ETHICS AND BUSINESS

“there are two educations. One

should teach us how to make a living
and the other how to live”
 INTRODUCTION

Business is part of human society. And since it is part

of the complex web interaction among institutions
and people, its activities must be viewed and
examined from the perspective of morality. Business
without ethics threatens the survival of human society
and in some cases, destroys the fiduciary relationships
of people.
.
 INTRODUCTION

The study of Business Ethics paves the way for

our common understanding of the fundamental
concepts of what is right and wrong in our human
conduct and its implications to business as an
important human activity
 OBJECTIVES:

1. Understand the nature of business from the

moral perspective of business
2. Rationalize the importance of ethics in business
3. Apply the dynamics of moral reasoning as a
framework for making ethical decisions in
business
4. Examine the morality of profit- motive in
business
5. Justify the need for ethical propriety in business
and the corporate world.
 The Businessman’s Myths about Business
Ethics
Businessmen are not immoral. And it would be
disastrous to judge and conclude that business
people commit unethical acts in doing business.
Business, certainly is a good and productive
human activity. However, it is the businessman’s
wrong perception about the role that ethics plays
in the world of business that affects his moral
judgment and decision making.
Myth # 1: Ethics Is a Personal affair and Not
a Public Debatable Matter

Some businessmen claim that ethics is a private

issue and not a public matter. In one sense, this is
true because one’s concept of morality is a result of
the environmental factors like religion, culture and
family values that have had a great impact on the
development of the ethical person. On the other
hand, man is also a social being, which means he is
always a being in relation with other men.
Myth # 2: Ethics and Business Do Not Mix

Some businessmen claim that Ethics has no place at

all in business. This view is most likely grounded on
the assumption that business is an autonomous
human activity where ethical standards do not exist
and that businessmen are free to do what they
want. To claim that business is an activity which is
independent of morality is again a short-sighted
view of the relationship between ethics and
business.
 Myth # 3: Ethics in Business Is Relative

Ethics is a private and subjective matter is the claim

that morality depends on the person himself and
his environment. This is another wrong perception
on the role that ethics plays in the world of
business. Some businessmen claim that morality is
relative, which means, the fundamental concepts of
right and wrong depend on cultural and religious
values of people.
 Myth # 4: Good Business Means Good Ethics
Some businessmen claim that good business means
good ethics. This certainly is a myth. A business may
be profitable but the means of acquiring profits may
be questionable. Drug-trafficking is a profitable
business and so is human smuggling and the like,
but they certainly violate some rules and values of
people. The study of Ethics to business encourages
businessmen and managers to look closely into the
end and the means of doing business.
 Myth # 5: Business is a War

Some business leaders and businessmen believe

that business is a war. For them, the market is an
arena of gladiators trying to fight for survival and
vying for the number one position. Because of this
belief, businessmen often resort to using predatory
tactics to destroy the competitors in order to
emerge as the market leader.
 Moral Reasoning Business
The essence of studying Business Ethics is to
provide the manager as a decision marker with a
framework for the resolution of moral issues and
problems affecting business activities and the
organization itself.

Moral Reasoning is a process in which ethical issues

and problems are benchmarked against a moral
standard so that a moral judgment is made
possible.
 Moral Reasoning Business

Since managers are tasked to solve problems of the

organization and its related activities, it is also the
responsibility of managers to help in the resolution,
if not the prevention, of moral issues that may have
adverse effects to the operations of the business.
 FRAMEWORK FOR MORAL REASONING
MORAL NORM
ETHICAL REALITY CHECK MORAL STANDARD MORAL
COMPANY POLICY JUDGMENT
ISSUES/PROBLEMS
ETHICAL PRINCIPLE

SITUATION PROBLEM DECISION RESOLUTION

ANALYSIS ANALYSIS ANALYSIS

EXAMPLES: -GRAVITY OF OFFENSE

-FREQUENCY OF OFFENSE -COMPANY RULES/POLICIES
GRAFT -HARM DONE -ETHICAL PRINCIPLES -MORAL OR IMMORAL
SEXUAL HARRASMENT -NUMBER OF PEOPLE -CODES OF CONDUCT -LEGAL OR ILLEGAL
THEFT AFFECTED -MORAL NORMS
BRIBERY -COST
 CHARACTERISTICS OF A GOOD MORAL
STANDARD
1. A good moral standard is one that looks at the
issue as something that is very serious, e.g.,
murder, graft and corruption, stealing.

2. A good standard must be grounded on good

moral argument. A good argument is an
argument that always tells the truth. A solid
moral argument leaves no room for loopholes
and counter arguments
 CHARACTERISTICS OF A GOOD MORAL
STANDARD
3. A good standard should be objective and not
subjective. It should be universally accepted and
should apply to all.

4. A good standard, when violated, brings about

feelings of guilt, shame and remorse or
conscience.
 REQUIREMENTS FOR A GOOD MORAL
JUDGMENT
1. A good moral judgment must be logical.

2. A good moral judgment must be based on facts

and solid evidence.

3. A good moral judgment must be based on

sound and defensible moral principles
 The Morality of Profit- Motive

Business as an activity is unthinkable without

profit as motive.

Businessman consider profit as a form of

anticipated reward or a compensation for the
efforts they spend, skills they apply and returns
for the capital they invested in putting up and
organizing the business.
 The Assumptions of Profit- Motive
Assumptions of Profit-Motive Factors:

1. Profit-motive in business is an ethical issue.

Since business is an integral part of society, its
activities, including profit making, must be
examined from the perspective of morality

2. Profit-motive as an ethical issue operates

within two important aspects of our human
conduct-freedom and structure of business.
 The Good and Bad Side of Profit- Motive:
A. The Good Side of Profit-Motive:

1. Profit-motive motivates people to do something

meaningful, e.g., it gives human life a goal to
pursue and something to live for.

2. profit-motive promotes ingenuity and cleverness

in running a business, e.g., business leaders and
entrepreneurs have to struggle hard to overcome
obstacles in order to achieve success.
 The Good and Bad Side of Profit- Motive:
3. Profit-motive makes people productive. Because
of their desire for money, businessmen have
become productive and some of their products have
been useful and have enhanced the quality of
human life.

4. Profit-motive generates potential capital for the

business. Profit is potential capital, something that
can be invested to establish new businesses.
 The Good and Bad Side of Profit- Motive:

B. The Bad Side of Profit- Motive:

1. Profit-motive promotes rivalry among

competitors.

2. Profit-motive makes people focus only on making

money, that is, to sell as many goods as possible
without considering whether or not these products
satisfy the needs and wants of consumers and end-
users.
The Good and Bad Side of Profit- Motive:

3.Profit-motive turns the businessman from being

a reflective and a questioning person because he
focuses his attention only on the practical activity
of making money.

4. Profit-motive promotes self-interest rather

than the common good.
 Ethical Considerations of Profit- Motive in
Business:
1. Earning profit is a good and valid activity in
business. Commercial activities will be absurd
without the profit-motive.
2. Making excessive profits is totally wrong. It leads to
greed, avarice and manipulation of the customers
3. Profit is not the ”be-all and end-all” of doing
business
4. The teachings of the Catholic Church do not totally
condemn profit as part of business activity.
 Moral Responsibility
Three meanings of moral responsibility by William H.
Shaw.
1. Moral Responsibility refers to holding to people
morally accountable for some past action or actions
2. Moral Responsibility also means care, welfare or
treatment of others as derived from the specific
social role that one plays in the society
3. Moral Responsibility likewise refers to one’s capacity
for making moral or rational decisions on his own.