Crane and MattenBusiness Ethics (3rd Edition)Chapter 1

Introducing Business EthicsLecture 1

OverviewWhat is business ethics?Why is business ethics important? Globalization: a key context for business ethics?Sustainability: a key goal for business ethics?

What is business ethics?Business ethics is the study of business situations, activities, and decisions where issues of right and wrong are addressed.

Ethics and the lawEthicsLaw

Defining morality, ethics and ethical theoryMorality 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.

The relationship between morality, ethics and ethical theory

Why is business ethics important?Power and influence of business in societyPotential to provide major contribution to society Potential to inflict harm Increasing demands from stakeholders Lack of business ethics education or trainingContinued occurrence of ethical infractionsEvaluating different ways of managing business ethicsInteresting and rewarding

Types of misconduct across sectorsSource: Ethics Resource Center (2008)

Observed ethical misconduct across sectorsSource: Ethics Resource Center (2008)

Differences across organizational typesShareholder orientation; size and complexity Financial integrity, employee/customer issues Formal, public relations and/or systems-based Shareholders and other stakeholders StakeholdersPublic sector organizationsMain priorities in addressing ethical issues Responsible and/or accountable toMain constraints Approach to managing ethics Civil society organizationsSmall businessesLarge corporationsRule of law, corruption, conflict of interest; procedural & accountability issues Delivery of mission to clients; integrity of tactics; legitimacy and accountability Financial integrity, employee/customer issues Formal, bureaucratic Informal, values-basedInformal, trust-basedGeneral public, higher level government organizationsDonors and clientsOwnersInertia, lack of transparencyLack of resources and formal training Lack of resources and attention

Globalization: a key context for business ethics?

What is globalization?According to Scholte (2005) globalization is not:internationalization liberalization universalization westernization Globalization is: a process which diminishes the necessity of a common and shared territorial basis for social, economic, and political activities, processes, and relations.deterritorialization

Relevance of globalization for business ethics

Cultural issuesLegal issuesAccountability issues

Globalization can affect all stakeholders of the corporation

Ethical impacts of globalization

International perspectives on business ethics

Different approaches to business ethicsWho 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?

Regional differences: Europe, North America, Asia

Sustainability: a key goal for business ethics?

Defining sustainabilitySustainable 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

The three components of sustainability

Triple bottom lineCoined by John ElkingtonBottom line thinking suggests sustainability as a goalThree dimensions:Environmental perspectivesEconomic perspectivesSocial perspectives

Corporate commitments to sustainability

SummaryDefinition of business ethicsBusiness ethics is vital for business in contemporary capitalismGlobal view is essential to understand ethical issuesDifferent regions have distinctly different perspective on business ethics issuesSustainability is an important goal for business ethics