BUSINESS ETHICS

THM410/BSMGT002
PREPARED BY:
MRS B. MUCHENJE (bzmuchenje@gmail.com)
FACULTY OF COMMERCE,
Office 103

Ethics Background
I like it from the Biblical point of view where God is the
Author of Morality
Jesus replied, Moses permitted you to divorce your
wives because your hearts were hard. But it was not
this way from the beginning. Mathew 19V8 (NIV)
Not according to the covenant that I made with their
fathers in the day that I took them by the hand to bring
them out of the land of Egypt; which my covenant they
brake, although I was a husband unto them, said the
LORD:

Continued:
But this shall be the covenant that I will make with the
house of Israel; After those days, said the LORD,
I will put my law in their inward parts, and write it in
their hearts; and will be their God, and they shall be my
people. Jer. 31v32-33 (NIV)
I will give you a new heart and put a new spirit in you; I
will remove from you your heart of stone and give you a
heart of flesh. Ezekiel 36v26 (NIV)

Continued:
All Scripture is God-breathed and is useful for teaching,
rebuking, correcting and training in righteousness, 17 so
that the servant of God may be thoroughly equipped for
every good work.2Timothy 3v16 (NIV)

1. ETHICS DEFINITIONS & THE

IMPORTANCE OF THE SUBJECT
It is the knowledge of the good and bad, right and
wrong, the just and unjust.
It is the set of principles people choose to live by
(Stroll).
It is a code of values that guide our choices and
actions and determines the purpose and course
of our lives.
It is the discipline that deals with moral duty and
obligation.

Continued:
It is what is ought to be done.
It is a study of peoples rights and duties, the
moral rules that people apply in making decisions
and the nature of relationships among people.
It is all about how individuals' decisions affect
other people.

Continued:
Ethics is practised daily in daily key terms of the ethical
language which are: values, rights, duties, rules and
relationships.
Values are relatively permanent desires that seem to be
good in themselves, like peace and goodwill.
A right is a claim that entitles a person to take a particular
action.
A duty is an obligation to take specific steps or obey the
law.

What is Business Ethics?

It is the ethics that concerns business operations.
Business ethics seeks to elaborate the values of
business life and how it fits into society.
Because business activity is human activity, it can be
evaluated from the moral point of view just as any other
human activity can be evaluated.
Business is part of society and therefore the actions of
people in business are subject to moral rules.

Why the need of practicing ethics?

When business people speak about business
ethics they usually mean one of three things:
(1) avoid breaking the criminal law in ones workrelated activity;
(2) avoid action that may result in civil law suits
against the company; and
(3) avoid actions that are bad for the company
image. Businesses are especially concerned with
these three things since they involve loss of money

Benefits of being ethical

It protects the reputation of the company.
Ethical policies can be a free marketing tool.
It helps to ensure that the company complies with
the existing law and is able to anticipate future
changes in it.
It sets the tone for the organizations, improves
professional standards and makes sure that
companies are in tune with the community.

Continued:
It helps companies to escape or avoid laws being
imposed on them.
Ethical policies balance the interests of
companys stakeholders.
It helps to create a psychologically health working
environment.
It promotes trust among stakeholders which is
fundamental to efficient business transactions.
Good ethics makes good business.

Consequences of being unethical

Loss of company reputation
Loss of business i.e. profits and customers
Unethical behaviour can undermine and in some cases
destroy bonds of trust and respect that are essential to
good business relationships.
Loss of trust among stakeholders
Promotion of internal conflicts
Confusion among employees and loss of business
focus

Who determines what is good?

i) society (i.e. ruling class, elite people)
ii) individuals (i.e. feelings and attitudes)
iii) Natural law
All the above foundations of ethics lead to theories
of ethics. Theories of ethics offer a comprehensive
survey of the major schools of thought and figures in
moral philosophy from Socrates to the present day.

2. THE ORIGINS OF ETHICS

Ethics and morality
Ethics is often restricted to the rules and norms of
specific kinds of conduct or the codes of conduct for
specialized groups.
Moralities are specific to societies and exist at certain
times and places. It includes a complex vocabulary
and patterns of reasoning that permit the members of
the society to engage in moral discourse for the
purpose of evaluating the actions of individuals and the
practices of the society.

Ethical Theories
The theories represent the grand ideas on which
principles are based.
Ethical theories provide framework to get at
underlying rationale, classify and understand
arguments, defend conclusions about right and
wrong.

Continued:
Ethical theory is necessary when reasonable
people disagree about controversial issues in
business such as right to privacy, drug testing,
sexual harassment, etc.
Such controversial issues are difficult precisely
because they are not easily settled by our ordinary
moral beliefs and the simple rules and principles
of morality.

