Business Ethics

• Ethics


  A set of moral principles or values that govern the actions and decisions of an individual or group
• Examples of prescribed sets of moral principles or values at the implementation level

  • Laws and regulations
  • Church doctrine
  • Code of business ethics for professional groups
• Characteristics and values associated with ethical behaviour

  • Integrity
  • Respect for others
• Categories of ethical principles

  • Personal ethics
  • Professional ethics
  • Business ethics
• Personal ethics


  • Basic justice, fairness
  • Respect for the right of others
  • Concern for the right of others
  • Concern for the well-being on welfare of others
  • Benevolence, trustworthiness, honesty
• Professional ethics

  • Compliance with the law
  • Integrity, impartiality, objectivity
  • Professional competence
  • Confidentiality
  • Professional behavior
  • Avoidance of potential or apparent conflict of interest
• Business ethics

  • Fair competition
  • Global, as well as domestic justice
  • Social responsibility
  • Concern for environment
• Characteristics of recognized professions

  • Responsibility to serve the public
  • Complex body of knowledge
  • Standards of admission to the profession
  • Need for public confidence
• The Professional Regulation Commission (PRC) and the 42 Professional Regulatory Boards have adopted a Code of Good Governance to cover an environment of good governance in which all Filipino professionals shall perform their tasks
• Ethical commitment


  Personal resolve to act ethically
• Ethical awareness


  Ability to discern between right and wrong
• Ethical competency


  Ability to engage in sound moral reasoning and consider carefully the implications of alternative actions
• Specific principles of professional conduct

  • Service to others
  • Integrity and objectivity
  • Professional competence
  • Solidarity and teamwork
  • Social and civic responsibility
  • Global competitiveness
  • Equality of all professions
• Business ethics


  Standards of moral conduct, behavior and judgment in business
• Corporate responsibility


  Businesses are legally bound and socially obligated to conduct business in an ethical manner
• Business ethics


  Based on the personal values and standards of each person engaged in business
• Purposes of business ethics


  • To help business and would-be business to determine what business practices are right and what are wrong
  • To make businessmen realize that they cannot employ double standards to the actions of other people and to their own actions
  • To show businessmen that common practices which they have thought to be right because they see other businessmen doing it, are really wrong
  • To serve as a standard or ideal upon which business conduct should be based
• Types of misrepresentation

  • Direct misrepresentation
  • Indirect misrepresentation
• Examples of direct misrepresentation

  • Deceptive packaging
  • Misbranding or mislabeling
  • False or misleading advertising
  • Adulteration
  • Weight understatement or short weighing
  • Measurement understatement or short measurement
  • Quantity understatement or short numbering
• Caveat emptor


  A very common practice of salesmen, where the seller is not obligated to reveal any defect in the product or service. "Let the buyer beware"
• Examples of indirect misrepresentation


  • Caveat emptor
  • Deliberate withholding of information
  • Passive deception
• Over-persuasion


  The process of appealing to the emotions of prospective customer used for the sole benefit of selling a product without considering the interest of the buyer
• Examples of over-persuasion

  • Urging a customer to satisfy a low priority need for a merchandise
  • Playing upon intense emotional agitation to convince a person to buy
• Unethical practices of corporate management

  • Board of directors: plain graft, interlocking directorship, insider trading, negligence of duty
  • Executive officers and lower level managers: claiming a vacation trip to be a business trip, having employees do work unrelated to the business, loose or ineffective controls, unfair labor practices, making false claims about losses, making employees sign documents that they are well and properly compensated but in fact are not, sexual harassment
  • Employees: conflicts of interest, dishonesty
• Ethical dilemma


  A situation a person faces in which a decision must be made about the appropriate behavior
• Six-step approach in resolving ethical dilemmas

  • Obtain the relevant facts
  • Identify the ethical issues from the facts
  • Determine who is affected by the outcome of the dilemma and how each person or group is affected
  • Identify the alternative available to the person who must resolve the dilemma
  • Identify the likely consequences of each alternative
  • Decide the appropriate action
• Corruption


  The abuse of private and public office for personal gain
• Examples of corruption

  • Bribery
  • Embezzlement
  • Nepotism
  • Kickbacks
  • State capture
  • Rigging
  • Fraud
  • Money laundering
  • Extortion
• Corruption


  Receiving, asking for or giving any gratification to induce a person to do a favor for private gain
• Corruption


  The misuse of entrusted power for private gain
• Factors that contribute to the spread of corruption

  • Opportunities
  • Minimal risk compared to benefits obtained
  • Career advancement
  • Earning more income
  • Financial problems caused by illness, loss of property, etc.
• Ill-effects of corruption

  • Adds up to 10% of the total costs of doing business in any part of the world and up to 25% of the cost of procurement programs in developing countries
  • Leads to waste or inefficient use of public resources
  • Corrodes public trust, undermines the rule of law and ultimately, delegitimizes the state
  • Leads to apathy, discontentment and turn people to radical extremists
  • Leads to a breakdown in social order and prevents ordinary people from receiving essential services
  • Creates unfair competition
• Characteristics of corruption

  • Recipients and payers
  • Extortion
  • Lubricant of society
  • An ethical dilemma
  • Poverty alleviation
  • Culture
  • Kindness among friends
• Based on the 2016 report made by the Secretary of Finance, the Philippines is losing P200B from smuggling and P400B from tax evasion. Globally, about P2.6T is lost annually
• Sectors affected by corruption in the Philippines

  • Judicial system
  • Police
  • Public services
  • Land administration
  • Tax administration
  • Customs administration
  • Public procurement
  • Natural resources
• Measures businesses and organizations can adopt to prevent corruption

  • Clear business processes
  • Policy on gifts and entertainment
  • Declaration of conflict of interest
  • Convenient corruption reporting system
• Legislation to curb corruption in the Philippines

  • Anti-Graft and Corrupt Practices Act
  • Anti-Red Tape Act
  • Revised Penal Code
  • Anti-Money Laundering Act
  • Act of Establishing a Code of Conduct and Ethical Standards for Public Officials and Employees
  • Government Procurement Reform Act
  • United Nations Convention against Corruption
• Vigilance of civil society is important to curb corruption
• The Integrity Initiative Campaign is an initiative to improve business ethics and reduce corruption
• Ethics

  • having to do with character
  • starts within the family
  • development depends on the environment
  • are practiced differently