Chapter one

The Importance of
Business Ethics

Lectured by: Ly Phyrith

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 Learning Objectives
1. What are ethics?
2. The type of Ethical Dilemmas
3. How we avoid ethical dilemmas
4. What is Business Ethics?
5. The areas of Ethical Challenges
6. Business ethics and the Role of the corporation
7. The Ethics of responsibility
8. Is business bluffing ethical?
9. Why Study Business Ethics?
10. Foundations of Ethical Behavior
11. Ethical Behavior
12. Why Ethical Behavior Adds Value
13. Taught in All Cultures
14. Personal Ethical Understanding
15. Ethics vs. Law

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 1. What are Ethics?
 Ethics is generally accepted rules of
conduct that govern society.
 Ethics are moral principles by which

people conduct themselves personally,

socially, or professionally.
 For example, you do not cheat on a test or lie
to friends or your family because of your
personal honor and integrity.
 For the good of society, you may recycle to

take care of the environment.

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 Ethic refers to well based standards of
right and wrong that prescribe what
humans ought to do.
 In terms of rights, obligations, benefits to
society, fairness, or specific virtues.
 To refrain from rape, stealing, murder,

assault, slander, and fraud.

 Virtues of honesty, compassion, and loyalty.

 Standards relating to rights, such as the right

to life, the right to freedom from injury, and

the right to privacy.

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 What is Moral?
 Morality is the concepts such as good and
evil, right and wrong, virtue and vice,
justice, etc.
 No one moral philosophy accepted by
everyone

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2. The type of Ethical Dilemmas
 Taking things that don’t belong to you
 Saying things you know are not true

 Giving or allowing false impressions

 Buying influence or engaging in conflict of

interest
 Hiding or divulging information

 Taking unfair advantage

 Committing acts of personal decadence

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 Perpetrating interpersonal abuse
 Permitting organizational abuse

 Violating rules

 Condoning unethical actions

 Balancing ethical dilemmas

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 3. How to Avoid Ethical Dilemmas
 Call it by different name
 Rationalizing dilemmas away: everybody

else does it
 Rationalizing dilemmas away: if we don’t

do it, someone else will

 Rationalizing dilemmas away: that’s the

way it has always been done

 Rationalizing dilemmas away: we’ll wait

until the lawyers tell us it’s wrong

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 Rationalizing dilemmas away: it doesn’t
really hurt anyone
 Rationalizing dilemmas away: the system
is unfair
 Rationalizing dilemmas away: it’s a gray
area
 Rationalizing dilemmas away: I was just
following orders
 Rationalizing dilemmas away: we all don’t
share the same ethics

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 4. Business Ethics
 Business Ethics comprises principles and
standards that guide behavior in the world
of business
 Business Ethics is right or wrong,
acceptable or unacceptable behavior
within the organization
 Business Ethics concerned with good and
bad or right and wrong behavior that take
place in business.

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5. The Areas of Ethical Challenges
 Individual values and the business
organization
 Conflict of interest
 Inappropriate gifts

 Security of company records

 Personal honesty

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 Individual right and the business
organization
 Employee screening
 Employee privacy

 Sexual harassment

 Affirmative action/equal employment

opportunity
 Employment at will

 Employee rights

 Comparable worth

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 Business operation
 Financial and cash management procedures
 Conflict between the corporation’s ethical

code and accepted business

 Practices in foreign countries

 Unauthorized payment to foreign officials

 Workplace safety

 Plant closures and downsizing

 Environmental issues

 Purchasing: conflict and bribery

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 Business and it competition
 Advertising content
 Appropriation of other’s ideas

 Product pricing

 Business and its product

 Contract relationship
 Product safety

 Product quality

 Customer privacy

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 Business and its stakeholders
 Shareholders’ interests
 Executive salaries

 Corporate contributions

 Social issues

 Business and government

 Government employees
 Government contracts

 Government responsibilities

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6. Business Ethics and the Role
of the Corporation
 To satisfy customers with goods and services of
real value
 Make a reasonable return on the funds entrusted
to the business corporation by its investors
 To create new wealth
 To crate new jobs
 To defeat envy (hard work and talent are fairly
rewarded)
 To promote invention and ingenuity
 To diversify the interests of the republic
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 7. The Ethics of Responsibility
 Don’t
 Cheat
 Steal

