Business Ethics

Ethics – is the study of standards of behavior which promote human welfare and “the good”

Business Ethics – is the study of standards of business behavior which promote human welfare and the good

Behaving ethically in business is widely regarded as good business practice. To provide you with a couple of quotes:

What is ethics in general?

• Ethics is about how we behave about the standards we hold ourselves to

• Ethics is about how we treat each other, even those we don’t know

Ethics is…

• Not just about feelings or conscience (양심)

• Not the same as religion

• Not just following the law

• Not following “what everybody does”

• Not technology or science – what we can be done

Ethics is…

• How we act as individuals

• How we structure our organizations and their work

• Ho we structure our society, our laws, our systems…

Business Ethics is…

• How we act as individuals in business

• How we structure our business organizations and the way they work

• How we structure our business society, our laws affecting business, our systems

Distinguishing Ethical Dilemmas from Ethical Lapses

Ethical Dilemma is a choice between alternatives that may all be ethical and valid.

Ethical dilemma involves choosing among alternatives that aren’t clear-cut. Perhaps two conflicting alternatives are both ethical and valid, or perhaps the alternatives lie somewhere in the gray area between clearly right and clearly wrong.

Ethical Lapse is knowing that something is wrong and doing it anyway. It is clearly unethical (and frequently illegal) choice

Ethical principles and standards in business:

• Define acceptable conduct in business

• Should underpin how management make decisions

An important distinction to remember is that behaving ethically is not quite the same thing as behaving lawfully:

• Ethics are about what is right and what is wrong

• Law is about what is lawful and what is unlawful

An ethical decision is one that is both legal and meets the shared ethical standards of the community

Businesses face ethical issues and decisions almost every day – in some industries the issues are very significant. For example:

Should businesses profit from problem gambling?

Should supermarkets sell beer cheaper than bottled water?

Is ethical shopping a luxury we can’t afford?

You will probably note the link between business ethics and corporate social responsibility (CSR). The two concepts are closely linked:

• A socially responsible firm should be an ethical firm

• An ethical firm should be socially responsible

However there is also a distinction between the two:

• CSR is about responsibility to all stakeholders and not just shareholders

• Ethics is about morally correct behaviour

How do businesses ensure that its directors, managers and employees act ethically?

A common approach is to implement a code of practice. Ethical codes are increasingly popular – particularly with larger businesses and cover areas such as:

• Corporate social responsibility

• Dealings with customers and supply chain

• Environmental policy & actions

• Rules for personal and corporate integrity

Two types of ethical reasoning that are invoked in answering the question, “when do we say that something is good or ethical?”:

1. Consequentialist reasoning

• This locates morality in the consequences of an act.

• An act is justified if the benefits outweigh the harms.

• The most common type of consequentialist reasoning is Utilitarianism Utilitarianism considers that the right thing to do is to maximize 'utility'. In this context, 'utility' means the balance of pleasure over pain, happiness over suffering.

• Therefore, utilitarians say that a policy or action is ethically justified if it maximizes the overall level of happiness in the community.

• Their mantra is 'the greatest good for the greatest number'.

2. Categorical reasoning / Deontology

• This locates morality in certain duties and rights.

• Rather than focusing on the consequences of an action, this type of reasoning says that it is the intrinsic quality of the act that matters.

Reference:

http://www.tutor2u.net/business/strategy/business-ethics-introduction.html

Organizational Behavior, McGraw Hill