________________________________________________________________________________________________
___________________________________________________________________________________________________________
_________________________________________________
Lesson Proper
I. THE DEFINITION OF WORK
Work is a personal activity as well as a social one. As a personal activity, it is directed
at the growth of an individual and a social activity, the purpose of which is to maintain human
society. Work has therefore moral and legal ramifications.
Work is the legal use for economic gain or profit of our mental and bodily powers. (R.
Agapay. Ethics and the Filipino, P. 149)
1. 1. Work is the "use" or application to accomplish some functions with our physical
forces. It is "use" because, for the purposes of material profit and gain, no one can
own the body of another man, nor can anyone sell his body or any part of it.
2. The intention of the work is to gain economic gain or influence. This is a part of work
's nature.
II. THE MEANING OF WORK IN THE HOLY BIBLE

From a biblical perspective, God is seen as the author of the work, and He also blesses
and sanctifies the work. God not only made man in the Old Testament; he is also the author of
the work. According to chapter 1 of Genesis, God has set a pattern of work and rest for us to
obey. He formed the universe in six days, resting on the seventh day. The explanation for this
respite is that the essence of work must be understood and valued by man.
In the New Testament, the essence of the work can be well understood from the
viewpoint of the mystery of the Incarnation of God. When Christ became man, mankind was
blessed and sanctified, including the work of man. Christ, the Son of God, has also worked as a
carpenter. Seen from this viewpoint, job is thus not a drudgery, not even a curse, but an
operation that has been blessed and sanctified and must therefore sanctify the worker
himself.
III. THEOLOGICAL MEANING OF WORK ACCORDING TO ST. THOMAS AQUINAS

The great Philosopher and theologians, St. Thomas Aquinas enumerates four
purposes of work in his treatise entitled Summa Theologica:
1. Provides for one's everyday livelihood

2. It avoids idleness, which is the root of man's evils.
3. It constrains the rebellious flesh
4. It enables man to give alms out of his material surplus
According to St. Thomas Aquinas, man is called from his work to serve God.
WORK WORKER OTHER WORKER
IV. THE HUMAN PERSPECTIVE OF WORK
Object: a task to Subject: Context:

be done the human person Others
When he works:
- He accomplishes something
- He defines himself
- He measures his works as a person
- He develops himself
- He provides an occasion to relate with
others
The Human Perspective of Work

V. HOW TO ENJOY WORK AND CREATE SPIRITUAL VALUES IN THE WORK PLACE:
 Performs the Golden Rule;

 Your mouth guard;
 The green jokes are stopped;
 Practice ethical conduct;
 Learn forgiveness;
 Become generous;
 Respecting bosses and colleagues;
 Become considerate;
 Do your job and perform your duties to the best of your capacity, skill;
 Be a grateful individual;
 Do not bring an issue to the workplace from home or vice versa
 Be to some an inspiration;
 Study the Bible every day;
 Establish a relationship with God in a personal way; and
 Smile and enjoy the job.
VI. BASIC DUTIES OF EMLOYER (R. Agapay, 1991)

 Respecting the dignity of employees
 Value their work
 Never treat them as slaves to make money, never
 Never assign them tasks beyond their strength or assign them tasks beyond
their strength. Employ them in a job that does not suit their age or gender
 Give them reasonable or fair salaries,
 Provide health and social recreation for them.
 Give them time to practice their faith.
 Teaching them how to use money wisely
 Teach them to love their household; and
 Providing them with promotional opportunities
VII. BASIC DUTIES OF WORKERS
 Work honestly and comply with all agreements

 Never injure capital, nor steal from the employer
 Never outraged the person of the employer
 Never employ deceit or violence in presenting a cause; and
 Never consult with “agitators "or men of evil principles
VIII. PROTESTANT WORK ETHIC
Martin Luther who, during the Renaissance, began the Reformation, Period as a protest
against some of the Catholic doctrine. For his disciples, Church also came up with a new
outlook on work.
 Through their work, people might serve God

