Ethics In Business

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UNIT 1

INTRODUCTION

UNDERSTANDING ETHICS

Ethics

• Ethics

– Is a code of moral standards of conduct for what is “good”/“right” as
opposed to what is “bad”/“wrong”.

• Ethical Behavior

– is that which is “right” or “good” in the context of governing moral code.

– What is considered ethical can vary across cultures.

– Ethical dilemmas are tests of personal ethics and values.

– People have tendencies to rationalize unethical behaviors.

Values

Ethical behavior is value driven.

Values are broad beliefs about what is appropriate behavior.

• Terminal Values

– Preferences about desired end states.

• Instrumental Values

– Preferences regarding the means to desired ends.

Ethical Dilemma

These are situations with no simple choice between write or

wrong.

The most common paradigms of ethical dilemma are:

 Truth versus loyalty.

 Individual versus community.

 Short-term versus long-term.

 Justice versus mercy.

Rationalizing Unethical Behavior

Main justifications:

• “What I’m doing is not really illegal.”

• “My behavior is in everyone’s best interests.”

• “Nobody will ever find out what I’ve done.”

Individual Characteristics Affecting

Ethical Behaviors

• Values

– Basic convictions about what is right or wrong on a broad range of
issues (family influences, religious values, personal standards,
and personal needs, etc.)

• Stage of Moral Development

– A measure of an individual’s independence from external influences

The main schools of thought about the extent to which
ethical standards apply across the world are:

–

Ethical Universalism

– Ethical Relativism

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 (=Behavior
unacceptable in one’s home environment should not be
acceptable anywhere else)

– Universal agreement on basic moral standards allows a multinational company
to develop a code of ethics that is applied evenly across its worldwide
operations

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 (=Ethical behavior is always
determined by cultural context)

• Some Companies code of conduct based upon the principle of ethical
relativism assume that local morality is an adequate guide for
ethical behavior

Ethics and Culture

Stages of Moral Development

ETHICAL THEORIES

Chart of Theories

Ethical Theories

Consequentialist Non Consequentialist

Ethical
Egoism

Utilitarianism

Act

Rule

Theology
The Golden

Rule
Kantianism

Ethical Egoism

• It is based on what is right, or what one ought to do ,

driven to act in accordance with one’s own self-interest.

• Tells us what people should do.

• It advocates the long term self interest of the individual.

Act Utilitarianism

• Founder was Jeremy Bentham (1748 – 1832) thinker and
social reformer. Pleasure and pain principle.

• An act is only morally right if and only if it maximises
utility.

• Utlity – intrinsic goodness, satisfactions, preferences and
desires.

• The ratio of benefit to harm calculated by taking everyone
affected by the act into consideration is greater than the ratio of
benefit to harm resulting from any alternative act.

Rule Utilitarianism

• An act is right if and only if it is in conformity with a

particular moral rule, and the rule is chosen because, of

all alternative rules, it maximises utility.

• i.e. “We must not hold a person accountable for a crime

he has not committed”

Non Consequentialist Theories

• Deontological (Means Duty)

– Immanuel Kant and the Categorical Imperative
• Each person should act in a manner that his or her actions could become universal law

• Duty is more important than result

• Other Theories

–

The Golden Rule

– Virtue Ethics

Kantianism

• German Philosopher – Immanuel Kant (1724-1804).

• Developed a theory of duty – intellectual justification for
the golden rule.

• He believed in a science of morals is possible because
humanity has the use of freedom and reason.

• When using people to accomplish your purposes, you have
a duty to respect them as human beings and to promote
their ability to realise their desired potential or goals.

Theologism

• Asserts that an act is right if, more than any alternative open to the agent at

the time, it is the most consistent with what God wills, either directly or

indirectly.

• Theologism provide us with a set of rules (e.g., the Ten Commandments) that

express God’s will.

The Golden Rule

• The Golden Rule “Do unto others as you would have them do unto

you” is a most widely accepted moral principle.

• Confucianism “That which you do not want done to yourself, do not do

to others” (Analects)

• Islam “No one is a believer unless he loves for his brother what he

loves for himself (Traditions)

• Buddhism “Hurt not others with what pains yourself”

Virtue Ethics

• Dates back to Aristotle

• It stresses the kind of moral abilities that put us in a position to act

morally, whether after weighty deliberation or quick reaction.

• It views the character of the person performing the action and

rejects applying the correct theory.

Determinants of Issue Intensity

Moral Reasoning
Four views of ethical behavior

Utilitarian Approach – Moral behavior produces the greatest good for the

greatest number.

Individualism Approach – Acts are moral when they promote the individual’s

best long-term interest, which ultimately leads to the greater good.

Moral–Rights Approach – Correct decisions are those that best maintain the

rights of those people affected by them.

Justice approach – Moral Decisions must be based on standards of

equity, fairness, impartiality.

A Framework

ETHICAL DECISION-MAKING

A Framework

WHAT IS DECISION?

A Framework

Decision is a choice from two or more

alternatives.

A Framework

STEPS OF ETHICAL
DECISION-MAKING

Step 1: Recognize the Ethical Issue

 Could this decision or situation be damaging to someone
or to some group? Does this decision involve a choice
between a good and bad alternative, or perhaps between
two “goods” or between two “bads”?

 Is this issue about more than what is legal or what is
most efficient? If so, how?

Step 2: Get the Facts

 What are the relevant facts of the case? What facts are not known? Can I learn more
about the situation? Do I know enough to make a decision?

 What individuals and groups have an important stake in the outcome? Are some
concerns more important? Why?

 What are the options for acting? Have all the relevant persons and groups been
consulted?Have I identified creative options?

Step 3: Evaluate Alternative Actions
 Evaluate the options by asking the following questions:

 Which option will produce the most good and do the least harm? (The Utilitarian
Approach)

 Which option best respects the rights of all who have a stake? (The Rights Approach)

 Which option treats people equally or proportionately? (The Justice Approach)

 Which option best serves the community as a whole, not just some members? (The
Common Good Approach)

 Which option leads me to act as the sort of person I want to
be? (The Virtue Approach)

Step 4: Make a Decision and Test It

 Considering all these approaches, whichoption best addresses the
situation?

 If I told someone I respect-or told a television audience-which
option I have chosen, what would they say?

Step 5: Act and Reflect on the Outcome

 How can my decision be implemented with the
greatest care and attention to the concerns of all
stakeholders?

 How did my decision turn out and what have I learned
from this specific situation?

Ethical Problem Framework

1. Gather the facts carefully to determine whether there is an ethical
problem.

2. If there is a problem, try to state it as clearly as possible.

3. Determine whether the problem has an ethical dimension.

4. Identify those affected by the problem.

5. In many cases you will need to demonstrate the seriousness of your
problem, since there is no need to deliberate at the length of a trivial
problem.

