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Unit 2
BUSINESS EHTICS
Dr. Henry Mensah
Defining Ethics
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Ethics is the ……Science of MoralBranch philosophy which is concernedwith human character and conductA code of moral standards of conduct forwhat is “good” and “right” as opposed towhat is “bad” or “wrong”.
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Sources of Ethical Norms
Fellow Workers
Family
Friends
The Law
Regions ofCountry
Profession
Employer
Society atLarge
Fellow Workers
ReligiousBeliefs
The Individual
Conscience
Morality
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Morality is used in connection with thepractical application of theories, principles,and standards of human conduct to particularacts or situations. E.g. when we apply a particular ethical theoryto an action and we try to judge whether thataction is right or wrong on the basis of thatethical theory.
The Moral Point of View•
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Business decisions can be made from the moral, economic,and legal points of view. An integration of the three is most appropriate The moral point of view uses reason or logic , not justfeelings or conventional views, to justify decisions QUESTION?????????
Would you feel comfortable if colleagues, friends, andfamily knew about your decision, or if it were reported onTV or in the newspapers??????
© 2012 Pearson Education, Inc. Allrights reserved.
Four morally relevant reasons foracting in a way
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Considering the benefit and harm to all of thedifferent parties involved. Respecting the essential humanity of others. Treating others with equality, fairness, and justice. Caring for other persons in ways that nurturerelationships.
© 2012 Pearson Education, Inc. Allrights reserved.
Ethics and the Law
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It is not enough to say that our conduct islawful because ethics go beyond the legalcode. Following ethical standard is not merely thesame as obeying the law. This may be considered the minimumacceptable standard to which companiesmust adhere.
© 2012 Pearson Education, Inc. Allrights reserved.
Two Schools of Thought;Ethics & the Law
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Law and ethics govern two differentrealms.
Law prevails in public life, whereas ethicsis a private matter (personal conduct)
Law embodies the ethics of business: Ethicalrules that apply to business have beenenacted by legislators into laws
© 2012 Pearson Education, Inc. Allrights reserved.
Why the Law is Not Enough•
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Ethical and legal aspects of a situation need tobe considered in decision making. Ethics applies not only to public matters but alsoshapes the law. Although much that is unethical in business isalso illegal, the law cannot be a complete guideto ethical business practice for many reasons
© 2012 Pearson Education, Inc. Allrights reserved.
Why the Law is Not Enough
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The law is:Inappropriate for regulating certain aspects ofbusiness activity (Certain behavior is immoral but
not illegal)Slow to develop in new areas of concern andoften unsettled (the wheel of law grind slowly butbiz decision are quick)Employs moral concepts that are not preciselydefined (how do we measure good faith,reasonableness etc…basis of morality)
Ethics and Culture
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Cultural RelativismSuggest that there is no one right way tobehave; cultural context determines ethicalbehavior
Ethics and Culture
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Excerpt From Universal Declaration of HumanRights
United NationsArticle 1—All human beings are born free andequal in dignity and rightArticle 18—Everyone has the right to freedom ofthought, conscience, and religionArticle 19—Everyone has the right to freedom ofopinion and expressionArticle 23—Everyone has the right to work, to freechoice of employment, to just and favorableconditions of workArticle 26—Everyone has the right to education
Business Ethics•
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What it right or wrong in the workplace anddoing what's right
this is in regard to effects of products/services and in relationships withstakeholders.
involves applying general ethical principlesand standards to business activities, behaviorand decisions Business actions are judged
By general ethical standards of societyNot by more permissive standards
Two Areas of Business Ethics
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Managerial mischief:includes "illegal, unethical, or questionablepractices of individual managers ororganizations, as well as the causes of suchbehaviors and remedies to eradicate them
Moral mazesincludes the numerous ethical problemsthat managers must deal with on a dailybasis, such as potential conflicts ofinterest, wrongful use of resources,mismanagement of contracts andagreements
Ensuring a Strong Commitment to BusinessEthics in Multinational Companies
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Three schools of thought about the extentto which ethical standards apply across
countries and cultures exist:Ethical UniversalismEthical RelativismIntegrative Social Contracts Theory
Concept of Ethical Universalism
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According to the school of ethicaluniversalism . . .
Same standards of what is right and what iswrong are universal and transcend mostcultures, societies, and religions
Universal agreement on basic moral standards allowsa multinational company to develop a code of ethicsthat is applied evenly across its worldwide operations
Concept of Ethical Relativism•
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According to the school of ethical relativism . . .What is ethical or unethical must be judged in light of
local moral standards and can vary from one countryto another
Some Companies code of conduct based uponthe principle of ethical relativism assume that
local morality is an adequate guide for ethicalbehavior
Drawbacks of Ethical Relativism
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The ethical relativism rule of “when in Rome, doas the Romans do” presents problems
It is ethically dangerous for company personnel toassume that local ethical standards are an adequateguide to ethical behavior
What if local standards condone kickbacksand bribery?What if local standards blink at
environmental degradation?