Continued:
If such situations are met, people need to go beyond
our conflicting positions and seek common ground in
ethical theory that will give out the best reasons
available.
Ethical theories represent the best efforts of
philosophers over the ages to understand morality.
Some familiarity with these theories will greatly
improve the moral compass that we use to navigate
the treacherous ethical terrain of the business world.

Continued:
However, the differences between theories should not
lead us to despair of resolving ethical issues or to
conclude that one resolution is as good as another. Nor
should we be discouraged by the fact that agreement
on complex ethical issues is seldom achieved.
The best we can do is to analyse the issues as fully as
possible which means getting the facts straight and
achieving definitional clarity and then develop the
strongest and most complete arguments we can for
what we consider to be the correct conclusions.

Ethics Theorists
Ethical theories are usually broken down into four general
subject areas that are:
i) Meta ethics,
ii) Normative Ethics,
iii) Applied ethics and
iv) Descriptive ethics.
The most popular ethical theorists are:
Kant (Deontology), Aristotle (Virtue), Mill (Consequentialism).

1. Meta-ethics
This studies the meaning of moral language and the
metaphysics of moral facts. It investigates where our ethical
principles come from and what they mean e.g. Are they social
inventions? Do they involve more than our individual emotions?
Meta-ethics answers issues of universal truth, the will of God,
the role of reason in ethical judgements and the meaning of
ethical terms.
Theories that fall under Meta-ethics include:
i) Subjectivism
This says that, all moral beliefs are based on personal feelings.
This theory states that, man is the centre of all things. An
individual is the final authority to the rule.

Continued:
ii) Emotivism
This is the variation of subjectivism. It hinges on
the principle that what we like is expressed
emotionally and not considered either true or false
e.g. a statement, I like to steal your money, does
not mean that it is good to steal.
This theory suggests that, moral judgements are
not testable facts but are feelings.

Continued:
iii) Cultural Relativism
This theory states that, ethical principles are not
universal, but rather, are determined by culture.
Paul Taylor believes that all moral norms are
relative to particular cultures hence moral conduct
depends o time and place. What is right or wrong
depends on ones background.

Continued:
iv) Supernaturalism
This theory maintains that, good or right is what
God wills us to do. The will of God is objective
because it comes from a source outside ourselves.
Supernaturalists believe that there are closer ties
between ethics and religion.

Continued:
v) The Golden Rule
Do unto others as you would like them to do unto
you. The Golden Rule is about our behaviour, not
the other persons. Morality is about how we
choose to behave in all situations than merely
reacting to another individuals behaviour.

2. Normative Ethics
These take on a more practical task which is to arrive
at moral standards that regulate right or wrong
conduct i.e. articulating good habits that we should
follow, the duties that we should do, the
consequences of our behaviour on others. Normative
ethics inquires what are the principles we ought to
live by? What should they be?
Theories that fall under Normative ethics include:

Continued:
i) Utilitarianism
John Stuart Mill built on the work of Jeremy
Betham to develop utilitarianism. This is the
most famous normative ethical principle in
Western philosophy. The general idea behind
this theory is that, right or good actions are
those that result in happiness. Happiness is
pleasure and absence of pain.

Continued:
Utilitarianism has two variations:
i) Act utilitarianism that requires that every time we act we ought
to calculate and determine which among all the options open to
us would promote the greatest net utility for all. The smallest
things we do can have enormous consequences later.
ii) Rule utilitarianism requires that every time we act, we obey
the set rules that, taken together, promote the greatest utility for
all. Rule utilitarians accept a list of rules that have been shown
to result in the overall best interests of most people.

Continued:
ii) Social Contract Theory
According to this theory, good or right is solely
determined by the rules we need to make and follow
in order for us to live together peacefully. Thomas
Hobbes, (1651), theorised that the absence of a
social contract would result in the state of nature
which he described as lonely, violent chaos.

Continued:
iii) Categorical Imperative
Immanuel Kant believed that moral laws are
absolute and do not change according to the
situation. Kant, (1785), devised the formula that
states that, there is only one law of morality and it is
that we should act in ways that we would want our
acts to become laws for everyone elses behaviour.

Continued:
iv) Virtue Theory
A virtue is a character trait that results in habitual
good behaviour rather than a principle of action.
Virtue theory requires that character traits
considered virtuous be identified, defined and
justified.


3. Applied Ethics
It involves examining specific controversial issues
such as abortion, infanticide, animal rights,
environmental concerns, homosexuality, nuclear
war, etc.

4. Descriptive ethics
Is also known as comparative ethics and is prescriptive.
It is the study of people's beliefs about morality.
Descriptive ethics is a value-free approach to ethics,
which defines it as a social science rather than
a humanity. Its examination of ethics doesn't start with a
preconceived theory, but rather investigates
observations of actual choices made by moral agents in
practice. Some philosophers rely on descriptive ethics
and choices made and unchallenged by a society or
culture to derive categories, which typically vary by