6. In many cases we are interested in determining what caused the
problem.

7. Develop solution.

Some methods of Group Decision-Making

• Devil’s Advocacy: one member of the group acts
as the devil’s advocate and critiques the way the group
identified alternatives.

• Dialectical inquiry: two different groups are assigned to
the problem and each group evaluates the other group’s
alternatives.

UNIT 3

WHISTLE-BLOWING AND BUSINESS ETHICS

BUSINESS, CULTURE AND POLITICS

Whistle-Blowing

WHISTLE- BLOWING

Release of information by a member or former employee of
an organisation that is evidence of illegal and or immoral
conduct in the organisation or conduct in the

organisation.

Whistle-Blowing can only be done by an member in the
organisation not a witness of a crime or a reporter.

DEFINING WHISTLE- BLOWING

1) Whistle-Blowing is something that can be done only by a member or former member of an

organisation.

2) It must be an Information that is not available for public.

3) It should be an evidence of some significant kind of misconduct on the part of an organisation.

4) Information must be outside normal channel of communication.

5) Release of Information must be something that is done voluntarily as opposed to being legally

required.

6) Whistle Blowing must be undertaken as moral protest. The motive must be correct some wrong

not to seek vigilance or personal advancement.

TYPES OF WHISTLE-BLOWING

• Internal Whistle-

•

Blowing

✓ When an

individual

advocates beliefs or

revelations within

the organization.

External Whistle-

Blowing

✓ When and

individual
advocates beliefs or

revelations outside

the organization.

CO N D I T I O NS FO R J U S T I F I E D WH I S T L E -BLOWING

Situation of sufficient moral importance:

If the situation of information is to disclosure people’s live at stake (for example, side-effects of drug

or medicine if not prescribed in the cover of medicine and information is releaved to public by

whistle blower).

Situation when all facts of information are properly understood with their

significance:

–A Whistle-Blower must do much documentation and other corrections as possible because

he/she is strong obliged to people

–An Employee should not jump into conclusion without much clarification.

–If significance of information is genuine it could be justified.

All internal channels have to be utilized without a step short of Whistle-Blowing:

–Whistle-Blowing should be last not the first resort.

–Its justified when there in no morally preferable alternatives.

–Information should be revealed to those external subjects who have power to change the

situation.

●Firstly,

Defence of the Law protect whistle blowers to provide
best contributions to the society.

▪Secondly,

Defence of the Law supports the right of an employee
on his freedom to speech

Arguments for Whistle-Blower Protection

●Firstly,
Law recognises whistle blowing as a right is open to abuse:

Employees might find an excuse to blow the whistle in order to cover up
their own incompetency or inadequate performance.

▪Secondly,
Legislation to protect whistle blowers could add on rights to employees and
make an environment difficult for managers to run company effectively.

Arguments against Whistle-Blower Protection

1. Benefit in learning
mistakes and problems
in early stage itself.

2. Shows companies
commitment towards
good ethics and ethical
corporate climate.

1. Legitimate complaints
sends wrong signal to
other employees to
whistle blow in case of
tension or strike.

2. Employee may go
outside of normal
communication channel
which is undesirable.

BENEFITS AND DANGER OFCOMPANY WHISTLE-BLOWING POLICY

Benefits Dangers

In 2014, World stood still with a shocking
revelation from a computer analyst Edward
Snowden.

A computer analyst whistleblower who
exposed top-secret NSA documents leading
to revelations about US surveillance on
phone and internet communications.

During the time where “free internet”, rights of a “netizen”, “internet security” were
hot topic for debates this kind of news and revelations created huge storm to the
Government and trust worthiness of citizens of the country. Government and
authorities even the President himself appeared for an explanation to this incident.
Even with much efforts government has retrieved its falling name and trust of its
citizens. As subject of controversy Snowden is variously called as a “traitor”,
“hero”, a whistleblower and even as “patriot”. For some he is a traitor who worked
for Dell broke the country’s security code to retrieve classified information. For
some he is a hero who is courage’s enough to pull those ‘black loops’ of the
government and Nations Security Intelligence.

His US passport has been cancelled and he fled to Russia for granting asylum.

Edward Snowden: The Ethics of Whistleblowing – Who Do You Think You Are? – YouTube

DILEMMA:

1.Is Edward Snowden who is an employee under Dell
Computer exposed the classified information to public
media against the government authorities and law a
“corporate traitor”?

2.Is Edward Snowden who revealed a corporate crime that
remind the public about the so called “internet security” veil
is so transparent even the authority can bypass through
security access of public. By this Act do he resembles a
“patriot” who stood for public interest?

Government and Business Policies

WHAT IS GOVERNMENT?
Government is a system of social control under which the right to make laws,

and the right to enforce them, is given to a particular group in society.

Governments come in different forms. Forms of government are distinguished

on the basis of its organizational structure and the degree of control

exercised over the society.

There are four common types/forms of government:

▪

Monarchy

▪

Dictatorship

▪

Democracy

▪

Theocracy

▪ Transitional

• In a democracy, the government is elected by the people. Everyone who is eligible to

vote has a chance to have their say over who runs the country. It is distinct from

governments controlled by a particular social class or group

• A democracy is determined either directly or through elected representatives.

Direct Democracy

• People vote directly on every issue

• Only practical in a small community

Representative Democracy

• People are represented by elected officials

• Used in large countries

• Also known as a Republic government

Democracy

Fundamental Elements of Democratic Political Systems

• Power is in the hands of a king, queen, emperor or empress.

• The ruling position can be passed on to the ruler’s heirs.

• In some traditional monarchies, the monarch has absolute power.

• But a constitutional monarchy, like the UK, also has a democratic government that limits
the monarch’s control.

• Most constitutional monarchies use a parliamentary system in which the king or queen
may have strictly ceremonial duties. They often have an elected prime minister who is
the head of government.

E.g.: Qatar, UK

Monarchy

• Governmental rulers are identical with the leaders of the dominant religion

• Governmental policies are either identical with or strongly influenced by the principals of the

majority religion.

• Government claims to rule on behalf of God or a higher power.

• E.g.: Iran, Vatican

Theocracy

• A country ruled by a single leader or party. The leader has not been elected and may use force

to keep control, having an absolute control over all citizens and every aspect of their lives.

• In a military dictatorship, the army is in control.

• Other names for a dictatorship include: Authoritarianism, Military Junta, Right, Wing,

Totalitarianism or Fascism.

