The document provides an overview of business ethics, emphasizing the importance of ethical principles in guiding organizational behavior and decision-making. It highlights the distinctions between personal and business ethics, managerial ethics, and corporate social responsibility, along with the benefits of implementing good corporate governance. The content outlines ethical versus unethical practices and the relationship between moral and legal issues within a business context.

1. Unit 5: Business ethics.
Unit summary
Business ethics is the application of ethical principles, values, and standards that govern or guide
behavior in an organization. It involves studying what is right or wrong and offers the tools for
dealing with moral complexity in the business. For an organisation to survive and grow, there
needs to be a code of ethics to assure healthy relations among all stakeholders. While it may be
dimed costly to follow code ethics since corporations are designs to make a profit, businesses
should contribute to the interest of society by ensuring fair practices. Needless to say, corporates
can find ways to make a healthy compromise to satisfy all entities.
Learning outcomes
After this lesson, you will better understand,
 Business ethics terminologies.
 Difference between ethical and unethical practices.
 Difference between personal and business ethics.
 Managerial ethics.
 Similarities and differences between legal and moral issues
 Corporate social responsibility.

2. Start lesson1
Terminologies.
Ethics
Ethics is the moral principle or discipline that governs a person's behaviour or conduct in an
activity.
Unethical
Unethical behaviour is the act of not conforming to high moral standards. In other words, it is
what is considered as being morally wrong in a profession or industry
Moral practice
Moral practice is the standard or behavior that influences an individual’s principals of right or
wrong.
Legal practices.
Legal practice refers to the processes and policies taken to abide by the law in an organization.
Personal ethics.
Personal ethics is the code of conduct that governs an individual’s way of life.
Differences between Business Ethics and Personal Ethics.
Personal ethics differs from business ethics in many ways. That is;
 Business ethics is the code of conduct imposed on an employee in relation to the
organization they are in. The individual must adhere to the set of ethics with respect to

3. their interaction and business dealing. On the other hand, personal ethics is ethics that a
person identifies with in regard to people and situations that they encounter on a day to
day basis.
 Personal ethics are influenced by an individual's surrounding, beliefs and upbringing.
That is family, friends and religion. But business ethics are explicitly learned after joining
a particular workforce. Different workforce determines the set of ethics one follows.
Examples of personal ethics are;
 Honesty.
 Openness.
 Integrity.
 Sincerity.
Examples of business ethics are:
 Punctuality.
 Time management.
 Confidentiality
 Transparency.

4. Managerial Ethics
Managerial ethics reviews a set of principles and rules dictated by upper management that
defines what is right or wrong in an organisation. It is a mechanism that goes hand in hand with
corporate governance. Corporate governance is the framework of rules, principals and values by
which a board of directors ensures accountability, fairness, and transparency in a company's
relationship with its stakeholder. Good management is a crucial factor in underpinning the
integrity and efficiency of a company. Managerial ethics can either strengthen a company and
reinforce trust in stakeholders or can weaken a company’s potential and lead to long-term
financial and relational damage. For this reason, any corporate that applies core principles of
good corporate governance and managerial ethics stands a better chance of surviving the market
and outperforming other companies.
Benefits of Effective Governance and Managerial Ethics.
One of the primary objectives of a corporation is to increase shareholder value and create good
relations with major stakeholders. Companies that incorporate the principle of good corporate
governance and managerial ethics stand a better chance of achieving organisational success and
economic growth. Benefits of incorporating these practices are:
Strong teamwork and productivity – ethics programs align employee behaviours with priority
ethical values preferred by top leaders of the organisation. When an organisation engages in
dialogues regarding values in the workplace, it builds openness, integrity and community which
are a crucial ingredient to teamwork. It also invites employees to contribute to ethical issues
which creates a strong alignment to values and standards of the organisation. This creates a
strong motivation and performance from the employees.

5. Employee growth – ethical programs help employees to face reality, whether positive or
negative in themselves. With this realisation, they can work on their issues thus facilitating
personal growth. The effects of this are the employees feel fully confident in dealing with
whatever come their way.
Reduces criminal acts – ethical programs tend to reveal or expose ethical issues earlier on in the
employment process. The early detection of this issues helps the employees to address them and
make improvements. When an organisation is aware of this issue, it can help follow up or
eliminate potential violation of rules and regulations.
Positive public image – an organisations attention to ethical issues in its organisation poetry's a
strong positive image to the public. The community views the organisation in a positive way as
valuing people over profits.
Positive influence to society – when an organisation indulges in ethical practices, it not only
benefits the individual or the organisation but in a way the effects are extensive the organisation.
Employees that are influenced by a moral code of ethics can further influence their communities
and families.
Increases trust – effective governance and good managerial ethics reassure shareholders of a
functional work ethic and that they can depend on transparency from management.
Difference between Ethical and Unethical Practices.
If asked to state the difference between ethical and unethical practices, the simple difference is
described as choosing between good and bad conduct. Stating this difference is not hard since
this is a value that was instilled in us from childhood. The same can be said to differentiate this
practices in a business set up only that in business there are actions that better describe this

