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Business Ethics

Fundamentals

Prof. Sunil Bakshi

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Introduction

Business Ethics Publics interest in business ethics

increased during the last four decades

Publics interest in business ethics

spurred by the media

Inventory of ethical issues in business

Employer-Employee Relations

Company-Customer Relations

Company-Shareholder Relations

Company-Community/Public Interest

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Publics Opinion on Business

Ethics

Gallup Poll finds that only 17% to 20% ofthe public thought the business ethics ofexecutives to be very highorhigh

To understand public sentiment towardsbusiness ethics, ask three questions

Has business ethics really deteriorated?

Are the media reporting ethical problems

more frequently and vigorously? Are practices that were once socially

acceptable no longer acceptable?

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Business Ethics:

What Does It Really Mean?

Ethical Problem

Societys

Expectations of

Business Ethics

Actual BusinessEthics

1950s 2000sTime

Business Ethics: Today vs. Earlier Period

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Business Ethics:What Does It Really Mean?

Definitions: Ethics involves a discipline that examines

good or bad practices within the context ofa moral duty

Moral Conduct is behavior that is right orwrong

Business Ethics include practices andbehaviors that are good or bad

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Business Ethics:

What Does It Really Mean?

Two Key Branches of Ethics:

Descriptive ethics involves studying,

describing & characterizing morality

WhatIs Normative ethics involves supplying and

justifying moral systems

What Should Be

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Conventional Approach to

Business Ethics

Conventional approach to business ethics

involves a comparison of a decision or

practice to prevailing societal norms

Pitfall: Ethical Relativism

Decisionor

Practice

PrevailingNorms

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Sources of Ethical Norms

PeerPressure

Family

Friends

Legal

Framework

Regions ofCountry

Profession

Employer

Society at

Large

FellowEmployees

Religious

Beliefs

The

Individual

Conscience

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Ethics and the Law

Law often represents an ethical minimum Ethics often represents a standard that

exceeds the legal minimum

Ethics Law

Frequent Overlap

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Making Ethical Judgments

Behavior or act

that has been

committed

Prevailing

norms of

acceptability

Value

judgments andperceptions of

the observer

compared

with

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Four Important Ethical Questions

What is? What ought to be?

How to we get from what is to what ought

to be? What is our motivation for acting ethically?

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Three Types OfManagement Ethics

Three Approaches to

Management Ethics

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1. Immoral ManagementA style devoid ofethical principles and active opposition to

what is ethical.

2. Moral ManagementConforms to high

standards of ethical behavior.

3. Amoral Management

Intentional - does not consider ethical

factors Unintentional - casual or careless about

ethical considerations in business

Approaches To Mgmt Ethics

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Models of Management Ethics- Emphasis on Corp Social Resp

Moral Mgmt

Model

Economic

Resp

Legal

Resp

Ethical

Resp

Philanthropic

Resp

Immoral Mgmt XXX X XAmoral Mgmt XXX XX X X

Moral Mgmt XXX XXX XXX XXX

Component of the CSR Definition

Weighing Code:

X = Token consideration (For appearance only)

XX = Moderate considerationXXX = Significant consideration

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Moral Management ModelsAcceptable Stakeholder Thinking

Moral Mgmt Model Acceptance of SHT SHT PostureImmoral Mgmt SHT rejected: Mgmt is

self absorbed

SHT rejected, not

deemed useful.

Accepts profit

maximization model

but does not realy

pursue it.

Amoral Mgmt SHT accepted;

Narrow view (Min nbr

of stakeholders

considered

Insrumental view of

SHT prevailsHow

will it help mgmt?

Moral Mgmt SHT enthudiasticallyembraced: Wider view

(Max nbr of

stakeholders

considered

Normative view ofSHT prevails. SHT is

fully embraced in all

decision making.

SHT: Stakeholders Thinking

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Developing Moral JudgmentWhy Managers Behave Ethically

Most of Us

Many of Us

Very Few

of Us

To avoid some punishment

To receive some reward

To be responsive to family,

friends % superiors

To be a good citizen

To do what is right, pursue

some ideal, such as justice

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Developing Moral Judgment

External Sources of ManagersValues:

Religious Values

Philosophical Values Cultural Values

Legal Values

Professional Values

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Developing Moral Judgment

Internal Sources ofManagers Values: Respect for the authority structure

Loyalty

Conformity Performance

Results

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Elements of Moral Judgment

Moral imagination Moral identification and ordering

Moral evaluation

Tolerance of moral disagreement and

ambiguity Integration of managerial and moral

competence

A sense of moral obligation

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Elements of Moral Judgment

Amoral Managers Moral Managers

Moral imagination

Moral identification Moral evaluation

Tolerance for ambiguity

and moral disagreement

Integration of managerialand moral competence

A sense of moral obligation

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Ethics, Economics, and Law