 A person should work his chosen job diligently and should work
 Do not try to switch from the possession that he was called to
 Work is viewed as the universal pillar of civilization and the cause of Social groups
vary.
 Each individual should earn an income that would satisfy his basic need It was
immoral to accumulate wealth,
But it was Max Weber, who further developed the Ethics of Protestant Work, based on
Calvinist tenets. The Protestant Work Ethics believes in the following principles, in essence:
 Predestination-the belief that God has chosen the elect (these are persons chosen by
God to inherit eternal life, and all others are condemned, and nothing could change,
because God does not change.
HARD WORK SUCCESS HEAVEN
 All men must work, even the wealthy, because the will of God is to work.
 Main elements of Protestant Work Ethics – Self-discipline, hard work and the desire
to save money.
 Ascetical life
 Reinvesting the profits of their labor to fund additional projects

 Selection of and pursuit of an occupation to attain the greatest, the potential benefit is
viewed as a religious analysis.
 For Protestants, working hard is a sign of devotion to their commitment to Religion
and belief
References
Agapay, Ramon B. (1991). Ethics and Filipino, Manila: National Book Store
Pascual, Manuel, Savellano et; al Study Guide in Good Governance and Social
Responsibility
Electronic Sources
https://www.scribd.com/presentation/371769279/Chapter-9-Developing-Good-Work-
Ethic-REport
Assessing of Learning
Name: _____________________________________________________ Score:___________________________
Course/Year/Section: ___________________________________ Date: ____________________________
Directions: Read and answer each question base on what you have learned today. Support
your answers.
1. Explain the Significance of Developing Good Work Ethic to the present time.
___________________________________________________________________________________________________________
___________________________________________________________________________________________________________
___________________________________________________________________________________________________________
___________________________________________________________________________________________________________
___________________________________________________________________________________________________________
___________________________________________________________________________________________________________
2. How would you describe a good work Ethic?

___________________________________________________________________________________________________________
___________________________________________________________________________________________________________
___________________________________________________________________________________________________________
__________________________________________________________________________________________________________
3. What activities might help a person develop a good work ethic?
___________________________________________________________________________________________________________
___________________________________________________________________________________________________________
___________________________________________________________________________________________________________
___________________________________________________________________________________________________________

Case for Analysis

A woman was working as a head nurse at clinic that employed about 20 people. The
owner and manager are member or religious cult. During business hours, everything seemed
normal, but during the two - hour lunch break, all the employees have to go to the rooftop
and attend in-house teaching. These courses encompass everything from communication
skills to office efficiency. They were all designed by a man who founded a religious cult of
which the owner was a member. Granted that they were business seminars, staff members
and employees including the head nurse felt those teachings were heavily colored with
religious influences. They had to understand every word as an important key in learning
lessons. However, most of the words could not be understood because they cannot be found
in dictionaries. When never she would ask her boss about a word, they would usually end up
discussing the cult out of the religious teachings to fully understand everything. She felt as
though she was being brainwashed but could not complain because she loved her work.
(excerpt from the Study Guide in Good Governance and Social Responsibility by Marilou P.
Pascual, Ph.D. Elizabeth S. Manuel, MPA Joy N. Savellano, MM-BM)
Questions:
1. What is the main ethical issue in this case?
___________________________________________________________________________________________________________
___________________________________________________________________________________________________________
___________________________________________________________________________________________________________
_____________________________________________________________________
2. It is morally right to business owners to impose their religious orientation on their
employees? Who or Why not? Explain your answer.
___________________________________________________________________________________________________________
___________________________________________________________________________________________________________
___________________________________________________________________________________________________________
__________________________________________________________________________________________________________
3. Is religious discrimination unethical? Explain your answer?

