Ethics In Business

Ethical issues in business

1. businesses must comply with a host of federal and state laws and regulations 2. the most difficult aspect of ethics that businesses face is decision making

Categorial Imperative

In deciding whether an action is right or wrong, or desirable or undesirable, a person should evaluate the action in terms of what would happen if everybody else in the same situation, or category, acted the same way

Problems with Utilitarian approach

In some situations, an action that produces the greatest good for the most people may not be the most ethical.

Industry ethical codes

Many industries have their own codes of ethics that give guidance on ethical questions.

Private company codes of ethics

Most companies attempt to link ethics and law via internal codes of ethics. While not law, they are rules that companies set forth that they can also enforce.

Pure Profit Maximizers

Originally, the only perceived duty of a corporation was to maximize profits and generate revenues for its owners

Business as a Corporate Citizen

Over the years, many people became dissatisfied with the profit-maximization theory, and corporations came to be viewed as "citizens" that were expected to participate in bettering communities and society

Corporate Social Responsibility

The concept that corporations can and should act ethically and be accountable to society for their actions - CSR is not imposed on corporation by law - CSR is most successful when a company undertakes activities that are significant and related to its business operations - Some activities include environmental efforts, ethical labor practices, charitable donations, and volunteer work

Moral minimum

The minimum degree of ethical behavior expected of a business firm, which is usually defined as compliance with the law.

Cost-benefit analysis

a decision-making technique that involves weighing the costs of a given action against the benefits of that action

Ethical reasoning

a reasoning process in which an individual links his or her moral convictions or ethical standards to the particular situation at hand - as businesses make decisions, they must consider the ethical implications of each alternative

Utilitarianism

an approach to ethical reasoning in which ethically correct behavior is related to an evaluation of the consequences of a given action on those who will be affected by it; in utilitarian reasoning, a "good" decision is one that results in the greatest good for the greatest number of people affected by the decision.

Duty-based ethics

an ethical philosophy rooted in the idea that every person has certain duties to others, including both humans and the planet; those duties may be derived from religious principles or from other philosophical reasoning - involves concepts of right and wrong, duties owed, and rights to be protected - religious ethical principles, principles of rights, and kantian ethical principles

Outcome-based ethics

an ethical philosophy that focuses on the impacts of a decision on society or on key stakeholders - focuses in the consequences of an action rather than on the nature of the action itself or any set of pre-established moral values or religious beliefs - looks at the impact of a decision in an attempt to maximize benefits and minimize harm - utilitarianism

Cost-benefit analysis and utilitarianism

applying the utilitarian theory requires the following steps: 1. a determination of which individuals will be affected by the action in question 2. cost-benefit analysis 3. a choice among alternative actions that will produce maximum society utility(the greatest positive net benefits for the greatest number of individuals) - outcome-based ethics

Corporate aspects of CSR

arguably, any socially responsible activity will benefit a corporation benefits can include: - Increased goodwill from the community. - Increased sales. - Higher employee retention. * however, some benefits may not be immediate and may cost the company more in the short term

The importance of ethical leadership

attitude of top management, unrealistic goals for employees, and fostering of unethical conduct

Social aspects of CSR

because business controls so much of the wealth and power in this country, business has a responsibility to use that wealth and power in socially beneficial ways - the social aspects of CSR require corporations to demonstrate that they are: promoting goals that society deems worthwhile and moving toward solutions to social problems - companies may be judged on: how much they donate to social causes and how they conduct their operations with respect to employment discrimination, human rights, environmental concerns, and similar issues

Fostering of unethical conduct

business owners and managers sometimes take more active roles in fostering unethical and illegal conduct, with negative consequences for their businesses

Fundamental ethical issue for business is...

developing integrity and trust

Two categories of ethics

duty-based ethics and outcome-based ethics

Business ethics

ethics in a business context; a consensus of what constitutes right or wrong behavior in the world of business and the application of moral principles to situations that arise in a business setting.

Stakeholders

groups, other than the company's shareholders, that are affected by corporate decisions; stakeholders include employees, customers, creditors, suppliers, and the community in which the corporation operates.

Unrealistic goals for employees

managers who set unrealistic production and sales goals increase the probability that employees will act unethically

Ethics

moral principles and values applied to social behavior; ethics has to do with an action's fairness, justness, rightness, and wrongness

Religious ethical principles

nearly every religion has principles or beliefs about how one should treat others; religious rules generally are absolute with respect to the behavior of their adherents - duty-based ethics

Attitude of top management

one of the most important ways to create and maintain an ethical workplace is for top management to demonstrate its commitment to ethical decision making - top management's behavior sets the ethical tone of a firm

Stakeholders and CSR

one view of CSR stresses that corporations have a duty to both shareholders and stakeholder - the rationale for this view is that, in some circumstances, one or more of these groups may have a greater stake in company decisions than share holders do

Shareholder

owner of a company; to own a share is to own a percentage of the company; shareholders are a type of stakeholders because a shareholder is affected by corporate decisions

Triple bottom line

the idea that investors and others should consider not only corporate profits, but also the corporation's impact on people and on the planet in assessing the firm; the bottom line is people, planet, and profits.

Principles of rights

the principle that human beings have certain fundamental rights (to life, freedom, and the pursuit of happiness) - a key factor in determining whether a business decision is ethical under this theory is how that decision affects the rights of others such as employees, customers... - duty-based ethics

Four-Part Analysis

when making decisions, a business should evaluate the following: 1. The legal implications of each decision 2. the public relations impact 3. the safety risks for consumers and employees 4. the financial implications - will assist the firm in making decisions that not only maximize profits but also reflect good corporate citizenship

Kantian Ethical Principles

when people are treated merely as a means to an end (such as when employees are treated as profit-making tools), they are being treated as the equivalent of objects and are being denied their basic humanity; a central postulate of Kantian ethics is the categorical imperative