Business Ethics Applied Ethics Examines Ethical Rules Business Essay

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Business ethics is a kind of applied ethics that examines ethical rules and principles within a commercial context. The various moral or ethical problems that can arise in a business setting and any special duties or obligations that apply to persons who are engaged in commerce. It takes the ethical concepts and principles developed at a more theoretical, philosophical level, and applies them to specific business situations. Generally speaking, business ethics is a normative discipline, whereby particular ethical standards are assumed and then applied. It makes specific judgements about what is right or wrong, which is to say, it makes claims about what should  done or what should not to be done. While there are some exceptions, business ethicists are usually less concerned with the foundations of ethics, or with mitigating the most basic ethical principles, and are more concerned with practical problems and applications, and any specific duties that might apply to business relationships.

Related disciplines

Business ethics is not same to the philosophy of business, the branch of philosophy that deals with the philosophical, political, and ethical underpinnings of business and economics. Business ethics operates on the basis, for example, that the ethical operation of a private business is possible those who dispute that basis, such as libertarian socialists, (who contend that "business ethics" is an oxymoron) do so by definition outside of the domain of business ethics proper.

The philosophy of business also deals with questions such as what, if any, are the social responsibilities of a business; business management theory; theories of individualism vs. collectivism; free will among participants in the marketplace; the role of self interest; invisible handtheories; the requirements of social justice; and natural rights, especially property rights, in relation to the business enterprise.

Business ethics is also connected to political economy, which is economic study from political and historical perspectives. Political economy deals with the distributive consequences of economic actions. It asks who gains and who loses from economic activity, and is the resultant distribution fair or just, which are central ethical issues.

Conflicting interests

Business ethics can be examined from various perspectives, including the perspective of the employee, the commercial enterprise, and society as a whole. Very often, situations arise in which there is conflict between one or more of the parties, such that serving the interest of one party is a detriment to the other(s). For example, a particular outcome might be good for the employee, whereas, it would be bad for the company, society, or vice versa. Some ethicists (e.g., Henry Sidgwick) see the principal role of ethics as the harmonization and reconciliation of conflicting interests.


Ethical issues and approaches

Philosophers and others disagree about the purpose of a business in society. For example, some suggest that the principal purpose of a business is to maximize returns to its owners, or in the case of a publicly-traded concern, its shareholders. Thus, under this view, only those activities that increase profitability and shareholder value should be encouraged. Some believe that the only companies that are likely to survive in a competitive marketplace are those that place profit maximization above everything else. However, some point out that self interest would still require a business to obey the law and adhere to basic moral rules, because the consequences of failing to do so could be very costly in fines, loss of licensure, or company reputation. The economist Milton Friedman is a leading proponent of this view.

Other theorists contend that a business has moral duties that extend well beyond serving the interests of its owners or stockholders, and that these duties consist of more than simply obeying the law. They believe a business has moral responsibilities to so-called stakeholders, people who have an interest in the conduct of the business, which might include employees, customers, vendors, the local community, or even society as a whole. They would say that stakeholders have certain rights with regard to how the business operates, and some would even suggest that this even includes rights of governance.

Some theorists have adapted social contract theory to business, whereby companies become quasi-democratic associations, and employees and other stakeholders are given voice over a company's operations. This approach has become especially popular subsequent to the revival of contract theory in political philosophy, which is largely due to John Rawls' A Theory of Justice, and the advent of the consensus-oriented approach to solving business problems, an aspect of the "quality movement" that emerged in the 1980s. Philosophers Thomas Donaldson andThomas Dunfee proposed a version of contract theory for business, which they call Integrative Social Contracts Theory. They posit that conflicting interests are best resolved by formulating a "fair agreement" between the parties, using a combination of i) macro-principles that all rational people would agree upon as universal principles, and, ii) micro-principles formulated by actual agreements among the interested parties. Critics say the proponents of contract theories miss a central point, namely, that a business is someone's property and not a mini-state or a means of distributing social justice.

Ethical issues can arise when companies must comply with multiple and sometimes conflicting legal or cultural standards, as in the case of multinational companies that operate in countries with varying practices. The question arises, for example, ought a company to obey the laws of its home country, or should it follow the less stringent laws of the developing country in which it does business? To illustrate, United States law forbids companies from paying bribes either domestically or overseas; however, in other parts of the world, bribery is a customary, accepted way of doing business. Similar problems can occur with regard to child labor, employee safety, work hours, wages, discrimination, and environmental protection laws.

