Business ethics

Contemporary Business
Ethics

Business ethics is a form of applied ethics that examines

ethical principles and moral or ethical problems that arise
in a business environment.

The field is vast, often encompassing such concerns as

corporate governance, reputation management, accurate
accounting and audits, fair labor practices and
environmental stewardship

Business ethics continues a rich tradition of leading the

way with new ideas about business and the intersection of
business and society.

Nature of Ethics
The word ethics is derived from the
Greek word ethos means character.
Ethics is a major branch of philosophy, encompassing
right conduct and good life. It is significantly broader
than the common conception of analyzing right and
wrong. A central aspect of ethics is "the good life."
Every profession has its own unique set of standards
called Code of Ethics like legal ethics, medical ethics,
and business ethics.

Two Systems of Ethics

There

are two systems of Ethics

Formalism
and
Consequentalism. Both systems
are not mutually exclusive in
the outcomes of their moral
analysis.
They
begin
from
different assumptions.

Formalism
Formalism is also called Deontology

which is an approach to Ethics that

affirms absolute morality. A particular
act is in itself right or wrong always in
every situation. For example lying is
wrong so there is no justification for
end, because wrongness does not
depend on the situation in which the
lie is told.

Consequentalism
The Consequentalism is also called

Teleology, it is concerned with moral

consequences of actions rather than
with the morality or the actions
themselves. For consequentalist lying
itself
is
not
unethical.
It
is
consequences, as a result of lying, that
must be evaluated for their ethical
implications. It is the lost of trust for
firm done by lying i.e. unethical.
The dominant form of consequentalism
, utilitarianism, judges actions by
usefulness, by whether they served to

Sources of Values for

Business Ethics
There are four sources of values for
business ethics.

Legal Regulation
Professional Codes of Ethics
Organizational Code of Ethics
Individual Values

Legal Regulation
Ethical Legal Relationship is to realize

that in our society Ethical Values

frequently become law and that legal
regulation can reflect societys ethical
values.
For example insider trading fraudulent
practices and conflict of interest are
often cited as examples of Ethical
failures. These practices are illegal.

Professional Codes of
Ethics
Professional

Codes of Ethics has

historical background of Professional
Codes like medicine and law. Other
professions recently developed their
own code of ethics to regulate the
profession in accordance with the
Regulatory Framework of the State.
Professional Codes of Ethics also
regulate the conduct of professionals
for example Pakistan Bar Council and
Pakistan Medical Dental Council.

Organizational Codes of
Ethics
All the organizations operating in any

State are subject to enforcement of

legal
system,
so
all
business
organizations now have developed
their own code of business ethics
which is also called
CODE OF
CONDUCT
The Code of Conduct is dealing with
honesty, compliance with laws safety
and security of employees customer
relationship and protection of the

Individual Values
The sources of Ethical values for

business decision making comes from

the individuals
Ethics are used by Managers as
guidelines in decision making that
affect
employees,
organization,
consumers and stakeholders.
Managers should look at existing
ethical norms and trends in the
industries in order to determine what
decision and actions are right or
wrong.

Achieving an Ethical
Business Corporation
The primary object of Modern Business

Organization is to earn profits because

profits
motivate
the
entire
organization, corporate culture and it
promotes
the
common
good
by
providing incentives for job creation
and results in organizational growth
and success.

The Control of Resources by

Non-owners
In the corporate world the owners of

business organizations are not in position

and control of their business resources.
This produces the problems of corporate
governance.
Managers, who are the agent of the
owners, have ethical and legal duties to
manage the organization for the benefit of
their owners.
As
managers
are
controlling
the
organization resources so it is easy for
them to misuse their authority or to
infringe upon the property of the

Consideration of All
Stakeholders

The Investors, owners, shareholders,

employees and consumers having

interest with business organization
have their interest at stake because
the company may take any action
which is against its stakeholders.
So ethical corporate behaviour of
organization is based on managers who
recognized and tact into account the
interest of various stakeholders.

Property as a system of
Personal Ethics
Property provides an ordering relationship

between people. Legally and morally owners

of the property must respect the equal right
of others to what is proper to them.
It is unethical for an employee to fail to warn
employees of safety risk in the work place for
the employees to embezzle money from the
employer.
The property system does not explain which
resources fall in the first instance within the
exclusive right of property protection.
The rule of law and property are fundamental
not only to structure but also to the values of
the private market and of ethical behavior in

Key ingredients of Business

Ethics
1.

2.

3.

4.

Corporate Compliance
Particularly related to government contracts - gave rise to
corporate compliance, which is most often narrowly focused
on complying with national and local laws and regulations.
Corporate Responsibility
Corporate
responsibility
refers
to
fulfilling
the
responsibilities or obligations that a company has towards
its stakeholders.
Corporate Social Responsibility
Corporate social responsibility can be understood in terms
of corporate responsibility, but with greater stress laid upon
the obligations a company has to the community,
particularly with respect to charitable activities and
environmental stewardship.
Corporate Governance
Corporate governance refers to the oversight of company
operations by bodies (e.g., board of directors) that bear the
responsibility to oversee, direct, and evaluate company
operations on behalf of the companys investors.

