Why Ethics Matter

Being a Professional of Integrity

Chapter Ethics and Profitability

Outline

Multiple versus Single Ethical

Standards
Being a Professional of Integrity
• By the end of this section, you will be able to:
• Describe the role of ethics in a business environment
• Explain what it means to be a professional of integrity
• Distinguish between ethical and legal responsibilities
• Describe three approaches for examining the ethical nature of a decision
Current issues
 Ethics consists of the standards of behavior
to which we hold ourselves in our personal
and professional lives.

In our personal lives, our ethics sets norms

Introduction for the ways in which we interact with
family and friends.

In our professional lives, ethics guides our

interactions with customers, clients,
colleagues, employees, and shareholders
affected by our business practices
 Being a Professional
of Integrity

Business ethics guides the conduct by

which companies and their agents
abide by the law and respect the
rights of their stakeholders,
particularly their customers, clients,
employees, and the surrounding
community and environment

Ethical business conduct permits us to

sleep well at night.
 Many people confuse legal and ethical
compliance.

Law and Behaving ethically requires that we meet the

mandatory standards of the law, but that is
Ethics not enough.

Companies today need to be focused not

only on complying with the letter of the law
but also on going above and beyond that
basic mandatory requirement to consider
their stakeholders and do what is right.
How, then, should we behave?
• By examining the consequences
• Utilitarianism suggests that an ethical action is one whose consequence
achieves the greatest good for the greatest number of people.
• By examining the means
• Deontology suggests that it is the means that lend nobility to the ends (Do
your duty: act on the basis of the core principle)
• By following our character
• Virtue theory: our ethical analysis of a decision is intimately connected with
the development of habits, the routine actions in which we choose to engage
What professionals say about ethics
• https://www.youtube.com/watch?v=F7-BtfxJypM
Ethics and Profitability
• By the end of this section, you will be able to:
• Differentiate between short-term and long-term perspectives
• Differentiate between stockholder and stakeholder
• Discuss the relationship among ethical behavior, goodwill, and profit
• Explain the concept of corporate social responsibility
Profitability and Success: Thinking Long Term
• A company enters a social contract with society as whole, an implicit
agreement among all members to cooperate for social benefits.
• A company pursues the maximizing of stockholder profit,
• In return for society’s permission to incorporate and engage in business, a
company owes a reciprocal obligation by benefiting the community
• A long-term perspective is a more balanced view of profit
maximization that recognizes that the impacts of a business decision
may not manifest for a longer time.
Stockholders, Stakeholders, and Goodwill
• Stakeholders are all the individuals and groups affected by a business’s
decisions.
• Among these stakeholders are stockholders (or shareholders), individuals
and institutions that own stock (or shares) in a corporation.
• The positive feeling stakeholders have for any particular company is called
goodwill, even though it is not directly attributable to the company’s assets
and liabilities, include:
• the worth of a business’s reputation,
• the value of its brand name,
• the intellectual capital and attitude of its workforce,
• and the loyalty of its established customer base.
B-Corp Boom
• https://www.youtube.com/watch?v=1d7YCvc_UE4
A Brief Introduction to Corporate Social
Responsibility
• CSR is the practice by which a business views itself within a broader
context, as a member of society with certain implicit social obligations
and environmental responsibilities.
• CSR places all stakeholders within a proper contextual framework.
CSR in brief
• https://www.youtube.com/watch?v=1bpf_sHebLI
Multiple versus Single Ethical Standards
• Ethical relativism: a philosophy according to which there is no right or
wrong and what is ethical depends solely on the context.
• Business leaders are not limited to only one of the ethical standard
• what should not change is a corporate commitment to not make exceptions in
its practices when those favor the company at the expense of customers,
clients, or other stakeholders.

• https://www.youtube.com/watch?v=1bpf_sHebLI