BUSINESS ETHICS

What is ethics?
 Ethics is the branch of philosophy that focuses

on morality and the way in which moral principles are applied to everyday life. Ethics has to do with fundamental questions such as “What is fair?” “What is just?” “What is the right thing to do in this situation?” Ethics involves an active process of applying values, which may range from religious principles to customs and traditions.

What is business ethics?
 Business ethics focuses on what constitutes

right or wrong behavior in the world of business. Corporate business executives have a responsibility to their shareholders and employees to make decisions that will help their business make a profit. But in doing so, businesspeople also have a responsibility to the public and themselves to maintain ethical principles.

Although ethics provides moral guidelines, individuals must apply these guidelines in making decisions. Ethics that applies to business (business ethics) is not a separate theory of ethics; rather, it is an application of ethics to business situations. Although all people have ethical responsibilities, higher ethical standards are imposed upon professionals who serve as social models, such as physicians, attorneys, and businesspeople.

“Is an act legal?” is different from the question. but it is not necessary illegal. it might be unethical to lie to your family. an action might be unethical. For example. Therefore.  Law and ethics are not the same thing.  .The Relationship Between Law and Ethics The law is an expression of the ethical beliefs of our society. The question. “Is an act ethical?” The law cannot codify all ethical requirements. yet not necessarily illegal.

Mahatma Ghandi and others. but that does not necessarily mean she was acting unethically. just because an act is illegal does not necessarily mean it is immoral. Should an individual obey the law even if it would be unethical to do so? Under the theory of civil disobedience espoused by Martin Luther King. Rosa Parks was acting illegally when she refused to give up her seat on the bus to a white male. an immoral law deserves to be disobeyed. Similarly. yet arguably ethical? . Can you think of any examples of acts that would be illegal.

.THEORIES OF ETHICAL CONDUCT  Theories of ethics present standards by which a person can analyze and evaluate his or her own moral conduct. two different philosophical frameworks developed: ethical standards based on universal duties (deontology) and ethical standards based on consequences (utilitarianism).  Over the centuries.

It tries to define universal duties that serve as moral guides to decision making. a person can apply these universal standards to determine a course of action that is good. .Deontology  Deontology is the philosophical practice of defining and adhering to an absolute set of standards by which ethical behavior can be measured. When a moral dilemma arises.

. In deontology. An example of a set of deontological rules would be the Ten Commandments. A person decides upon actions by asking if a particular action is morally right or wrong. The act of carrying out that duty is important rather than the consequences of the act. a person fulfills absolute moral duties regardless of whether good comes from the actions.

a person applying the rights model selects the action that minimizes the violation of stakeholder’s rights. When encountering ethical dilemmas. . An action that maximizes respect for human rights and minimizes their violation is morally correct.The Rights Model  The rights model analyzes ethical issues by focusing on an action’s impact on human rights. Under this model. human rights are the rights all people have.

two basic categories of human rights exist within the model: (1) rights of liberty. The two necessities to be fully human are freedom and well-being. . Thus. and (2) rights of wellbeing.

Rights of Liberty  Privacy  Free consent  Free speech  Freedom of conscience  Right to life .

Rights of Well-Being  Employment  Food  Housing  Education .

Each person’s life has an infinite value. each person possesses certain fundamental human rights because of the fact that they are a human being. . Under the rights model.

. The model determines correctness in terms of social benefit.Utilitarianism  Utilitarianism is an approach to establishing ethical standards based on the consequences of an action. a person selects the action that brings about the greatest amount of good for the greatest number of people. Many business people favor the “cost/benefit” approach of utilitarianism. In an ethical dilemma.

 Identify the ethical issues.  Identify the alternative courses of action.  Determine to which extent each alternative respects the dignity and fundamental rights of stakeholders or violates their rights.  Choose the alternative that maximizes the dignity of stakeholders and minimizes the violation of their rights.Applying the Rights Model Identify the facts.  Identify the stakeholders.  .

 Identify the stakeholders.  Choose that alternative which results in the greatest amount of good for the greatest number of stakeholders.  .  Identify the ethical issues.  For each alternative.Applying Utilitarianism Identify the facts.  Identify the alternative courses of action. calculate the costs and benefits (identify who would be harmed and who would benefit).

Example #1  Cartoon: “The Difference Between Ethics and Business Ethics” .

or perform many of the other functions that she previously had performed and that are included in her job description.Example #2  A secretary who has worked for your corporation for fifteen years is involved in a car accident in which she permanently loses the use of her right hand. Thus. file. . she can no longer effectively type.

The injured secretary has been very loyal to your corporation. and you have been very satisfied with her work and dedication. . Your corporation has a very tight budget and does not have sufficient funds to pay for an additional secretary without reallocating budget items. She wants to stay at her job.

Should your corporation fire her. apply: Utilitarianism The Rights Model Your own personal opinion . or find a way to retain her? In resolving this dilemma. Moreover. lay her off with compensation. she does not believe that she could find other employment at this time.

