Business Ethics

• Ethics


  Discipline that deals with moral duty & obligation

  • Set of moral principles or value
  • Sometimes interchangeable with morality
• Morality


  Doctrine or system of moral conduct
• Moral conduct

  Principles of right, wrong and fairness in behavior
• According to 2012 Gallup Poll, only 21% had very high/ high official standards in ethics
• Business Ethics


  Concern with morality and fairness in behavior, actions, policies and practices that take place within the business
• Business Ethics


  • A quest to determine if these practices are acceptable or not
  • Fairness, Justice, Equity
• Justice


  • Usually has been used with reference to a standard for rightness
  • Set of rules that has to be followed
• Fairness


  Used with regard to an ability to judge without preference to feeling or interest
• Descriptive Ethics


  • Concerned with describing, characterizing and studying the morality of people, organization, culture or society
  • Focused on "what is"
• Normative Ethics


  • Concerned with supplying and justifying a coherent moral system of thinking and judging
  • Seek to uncover, develop, and justify basic moral principles that are intended to guide behavior, actions and decisions
  • Focused on "what should be"
• Law


  • Embodies notion of ethics
  • May be seen as reflection of what society thinks are minimal standard of conduct and behavior
• Ethics


  • Ethical behavior is typically thought to reside behavior required by law
  • Ethical behavior is viewed as higher form of behavior that lawful behavior
• Immoral Management


  • Focused on exploiting opportunities for corporate or personal gain
• Moral Management


  • Conforms to high standards of ethical behavior or professional standards of conduct
• Amoral Management


  • Indifferent to moral principles, that is, it does not practice them but neither go against them
• Characteristics of Immoral Managers


  • Intentionally do wrong
  • Self-centered and self-absorbed
  • Actively oppose what is right, fair, or just
  • Exhibit no concern for stakeholders
• Moral Managers


  • Ethical leadership is commonplace
  • Goal is to succeed with ethics
  • High level of personal and professional standard
  • Possess an acute moral sense and moral maturity
• Amoral Managers


  • Intentionally Amoral: Don't think ethics and business should mix
  • Unintentionally Amoral: Don't consider the ethical dimension of decision making, Don't "think ethically", Well-intentioned, but morally casual or unconscious
• ENRON was the biggest accounting fraud in history
• Kenneth Lay and Jeffrey Skilling were the CEOs of Enron
• Jeffrey Skilling introduced the company to Market-to-Market Accounting
• Skilling was known for his darwinian philosophy, "Survival of the fittest"
• 1. Conventional Approach


  - based on how common , everyday society views business ethics today.
• Principles Approach 


  based on the use of  ethics,principles or guidelines to justify and direct behavior,actions,policies and practices
• Ethical Test Approach- based on short,practical questions or test to guide ethical decision making,behavior and practices
•  Intentionally Amoral

  • Don’t think ethics and business should mix
  • Business and ethics exist in separate
• Unintentionally Amoral

  • Don’t consider the ethical dimension of decision making
  • Don’t “think ethically”

  Well-intentioned, but morally casual or unconscious
• Pre-conventional 


  Obedience/Avoiding punishment

  Self Interest

  3-7 age
• Obedience/Avoiding punishment


  no difference between doing the right thing and avoiding punishment
• Self-interest 


  -Interest shifts to reward rather than punishment

  -effort to secure the greatest benefit for oneself
• Coventional


  8-13 age

  Conformity and Interpersonal Accord

  Authority and Social Order/law

  Focused on other people
• Conformity and Interpersonal accord


  Good boy/girl attitude

  effort is made to secure approval and validating and painting friendly relationships with others
• Post-Convetional


  (AdulthooD)

  Social Contract

  Universal ethics principles

  It focused on society and community
• Social Contract 


  mutual benifit

  morally right and legally right are not always the same

  good for everyone
• Universal ethics principles 


  Morality is based on principle that transcend mutual benefits

  good and bad karma
• Ponzi Scheme 


  an investment fraud that pays existing investors with funds that are collected from new investor
• Bernie Madoff


  operator of the largest ponzi scheme
• Portfolio Manager


  professional that is responsible for making investment decisions and carrying them out on behalf of vested individuals
• Authority and social order/law


  orientation towards fixed rules

  maintaining social/order law

  interpersonal is expanded
• Corporate Social Responsibility

  • Is the Idea that a business has a responsibility to the society exists around it.
  •  Firms that embrace CSR are typically organized in a manner that empowers them to act in a socially responsible way to positively impact the world.
  • A self-regulating business model that helps a company be socially accountable to itself, its stakeholders and the public