Business Ethics as
Discipline
Business ethics can be both a normative and a
descriptive discipline. As a corporate practice and a
career
specialization,
the
field
is
primarily
normative. In academia descriptive approaches are
also taken. The range and quantity of business
ethical issues reflects the degree to which business
is perceived to be at odds with non-economic social
values. Historically, interest in business ethics
accelerated dramatically during the 1980s and
1990s, both within major corporations and within
academia. For example, today most major corporate
websites lay emphasis on commitment to promoting
non-economic social values under a variety of
headings (e.g. ethics codes, social responsibility
charters). In some cases, corporations have
redefined their core values in the light of business
ethical considerations.

Issues in Business Ethics

Ethical issues concerning relations between

different companies , like joint ventures,
mergers, acquisitions, take-over, etc.

It also includes leadership issues,

organizational development issues, financial
scandals, misuse of corporate ethics policies
as marketing tool etc.

Professional Ethics
Professional ethics covers the myriad
practical ethical problems and
phenomenon which arise out of
specific functional areas of companies
or in relation to organized business
profession.

Ethical issues in
Accounting Information

Creating accounting reports with misleading facts and

figures.

Insider trading, securities fraud, forex scams, and

manipulation of financial market.

Kickbacks, bribery, facilitation payment.

Corporate frauds and fake companies.

Ethical issues in HRM

The ethics of Human Resource Management

(HRM) covers those ethical issues arising
around the employer-employee relationship,
such as the rights and duties of employer and
employee.
Discrimination issues include discrimination
on the basis of age, gender, race, religion,
disabilities, etc.
Issues surrounding the representation of
employees and the democratization of the
workplace: union busting, and illegal strike.
Issues affecting the privacy of the employee:
workplace surveillance and drug testing.
Issues relating to the fairness of the
employment contract and the balance of
power between employer and employee.
Occupational Health and Safety.

Ethical issues in Sales and

Marketing

Marketing which goes beyond the mere provision

of information about (and access to) a product may
seek to manipulate our values and behavior. To
some extent society regards this as acceptable,
but where is the ethical line to be drawn?
Marketing ethics overlaps strongly with media
ethics, because marketing makes heavy use of
media. However, media ethics is a much larger
topic and extends outside business ethics.
Pricing: price fixing, price discrimination, price
skimming.
Anti-competitive practices: these include but go
beyond pricing tactics to cover issues such as
manipulation of loyalty and supply chains.
Children and marketing: marketing in schools.

Ethical issues in Production

This area of business ethics deals with the duties of a

company to ensure that products and production
processes do not cause harm. Some of the more acute
dilemmas in this area arise out of the fact that there is
usually a degree of danger in any product or production
process and it is difficult to define a degree of
permissibility, or the degree of permissibility may depend
on the changing state of preventative technologies or
changing social perceptions of acceptable risk.
Defective, addictive and inherently dangerous products
and services (e.g. tobacco, alcohol, weapons, motor
vehicles, chemical manufacturing).
Ethical relations between the company and the
environment: pollution, environmental ethics, carbon
emissions etc.
Ethical problems arising out of new technologies:
genetically modified food, mobile phone radiation and
health.
Product testing ethics: animal testing for experimental
purpose, use of economically disadvantaged groups (such
as students) as test objects.

Ethical issues in Intellectual

Property, knowledge, and skills

Knowledge and skills are valuable but not easily

"ownable" as objects. Nor is it obvious who has the
greater rights to an idea: the company who trained
the employee, or the employee themselves? The
country in which the plant grew, or the company
which discovered and developed the plant's
medicinal potential? As a result, attempts to assert
ownership and ethical disputes over ownership
arise.
Patent infringement, copyright infringement, trade
mark infringement.
Even the notion of intellectual property itself has
been criticised on ethical grounds.
The practice of employing all the most talented
people in a specific field, regardless of need, in
order to prevent any competitors employing them.
Bioprospecting (ethical) and biopiracy (unethical).

Ethical issues in International

Business Systems

While business ethics emerged as a field in the 1970s,

international business ethics did not emerge until the late
1990s, looking back on the international developments of that
decade. Many new practical issues arose out of the
international context of business. Theoretical issues such as
cultural relativity of ethical values receive more emphasis in
this field. Other, older issues can be grouped here as well.
Issues and subfields include:
Comparison of business ethical traditions from various
religious perspectives.
Ethical
issues
arising
out
of
international
business
transactions; e.g. bioprospecting and biopiracy in the
pharmaceutical industry; the fair trade movement and
transfer pricing.
Issues such as globalization and cultural imperialism.
Varying global standards - e.g. the use of child labour.
The way in which multinationals take advantage of
international differences, such as outsourcing production (e.g.
clothes) and services (e.g. call centres) to low-wage countries.

Thank You