• E.g.: North Korea, Myanmar (Burma)

Dictatorship

Transitional

• A transitional government is one that is in the process of changing from one form

to another.

• Countries with transitional governments are often unstable.

E.g.: Iraq, Afghanistan

Economic Systems

Economic systems (i.e., production, distribution and

consumption of goods and services) are closely

connected to the form of governments.

There are three main forms of economic systems:

•

Capitalism

•

Socialism

• Communism

Capitalism

• An economic system in which individuals and

corporations are free to invest in and own all aspect

of a business.

• In a capitalist country, people own their own

companies and can manage them to earn a profit.

• E.g.: the United States

Socialism

• Apolitical and economic system in which some businesses are
controlled by the government rather than by individuals.

• In a socialist country, people have equal rights to various benefits
(health, education), and there is an effort to limit the inequalities of
wealth and power.

• Taxes are often quite high to provide for these benefits.

• People do hold private property in socialist

countries.

• A country can be both socialist and democratic

E.g.: Sweden

Communism

• A political and economic system in which the government
controls all business.

• Individual people cannot own property or industries and in
theory, people of all social classes are treated equally.

• Communist countries have totalitarian governments.

• All communists are socialists, but not all socialists are
communists.

• E.g.: China

Political Environment

• Political decisions affect all aspects of the business environment

• Political decisions reflect underlying ideologies or beliefs

• Political decisions can create opportunities or threats for organisations

• Political decisions are taken at a variety of levels:

▪ Local

▪ Regional

▪ National

▪ Global

Companies like certainty in their environment and they tend to invest where risk is

limited.

Bureaucracy

Corruption level

Freedom of the press

Tariffs

Trade control

Education Law

Anti-trust law

Employment law

Discrimination law

Data protection law

Environmental Law

Health and safety law

Competition regulation

Regulation and deregulation

Tax policy (tax rates and incentives)

Government stability and related changes

Government involvement in trade unions and agreements

Import restrictions on quality and quantity of product

Intellectual property law (Copyright, patents)

Consumer protection and e-commerce

Laws that regulate environment pollution

Main political/legal factors affecting business:

In the broad context of international business, political risk is
defined as the risk or probability of occurrence of some political
events that will change the prospects for the profitability of a given
investment.

Macro-political risk events include sociopolitical disorder, power
group transfer, and political corruption as well as government
interference.

Political Risk

• Instability: The probability of encountering political risk in a host country is considered to

be directly related to the relative stability the country’s political system. This instability may

have its roots in different economic, political, and social factors. Some specific causal

factors may include communal unrest, strained international relations with neighboring

countries.

• Past patterns: Past patterns of political behavior is analyzed to determine political risk

involved. However, predicting political risk on the basis of historical records has its own

drawbacks. Political situations under which risks were encountered by companies or

individuals in the past might have changed altogether.

• Opinion analysis: Political risk may also be measured qualitatively by examining the views

of people engaged in governmental decision making and people who may influence future

political events affecting business.

Measuring Political Risk

• Avoidance: Selecting only safe environments for business and rejecting regions

that are perceived to have greater than average degree of political risk.

• Premium for risk: Increasing the ROI (return on investment) or requiring shorter

period of payback.

• Adaptation: Responding to the particular political environment of the host country

and structuring the international operations accordingly (e.g., adapting to the local

methods, utilization of host country professional expertise, joint venture, etc.).

• Transfer: Sharing of risks with other individuals or companies or reducing the risks

through transfer to other agencies.

Political Risk Management

Some of the steps that an individual or a company may follow in order to establish

political strategies:

➢ Identifying the issue (e.g., protectionism, environmental standards, human rights,

workers rights, etc.)

➢ Defining the nature of the political issue

➢ Assessing the potential political action of other firms and of special interest groups

➢ Identifying important institutions and key individuals

➢ Formulation of strategies (objectives, alternatives)

➢ Determining the impact of implementation (both in home and host countries)

➢ Selection of the most appropriate strategy and implementation.

Political Strategies for conducting business

Main conclusions:

• The political environment is both complex and dynamic

• Individuals and organisations have different views as to the ‘correct’ role of

governments and institutions – and interpret these relationships in different

ways

• Government and institutional attitudes change over time, sometimes

amazingly quickly

• Decisions at the four different geo-political levels are all interlinked

• International aspects are increasingly important

EFFECTS OF CULTURE ON BUSINESS

WHAT IS CULTURE?
Culture is a socially transmitted knowledge of values, beliefs, norms, and

lifeways of a particular group guiding their thoughts, generating behaviors and

interpreting experiences. Culture is defined, among others, by language, religion,

cuisine, social habits, music and arts.

Culture does not exist outside of people’s heads

Each person has his or her own version of a culture based on life experience and

the roles he or she knows (age, gender, professional, social class, ethnicity, etc)

No one person knows the entirety of a culture

No business can be culturally neutral

Culture is a composite of all the rules for all the roles that anyone plays in a

given society

Culture may have visible and invisible elements:

• Visible—easily seen

– Clothing, jewelry, charms, hairstyles

• Invisible—less observable

– Value belief system that drives visible practices

Culture and Its Effect

Once upon a time there was a great flood, and involved in this
flood were two creatures, a monkey and a fish. The monkey,
being agile and experienced, was lucky enough to scramble up a
tree and escape the raging waters. As he looked down from his
safe perch, he saw the poor fish struggling against the swift
current. With the best of intentions, he reached down and lifted
the fish from the water. The result was inevitable.

3-35

Power Distance

– How much people accept equality in power; high power distance reflects an acceptance of power inequality

among institutions, organizations, and individuals. Low power distance means people expect equality in power

Uncertainty Avoidance

– The degree to which members of a society feel uncomfortable with uncertainty and ambiguity and thus support

beliefs and behaviors that promise certainty and conformity

Individualism

– A value for a loosely knit social framework in which individuals are expected to take care of themselves.

Collectivism

– A preference for a tightly knit social framework in which people look out for one another and organizations

protect their members’ interests

Masculinity

– A preference for achievement, heroism, assertiveness, work centrality, and material success

Femininity

– A preference for relationships, cooperation, group decision making, and quality of life

Hofstede’s Value Dimensions

Hofstede’s cultural dimensions theory is a framework for cross-cultural communication, developed by Geert Hofstede. It shows the

effects of a society’s culture on the values of its members, and how these values relate to behaviour.

Impact of Language on Business

• One of the first barriers that companies face on

the path of internationalisation is differences in

natural languages.

• The language diversity has created problems for

companies in integrating their workforces and

marketing products on a truly national level.

Impact of Language on Business

• In Taiwan, the translation of
the Pepsi slogan “Come alive
with the Pepsi Generation“ is
changed as “Pepsi will bring
your ancestors back from the
dead“.