It is sometimes claimed that a Gresham's law of ethics applies in which bad ethical practices drive out good ethical practices. It is claimed that in a competitive business environment, those companies that survive are the ones that recognize that their only role is to maximize profits. On this view, the competitive system fosters a downward ethical spiral.

Rushworth Kidder developed a fascinating way to address ethical conflicts. He calls it a "trilemma". Instead of feeling stuck in a choice between violating your ethics and doing something painful but ethical, he suggests exploring if there is a third, unexplored option.


Corporate ethics policies

Many companies have formulated internal policies pertaining to the ethical conduct of employees. These policies can be simple exhortations in broad, highly-generalized language (typically called a corporate ethics statement), or they can be more detailed policies, containing specific behavioral requirements (typically called corporate ethics codes). They are generally meant to identify the company's expectations of workers and to offer guidance on handling some of the more common ethical problems that might arise in the course of doing business. It is hoped that having such a policy will lead to greater ethical awareness, consistency in application, and the avoidance of ethical disasters.

An increasing number of companies also requires employees to attend seminars regarding business conduct, which often include discussion of the company's policies, specific case studies, and legal requirements. Some companies even require their employees to sign agreements stating that they will abide by the company's rules of conduct.

Not everyone supports corporate policies that govern ethical conduct. Some claim that ethical problems are better dealt with by depending upon employees to use their own judgment.

Others believe that corporate ethics policies are primarily rooted in utilitarian concerns, and that they are mainly to limit the company's legal liability, or to curry public favor by giving the appearance of being a good corporate citizen. Ideally, the company will avoid a lawsuit because its employees will follow the rules. Should a lawsuit occur, the company can claim that the problem would not have arisen if the employee had only followed the code properly.

Sometimes there is disconnection between the company's code of ethics and the company's actual practices. Thus, whether or not such conduct is explicitly sanctioned by management, at worst, this makes the policy duplicitous, and, at best, it is merely a marketing tool.

To be successful, most ethicists would suggest that an ethics policy should be:

Given the unequivocal support of top management, by both word and by example.

Explained in writing and orally, with periodic reinforcement.

Doable....something employees can both understand and perform.

Monitored by top management, with routine inspections for compliance and improvement.

Backed up by clearly stated consequences in the case of disobedience.

When i do good ,i feel good ;when i do bad ,i feel bad. Thats my religion ( Abraham lincoln )

 A Typology of Situational Factors: Impact on Salesperson Decision-Making about Ethical Issues

William T Ross, Diana C Robertson

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Journal of Business Ethics (2003)

Volume: 46, Issue: 3, Publisher: Springer Science & Business Media B.V., Pages: 213-234

ISSN: 01674544

Available from


We explore two dimensions of situational factors expected to influence decision-making about ethical issues among sales representatives - universal vs. particular and direct vs. indirect. We argue that these distinctions are important theoretically, methodologically, and managerially. We test our hypotheses by means of a survey of 252 sales representatives. Our results confirm that considering universal and particular and direct and indirect situational factors contributes to our understanding of decision-making about ethical issues within a sales context, specifically willingness to engage in an unethical act. We also find that personal factors act independently and interact with situational factors in decision-making about ethical issues. Both demographic factors, age and gender, and personality factors, Machiavellianism and self-monitoring, have main effects on decision-making, and some of these factors interact with situational factors to affect decision-making. For example, age of the decision-maker (younger) and size of commission (larger) interact such that the likelihood of choosing an unethical alternative is greater. ABSTRACT FROM AUTHOR Copyright of Journal of Business Ethics is the property of Springer Science & Business Media B.V. and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts)

Stimulus characteristics of a sufferer and difficulty of escape as determinants of helping

Ervin Stauba and Robert S. Baer

aU. Massachusetts, Amherst

Available online 22 May 2007. 

