ETHICS, Corporate

Social Responsibility
and CORPORATE
BEHAVIOR
April Vital

Numerous scandals in the late 1990s and

early 2000s seemed to add credence to
the criticism of business ethics.
Corporate executives of WorldCom, a
giant in the telecommunications field,
admitted fraud and misrepresentation in
financial statements. WorldCom's former
CEO went on trial for alleged crimes
related to this accounting ethics scandal.

 A similar scandal engulfed Enron in the

late 1990s and its former CEO, Ken Lay,
also faced trial. Other notable ethical
lapses were publicized involving
ImClone, a biotechnological firm; Arthur
Andersen, one of the largest and oldest
public accounting firms; and
Healthsouth, a large healthcare firm
located in the southeast United States.
These companies eventually suffered
public humiliation, huge financial losses,
and in some cases, bankruptcy or

 It is the awareness of and judgments

made in ethical dilemmas by all that
determines the overall level of ethics in
business. Thus, the field of business
ethics is concerned not only with
financial and accounting irregularities
involving billions of dollars, but all kinds
of moral and ethical questions, large and
small, faced by those who work in
business organizations.

OBJECTIVES
(1) the major theories or "moral
philosophies" that are applied to
business ethics;
(2) a well-established model of ethical
decision-making in business; and (3) the
factors that affect individual ethical
decision-making in the business context.

 Ethics in business, or business ethics as it is often

called, is the application of the discipline, principles,
and theories of ethics to the organizational context.
Business ethics have been defined as "principles
and standards that guide behavior in the world of
business."
Ethical behavior in business is critical. When
business firms are charged with infractions, and
when employees of those firms come under legal
investigation, there is a concern raised about moral
behavior in business. Hence, the level of mutual
trust, which is the foundation of our free-market
economy, is threatened

 The corporate world has always had some

rules, standards and norms for doing
business. Corporate behavior.
Social, cultural basis, which can be
different from country to country
Ethical Code of business
- When the company these standards or
norms as part of their responsibility
Equitable, fair and ethical

 Ethics is inevitable part of business

responsibility
Challenge? Characterized by conflicts of
interests

CONFLICT
Maximize
social issues
profit as
primary goal

Face

 Ethics is the set of rules prescribing what is

good or evil, or what is right and wrong for
people.
Values that form the basis of human relations,
and the quality and essence of being morally
good or evi. Or right or wrong.
Overall fundamental principles and practices for
improving the level of well-being of humanity
Business ethics means honesty, confidence,
respect and fair acting in all circumstances

 Concrete, subjective, no boundaries

Business ethics can be discussed with differing
approaches and in varying degrees of importance
in different fields.
"principles and standards that guide behavior in
the world of business

Ubiquitous in business life, at the business level in

human life.
What, how much, for whom (Aras, 2006)

Power Culture
Task Culture
Person Culture
Role Culture
Charles Handy, Irish philosopher and a
world-leading figure in organisational
culture, identified four overarching types
of workplace culture

ETHICAL PHILOSOPHIES
Problematical area as there is no
absolute agreement as to what
constitutes ethical )or unethical
behavior).
Philosophies represent key areas of
debate and contention in the philosophy
of ethics.

Deontological Ethics
Greek , deon, "obligation, duty")
Immanuel Kant
normative ethical position that judges the morality of an action based on the action's adherence to a rule or
rules. It is sometimes described as "duty-" or "obligation-" or "rule-" based ethics, because rules "bind you
to your duty.
is defined as an ethical theory that the morality of an action should be based on whether that action itself is
right or wrong under a series of rules, rather than based on the consequences of the action. An example of
deontology is the belief that killing someone is wrong, even if it was in self-defense.
regarding which choices are morally required, forbidden, or permitted. In other words, deontology falls within
the domain of moral theories that guide and assess our choices of what we ought to do

Certain actionhave the potential for explaining why certain people have moral standing to complain about
and hold to account those who breach moral duties. For the moral duties typically thought to be
deontological in characterunlike, say, duties regarding the environmentare duties to particular people,
not duties to bring about states of affairs that no particular person has an individual right to have realized.s
are right and wrong in themselves and so there are absolute ethical standards which need to be upheld.

Problem?
How do we know which acts are wrong and how do we distinguish between a wrong act and an omission?
Nagel underlying notion of rights which constraint our actions, although this might be overriden in certain
circumstances.
Eg. Present there is an absolute moral constraint against killing someone
Future - there may be none

 My duty is to make sure that I do not

do evil. If I kill to save a life, by killing I
am causing evil. My first duty is always
to ensure that I am good in myself.
Killing or lying or stealing would make
me bad in myself.
If everyone followed my rules, then noone would be killing, lying, or stealing,
and evil would disappear in the world.

Teleological Ethics
Greek telos, end; logos, science)
Aristotle

- distinguished between the right and the

good, with the right encompassing those
actions which maximize the good
Its outcomes determine what is right
rather than inputs (eg. Actions) in terms
of ethical standards.
Rawls: A Theory of Justice
Ones duty is to promote certain ends,
and the principles of right and wrong
organise and direct our efforts towards
these ends

 torturing someone to find the location of

a ticking time bomb. While the torture
for its own sake would be wrong,
because it is done for the greatest good
and to save lives, it can be understood to
be the ethical thing to do.

UTILITARIANISM
Outcomes are all that matter in
determining what is good
Aggregation of all these self-interests will
automatically lead to the maximum good
for society at large.
There is a large role for government in
mediating between these indicidual
actions to alow for the fact that some
needs can best be met cmmunally.

ETHICAL RELATIVISM
There are no universally valid moral principles because there
are no certain universa ltruths.
CONVENTIONALISM a given set of ethics or moral principles
are only valid within a given culture at a particular time,
Ethical relativism is the mores and standards of a society
which define what is moral behavior and ethical standards are
set, not absolutely, but according to the dictates of a given
society at a given time. CONFORM TO SOCIETYS STANDARDS
= BEHAVING ETHICALLY
Problem: ethical standards and practices of the 19 th century
are different to our own as are the standards of another
countries.
SUBJECTIVISM individual choice is the key deterinant of the
validity of moral principles

 Standards of society at large

Standards of chosen profession
Standards of the peer group to which we
belong
Different grouping within society tend to have
different moral standards of acceptable
behavior and we have a tendency to behave
differently at different times and when we are
with different groups of people

Eg. Traveling to foreign country

Ethical Objectivism
Direct opposition to relativism
Although moral principles may differ between
cultures. Some moral principles have
universal validity whether or not they are
universally recognized.
Strong or absolutism there is one true moral
system
Weak there is a core morality of universally
valid moral princiles but also acepts
indeterminate area where relativism is
accepted

 We can see that each of these theories

of ethics is problematical and that there
is no overarching priniple which
determines either what is ethical or what
is not. Nevertheless a concern with
ethics has been introduced explicitly into
organisation theory and strategy in
recent years. This has led to an
increased interes in Corporate Social
Responsibility.