Crane & Matten

Business Ethics

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 Introducing
Business Ethics
Lecture 1

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 Overview
• What is business ethics?
• Why is business ethics important?
• Globalization: a new context for business
ethics?
• Sustainability: a new goal for business
ethics?
• Europe: a new perspective on business
ethics?

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 What is business ethics?
Business ethics is the study of business
situations, activities, and decisions
where issues of right and wrong are
addressed.
(Crane and Matten, 2004: 8)

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 Ethics and the law

Ethics

Grey area

Law
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 Defining morality, ethics and ethical
theory

• Morality is concerned with the norms, values and

beliefs embedded in social processes which define
right and wrong for an individual or a community.
• Ethics is concerned with the study of morality and the
application of reason to elucidate specific rules and
principles that determine right and wrong for any
given situation.
• These rules and principles are called ethical theories.

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 The relationship between morality, ethics
and ethical theory

Ethics … to
rationalizes produce …that can be
morality … ethical applied to
theory … any situation.
Potential
Morality Ethics Ethical solutions to
theory ethical
problems

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 Why is business ethics
important?
• Power and influence of business in society
• Potential to inflict harm
• Increasing demands from stakeholders
• Lack of business ethics education or training
• Continued occurrence of ethical infractions
• Evaluating different ways of managing business
ethics
• Interesting and rewarding

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 Globalization: a new context for
business ethics?

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 What is globalization?
• According to Scholte (2000) globalization is not:
– ‘internationalization’
– ‘liberalization’
– ‘universalization’
– ‘westernization’
• Globalization is: the progressive eroding of the
relevance of territorial bases for social, economic and
political activities, processes and relations
– ‘deterritorialization’

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 Relevance of globalization for
business ethics

• Cultural issues
• Legal issues
• Accountability issues

Globalization can affect all stakeholders of

the corporation

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 Sustainability: a new goal for
business ethics?

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 Defining sustainability
• Sustainable development is development that meets
the needs of the present without compromising the
ability of future generations to meet their own needs.
(World Commission on Environment and
Development 1987)
• Sustainability refers to the long-term maintenance of
systems according to environmental, economic and
social considerations (Crane and Matten, 2004: 24)

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 The three components of
sustainability

Economic Social

Environmental

Source: Crane and Matten (2004), Figure 1.5, page 22

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 Triple bottom line
• Coined by John Elkington
• Bottom line thinking suggests sustainability
as a goal
• Three dimensions:
– Environmental perspectives
– Economic perspectives
– Social perspectives

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 Europe: a new perspective for
business ethics?

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 European and American approaches
to business ethics
• Who is responsible for ethical conduct in
business?
• Who is the key actor in business ethics?
• What are the key ethical guidelines for
ethical behaviour?
• What are the key issues in business ethics?
• What is the most dominant stakeholder
management approach?

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 Differences in business ethics
between Europe and the US

United States Europe

Who is responsible for The individual Social control by the

ethical conduct in
business?
Who is the key actor in
business ethics?
What are the key
guidelines for ethical
behaviour?
What are the key issues in
business ethics?
What is the dominant
stakeholder management
approach?
collective
The corporation Government, trade unions,
corporate associations
Corporate codes of ethics Negotiated legal
framework of business
Misconduct and Social issues in organizing
immorality in single the framework of business
decisions situations
Focus on shareholder Multiple stakeholder
value approach

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 Summary
• Definition of business ethics
• Business ethics is vital for business in
contemporary capitalism
• Global view is essential to understand ethical
issues
• Sustainability is an important goal for business
ethics
• Europe needs a distinctly different perspective
on business ethics issues

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