Integrative Social Contracts Theory
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According to the integrative social contractstheory, the ethical standards a company shouldtry to uphold are governed by both
A limited number of universal ethical principles thatput ethical boundaries on actions and behavior in allsituations
andThe circumstances of local cultures, traditions, andvalues that further prescribe what constitutesethically permissible behavior and what does not
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Ethics and the Role of Managers•
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Ethical dilemmas: A problem orissue demanding competingdecision or choice all of which areunethical although beneficial Ethical dilemmas for top managersare due to conflicts between threemain roles.
Managers as economic actorsManagers as company leadersManagers as community leaders
Ethical Leadership•
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Managers must provide a good role model by:Being ethical and honest at all times.Telling the truth; don’t hide or manipulate information.Admitting failure and not trying to cover it up.Communicating shared ethical values to employeesthrough symbols, stories, and slogans.Rewarding employees who behave ethically andpunish those who do not.Protecting employees (whistleblowers) who bring tolight unethical behaviors or raise ethical issues.
Factors influencing ethical managerial behavior—the person, organization, and environment.
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How managers act andcommunicate as role models
Immoral managerAmoral managerMoral manager
Ethics mindfulnessEnriched ethical awareness thataffects behavior
Three Models of MoralManagement
The Moralist View cont….
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There are 3 types of moralist – Immoral,Moral & Amoral Biz
Immoral Management -
An approach devoid of ethical principlesand an active opposition to what is ethical.The operating strategy of immoralmanagement is focused on exploitingopportunities for corporate or personalgain. © 2012 Pearson Education, Inc. All
rights reserved.
The Moralist View cont….
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Moral Management -Conforms to highest standards of ethical
behavior or professional standards ofconduct.
Amoral Management –
Indifferent between two aboveAccepts the ethical prescription but sees it as
irrelevant to businessSet their own rules of the gameethical conduct in business is merely strategic
behavior within the rules that government has setAlways have strategic intent to reap profit in the
long run© 2015 Cengage Learning 25
© 2015 Cengage Learning 26
© 2012 Pearson Education, Inc. Allrights reserved.
© 2012 Pearson Education, Inc. Allrights reserved.
What is Whistle Blowing?
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Whistle-BlowingThe voluntary release of information by amember or former member of an organization
Evidence of illegal and/or immoral conductin the organizationoutside the normal channels of communicationConduct in the organization that is not inthe public interest
Some key highlights of the definition
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A whistle-blower is a member or former member ofan organization and not an outsider. The information that is revealed by the whistle-blower is non-public information and not alreadyknown facts. The information concerns some significantmisconduct by the organization or some of itsmembers.
© 2012 Pearson Education, Inc. Allrights reserved.
key highlights cont…..•
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The information is revealed outside of the normalchannels of corporate communication within anorganization. The information is revealed voluntarily and not bya legal mandate. The information is revealed as a moral protest inorder to correct some perceived wrong.
© 2012 Pearson Education, Inc. Allrights reserved.
© 2012 Pearson Education, Inc. Allrights reserved.
The Loyal Agent Argument
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The Loyal Agent Argument isAn argument against the right of an employee toblow the whistle because
An employee is a legal agent of an employerThe main obligation of an agent is to act in the interest ofthe principal
whistle-blower might appear to be a disloyal agent, theobligations of an agent’s loyalty has limits.
© 2012 Pearson Education, Inc. Allrights reserved.
Exit, Voice, and Loyalty
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In Albert O. Hirschman’s book Exit, Voice,and Loyalty , he states
Members of organizations can respond todissatisfaction by
Leaving the organizationSpeaking up and making the dissatisfaction knownin the hope of bringing about change
© 2012 Pearson Education, Inc. Allrights reserved.
The Arguments against Whistle-Blower Protection
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Whistle-blowing might be used byemployees to:
Protest company decisions or to get backat their employersCover up their own incompetence orinadequate performance
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The Arguments against Whistle-Blower Protection
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Legislation protecting whistle-blowersWould encroach on the right of employersto conduct business as they see fit
Would add another layer of regulation to theexisting legal restraints on business,
Making it more difficult for managers torun a company efficiently
© 2012 Pearson Education, Inc. Allrights reserved.
The Arguments for Whistle-BlowerProtection
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If whistle-blowers come forwardDangers to the public will be broughtto light
We have a moral right to the freedom ofspeech and should be protected.
Management 9/e - Chapter 2 36
Whistleblowers cont’
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Barriers to whistleblowing include:Strict chain of commandStrong work group identitiesAmbiguous priorities
Organizational methods for overcomingwhistleblowing barriers:
Ethics staff units who serve as ethicsadvocatesMoral quality circles