Session 3

Ethics and Business

 Chapter 1
ETHICS & BUSINESS
• Sensitivity: To insure that you are aware
of/sensitive to ethical issues in all aspects of the
business environment and professional
exchanges.
• Skill-building: To provide you with reasoning
and decision-making tools to help you think
through ethical issues and to respond sensibly
when faced with such issues.
 Chapter 1
ETHICS & BUSINESS
• Integration: To enable you to effectively
integrate your personal values and reasoning
skills into all of what you do and stand for.
 What does ethical mean:
• Study of businessmen
– "What my feelings tell me is right" (50%): Doing
what your conscience tells you.
– "What is in accord with my religious beliefs"
(25%): Doing what the church or bible says.
– What "conforms to the golden rule" (18%)
 Inadequacy of all these answers in
theory & practice

• "conscience" sometimes commands wrongly

or not at all
• religion: sometimes commands wrongly
– especially others' religions, we're inclined to think
– Salmon Rushdie Fatwah example
– "You shall not suffer a witch to live“ (Exod 22:18)?
• The Golden Rule:
– perhaps commands wrongly: different strokes for
different folks
– hard to interpret it
Definitions of Ethics

• Ethics is the activity of examining one’s moral

standards or the moral standards of society,
and asking how these standards apply to our
lives…reasonable or not.
• The study of Morality
• How we should act toward other people
• The right and proper way to act in one’s
professional life.
 Business Ethics
• normative study of moral standards as they apply to
business policies, institutions, and behavior
• Business defined
– preliminary definitions
• a society = people who have common ends and whose activities
are organized by a system of institutions designed to achieve those
ends
• institutions = relatively fixed patterns of activity
• economic = pertaining to the production & distribution of goods
and services
• http://ethisphere.com/2011-worlds-most-ethical-
companies/
 WHY CARE ABOUT ETHICS?
¢ Unethical behavior creates financial
and marketing risks.
¢ A company can go out of business,
and its employees can go to jail, if no
one is paying attention to the ethical
standards of the firm.
¢ Consumer boycotts give even the
most skeptical business leader
reason to pay attention to ethics.
 WHY CARE ABOUT ETHICS?
• A firm’s ethical reputation can provide a
competitive advantage, or disadvantage
• Managing ethically can also pay significant
dividends in organizational structure and
efficiency.
• Trust, loyalty, commitment, creativity, and
initiative are just some of the organizational
benefits that are more likely to flourish within
ethically stable and credible organizations.
 Comparison of Ethical Systems
Paradigm Rules of Conduct Negative
Consequences
Legal Approximate Criminal proceedings
guidelines for
minimally accepted
behavior
Codes Broad organizational, Potential expulsion
professional or from the institution
industry expectations
for acceptable
behavior
 Comparison of Ethical Systems
Paradigm Rules of Conduct Negative
Consequences
Religion The Golden Rule Retribution in
10 Commandments another existence
Philosophy “Goodness” Not achieving self-
“Fairness” actualization
Greatest good for through altruism
greatest number
Culture Rules, customs, and Potential expulsion
norms of group, from the association
culture, society
 What is a value?
• Values are the basic notion of what is
right and wrong and values are fairly
stable over time.
• A value is a principle, standard,
quality, considered to be desirable.
• American Heritage Dictionary
 Why is it important to learn
about values?

• If you want to understand a person’s

behavior, you must understand his or
her values.
–If we know an individual’s values we are
better able to predict a behavior in a
particular situation.
 Assumptions about Values
• Values are the underlying general basic beliefs about
what is good, desirable or worth while.

• They are abstract and general; things like freedom and

equality rather than preferences about particular policy
issues or specific candidates.
 Assumptions about
Values
• They are believed to be what people care about
deeply and serve as standards for judging acts,
guiding behavior, evaluating social conditions, and
give meaning to life.
• Values are thought to be relatively stable than
opinions so that they are and not subject to sudden
shifts or impulses of the moment.
• Finally, it is thought that they can be ranked in order
of importance.
 Do Values Change?

• Values change in response to

many influences.
– Technology
– Shifts in population
– Education
– Changes in basic institutions, e.g.,
family and religion
– Affluence
 Why is it important to learn
about values?

• If you want to understand a person’s

behavior, you must understand his or
her values.
–If we know an individual’s values we are
better able to predict a behavior in a
particular situation.
 Dominant Values in Today’s
Workforce
S. Robbins (2002)

http://www.prenhall.com/behindthebook/0132431521/pdf/Ro
bbins_CH03.pdf
 How can values be
classified?
• Theoretic •Political
• Economic •Religious
• Aesthetic •Ethical
• Social
"How can we know what a
person’s values are?"
• Ask people
– Open-ended questions
– Surveys (Rokeach Values Survey)
• Infer values from people’s actions
– if people's values influence their behavior we
may observe the behavior and using logic try
to determine what values are consistent with
that behavior
Activity #1: What are Your Values
• Rank the values on the hand-out
according to your personal hierarchy.
• From groups of 4-5 persons. Compare
your answers. Are they the same? Or
are they different? Why do you think
they are similar or different?
• As a group, rank your the top five values.
• Choose a representative who will give a
brief report (1 minute) to the class
TERMINAL VALUES INSTRUMENTAL VALUES
 Values Framework
Human
Dignity

Love and Integrity

Truth
Faith

Hard Social
Work Justice
 Human Dignity

The human person is uniquely

valuable because s/he is:
• Created and sustained by
God with a personal love.
• Made in the image and
likeness of God and endowed with the
signal gifts of reason and freedom that are
unique in all of creation.

From Albino Barrera

Modern Catholic Social Documents & Political Economy, 2001 From Barrera (2001)
 Human Dignity

The human person is uniquely

valuable because s/he is:
• Has been redeemed by Christ.
• Is the subject of a special divine friendship
and is destined for eventual union with
God– the human final end, perfection and
fulfillment.

From Albino Barrera

Modern Catholic Social Documents & Political Economy, 2001 From Barrera (2001)
 Social Justice Values
• Basic human needs
– The needs of all individuals and
societies should be met, within the
constraints imposed by the biosphere;
and all should have equal opportunity
for improving their lot.
 Social Justice Values
• Intergenerational equity
– Each generation should leave to the future a world
that is at least as diverse and productive as the one
it inherited. To this end, non-renewable resources
should be used sparingly, renewable resources
should be used sustainably, and waste should be
minimized. The benefits of development should
not be consumed now while leaving the costs to
the future.
 Social Justice Values

• Human rights
– All persons should have the
fundamental freedoms of conscience
and religion, expression, peaceful
assembly, and association.
 My Ethical Audience
Stakeholders Defined

Individuals or groups whose welfare may be

seriously affected by a corporation’s activities
and thus have a “stake” or claim in manager’s
decision making.
 Stakeholder Management

• Previous View: Business is an isolated

entity
• New View: Business in relationship to
a wide range of stakeholders
§ Traditional: Employees, Management,
Shareholders, and Board of Directors
 Stakeholder Management

§ Expanded: Customers, Labor Unions,

Suppliers, Vendors, Advisers,
Competitors, Government, Media,
Community, Related Industries, Hospitals,
Charitable Institutions, and NGOs
§ Extended: Environment, Countries
 Video on What Would You Do?

§ Who are the stakeholders in the scenario?

§ If you were the grocery manager what
would you do?
§ Can you identify what values did the
customers display?
§ How was human dignity affected in this
case?