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9-1 
What Is Business Ethics? 
 Business ethics involves applying 
general ethical principles and standards 
to business activities, behavior and 
decisions 
 Ethical principles in business are not 
different from ethical principles in general 
 Business actions are judged 
 By general ethical standards of society 
Not by more permissive standards
9-2 
Ensuring a Strong Commitment to 
Business Ethics in Multinational 
Companies 
 Three schools of thought about 
the extent to which ethical 
standards apply across countries 
and cultures exist: 
Ethical Universalism 
Ethical Relativism 
Integrative Social 
Contracts Theory
9-3 
Concept of Ethical 
Universalism 
 According to the school of ethical 
universalism . . . 
Same standards of what is right and 
what is wrong are universal and 
transcend most cultures, societies, 
and religions 
Universal agreement on basic moral 
standards allows a multinational company to 
develop a code of ethics that is applied 
evenly across its worldwide operations
9-4 
Examples of Universal 
Ethical Principles or Norms 
 Honesty 
 Trustworthiness 
 Respecting the rights of 
others 
 Practicing the Golden Rule 
 Avoiding unnecessary 
harm to 
 Workers 
 Users of a company’s 
product or service
9-5 
Concept of Ethical Relativism 
 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 country to another 
 Companies a code of conduct based 
upon the principle of ethical relativism 
assume that local morality is an 
adequate guide for ethical behavior
9-6 
Drawbacks of Ethical 
Relativism 
 The ethical relativism rule of “when in 
Rome, do as the Romans do” presents 
problems 
 It is ethically dangerous for company 
personnel to assume that local ethical 
standards are an adequate guide to ethical 
behavior 
» What if local standards condone 
kickbacks and bribery? 
» What if local standards blink at 
environmental degradation?
9-7 
Integrative Social Contracts Theory 
 According to the integrative social 
contracts theory, the ethical 
standards a company should try to 
uphold are governed by both 
1. A limited number of universal ethical 
principles that put ethical boundaries on 
actions and behavior in all situations 
and 
2. The circumstances of local cultures, 
traditions, and values that further 
prescribe what constitutes ethically 
permissible behavior and what does not
9-8 
Prioritizing Ethical Standards 
 Integrative social contracts theory 
provides that “first order” universal 
ethical norms always take 
precedence over “second order” 
local ethical norms when local 
norms are more permissive
9-9 
Corporate Social Responsibility 
 Social responsibility calls for 
companies to strike a balance between 
1. Its economic responsibility to 
shareholders 
2. The legal responsibility to comply with the 
laws of the countries where it operates 
3. The ethical responsibility to abide by 
society’s norms, and 
4. The discretionary philanthropic 
responsibility to meet the unmet needs of 
society

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Intro presenation on business ethics

  • 1. 9-1 What Is Business Ethics?  Business ethics involves applying general ethical principles and standards to business activities, behavior and decisions  Ethical principles in business are not different from ethical principles in general  Business actions are judged  By general ethical standards of society Not by more permissive standards
  • 2. 9-2 Ensuring a Strong Commitment to Business Ethics in Multinational Companies  Three schools of thought about the extent to which ethical standards apply across countries and cultures exist: Ethical Universalism Ethical Relativism Integrative Social Contracts Theory
  • 3. 9-3 Concept of Ethical Universalism  According to the school of ethical universalism . . . Same standards of what is right and what is wrong are universal and transcend most cultures, societies, and religions Universal agreement on basic moral standards allows a multinational company to develop a code of ethics that is applied evenly across its worldwide operations
  • 4. 9-4 Examples of Universal Ethical Principles or Norms  Honesty  Trustworthiness  Respecting the rights of others  Practicing the Golden Rule  Avoiding unnecessary harm to  Workers  Users of a company’s product or service
  • 5. 9-5 Concept of Ethical Relativism  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 country to another  Companies a code of conduct based upon the principle of ethical relativism assume that local morality is an adequate guide for ethical behavior
  • 6. 9-6 Drawbacks of Ethical Relativism  The ethical relativism rule of “when in Rome, do as the Romans do” presents problems  It is ethically dangerous for company personnel to assume that local ethical standards are an adequate guide to ethical behavior » What if local standards condone kickbacks and bribery? » What if local standards blink at environmental degradation?
  • 7. 9-7 Integrative Social Contracts Theory  According to the integrative social contracts theory, the ethical standards a company should try to uphold are governed by both 1. A limited number of universal ethical principles that put ethical boundaries on actions and behavior in all situations and 2. The circumstances of local cultures, traditions, and values that further prescribe what constitutes ethically permissible behavior and what does not
  • 8. 9-8 Prioritizing Ethical Standards  Integrative social contracts theory provides that “first order” universal ethical norms always take precedence over “second order” local ethical norms when local norms are more permissive
  • 9. 9-9 Corporate Social Responsibility  Social responsibility calls for companies to strike a balance between 1. Its economic responsibility to shareholders 2. The legal responsibility to comply with the laws of the countries where it operates 3. The ethical responsibility to abide by society’s norms, and 4. The discretionary philanthropic responsibility to meet the unmet needs of society