Impact of Language on Business

• In China,the name Coca-Cola was first
rendered as Ke-kou-ke- la.Unfortunately, the
Coke company did not discover until after
thousands of signs had been printed that the
phrase means “bite the wax tadpole” or
“female horse stuffed with wax” depending
on the dialect.

• Coke then researched 40,000 Chinese
characters and found a close phonetic
equivalent, “ko-kou-ko-le“, which can be
loosely translated as “happiness in the
mouth“.

Music and Arts

• One of the easiest way to reach people is music and arts-

especially tv series.When you reach people,your job is pretty

easier for business and marketing.

• Some countries have realized the greatiest impact of tv

series,music and different arts on business.

Religion

• Religion is a strong shaper of values. Religion of a nation

has influence on the way firms are doing business like

working hours, holidays, preferences and tastes.

• For example, McDonald’s agreed not to serve beef in

India because of criticism from Hindus, the Israeli national

airline, does not fly on Saturday (it is holiday in Judaism).

Social Habits

Avoid doing the things below when making business with Japanese people;

•Do not blow your nose in a public place (including meeting rooms).

•Do not grab your host’s hand in meetings.

•Never pat a Japanese man on the back or shoulder.

•Always smile, be pleasant, be willing to learn, ask a lot of questions about your customer’s company (and

none about his/her private life).

Other examples:

•France: Wear an official dress.

•Saudi Arabia: During the greetings kiss three times (never ever try to kiss a women).

•Germany: Be there on time.

Japan
a. Much of the Japanese culture—and the basis of working relationships—can be explained by

the principle of wa, meaning peace and harmony.

b. Japan’s cultural roots have produced a very homogeneous managerial value system, with

strong middle management, strong working relationships, a strong seniority system that

stresses rank, and an emphasis on looking after subordinates.

c. The principle of wa places emphasis on participative management, consensus problem

solving, and decision making within a patient, long-term perspective. Low emphasis is given

to open expression of conflict.

Comparing cultures:

Germany
a. The reunited Germany is naturally fairly culturally diverse, because the country borders

several nations. Based on Hofstede, Germans rank high on individualism (though less

individualistic than the United States), high on uncertainty avoidance and masculinity, and have

a relatively small need for power distance. These cultural norms manifest themselves in

German’s preferences for being around familiar people and situations and, also, in their

propensity to do a detailed evaluation of business deals before committing themselves.

b. Christianity dominates German culture—96 percent are either Protestant or Catholic.

This may be why Germans prefer rule and order in their lives. Germans are assertive in

business but not aggressive; they have a very strict sense and use of time and follow

hierarchical organizational structures with power at the top. In negotiations, Germans want

detailed information before and during discussions.

Comparing cultures:

Latin America
a. Latin America comprises many diverse independent nations, where mostly Spanish or

Portuguese languages prevail.

b. Christianity—predominantly Roman Catholicism—is the religion of Latin America, and

people in general are high on power distance and uncertainty avoidance.

c. People have a very fluid orientation toward time and tend to be multi-focused; planning,

negotiations, and scheduling take place in a more relaxed atmosphere.

d. Communication tends to be expressive, demonstrative, and high-context.

Comparing cultures:

South Korea

a. Koreans rank high on collectivism and pragmatism, fairly low on masculinity, moderate on

power distance, and quite high on uncertainty avoidance. In Korea, priorities are family,

respect for authority, formality, class, and rank. Koreans are aggressive and hardworking,

friendly, and hospitable.

b. Business is based on honor and trust; most contracts are oral.

Comparing cultures:

Cuisine

Preferences and tastes may be different for each individual, it also differs among different

cultures. For example, Japan people dislike sour tastes like lemon, and colors that is

reminder of sour (yellow). Because of this perception, firms using yellow packages on

their product have faced a decrease in their sales.

Kellogg’s set up a branch in India and started selling Corn Flakes. What they didn’t

realize was that Indians think that to start the day with something cold — like cold milk

on their cereal — is a shock to the system. And if they pour warm milk on Kellogg’s Corn

Flakes, they instantly turn into wet paper. In business studies, when you look at a

market, you have to know something about its anthropology and its cultural rituals.

What Kellogg’s ignored was that the Indians dislike cold breakfast.

Managing Cultural Differences

• Although there are cultural differences between different companies
belonging to the different nations, these differences are not necessarily a
handicap. There is a need for understanding between the firms in the
different cultures. The parties must learn how to cope with the cultural
differences that exist. In order to manage these cultural differences, first
of all we must admit that there exist cultural differences in different
nations. So, if multinational firms want to be successful in different
markets, they must be flexible and respond the local preferences, tastes
and perceptions which are different from their home country.

CULTURES CAN CHANGE!

Culture change occurs in one of two ways

1. A new behavior pattern spreads through a group, followed by
a change in the rules and standards to conform with the new
behavior pattern.

2. A change in the conscious rules of the society, followed by a
change in behavior patterns.

Change in behavior patterns and changes in rules do not usually
occur simultaneously

• Source

• Internal Source =
invention or
discovery

• External Source =
diffusion

• Motivation

• Internal Motivation =
cultural evolution

• External Motivation =
conquest or
colonialism

Aspects of Culture Change

Types of Change motivation
May be a new culture or return to past traditions

Internally Motivated

1. Revolution = violent

overthrow of existing

leadership

2. Millenial Movement =

secular with political

leader

2. Revitalization = religious

with religious prophet as

leader

Externally Motivated

1. Conquest = forced

massive change after war

2. Colonization = occupation

with goal of economic

exploitation

Individual Change

• Acculturation

•

Assimilation

•

Biculturalism

Group Change

• Evolution

•

Diffusion

•

Syncretism

Types of Culture Change

Cultural Evolution

• This is the sort of natural change that occurs in all societies, as people adjust their cultures to
fit new environmental conditions and situations. Individuals try out new strategies and/or
beliefs, and the rest of the society decides whether the new practice is working well. When a
new practice is adopted by a significant segment of the society, then culture change has
occurred.

Diffusion

• This occurs when a culture trait is borrowed by a society in which it did not develop. For
example, Coke and Pepsi are found throughout the world in literally hundreds of societies.
These products have diffused around the world.

Syncretism

• Syncretism occurs when aspects of two cultures are blended into a single culture trait. A
good example of this is Mexican food as it is served in Southern California. Taco Bell and El
Torito are not authentic Mexican food. They are a blending of Mexican and American
ingredients cooked in Mexican styles that have been adapted to American tastes.