Explored reactions of a total of 118 passersby to 1 of 2 21-yr-old distressed male confederates on the street. The major finding (Exp II) was that helping behavior was substantially greater when escape from the victim's distress was difficult (victim in the S's path) than when it was easy (victim on the other side of the street). Greater difficulty of escape presumably increased the cost of not helping. In addition, in Exp II greater apparent need for help (the victim collapsing with his hand over his heart) resulted in more approach to the victim than did less apparent need (the victim collapsing while holding his knee), but in Exp I greater need resulted in less approach. Ratings of films of the confederates enacting the "heart problem" show that the distress of the confederate of Exp II was more often interpreted as due to a heart problem, apparently because he was overweight, than was the distress of the confederate of Exp I. (PsycINFO Database Record (c) 2006 APA, all rights reserved)

Author Keywords: stimulus characteristics of sufferer &; difficulty of escape, helping behavior, passersby

Self-focused attention and helping behavior

Frederick X. Gibbonsa and Robert A. Wicklund

aIowa State U, Ames

Available online 28 May 2007. 

Conducted 4 experiments that examined the role of self-directed attention in prosocial behavior. In the 1st 2 experiments, in which only focus of attention was varied, self-awareness had a debilitating impact on prosocial behavior. In subsequent research, conditions were created under which self-focus enhanced prosocial behavior. Two such conditions are identified, both of which concern whether the potential helper is likely to focus on helping-relevant values at the moment the opportunity to help arises: (a) The situation must clearly set off an orientation toward acting on a value of helping; that is, the cue to help must be legitimate as well as salient. (b) The person who is called upon to act prosocially must not come into the helping situation with a personal preoccupation that would be inimical to thinking about helping. The research is discussed in terms of its relevance to the early thinking of the symbolic interactionist school, and it is oriented around the theory of self-awareness. (30 ref) (PsycINFO Database Record (c) 2006 APA, all rights reserved)

Author Keywords: self focused attention, prosocial behavior, college students, relevance for symbolic interactionist school &; theory of self awareness

Moral exclusion occurs when individuals or groups are perceived as outside the boundary in which moral values, rules, and considerations of fairness apply. Those who are morally excluded are perceived as nonentities, expendable, or undeserving. Consequently, harming or exploiting them appears to be appropriate, acceptable, or just. This broad definition encompasses both severe and mild forms of moral exclusion, from genocide to discrimination. The paper discusses the antecedents and symptoms of moral exclusion, and the interaction between the psychological and social factors that foster its development. Empirical research on moral exclusion is needed to pinpoint its causes, to predict its progression, and to effect change in social issues that involve the removal of victims from our moral communities. The last section of the paper introduces the articles that follow.

This contribution identifies some of the major themes and controversies in current research on stigma and social disadvantage, paying particular attention to the perspective of the stigmatized. We examine the social contextual and interactive nature of stigmatization that determines its impact and consequences for those who are stigmatized. We outline some areas of research where different findings seem incompatible or have remained unresolved. Specifically, we identify moderators of the consequences of social stigma for the self, of the role of identification with the stigmatized group as a source of vulnerability or of resilience, as well as of how stigma affects task performance. In this way, we provide a thematic framework outlining the different ways in which the articles in this special issue contribute to the resolution of current controversies and debates in the literature on social stigma

Business ethics is a form of applied ethics that examines ethical principles and moral or ethical problems that arise in a business environment. It applies to all aspects of business

conduct and is relevant to the conduct of individuals and business organizations as a


Applied ethics is a field of ethics that deals with ethical questions in many fields such as

medical, technical, legal and business ethics.

In the increasingly conscience-focused marketplaces of the 21st century, the demand for

more ethical business processes and actions (known asethicis m) is increasing.[1]

Simultaneously, pressure is applied on industry to improve business ethics through new

public initiatives and laws (e.g. higher UK road tax for higher-emission vehicles).[2]

Businesses can often attain short-term gains by acting in an unethical fashion; however,

such behaviours tend to undermine the economy over time.

Business ethics can be both anormative and ades criptive discipline. As a corporate

practice and a career specialization, the field is primarily normative. In academia

descriptive approaches are also taken. The range and quantity of business ethical issues

reflects the degree to which business is perceived to be at odds with non-economic social


Historically, interest in business ethics accelerated dramatically during the 1980s and

1990s, both within major corporations and within academia. For example, today most

majorcorporate websites lay emphasis on commitment to promoting non-economic social

valuesunder a variety of headings (e.g. ethics codes, social responsibility charters). In

some cases,corporations have redefined their core values in the light of business ethical

considerations(e.g.BP's "beyond petroleum" environmental tilt).

