Business Ethics, introduction, ethics and the law, why is business ehtics so important, globalisation

2. Introduction to Business Ethics
•Ethics:- The word ‘ethics’ has originated from the word ‘ethos’ which implies
character or manners.
•Ethics is thus , a science of morals, a treatise on rules of conduct which may be
referred as “moral principles”.
•In the context of business, “ethics” may be defined as the study of good and
bad, right and wrong or just and unjust action of the business men and the
corporations.

3. Introduction to Business Ethics
• “Business Ethics, thus, refers to set of rules of conduct applied to business
which is acceptable to society at large without any hitch/reservation.
• In practice business ethics is used to describe do’s and don’ts for business, the
various things that corporate’s should or should not do.

4. Overview
• What is business ethics?
• Why is business ethics important?
• Globalization: a key context for business ethics?
• International variety in approaches to business ethics?
• Sustainability: a key goal for business ethics?

5. What is business ethics?
Business ethics is the study of business situations,
activities, and decisions where issues of right and
wrong are addressed.

6. Ethics and the law
Ethics
Law
Grey area

7. Defining morality, ethics and ethical
theory
• Morality is concerned with the norms, values and
beliefs embedded in social processes which define
right and wrong for an individual or a community.
• Ethics is concerned with the study of morality and
the application of reason to elucidate specific rules
and principles that determine right and wrong for
any given situation.
• These rules and principles are called ethical
theories.

8. …that can
be applied to
any
situation.
… to
produce
ethical
theory …
Ethics
rationalizes
morality …
Morality Ethics Ethical
theory
Potential
solutions to
ethical
problems
The relationship between morality, ethics and
ethical theory

9. Why is business ethics important?
1. Power and influence of business in society
2. Potential to provide major contribution to society
3. Potential to inflict enormous harm
4. Increasing demands from stakeholders
5. Lack of business ethics education or training
6. Continued occurrence of ethical infractions
7. Evaluating different ways of managing business ethics
8. Interesting and rewarding

10. Globalization: a key context for
business ethics?

11. © Oxford University Press, 2007. All
rights reserved.
What is globalization?
• According to Scholte (2000) globalization is not:
• ‘internationalization’
• ‘liberalization’
• ‘universalization’
• ‘westernization’
• Globalization is: the progressive eroding of the relevance of
territorial bases for social, economic and political activities,
processes and relations
• ‘de-territorialization’

12. Relevance of globalization for business
ethics
• Cultural issues
• Legal issues
• Accountability issues
Globalization can affect all stakeholders of the corporation

13. © Oxford University Press, 2007. All
rights reserved.
Ethical impacts of globalization
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Shareholders Globalization provides potential for greater profitability, but also greater risks. Lack of regulation of
global capital markets, leading to additional financial risks and instability.
Employees Corporations outsource production to developing countries in order to reduce costs in global
marketplace – this provides jobs but also raises the potential for exploitation of employees through
poor working conditions.
Consumers Global products provide social benefits to consumers across the globe but may also meet protests
about cultural imperialism and westernization. Globalization can bring cheaper prices to customers,
but vulnerable consumers in developing countries may also face the possibility of exploitation by
MNCs.
Suppliers and
Competitors
Suppliers in developing countries face regulation from MNCs through supply chain management.
Small scale indigenous competitors exposed to powerful global players.
Civil society
(pressure groups,
NGOs, local
communities)
Global business activities brings the company in direct interaction to local communities with
possibility for erosion of traditional community life; globally active pressure groups emerge with aim to
“police“ the corporation in countries where governments are weak and tolerant.
Government and
regulation
Globalization weakens governments and increases the corporate responsibility for jobs, welfare,
maintenance of ethical standards, etc. Globalization also confronts governments with corporations
from different cultural expectations about issues such as bribery, corruption, taxation, and
philanthropy.

14. International variety in approaches to business
ethics.

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rights reserved.
Differences in business ethics between Europe, the US & Asia
Europe United States Asia
Who is responsible
for ethical conduct
in business?
Social control by
the collective
The individual Top management
Who is the key
actor in business
ethics?
Government, trade
unions, corporate
associations
The corporation Government,
corporations
What are the key
guidelines for
ethical behaviour?
Negotiated legal
framework of
business
Corporate codes of
ethics
Managerial
discretion
What are the key
issues in business
ethics?
Social issues in
organizing the
framework of
business
Misconduct and
immorality in single
decisions situations
Corporate
governance and
accountability
What is the
dominant
stakeholder
management
approach?
Formalised multiple
stakeholder
approach
Focus on
shareholder value
Implicit multiple
stakeholder
approach, benign
managerialism

16. © Oxford University Press, 2007. All
rights reserved.
Sustainability: a key goal for business
ethics?

17. Defining sustainability
• Sustainable development is development that meets
the needs of the present without compromising the
ability of future generations to meet their own
needs. (World Commission on Environment and
Development 1987)
• Sustainability refers to the long-term maintenance
of systems according to environmental, economic
and social considerations

18. The need of sustainability
• Environmental pollution- in particular the effects on climate change
caused by production, transportation and use of
chlorofluorocarbons(CFCs) there by depleting ozone layer.
• Waste disposal- due to throwaway culture
• Plant closings and downsizing of staff- leading to individual &
community problems
• Erosion of local cultures & environment due to Internet intrusion,
influx of mass tourism etc.

19. The need of sustainability- cont
Sustainability emphasizes on
• The needs of future generations
• Intergenerational equity and
• Ethics in action at each business decision

20. The three components of
sustainability by John Elkington
Economic Social
Environmental

21. Triple bottom line (TBL)
• Coined by John Elkington
• Bottom line thinking suggests sustainability as a goal
• Three dimensions:
• Environmental perspectives
• Economic perspectives
• Social perspectives