Under the European convention for the Protection of Human Rights and Fundamental Freedoms.  . it is regarded as a human rights violation.  No member of the European Union uses it. so no nation can be admitted to the European Union if it still has the death penalty on its books.CAPITAL PUNISHMENT Apart from the United States.S. few countries use the death penalty.  Only China and Iran execute more people than the U.

that state had more executions than any other. When President Bush was elected president.  When he was governor of Texas. the federal government had not used the death penalty for 38 years. . He reinstated it. or any other American governor in modern times. and Bush signed 152 death warrants – more than any previous governor of Texas.

. did he stop an execution. he made his life-and-death decision after a half-hour briefing with his legal counsel. Typically. as governor of Texas.  Only once.

it’s the difference between innocence and guilt. Bush has said: “Some advocates of life will challenge why I oppose abortion yet support the death penalty.” . To me. yet support the death penalty?  Not necessarily. Is it inconsistent to oppose the killing of embryos or fetuses.

Since humans are fallible. But to hold the two positions consistently. . one would at least need to be very careful about supporting the death penalty. any legal system that puts large numbers of people to death will risk executing people innocent of the crimes for which they were charged.

and in some cases executed. who were later shown to be innocent.  The Death Penalty Information Center has a list of 102 people wrongfully sentenced to death in the U.S. . between 1973 and 2000. Several studies list people who have been condemned to death.

. between 1976 and 2000 found that at least 120 people were put to death while still proclaiming their innocence. An investigation by the Chicago Tribune of all 682 executions in the U.S. and in 4 of those cases there was evidence supporting their claim of innocence.

 When Florida Supreme Court Justice Gerald Kogan retired. . he said that there were several cases in which he had “grave doubts” about the guilt of people executed in Florida.

a deathrow inmate for 16 years. Gov. was about to be executed.  In 1999.President Bush’s attitude about the risk of putting to death innocent people is in sharp contrast to another Republican governor who was once a supporter of the death penalty. George Ryan of Illinois became concerned about the risk of putting innocent people to death when an investigation by a journalism class at Northwestern University proved that another man committed a murder for which Anthony Porter.  .

“Our capital system is haunted by the demon of error. error in determining guilt and error in determining who among the guilty should die. concluded that 13 condemned prisoners were innocent.  Ryan stated. over 3 years.” . Ryan set up a commission that.

Ryan felt that he could no longer live with the risk of executing the innocent: he commuted all death sentences in Illinois to terms of imprisonment. Just before he left office. .

. if not probable. No matter how careful Bush may have been – after all. that at least one of the people executed during his tenure was innocent. he did spend 30 minutes reviewing each case before he signed the death warrant – it remains possible.

 Bush has said: “I support the death penalty because I believe.” . if administered swiftly and justly. capital punishment is a deterrent against future violence and will save other innocent lives.

“I do – that’s the only reason to be for it. I think the reason to support the death penalty is because it saves other people’s lives.” . In the third of his debates with Al Gore. Bush said. Let me finish that – I don’t think you should support the death penalty to seek revenge. moderator Jim Lehrer asked Bush whether he thought that the death penalty actually deters crime. I don’t think that’s right.

there is plenty of relevant data. The problem with this defense of capital punishment is that almost all of the evidence is against it. . Since it is easy to compare murder rates before and after the abolition or reinstitution of the death penalty. or in different jurisdictions that do or do not have the death penalty.

. 10 of them have had homicide rates lower than the national average. In fact. These states have not had higher homicide rates than the states that did enact a law. after the 1976 USSC ruling that the death penalty is constitutional. a dozen states chose not to enact laws allowing it. For example.

The homicide rate is higher in South Dakota.  Homicide rates have risen and fallen in roughly symmetrical patterns in states with and without the death penalty.  Connecticut has it. indicating that the death penalty has little effect on the incidence of homicide. North Dakota does not. the homicide rate is higher in the state that has the death penalty.South Dakota has it.  . Massachusetts does not. Again.

came out against a bill prohibiting the use of the death penalty against profoundly mentally retarded criminals (with IQs of less than 65). His explanation: “I like the law the way it is. and thus is morally innocent. as governor of Texas. Bush.”  .Executing the Mentally Retarded A person who is seriously mentally retarded is likely to be incapable of understanding right from wrong. even if he or she did commit the crime.  As a national consensus against executing the mentally retarded began to build.

. Even in Texas. Washington was executed. Bush denied an appeal for clemency on behalf of Terry Washington.  In May 1997. a poll in 1998 showed that 73% of all Texans were opposed to executing the mentally retarded. a thirty-three-year-old mentally retarded man with the communication skills of a 7-year-old.

executing retarded persons is “cruel and unusual punishment” and hence a violation of the 8th Amendment. In June 2002. . given the growing national consensus. the USSC ruled that.

What ethical concerns does it cover? Is it a detailed document or general in its terms?  . Go to http://wbl.Internet Activities and Assignments  1. select “Internet Applications.” and then click on Chapter 40. Ethics in Business. 2.westbuslaw. Go to the homepage of a Fortune 500 company that has published its code of ethics on the World Wide Web. Do Activity 40-1.com .

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