?Ethics is a Greek word, it means Character or manners.

?Ethics is subjective while morality is objective.

?Ethics is about sense of belongingness to society of business or organization

Definition of Business Ethics Business Ethics is a specialized study of moral right and wrong. It concentrates on moral standards as they apply particularly to business policies, institutions, and behavior. Ethics is a set of moral principles or values which is concerned with the righteousness or

wrongness of human behavior and which guides your conduct in relation to others

(for individuals and organizations).

In the field of Business ethics, there is variety of theories, approaches and philosophies, each professing to offer fundamental insights into what constitutes business ethics Ethics is the activity of examining the moral standards of a society, and asking how these standards apply to our lives and whether these standards are reasonable or unreasonable, that is, whether they are supported by good reasons or poor ones

Ethical Issues Relate to all Functional Areas • Accounting

• Finance

• Management

• Marketing

Why ethics is important in business? ?To gain the goodwill of the community

?To increase the lifetime of an organization

?Produce safe and effective products

?Provide excellent service &Maintain customers.

? Develop and maintain strong employee relations

-Suffer less turnover - Enjoy better employee morale ?Suppliers and other business partners prefer companies that operate in a fair and ethical manner. Why Business Ethics Important ?Business Ethics is important to any organization despite the fact that the chief aim of any organization is to maximize shareholder's wealth. ?Good ethics should be seen as a driver of profitability rather than a burden on business. ?Investors are reassured about the company's approach to risk management ?An ethical framework is part of good corporate governance and suggests a well run business. ?Employees will be motivated in the knowledge that they operate in an environment of good ethical corporate behavior. ?To gain a long-term relationship with customers and achieve customer return for the business, the business needs to be based on ethics.

The main rules of ethics 1.The golden rule: "Treat others as you want to be treated"

2.The common principles and religion.

3.The common good: "the greatest possible good for the greatest possible number of

individuals". 4.Universalization: "What may happen if all people do that action?" 5.Declaration: "Can you declare this action?" Objectives of Ethics 16604433-Business-Ethics ?Study of human behaviour and makes evaluative assessment about that as moral or immoral (A diagnostic goal). ?Establishes moral standards and norms of behaviour.

?Makes judgment upon human behavior based on these standards and norms.

?Prescribes moral behaviour and makes recommendations about how to or how not

to behave. ?Expresses an opinion or attitude about human contact in general. Nature of Ethics ?Concepts of ethics deals with human beings only. Human beings can distinguish right or wrong, good or evil. ?The Study of ethics is a set of systematic knowledge about moral behaviour and conduct. Study of ethics is a science - a social science. ?Science of ethics (Normative Science) : it judges the value of the facts in terms of ideal situation. ?Deals with human conduct which is voluntary, not forced or coerced by persons or circumstances. Code of Ethics in Business ?Responsibilities of Business : a) not to do harm knowingly,

b) to adhere all applicable laws and regulations,

c) the accurate representation of their education, training and experience,

d)active support, practice and promotion of this code of ethics.

?Honesty and Fairness : a) being honest in serving consumers, clients, employees, suppliers, distributors and the


b) no knowingly participating in conflict of interest without prior notice to all parties


?Rights and Duties of parties : a) products and service offered are safe and fit for their intended use,

b) communications about offered product and services are not deceptive,

c) all parties intend to discharge their obligations, financial and otherwise, in good faith,

Characteristics of Business Ethics ?Ethical decisions differ with individual perspective of different persons. Each person views the ethical question in terms of his or her own frame of reference. And this frame of reference is the person's own unique value system. ?Ethical decisions are not limited only to themselves, but affects a wide range of other situations as well. Similarly, unethical decisions do not end in themselves, but have widespread ramifications. ?Most ethical decisions involve a tradeoff between cost incurred and benefits received.Cost and benefits, profits and social responsibilities are different ends of a single spectrum. All cannot be maximized simultaneously. ?The consequences of most ethical or unethical decisions are not clear. The only certainty is that somewhere, sometime, somehow, something positive will result from an ethical decision and something negative from unethical one. ?Every person is individuallyresponsible for the ethical or unethical decision and action that he or she takes. Taking an ethical decision cannot be an impersonal

activity as it involves the person's individual unique value system along with his

moral standards.