Acculturation (do NOT confuse with Enculturation, i.e. learning the culture you grow
up in)

• This is what occurs when individuals or groups migrate to an new country or culture.
They must adjust to the new cultural context in which they find themselves. Immigrants
tend to acculturate at different rates depending on the part of culture they need to
change, and the number of immigrants from their home culture that are living in the new
society. Religion is usually one of the last aspects of culture to be changed.

Assimilation

• This is what happens when individuals acculturate to a new culture and become so fully
immersed that they are indistinguishable from native members of the new society into
which they have moved. Research shows that it takes three generations for immigrants
to fully assimilate to a new culture. The actual immigrants themselves have little chance
of assimilation. It is their grandchildren who will be fully assimilated.

Biculturalism

• Biculturalism occurs when an individual knows two cultures extremely well, and can act
as a native in either culture. Bicultural individuals frequently switch back and forth from
one culture to another, depending on the social context in which they find themselves.

Humor and culture in international business | Chris

Smit | TEDxLeuven – YouTube

1

CASE STUDY

Task details:

 This is an individual assignment.
 You are asked to write an essay, proving answers to all the questions specified below (see page 2). These answers must be based on corresponding theories.

Make sure you are providing sufficient and relevant arguments sustaining your answers. In case of using real case example(s) in support of your standpoint,
there should be a clear reference to that/those case(s).

 All the sources should be correctly cited, and the theories clearly identified.
 The essay should contain introduction, body(discussion) and conclusion parts. Questions must be answered in an essay format, no bullet points allowed.
 The submission must be in PDF file format.

Formalities:

 Wordcount: 1000 to 1500 words
 Structure: Cover, Table of Contents, References and Appendix are excluded of the total wordcount.
 Font: Arial 11 pts.
 Text alignment: Justified.
 Citation: The in-text References and the Bibliography must be in Harvard’s citation style.

Weight: This task is 30% of your total grade for this subject.

It assesses the following learning outcomes:

 Outcome 1: Learn how to identify ethical issues.
 Outcome 2: Learn how to address ethical issues in a corporate setting.
 Outcome 3: Learn how to use ethical theories to analyze, critically assess, and make decisions related to ethical issues.

2

Task:

You own a cement company, and deal with most the local contractors for cement, sand, etc. You have a reputation of high-quality products, and
for good customer service with your customers. Your foreman has just run the standard quality control tests you have performed regularly on
your products.

When the test results are ready, you discover that the new batch of product is 10% less durable than your usual material. It is still well above all
industry standards and meets all building codes and requirements for the purposes for which it is intended, but it is, nevertheless, not up to your
usual standards. Throwing it away would cost your company many thousands of dollars.

You decide to sell the cement anyway.

Questions:

1. Should you tell your customers?
2. Should you discount the price?
3. Should you tell your employees, so they will be knowledgeable with the customers?
4. Would you use this cement on foundations for your own house?

IMPORTANT: Your answers should be based on a specific ethical theory discussed in class (utilitarianism, deontology, etc.). Choose and apply
the one you consider the best for identifying ethical issues involved and their solution. Do not forget to cite your sources.

3

Rubrics

Identification of
main

Issues/Problems

25%

Identifies and demonstrates a
sophisticated understanding
of the main issues / problems
in the case study.

Identifies and demonstrates an
accomplished understanding of
most of the issues/problems.

Identifies and demonstrates
acceptable understanding of
some of the issues/problems in
the case study

Does not identify or
demonstrate an acceptable
understanding of the
issues/problems in the case
study

Analysis and
Evaluation of

Issues /
Problems

25%

Presents an insightful and
thorough analysis of all
identified issues/problems.

Presents a thorough analysis of
most of the issues identified.

Presents a superficial
analysis of some of the
identified issues.

Presents an incomplete analysis
of the identified issues.

Development of
Ideas

and Opinions

25%

Supports diagnosis and
opinions with strong
arguments and well-
documented evidence;
presents a balanced and
critical view;
interpretation is both
reasonable and objective.
Excellent use of Harvard
style

Supports diagnosis and opinions
with limited reasoning and
evidence; presents a somewhat
one-sided argument;
demonstrates little engagement
with ideas presented. Good use
of Harvard style

Little action suggested
and/or inappropriate
solutions proposed to the
issues in the case study.
Some use of Harvard style.

No action suggested and/or
inappropriate solutions
proposed to the issues in the
case study. Failed to use or
incorrect use of Harvard style

Link to Ethical
Theories and

Additional
Research

25%

Makes appropriate and
powerful connections
between identified
issues/problems and strategic
concepts studied in the course
readings and lectures;
supplements case study with
relevant and thoughtful
research and documents all
sources of information

Makes appropriate but
somewhat vague connections
between identified
issues/problems and concepts
studied in readings and lectures;
demonstrates limited command
of the analytical tools studied;
supplements case study with
limited research.

Makes inappropriate or little
connection between issues
identified and the concepts
studied in the readings;
supplements case study, if at all,
with incomplete research and
documentation.

Makes no connection between
issues identified and the
concepts studied in the
readings; supplements case
study, if at all, with incomplete
research and documentation.

UNIT 2

UNDERSTANDING BUSINESS ETHICS

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

Business ethics is also known as corporate ethics. It is a form of applied ethics or professional
ethics that examines ethical principles and moral or ethical problems that arise in a business
environment.

Business ethics are the values and principles which operate in the world of business. They form
the moral framework of the organisation.

A business is considered to be ethical only if it tries to reach a trade off between pursuing
economic objective and its social obligations.

Corporate business executives have a responsibility to their shareholders and employees to
make decisions that will help their business make a profit. But in doing so, businesspeople also
have a responsibility to the public and themselves to maintain ethical principles.

What is Business Ethics ?

3

Four different levels of business ethics can be identified based on what type of
business and how their actions are evaluated.

1. The society level, which defines ethical behavior and assesses the effect of
business on society.

2. The industry level, which suggests that different industries have their own
set of ethical standards (e.g., chemical industry vs. pharmaceutical industry)

3. The company level, under which different companies have their own set of
ethical standards

4

. The individual manager level, at which each manager and other corporate
participants are responsible for their own ethical behavior

Why be ethical in business?

4

Goodwill of the business

•People like to build long term relationships with organizations

that perform their tasks on the principles of ethics.

•Following a code of ethics enhances the goodwill of the

organization and organization possess a strong public image.

•Moreover strong public image leads to continual loyalty and

attracts new investors.

Prevention fromlegal action(s)

•Byimplementing ethical practices organizations are automatically

prevented from illegal and objectionable activities as business ethics

instruct to avoid all that is wrong or evil.

•Suchorganizations have no fear of legal action and social boycott.