6. process. Here are examples differences of ethical and unethical practices from a business point of
view.
Ethical practices.
Ethical practices are practices that help in the growth and improvement of business relationships
in a business setup.
 Fairness – creating a fair system concerning the recruitment of employees, working
conditions, timely payment of salaries. Among others.
 Investor interest – organisations should protect their investor's money at all cost and
make timely payments of interest. They should also offer transparency of business
operation to assure honesty.
 Customer service and protection – a company, should offer complete products and
services to their customers without holding back information. They should also protect
their customer's information from outsiders and refrain from using it for personal gain.
 Fair competition – companies should avoid unfair tactics and methods when competing
in the market.
 Complying with government regulations – this is when an organisation abides by rules
and regulations in regards to taxes, duties, payment of licenses and trades practices
among others.
 Environmental awareness – this is when a business is sensitive to the environment and
strives to keep a sustainable environment.

7. Unethical practices.
Ways that a business can or individuals in business can act unethically are;
 Bribery – this is the soliciting of funds to influence the recipient's conduct. It may be
difficult to quantify the damage caused by corruption in a company set up, but research
shows that employees stand a more significant chance of experiencing the adverse effects
of bribery.
 False advertising – this is when an organisation releases misleading information to the
public to influence the customer's decision.
 Paying less than minimum wage – this is the improper payment of wages to employees
of an organisation.
 Conflict of interest- when stakeholders conflict with corporate governance on issues
surrounding business operations, causes division and interrupts effectiveness of the
business operations.
 Insider trading – this is when members from within an organisation leak out information
to outsiders
 Coercion - the practice of forcefully compelled someone to do things that are against
their will by using force or threats. This action can significantly affect an individual's
effectiveness at their post.
 Unfair discrimination – this is unjust treatment or privileges given based on age, race,
gender, nationality or religion.
 False presentation of income and statements – this when individuals present false
income returns and reports for evasion of taxes and different government benefits and

8. incentives. These type of unethical practice once discovered affects shareholders of the
business.
 Political bribery – this is the donation or contribution to political leaders and parties to
get full privileges. E.g., contracts, tenders, and licenses.
 Environmental – this is the practice of environmental pollution.
 Illegal accumulation of profits – this is the indulgence of various illicit activities to
maximise profits. E.g., black marketing. These types of trading can cause severe
problems with law enforcement and bring down an organization.

9. End lesson1 start lesson2
Differences of moral and legal issues.
Legal practices differ from ethical practices because ethical practices are based on human right
and wrongs while legal methods are based strictly on the written law. Today it is irrefutable that
many issues revolve around either legal or ethical scrutiny. The relationship between this two
terms is quite apparent as many laws are created with ethical standards. Both moral and legal are
often used in the same context regarding issues and social situations. For example
 An action is considered legal for as long as it doesn’t break any existing laws. In contrast,
an ethical act is considered only when it does not agree with societal perception.
 A legal act applies to all members of the society thus observing these laws is mandatory.
Observing ethical standards is often voluntary as they are usually based on individual
perception of right or wrong.
 Ethical standards are often abstract with no written or legal basis. In contrast, laws are
codified, typically containing a country's constitution.
It is safe to conclude the ethics and laws are closely related laws represent the minimum ethical
behaviors of individuals.
Decision making.
Decision making is an inevitable process in the day to day running of a business. Working for an
organisation requires decision makers to follow an ethical model or framework when making

10. these decisions. As an organisation grows, different individuals with different ethical standards
are hired, and this may affect how individuals approach the decision-making process.
Corporate social responsibility.
Corporate social responsibility is a self-regulating business model that helps a company to be
socially accountable to itself, the public and its stakeholders. The practice of corporate social
responsibility helps organisations to be conscious of the kind of impact they have all aspects of
society that is economical, social and environmental. A company's involvement in the issues
affecting the environment and society in its neighbouring society shows its engagement in social
responsibility and business ethics. Ways that an organization can contribute to corporate social
responsibility are through Philanthropy, Volunteering efforts, community development and
social awareness and education.

11. Benefits of corporate social responsibility.
Customer retention – an organisation that carries our corporate social responsibility is likely to
attract and retain more customers than an organization that doesn’t. Customers are likely to
choose an organization that has a reputation for being socially responsible.
Access to funding – for investors to support a company financially, they often consider
organizations that are ethical and have good social standards. Many investors focus on
companies with an excellent socially responsible track record.
Positive image – companies that have ethical programs create a positive image and good
reputation to the community.
Employee retention – a company’s steadfastness to indulge in environmental programs and
community programs retains employee’s loyalty to the organization. Employees love to align
themselves with a reputable organization. Employees are better motivated when they are
involved in activities that uplift neighboring communities.