?Ethical decisions are voluntary human actions. A person cannot escape his personal liability for his crimes citing force of circumstances or pressure Benefits of Ethics ?Fostering a more satisfying and productive working environment

?Building and sustaining Organisation reputation

?Maintaining the trust of staff to ensure continued self-regulation

?Providing ethical guidance for employees prior to making difficult


?Aligning the work efforts of employees with the Organisation's broader mission and vision ?Increased employee loyalty, higher commitment and morale as well as lower staff turnover ?Attraction of 'high-quality' staff

?Reputation benefits (customers and suppliers)

?More open and innovative culture

?Decreased cost of borrowing and insurance

?Generation of good-will in the communities in which the business

operates Influencing factors of Ethics 17191258-Busines-Ethics Internal environmental factors •Individual factors •Organizational factors External environmental factors • political economical factors • social factors 1.Individual factors Individuals with higher ego strengths will not depend on others for decisions making , whereas people with low ego strength will look to others for help in arriving at decisions Organizational culture -

The culture of an organization includes its values, belief systems, and norms. It is

influenced by the behavior of the mangers or the top management of the organizations

Performance measurement systems •The top management of sears auto centers developed incentive systems to improve revenue performance, and set targets for their employees that were

practically unachievable. The employees therefore resorted to unethical actions by

indulging in unnecessary and incomplete repairs of vehicles and overcharging for


•Finally , consumers initiated legal proceedings against the organization Reward systems •Reward system in many organizations tend to encourage unethical behavior like kickbacks. Also, some organizations tend to discourage and penalize

whistleblowers; such punishment systems tend to further encourage unethical behavior. •Reward systems should be integrated with the performance measurements systems Position related factors •These are peer pressure, the expectations of the top management regarding achievement of objectives, the presence or absence of a code of conduct, superior- subordinate relationships, extent of resource availability, etc., •For example, employees of departments like marketing and purchase tend to face more ethical dilemmas Organizational factors •If a specific ethical behavior is rewarded, employees will tend to continue behaving in that way. On the other hand, if any employee gets punished for a

specific behavior , he and the others in the organization will not resort to that kind

of behavior

Political and economical factors •It include factors like government polices, tax structures, and the tariffs and duties levied on imports. • Many organizations resort to bribing government officials to get contracts or licenses for businesses or to get into such transactions to stay in competitions. •The case of Siemens AG officials routing organizational funds to an Italian energy company as bribes is an example of unethical behavior. Social factors •Giving the right information to customers regarding products and services is one of the major ethical considerations that organizations must keep in mind. •Being ethical serves as a competitive advantage for organizations, as it helps them build up a good reputation and image for themselves. •Johnson and Johnson- faced a serious crisis, when a few capsules of its popular medicine, Tylenol were found to be laced with cyanide. TWO KEY ASPECTS OF ETHICS ?The first involves the ability to discern right from wrong, good from evil, and propriety from impropriety. ?The second involves the commitment to do what is right, good and proper. Ethics entails action; it is not just a topic to mull or debate." 10 Myths About Business Ethics 1.Business ethics is more a matter of religion than management. 2.Our employees are ethical so we don't need attention to business ethics.

3.Business ethics is a discipline best led by philosophers, academics and theologians

4.Business ethics is superfluous -- it only asserts the obvious: "do good!"

5.Business ethics is a matter of the good guys preaching to the bad guys.

6.Business ethics in the new policeperson on the block.

7.Ethics can't be managed.

8.Business ethics and social responsibility are the same thing.

9.Our organization is not in trouble with the law, so we're ethical.

10. Managing ethics in the workplace has little practical relevance.

Someof the Unethical Business practices are : ?Cutting corners on quality

?Covering up incidents

?Abusing or lying

?Lying customers

?Stealing from the company

?Taking credits from co-workers ideas/work

?Taking or giving bribe

?Government corruption

?Financial scandals

?Product safety


?Sexual harassment

?Firing an employee for whistle blowing

?Divulging confidential information

COMMON UNETHICAL ACTS ?Lying to supervisors

?Falsifying records

?Alcohol and drug abuse

?Conflict of interest


?Gift/entertainment receipt in violation of company policy

Global Ethical Issues •Wages and hours

•Child labor


•Legal and ethical business practices

•Product safety and quality