Ethicalpracticescreatea strong public image

• Organization with strong ethical practices will possess a strong image

among the public.

• Thisimage would lead to strong loyalty.

• Strong public image results in attracting new investors.

• Ethics practices support employee growth

• Ethics in the workplace helps employees face reality, both good and bad,

in the

company.

• Employees feel full confidence and therefore they can deal with any

sort of situation.

Strong teamwork and high productivity

• Constant check and dialogue will ensure that the employee matches

to the value of organization which will in turn results in better co-

operation and increased productivity.

• Build trust with key shareholders: implementation of ethics helps

organization to gain trust of their shareholders.

• Shareholders feel confidence that companyis well monitored.

High profits and good governance

• Business ethics create high returns or profits for the company

and its share prices increase if the company acts upon its social

responsibility (CSR).

• Most of the benefits received from business ethics are the goals of

corporate

governance.

• Thus, we can say that ethics have a strong impact on corporate

governance and the implementation of business ethics can ensure good

governance.

• Customers

• Managers/Owners/Shareholders

• Pressure Groups/Activists

• Workforce

• Community/Society

• Trading Partners

Who cares about Business Ethics?

10

✓ Solidarity

✓ Efficiency

✓ Rationality

✓

Fairness

✓ Refraining from willingly harming others

✓ Role-responsibility

Basic ethical principles for business

Business contributions to the sustainable development (UN chart)

BUSINESS ETHICS

AND

CORPORATE GOVERNANCE

WHAT IS CORPORATE GOVERNANCE?

The system of rules, practices and processes by which a company

is directed and controlled.

Corporate governance essentially involves balancing the interests

of the many stakeholders in a company (shareholders,

management, customers, suppliers, financiers, government,

community).

BENEFITS OF GOOD CORPORATE GOVERNANCE

✓ Improved r eputation

✓ Fewer fines, penalties, lawsuits

✓ Decreased conflicts and fraud

✓ Enhanced p erformance

✓ Access to capital

✓ Better standards

✓ Better talent utilization

Corporate Culture Companies should promote a spirit of integrity that
goes beyond compliance.

Incentives Individuals within the company tend to act according
to incentives provided to them in terms of rewards
and the performance evaluation process.

Opportunities Effective corporate governance, internal controls, and
enterprise risk management can reduce the
opportunity for unethical conduct.

Choices Individuals, in general, are given the freedom to make
choices and usually choose those that will maximize
their well-being.

Some hints for effective (internal) Corporate Governance

SOME EXAMPLES OF UNETHICAL

ISSUES IN BUSINESS

• Bribery

Accepting bribe create a conflict of interest between the person

receiving bribe and his organization. And this conflict would result

in unethical practices.

• Coercion

It is forcing a person to do things which are against his personal

believes. E.g. blocking a promotion, loss of job or blackmailing.

• Insider Trading

(Insider trading is misuse of official position.)

Here the employee leaks out certain confidential data to outsiders or

other insiders which effect the reputation and performance of

company.

• Conflicts of Interest

Conflict of interest when private interests are important for employees

which are against the desire of employer.

• Unfair Discrimination

Unfair treatment or given privileges to persons on the base of race,

age, sex, nationality or religion. It is failures to treat all persons

equally.

• Political Donations and Gifts

Gifts, donations or contribution to political leaders or parties to get

any unconditional act done e.g. sanctioning of any special contract,

issue of licenses etc.

• Presentation of false returns of income and statements

It is to prepare false income returns and statements of accounts for

evasion of tax and getting various govt. benefits and incentives.

• Accumulation of profits by illegal

Sometimes business undertakes various unconstitutional and

unethical and activities to maximize its profits (e.g., black

marketing, speculation etc.)

MAIN CAUSES OF UNETHICAL

CONDUCT IN A COMPANY

1. Pressure to meet unrealistic objectives and deadlines:

According to a recent survey, the pressure from management or from the

Board to meet unrealistic business objectives is the leading factor that

causes unethical

behavior.

2. Increase in acute competition:

Competition is increasingat national and internationallevel. Every business

aims to be the highest profit maker.

To achieve this goal, organization/individuals are urged to act dishonestly

and unethically.

3. Economic Greed:

People have a desire to live a life full of comforts and luxuries. Some

people follow unethical means to earn more money.

Personal financial worries become a cause for unethical practices

such as accepting a bribe.

4. Lack of Management Support or Poor Leadership:

– Leader is responsible for motivating his staff.

-If the leader does not encourage his subordinates to be ethical then

there are higher chances of unethical conduct

-If the leader himself is involved in unethical activities, his

employees may do the same.

5. Pressure to earn profit:

– Shareholders expect larger returns.

– Employees hope for higher salary and benefits

– Directors expect higher remuneration

-Thus there is an increasing pressure to maximize profit to cope

with enlarged requirements.

6. Information of unethical acts through media:

The information given by media provides ideas to

inexperienced businessman for doing unethical activities.

12 Ethical Principles for

Business Executives

26

1. HONESTY. Ethical executives are honest and truthful in all their dealings and they do not deliberately mislead
or deceive others by misrepresentations, overstatements, partial truths, selective omissions, or any other means.

2. INTEGRITY. Ethical executives demonstrate personal integrity and the courage of their convictions by doing
what they think is right even when there is great pressure to do otherwise; they are principled, honorable and
upright; they will fight for their beliefs. They will not sacrifice principle for expediency, be hypocritical, or
unscrupulous.

3. PROMISE-KEEPING & TRUSTWORTHINESS. Ethical executives are worthy of trust. They are candid and
forthcoming in supplying relevant information and correcting misapprehensions of fact, and they make every
reasonable effort to fulfill the letter and spirit of their promises and commitments. They do not interpret
agreements in an unreasonably technical or legalistic manner in order to rationalize non-compliance or create
justifications for escaping their commitments.

4. LOYALTY. Ethical executives are worthy of trust, demonstrate fidelity and loyalty to persons and institutions
by friendship in adversity, support and devotion to duty; they do not use or disclose information learned in
confidence for personal advantage. They safeguard the ability to make independent professional judgments by
scrupulously avoiding undue influences and conflicts of interest. They are loyal to their companies and
colleagues and if they decide to accept other employment, they provide reasonable notice, respect the
proprietary information of their former employer, and refuse to engage in any activities that take undue
advantage of their previous positions.

5. FAIRNESS. Ethical executives and fair and just in all dealings; they do not exercise power arbitrarily, and do
not use overreaching nor indecent means to gain or maintain any advantage nor take undue advantage of
another’s mistakes or difficulties. Fair persons manifest a commitment to justice, the equal treatment of
individuals, tolerance for and acceptance of diversity, the they are open-minded; they are willing to admit they
are wrong and, where appropriate, change their positions and beliefs.

