LECTURE 2

Ethics in the
Business World
OVERVIEW
 Business is an important part of
contemporary society and it involves all of
us, in one way or another.
 Business is not something separate from
society or imposed on it—it is an integral
part of society.
 Morality consists of rules of human
behavior and specifies that certain actions
are wrong or immoral and that others are
right or moral.
 Because business activity is human
activity, it can be evaluated from the
moral point of view, just as any other
human activity can be so evaluated.
WHAT IS BUSINESS ETHICS?
DEFINITION OF BUSINESS
 “Business”includes any and all economic
transactions between individuals,
between individuals and profit-making
organizations, and between profit-making
organizations and other such
organizations.
WHAT IS ETHICS?
 WHAT IS ETHICS?
 The word ‘ethic’ comes from the Greek word ethos, which
means “the character, custom or a set of moral behaviour
that is accepted extensively.”
 The etymology of ethics suggests its basic concerns are:
 (1) individual character, including what it means to be “a good
person,” and
 (2) the social rules that govern and limit our conduct, especially
the ultimate rules concerning right and wrong, which we call
morality.
 Ethics refers to a set of moral principles that govern the
appropriate conduct of an individual or group.
 Ethics speaks to how we ought to live, i.e., how we ought to
treat others and how we ought to manage our own lives
ETHICS STUDIES MORALITY
 Morality is a term used to cover those
practices and activities that are
considered importantly right and wrong;
the rules that govern those activities; and
the values that are embedded, fostered, or
pursued by those activities and practices.
 Ethics is a systematic attempt to make
sense of our individual and social moral
experience, in such a way as to determine
the rules that ought to govern human
conduct, the values worth pursuing, and
the character traits deserving
development in life.
 WHAT IS ETHICS?

 Religion, unlike ethics appeals to authority rather than

reason (e.g., Thou shalt not steal! If you believe the
Christian Bible, then you simply should not steal
because it is morally wrong)

 Law is usually based on ethical principles but law is not

synonymous with ethics
 Remember Apartheid in South Africa and racial
discrimination in the USA. Both these systems were
legal but quite unethical
WHAT IS THE AIM OF
BUSINESS ETHICS?
 Business ethics as a field is defined
by the interaction of ethics and
business
 It is neither defense of the status quo
nor its radical change. Rather, it
should serve to remedy those aspects
or structures that need to change,
and it should protect those that are
moral.
DOG-EAT-DOG WORLD: THE MYTH OF
AMORAL BUSINESS
Business was viewed as
amoral with regards to
ethics
The view was ‘the
business of business is
doing business’ (i.e.
profit-making).
Ethical language was
not deemed to be the
language of business
Argued that businesses
act unethically not
because of a desire to do
evil, but simply because
they want to make a
profit and therefore
disregard some of the
consequences of their
actions.
THE BREAKDOWN OF THE MYTH OF
AMORAL BUSINESS
1. By the reporting of scandals and the
concomitant public reaction to these
reports;
2. By the formation of popular groups
such as the environmentalists and the
consumerists;
3. By the concern of business in ethics,
as expressed in conferences, magazine
and newspaper articles, and the
burgeoning of corporate codes of ethical
conduct and of ethics programs.
THE MORAL BACKGROUND OF
BUSINESS
 Morality consists of rules of human behavior and
specifies that certain actions are wrong or
immoral and that others are right or moral.
 Because most businesses value their reputations,
we do not really live in a “dog-eat-dog” business
world. It is because the ordinary person does not
need to be told that lying and stealing are wrong
that they form part of the background of
business.
 The limits set by society on business are often
moral, but they are also frequently written into
law.
 The retreat to law as the sole norm by which to
guide business is in part a reflection of the fact
that most managers do not know how to handle
many moral issues in business.
THE CHANGING MANDATE FOR
BUSINESS
 The social mandate to
business is not only
given in law.
 Today the mandate to
business is more
complex.
 Corporations are asked
to consider the impact of
their decisions and
actions on the
environment, the public,
and the common good.
 Business must consider
what structures promote
moral responsibility and
facilitate the weighing
of moral and other
values.
BUSINESS ETHICS INVOLVES 5
ACTIVITIES
1. The application of general ethics
principles to particular cases or practices
in business.
2. The second is metaethical: whether moral
terms that are generally used to describe
individuals and the actions they perform
can also be applied to organizations,
corporations, businesses, and other
collective entities.
3. The analysis of the presuppositions of
business—both moral presuppositions
and presuppositions from a moral point of
view.
BUSINESS ETHICS INVOLVES 5
ACTIVITIES, CONTINUED
4. Fourth, those in business ethics are
sometimes led by embedded problems to
go beyond the field of ethics into other
areas of philosophy and into other
domains of knowledge, such as
economics and organization theory.
5. The fifth activity in which business
ethics is typically involved is describing
morally praiseworthy and exemplary
actions, of either individuals in business
or particular firms.