Ethical Standards in

Business Organizations:

By: Syed Ahmed Owais

To: Sir. Abuzar Wajidy
Course: Strategic Management

2007 - 2010 Dr.Syed Ahmed Owais 1

Ethical Standards in Business Organizations:
Topics:

1. Ethical Behavior.
2. Values.
3. Alternate views of ethics.
4. Cultural Issues in Ethical behavior.
5. Ethical Dilemmas at Work Place.
6. Rationalization for Unethical Behavior.
7. Factors influencing Ethical Behavior.
8. Maintaining high ethical standards.
9. Corporate Social Responsibility.
10. Perspective on Corporate Social Responsibility.
11. Evaluation of Corporate Social Performance/

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 1. Ethical Behavior:

Ethics:
Ethics sets standards of good or bad, or right or
wrong, in ones conduct.

Ethical Behavior:

Ethical behavior is right or good

in the context of a governing Moral code.

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 2. Values:

Values:
Values are broad beliefs about what is
appropriate behavior.

(i) Terminal Values:

Terminal Values are preferences about
desired end states. e.g. Self-respect, family security,
freedom, inner harmony and happiness.

(ii) Instrumental Values:

Instrumental Values are preferences
regarding the means to desired ends. e.g, Honesty,
ambition, courage, imagination, and self-discipline.

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 3. Alternate Views of Ethics:

Moral-rights View.
Individualism View.
Utilitarian View.
Justice View.

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 3. Alternate Views of Ethics:

Moral-rights View:
In the moral rights view ethical
behavior respects and protects fundamental rights.

Individualism View:
In the individualism View ethical
behavior advances long-term self-interests.

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 3. Alternate Views of Ethics:

Utilitarian View:
In the Utilitarian view ethical behavior
delivers the greatest good to the most people.
Justice View:
In the justice view ethical behavior treats
people impartially and fairly.

A. Procedural Justice.
B. Distributive Justice.
C. Interactional justice.

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 3. Alternate Views of Ethics:

Justice View:

a.Procedural Justice:
Procedural justice is concerned
that policies and rules are fairly applied.

b.Distributive Justice:
Distributive justice is
concerned that people are treated the same regardless of
personal characteristics.

C. Interactional justice:
Interactive justice is the degree
to which others are treated with dignity and respect.

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 4. Cultural Issues in Ethical behavior:

Cultural Relativism.
Universalism.
Ethical Imperialism.

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 4. Cultural Issues in Ethical behavior:

Cultural Relativism:
Cultural Relativism suggests there is
no one right way to behave; ethical behavior is determined
by its cultural context.

Universalism:
Universalism suggests ethical standards
apply absolutely across all cultures.

Ethical Imperialism:
Ethical imperialism is an attempt
to impose ones ethical standards on other cultures.

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 5.Ethical Dilemmas at Work Place:

Ethical Dilemma:
An ethical dilemma is a situation that
although offering potential benefit or gain is also unethical.

(i) Discriminations.
(ii) Sexual Harassment.
(iii)Conflicts of Interest.
(iv)Customer Confidence.
(v)Organizational Resources.

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 5.Ethical Dilemmas at Work Place:

Discriminations:
Denying promotion or appointment
to a job candidates race, religion, gender, age or other
non-job-relevant criterion.

Sexual Harassment:
Making a coworker feel
uncomfortable because of inappropriate comments or
actions regarding sexuality; or a manager requesting
sexual favors in return for favorable job treatment.

(iii)Conflicts of Interest:
Taking a bribe or kickback
or extraordinary gift in return for making a decision
favorable to the gift giver.

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 5.Ethical Dilemmas at Work Place:

(iv)Customer Confidence:
Giving to another party
privileged information regarding the activities of a
customer.

(v)Organizational Resources:
Using official stationary
or a company e-mail account to communicate personal or
make personal opinions or make request from community
organizations.

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 6.Rationalization for Unethical
Behavior:

Convincing yourself that that the:

-Behavior is not really illegal.

-Behavior is in everybodys interest.
-That nobody will ever find out what youve done.
-Organization will protect you.

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 7.Factors influencing Ethical Behavior:

Personal.
Organizational.
Enviroment.

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 7.Factors influencing Ethical Behavior:

(i)Personal:
-Personal Needs.
-Personal Standards.
-Family Influence.
-Religious Values.

