Business Ethics - Session 5

8/3/2019 Business Ethics - Session 5

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Business Ethics

What are ethics?

Why does business need to be ethical?

How can business become ethical ?


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Business Ethics

In the business world, ethics is the

study of morally appropriate

behaviors and decisions, examining

what "should be done.

Ethics are the standards by which

behaviours are evaluated for their

morality - their rightness or

wrongness.


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Business interact with civil society -

1) Accountability to investors and lenders- thefinancial domain (corporate accounting,

auditing, corporate law & stock market

regulators, corporate governance)

2 Accountability to direct participants in

corporate value creation- customers,

employees, vendors; the domain of consumerprotection, labour laws, commercial contracts

(this is the direct focus of corporate

management).


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3) Accountability for the effect of their operations on the physical environment

(domain of environental regulations)

4) Accountability for the human condition

around their operations health, education,

employment, and cultural needs in the

community (here corporate responsibility isnot much regulated and this factor is the

focus of most corporate philanthropy)


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5) Accountability for the political health of thesocieties where they operate- human rights,

fair democratic process

These five domains are like steps of a ladder for

Business ethics and CSR.


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Business Ethics

Development The cultural context influences

organizational ethics

Top managers also influence ethics

The combined influence of culture and

top management influence

organizational ethics and ethicalbehaviors


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The Evolving Context for

Ethics From domestic where ethics are

shared

To international where ethics are notshared when companies:

Make assumptions that ethics are thesame

Ethical absolutismthey adapt to us Ethical relativismwe adapt to them

To global which requires an integrativeapproach to ethics


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Emergence of a Global

Business Ethic

Growing sense that responsibility for rightingsocial wrongs belongs to all organizations

Growing business need for integrativemechanisms such as ethics Ethics reduce operating uncertainties

Voluntary guidelines avoid governmentimpositions

Ethical conduct is needed in an increasinglyinterdependent worldeveryone in the samegame

Companies wish to avoid problems and/or

be good public citizens


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Ways Companies Integrate

Ethics

Top management commitment in word

and deed

Company codes of ethics

Supply chain codes

Develop, monitor, enforce ethicalbehavior

Seek external assistance


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External Assistance with

Ethics

ndustry or professional codes

Certification programs, e.g., ISO 9000

Adopt/follow global codes

Caux Round Table Principles


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Reasons for Businesses to

Engage in Development of a

Global Code of Business Ethics

Create the same opportunity for all

businesses if there are common rules

Level the playing field

They are needed in an interconnected world

They reduce operating uncertainties

If businesses dont collaborate, they may not

like what others develop


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Four Challenges to a Global

EthicGlobal rules emerge from negotiations and

will reflect values of the strong

Global rules may be viewed as an endrather than a beginning

Rules can depress innovation and creativity

Rules are static but globalization is dynamic

Documents

Business Ethics - Session 5