6. CONCERN FOR OTHERS. Ethical executives are caring, compassionate, benevolent and kind; they like the Golden
Rule, help those in need, and seek to accomplish their business objectives in a manner that causes the least harm and
the greatest positive good.

7. RESPECT FOR OTHERS. Ethical executives demonstrate respect for the human dignity, autonomy, privacy, rights,
and interests of all those who have a stake in their decisions; they are courteous and treat all people with equal respect
and dignity regardless of sex, race or national origin.

8. LAW ABIDING. Ethical executives abide by laws, rules and regulations relating to their business activities.

9. COMMITMENT TO EXCELLENCE. Ethical executives pursue excellence in performing their duties, are well informed
and prepared, and constantly endeavor to increase their proficiency in all areas of responsibility.

10. LEADERSHIP. Ethical executives are conscious of the responsibilities and opportunities of their position of
leadership and seek to be positive ethical role models by their own conduct and by helping to create an environment in
which principled reasoning and ethical decision making are highly prized.

11. REPUTATION AND MORALE. Ethical executives seek to protect and build the company’s good reputation and the
morale of its employees by engaging in no conduct that might undermine respect and by taking whatever actions are
necessary to correct or prevent inappropriate conduct of others.

12. ACCOUNTABILITY. Ethical executives acknowledge and accept personal accountability for the ethical quality of
their decisions and omissions to themselves, their colleagues, their companies, and their communities.

6 Pillars of Business Ethics

Trustworthiness – Honest in conduct (not stealing or cheating), Integrity, Reliability (promise-

keeping) and Loyalty

Safeguard public confidence in the integrity of the organization by displaying honesty in all

dealings and avoiding conduct that might create the appearance of impropriety. Go beyond

what is legally required to permit public scrutiny of your activities.

Respect – Civility (courtesy and decency), Autonomy and Tolerance

Treat others with dignity – the way you would like to be treated. Be civil, courteous and decent

with all employees, customers and business partners.

Responsibility – Accountability, pursuit of excellence (diligence and perseverance) and self-

restraint. Conduct business efficiently and honorably in a manner that permits employees,

suppliers, vendors, customers and members of the local community to make informed

judgments and hold the company accountable.

Fairness – Impartiality and Equity

Seek to be impartial; employ independent objective judgment on merit, free from conflicts of

interest – both real and apparent. Compensate all employees equitably; minimize wage

disparities.

Caring – Charity and Compassion

Demonstrate a genuine sense of compassion and concern for the welfare of others – inside and

outside the company walls. Don’t allow tax advantages to dictate charitable contributions from

the company. These are maneuvers, not contributions.

Citizenship – Volunteerism (doing your share), Environmental protection and Law abidance

Honor and respect the principles and spirit of democracy and set a positive example by

observing the letter and spirit of laws. Demonstrate a commitment to the environment and to

social responsibility that goes beyond legal requirements.
31

How to empower Ethics at an

organizational

level?

32

Treating employees equitably enables substantial organizational benefits while avoiding unethical
operations and the corresponding consequences.

To ensure an organization is fair, one must consider the concept of justice as a central pillar of what
creates a fair environment (and what does not). The question is simple: how do employees perceive
the behavior of the organization, and how does this impact both employee and organizational
outcomes?

In answering these questions, there are three useful perspectives one can adopt in considering
fairness in the organization:

Distributive – Simply put, the distribution of resources should align with the value of an individual’s
inputs. Of course, this is more complex than salary. As a manager, ensure that credit, bonuses, and
benefits are also distributed fairly.

Procedural – Employees don’t only want compensation. They also need input into the process, and
shared accountability in the decisions being made. When designing the procedure of a given work
group, inclusion of everyone’s perspectives can lead to substantially higher satisfaction, efficiency,
and fairness.

Interactional – All members of an organization must both be treated appropriately (from a social
frame) and informed respectfully (from an informational frame). In short, employees should be
treated with propriety in discussions and shouldn’t be left in the dark when important decisions are
made.

Fairness

There are many overt and subtle outcomes of treating employees equitably. The simplest
examples of positive results due to a strong sense of ethical fairness in an organization include:

Higher Performance and Efficiency – People feel their input is aligned with their
compensation

Commitment – Happy employees tend to stick around.

Citizenship – If there is inequity in how people are treated, it tends to divide them. This is
incredibly dangerous, and can quickly erode the positive benefits of looking out for one another.

Avoiding Counterproductive Behavior – In short, dissatisfied employees are more prone to
working against the established goals of the organization. Behaviors such as not doing certain
tasks or helping certain work-groups can quickly become a source of inefficiency.

Absenteeism – Sick days, skipping meetings, and generally unplugging from the organization
is often an outcome of inequitable organizations.

Emotional Exhaustion – Unsatisfied employees wrestle with insecurity and dissatisfaction,
both of which are emotionally draining.

Implications of Fairness

Transparency consists of operating in such a way that it is easy for others to see what actions

are being performed.

For example, a cashier making change at a point of sale by segregating a customer’s large bills,

counting up from the sale amount, and placing the change on the counter in such a way as to

invite the customer to verify the amount of change demonstrates transparency. Radical

transparency is a management method where nearly all decision making is carried out publicly.

All draft documents, all arguments for and against a proposal, all final decisions, and the

decision making process itself are made public and remain publicly archived.

Corporate transparency, a form of radical transparency, is the concept of removing all barriers

to—and the facilitation of—free and easy public access to corporate information. This includes

the laws, rules, and processes that facilitate and protect those individuals and corporations that

freely join, develop, and improve the process.

The transparency that occurs as a result of open communication protects against potential

abuses of power and makes for a safer environment overall.

Open Communication of Decisions

All organizations, regardless of their mission (e.g., profit oriented, nonprofit) and size (large vs.

small), should establish an “Organizational Ethical Culture.” that means:

• Organization, which is defined as a group of individuals or entities bound to achieve a

shared goal;

• Ethics, which is honorable behavior conforming to the norm of the group;

• Culture, which is a pattern of shared beliefs adopted by the group in dealing with its

internal and external affairs.

These help to minimize problems with conflicts of interest because they spell out the extent to

which such conflicts should be avoided, and what the parties should do where such conflicts are

permitted (disclosure, recusal, etc.). Thus, professionals cannot claim that they were unaware

that their improper behavior was unethical. As importantly, the threat of disciplinary action (for

example, a lawyer being disbarred) helps to minimize unacceptable conflicts or improper acts

when a conflict is unavoidable.

Codes of Ethics

How to empower Ethics at an individual

level?

