Ethical Standards in Business Organizations

Ethical Standards in Business
Organizations:
By: Syed Ahmed Owais
To: Sir. Abuzar Wajidy
Course: Strategic Management
2007 - 2010 1Dr.Syed Ahmed Owais

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/
2007 - 2010 Dr.Syed Ahmed Owais 2

1. Ethical Behavior:
 Ethics:
Ethics sets standards of good or bad, or right or wrong, in
one’s conduct.
 Ethical Behavior:
Ethical behavior is “right” or “good” in the
context of a governing Moral code.

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.

3. Alternate Views of Ethics:
 Moral-rights View.
 Individualism View.
 Utilitarian View.
 Justice View.

 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.

 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.

 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.

4. Cultural Issues in Ethical behavior:
 Cultural Relativism.
 Universalism.
 Ethical Imperialism.

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 one’s ethical standards on other cultures.

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.

 Discriminations:
Denying promotion or appointment to a
job candidate’s 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.

 (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.

6.Rationalization for Unethical Behavior:
 Convincing yourself that that the:
-Behavior is not really illegal.
-Behavior is in everybody’s interest.
-That nobody will ever find out what you’ve done.
-Organization will “protect” you.

7.Factors influencing Ethical Behavior:
 Personal.
 Organizational.
 Enviroment.

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

ii) Organization:
Boss can have a major impact on their
subordinate’s behavior.
(iii) Environment:
Organizations operate in competitive
environments influenced by government laws and regulations and
social norms and values.

8.Maintaining high ethical standards:
 Ethical Training.
 Ethical Role Model.
 Ethical Code of Conduct.
 Whistle Blower.

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.

(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.

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.

 Organizational Stake Holders:
1.Employees:
Employees and contractors who work for the
organization.
2.Customers:
Consumers and clients that purchase the organization’s
goods and/or use its services.

3.Suppliers:
Providers of the organization’s 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.

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.

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.

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.

11.Evaluation of Corporate Social
Performance:
 Social Responsibility Audit:
A social responsibility audit
assesses an organization’s accomplishments in areas of social
responsibility.

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?

Social Responsibility Strategies:
 Obstructionist Strategy.
 Defensive Strategy.
 Accommodative Strategy.
 Proactive Strategy.

(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.

(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.

13.Government’s 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.

14.Organization’s 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.

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

Ethical Standards in Business Organizations:
 Reference:
“Strategic Management Concepts and cases “
12 th edition,
Fred R David.

Ethical Standards in Business Organizations

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