 Lie

 Bribe

 Take bribes

 To mete out stiff punishment

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 8. Is Business Bluffing Ethical?
 Pressure to deceive
 To Poker Analogy
 We can learn a good deal about the nature of
business by comparing it with poker.
 The winner is the man who plays with steady

skill. Victory requires intimate knowledge of

the rules, insight into the psychology of the
other players, a bold front, self-discipline, and
the ability to respond swiftly and effectively to
opportunities provided by chance.
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 Discard the golden rule
 We don’t make the laws

 Cast illusion aside

 The individual and the game

 For the office use

 Playing to win

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9. Why Study Business Ethics?
 Reports of unethical behavior are on the
rise.
 Society’s evaluation of right or wrong

affects its ability to achieve its business

goals.
 Studying business ethics is a response to

Federal Sentencing Guidelines for

Organizations (FSGO) and stakeholder
demands for ethics initiatives.
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 Individual ethics is not enough.
 Studying business ethics helps identify

ethical issues to key stakeholders.

 Effective corporate governance
 assists management in better running the
company
 promotes vigilant oversight by the board

 encourages active monitoring by shareholders

 promotes gatekeepers (auditors, legal

counsel, etc.) to fulfill their roles

 improves public trust in the company

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 10. Foundations of Ethical
Behavior
- Treat others as you would be treated
- Respect
- Honesty
- Trust

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 11.Ethical Behavior
Conducting one’s life in complete
accord with a firmly held set of
values and principles
- These principles may be derived from
religious beliefs, philosophical
understanding, etc.
- Application should be in all areas of one’s
life: personal, family, business, social, etc.
- “Integrity” is the consistent application of
ethical behavior.
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12. Why Ethical Behavior Adds
Value
Better information
 Trust from investors
 Lower costs for audits, controls, investigations
 Better allocation of resources
 Customers will be more loyal (RC Willey
example
 Lower costs from suppliers (automotive
company example)
 Attracting and retaining better employees

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Why Ethical Behavior Adds Value
Fair competition
 Lowers cost of business in economy
 Leads to better decision-making (do what’s
best for firm, not one individual)
 Improves competitive nature of a country’s
economy

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 13.Taught in All Cultures
Judaism: What you hate, do not do to
anyone.
Islam: No one of you is a believer until he
loves for his brother what he loves for
himself.
Hinduism: Do nothing to your neighbor
which you would not have him do to you.
Sikhism: Treat others as you would be
treated yourself.
Buddhism: Hurt not others with that
which pains yourself.
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 Taught in All Cultures
Confucius: What you do not want done to
yourself, do not do to others.
Aristotle: We should behave to our friends
as we wish our friends to behave to us.
Plato: May I do to others as I would that
they should do unto me.

TREAT PEOPLE THE WAY

YOU WANT THEM TO TREAT YOU

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 14.Personal Ethical
Understanding
- Concepts of right and wrong, fair play,
respect for rights of others, honesty,
personal integrity
- Best learned in the home at an early age—
and follow-up is needed throughout life
- Institutions (churches, schools, etc.) can
help
- Difficult to “back fill” in adulthood

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 15. Ethics vs. Law
- Ethics: what one should or should not
do, according to principles or norms of
conduct
- Ethics codes are not produce by
democratically-elected legislatures
- Enforcement mechanism usually informal,
may be complex, even unconscious

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 Ethics vs. Law
- Law: what one must or must not do,
according to legal dictates.
- Laws are created by democratically-elected
legislatures in democracies such as
Canada
- Laws come with explicit (clear & exact)
penalties for infractions (breaking a law)
and a formal enforcement system

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“Good Ethics Means
Good Business”

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 References
1. Linda Klebe Trevino, Katherine A. Nelson (2011), Managing
Business Ethics, 5e, John Wiley & Sons. Inc, USA.
2. Marianne Moody Jennings (2009), Business Ethics, 6e,
South-Westen, USA.
3. Joseph DesJardins (2011), An Introduction to Business
Ethics, 4/e, Prentice Hall, USA.
4. Manuel G. Velasquez (2006), Business Ethics, 6e, 2006,
Prentice Hall, USA.
5. Mollie Painter Orland (2008), Business Ethics as Practice,
CAMBRIDGE UNIVERSITY PRESS, UK.
6. Ferrell O.C. et al. (2007), Business Ethics, 4e, Colorado State
University, USA.
7. Robert W. Kolb (2008), Encyclopedia of Business Ethics and
Society, SAGE Publications, Inc., USA.
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