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 8.Factors influencing Ethical Behavior:

ii) Organization:
Boss can have a major impact on their
subordinates behavior.

(iii) Environment:
Organizations operate in competitive
environments influenced by government laws and
regulations and social norms and values.

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 8.Maintaining high ethical standards:

Ethical Training.
Ethical Role Model.
Ethical Code of Conduct.
Whistle Blower.

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 8.Maintaining high ethical standards:

i) Ethical Training:
Ethical training seeks to help people
understand the ethical aspects of decision making and to
incorporate high ethical standards into their daily
behaviour.

(ii) Ethical Role Model:

All managers are in a position to
influence the ethical behavior of the people who work for
and with them.

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 8.Maintaining high ethical standards:

(iii) Ethical Code of Conduct:

A code of ethics is a
formal statement of values and ethical standards.

(iv) Whistle Blower:

A whistleblower exposes the
misdeeds of others in organization.

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 9.Corporate Social Responsibility:

Corporate Social Responsibility:

Corporate Social Responsibility is the obligation of an

organization to serve its own interests its own interests and
those of society.

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 9.Corporate Social Responsibility:

Organizational Stake Holders:

1.Employees:
Employees and contractors who work for the
organization.

2.Customers:
Consumers and clients that purchase the
organizations
goods and/or use its services.

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 9.Corporate Social Responsibility:

3.Suppliers:
Providers of the organizations human,
information,
material, and financial resources.

4.Owners:
Stockholders, investors, and creditors with
claims on
assets and profits of the organization.

5.Competitors:
Other organizations producing the same
or
similar goods and services.
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 9.Corporate Social Responsibility:

6.Regulators:
The local, state and national government agncies
that enforce laws and regulations.

7.Invest Group:
Community groups, activists, and others
representing interests of citizens and society.

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 10.Perspective on Corporate Social
Responsibility:
Arguments in Favor of CSR:

1. Add long run profits for business.

2. Improve the public image of business.
3. Help them avoid government regulations.

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 10.Perspective on Corporate Social
Responsibility:
Arguments against CSR:

1. Increase cost.
2. Reduce profit.
3. Gives too much social power.
4. Do so without business accountability.

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 11.Evaluation of Corporate Social
Performance:

Social Responsibility Audit:

A social responsibility
audit assesses an organizations accomplishments in areas
of social responsibility.

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 11.Evaluation of Corporate Social
Performance:
Criteria for Evaluating Social Performance:

1. Economic Responsibility:
Is it profitable?

2. Legal Responsibility:
Does it obey law?

3. Ethical Responsibility:
Is it doing the right things?

4. Discretional Responsibility:
Does it contribute to the broader
community?

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 Social Responsibility Strategies:

Obstructionist Strategy.
Defensive Strategy.
Accommodative Strategy.
Proactive Strategy.

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 Social Responsibility Strategies:

(i) Obstructionist Strategy:

An obstructionist strategy
avoids
social responsibility and reflects mainly economic priorities.

(ii ) Defensive Strategy:

A defensive strategy seeks
protection by doing the minimum legally required.

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 Social Responsibility Strategies:

(iii ) Accommodative Strategy:

An accommodative
strategy accepts social responsibility and tries o satisfy
economic, legal, and ethical criteria.

(iv) Proactive Strategy:

A proactive strategy meets all
the criteria of social responsibility, including discretionary
performance.

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 13.Governments Role:

How Government influence organizations:

1. Occupational Safety and Health:

The Occupational
Safety
and Health Act of 1970.

2. Fair Labor Practices:

Equal Opportunity Act of 1972.

3. Consumer Protection:
The Consumer Protection Act of
1972.

4. Enviromental Protection:
Air Pollution Control Act of 1962.
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 14.Organizations influence on
Governments:
How Organizations influence Governments:

1. Personal Contacts & Networks:

2. Public Relation Campaigns:

3. Lobbying:
Lobbying expresses opinions and preferences to
government officials.

4. Political Action Committees:

Political action committees
collect money for donation to political campaigns.

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 15.Corporate Governance:

Corporate Governance:
Corporate Governance is the
oversight of op management by a board of directors.

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 Ethical Standards in Business
Organizations:

Reference:

Strategic Management Concepts and cases

12 th edition,
Fred R David.

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