___________________________________________________________________________________________________________
___________________________________________________________________________________________________________
___________________________________________________________________________________________________________
___________________________________________________________________________________________________________
________________________________________

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Module

1. Understand ethics and business and its relationship to one another;

Name: _____________________ Date : _________________

GOOD GOVERNANCE AND SOCIAL RESPONSIBILITY | 1

Ethics covers the following dilemmas:

Morality: Moral versus Non Moral Standards

Non-moral-standards refer to rules that are

GOOD GOVERNANCE AND SOCIAL RESPONSIBILITY | 2

Conscience is a faculty of the mind that motivates us to act morally—or at least

1. Conscience as pluralistic, neutral and subjective

GOOD GOVERNANCE AND SOCIAL RESPONSIBILITY | 3

3.1 Conscience as a faculty for indirect moral knowledge

GOOD GOVERNANCE AND SOCIAL RESPONSIBILITY | 4

Individual Integrity and Responsibility

GOOD GOVERNANCE AND SOCIAL RESPONSIBILITY | 5

Having a high degree of integrity at work means that:

How to demonstrate integrity in the workplace

Understanding the relationship between business & ethics

GOOD GOVERNANCE AND SOCIAL RESPONSIBILITY | 6

The highly competitive environment in today's global economy puts pressures on

Good business practices starts with management setting standards of what's

GOOD GOVERNANCE AND SOCIAL RESPONSIBILITY | 7

The Morality of Profit

GOOD GOVERNANCE AND SOCIAL RESPONSIBILITY | 8

Assessing Learning Activity

Name: ________________________________________ Date:________________

UNIT II. THE DIFFERENT NORMATIVE ETHICAL THEORIES

GOOD GOVERNANCE AND SOCIAL RESPONSIBILITY | 9

At the end of the unit, I am able to:

Name: ____________________________________________ Date: ________________

1. Should Heinz steal the drug? Why or why not?

GOOD GOVERNANCE AND SOCIAL RESPONSIBILITY | 10

5. Why should people do everything they can to save another's life?

GOOD GOVERNANCE AND SOCIAL RESPONSIBILITY | 11

THE DIFFERENT NORMATIVE ETHICAL THEORIES COMMONLY USED IN BUSINESS IN

A. Kohlberg’s Stages of Moral Development

A) KOHLBERG’S STAGES OF MORAL DEVELOPMENT

GOOD GOVERNANCE AND SOCIAL RESPONSIBILITY | 12

KOHLBERG’S STAGES OF MORAL DEVELOPMENT

LEVEL 1: PRE CONVENTIONAL

Stage 1: Obedience-and-Punishment Orientation

Stage 2: Instrumental Orientation

Stage 3: Good Boy, Nice Girl Orientation

GOOD GOVERNANCE AND SOCIAL RESPONSIBILITY | 13

Stage 4: Law-and-Order Orientation

LEVEL 3: POST CONVENTIONAL

Stage 5: Social-Contract Orientation

Stage 6: Universal-Ethical-Principal Orientation

B) MACHIAVELLIAN PRINCIPLES AND MODERN BUSINESSES

GOOD GOVERNANCE AND SOCIAL RESPONSIBILITY | 14

So how do you achieve success and build an empire that’s secure?

So let’s look at 10 Machiavellian business lessons.

2. Encourage criticism and frankness: Overlooking the significance of employee feedback

GOOD GOVERNANCE AND SOCIAL RESPONSIBILITY | 15

GOOD GOVERNANCE AND SOCIAL RESPONSIBILITY | 16

Utilitarianism is a theory of morality, which advocates actions that foster happiness or

Utilitarianism is a tradition of ethical philosophy that is associated with Jeremy Bentham

The Three Generally Accepted Axioms of Utilitarianism State That:

 Pleasure, or happiness, is the only thing that has intrinsic value.

GOOD GOVERNANCE AND SOCIAL RESPONSIBILITY | 17

"Rule" Utilitarian Ethics

UTILITARIANISM'S RELEVANCE IN THE CORPORATE WORKPLACE

D) THE PRINCIPLE OF RIGHTS AND VIRTUES: THE KANTIAN ETHICS

GOOD GOVERNANCE AND SOCIAL RESPONSIBILITY | 18

Name: _____ Date : _

Name: ________________________ Date:

Name: ____________________________ Date:

Name: ________________________ Date:

Year & Section___ Date