• At the individual level, organizations must focus on developing and empowering each

employee to understand and adhere to ethical standards. There are four basic elements

organizations can build to empower individual ethics:

• A written code of ethical standards (ethical code)

• Training for management and employees (ethical training)

• Advice and consulting on a situation to situation basis (ethics officers)

• A confidential and easily accessible system of reporting (ethical reporting)

• Equipping organizations with these four components can alleviate much of the burden on the

individual, and enable each employee to learn what is appropriate (and what isn’t).

Structure

As with most facets of management, there is also a critical motivational component to individual
ethics. Intrinsic and extrinsic motivations can reinforce positive behavior and/or eliminate negative
behavior in the workplace.

Whistleblowing, for example, is a practice that gets quite a bit of both positive and negative media
attention. Whistleblowers are individuals who identify unethical practices in organizations and report
the behavior to management or the authorities. A whistleblower who behaves honestly, reporting a
problem accurately, should be rewarded for their bravery and honesty, as opposed to punished and
ostracized. If an employee is blowing the whistle, it is likely that the organization itself has failed to
empower and positively reinforce honest and ethical discussions internally.

Another example is rewarding employees for admitting mistakes. An employee who makes a mistake
on the assembly line, and accidentally produces a batch of defective goods, could react in a number
of ways. If the organization punishes employees for mistakes, the employee is quite likely to be
motivated to keep quiet and not mention it to avoid punishment. However, if the organizational is
ethical and clever, they will empower employees to take responsibility for their mistakes and even
reward them for coming forward, apologizing, and ensuring that no consumer receives a defective
product. It seems at first counter-intuitive to reward an employee for a mistake, but ultimately it
provides the best outcome for everyone.

Motivation

Finally, some aspects of individual ethics are rooted in the individual. Attaining a strong sense of

professionalism, and recognizing the ethical implications of certain professional decisions, is a

key component of education, individual reflection, and experience. For some professions it is

even more critical and relevant than others.

Journalists, for example, could easily attain higher notoriety for making up false stories about

celebrities to gain traffic to their news website. But an ethical journalist recognizes the

repercussions of slander for the individual being discussed, and maintains an honest ethical

code of reporting only what they know to be true (and not what they speculate). Psychologists

will maintain patient privacy, understanding the repercussions of leaking personal information

about their patients.

There are many potential examples, but the primary point is that professionals understand the

their field deeply, including the repercussions of making ethical mistakes.

Professionalism

A situation in which someone in a position of trust has competing professional or personal interests is known as a
conflict of interest.

A conflict of interest can exist even if there are no improper acts that result from it. One way to understand this is to use
the term “conflict of roles”.

These are some of the most common forms:

Self-dealing, in which an official who controls an organization causes it to enter into a transaction with the official, or
with another organization that benefits the official, i.e., the official is on both sides of the “deal”.

Outside employment , in which the interests of one job contradict another.

Family interests, in which a spouse, child, or other close relative is employed (or applies for employment) or where
goods or services are purchased from such a relative or a firm controlled by a relative. For this reason, many
employment applications ask if one is related to a current employee. In this event, the relative may be recused from any
hiring decisions. Abuse of this type of conflict of interest is called nepotism.

Gifts from friends who also do business with the person receiving the gifts (may include non-tangible things of value
such as transportation and lodging).

Pump and dump, in which a stockbroker who owns a security artificially inflates its price by “upgrading” it or spreading
rumors, sells the security and adds short position, then “downgrades” it or spreads negative rumors to push its price
down.

Other improper acts that are sometimes classified as conflicts of interests may be better classified elsewhere: e.g.,
accepting bribes is corruption; the use of government or corporate property or assets for personal use is fraud; not
conflict of interest.

About the Conflicts of Interest

Ethical issues may vary from one organization to another according to the
factors influencing the ethical behavior:

▪ conflicts of interest,

▪ quality control issues,

▪ discrimination in hiring and promotion,

▪ misuse of proprietary information,

▪ abuse of company expense accounts,

▪ misuse of company assets,

▪ drug and alcohol abuse,

▪ environmental pollution, environmental destruction,

▪ etc.

Examples of internal Ethical Issues

• Should firms use child labour?

• Is animal testing needed in products and ingredients?

• What wages should firms pay to poor countries?

• To what extent should firms seek to be environmentally friendly?

• Should firms get involved in certain activities (e.g., making weapons)?

• Should a firm relocate to a country paying lower level of wages?

• Should a firm release a life-saving drug after limited testing?

• Should advertising aimed at children be restrained?

Common ethical issues in business running:

✓ Sense of employee responsibility.

✓ Freedom to raise concerns without fear of retaliation.

✓ Managers modeling ethical behavior and expressing the importance of

integrity.

✓ An understanding by leadership of the pressure points that drive unethical

behavior.

✓ Processes to find and fix these areas of pressure.

What are the key attributes of an ethical (business) culture?

✓ Comply with a written code of business conduct.

✓ Provide sufficient training to all personnel within their organization regarding personal responsibility

under the code.

✓ Encourage internal reporting of violations of the code with the promise of no retaliation for such

reporting.

✓ Self-govern their activities by implementing controls to monitor compliance with all applicable laws and

regulations.

✓ Share their best practices through participation in an annual forum.

✓ Be accountable to the public, particularly through the completion of an annual questionnaire.

What are the success principles for business ethics

and ethical conduct?

Case study:

A secretary who has worked for your corporation for fifteen years is involved in a car accident in which she

permanently loses the use of her right hand. Thus, she can no longer effectively type, file, or perform

many of the other functions that she previously had performed and that are included in her job description.

Your corporation has a very tight budget and does not have sufficient funds to pay for an additional

secretary without reallocating budget items. The injured secretary has been very loyal to your corporation,

and you have been very satisfied with her work and dedication. She wants to stay at her job.

Moreover, she does not believe that she could find other employment at this time.

Should your corporation fire her, lay her off with compensation, or find a way to retain her? In resolving

this dilemma, apply:

– Utilitarianism

– The Rights Model

– Your own personal opinion

When resolving Ethical Dilemmas:

• Step One: Analyze the consequences.

– Consider short vs. long run

– Consider benefit vs. harm

• Step Two: Analyze the actions.

– Are they fair, equal, honest, respectful?

• Step Three: Make a decision.

– Can you live with the outcome?

Questions that help in resolving Ethical Dilemmas:

• What are the facts?

• What can you guess about the facts you don’t know?

• What do the facts mean?

• What does the problem look like through the eyes of the people involved?

• What will happen if you choose one thing rather than another?

• What do your feelings tell you?

• What will you think of yourself if you decide one thing or another?

• Can you explain and justify your decision to others?