BUSINESS ETHICS AND SOCIAL RESPONSIBILITY

Handout # 3
Code of ethics also called as code of conduct or ethical code – sets out the company’s values, ethics, objective, and responsibilities.

COMPONENTS OF A CODE OF ETHICS

VALUES – a company’s values guide the organization’s internal conduct and its relationship with stakeholders. The values sum up the
company’s reputation wherein all interactions are treated with respect regardless of position and circumstances.

PRINCIPLES – to support the values of the organization, there are credos that employees should live with during their stay in the
company. Business principles such as customer satisfaction, business profitability, and continuous improvement are just some of the
principles that stakeholders live by. Corporate social responsibility is also another principle found in the code of ethics.

MANAGEMENT SUPPORT – this means that management is serious in considering the code as the bible of the employees in terms of
ethics. To show support, management allows the display of this code of ethics in prominent and strategic places in the work area.

PERSONAL RESPONSIBILITY – any member of the organization should uphold and preserve the code of ethics because any violation of
the code may involve legal and moral consequences. Each employee should be guided by the code and must report anyone who violates it.
COMPLIANCE – all legal requirements of the code should be met. Any licensing requirements, including but not limited to reporting of
financial statements, should be met.

The Code of Hammurabi

- (1700s B.C.) which prescribes a prices and tariffs and lays down both rules of commerce and harsh penalties for noncompliance,
is the earliest evidence of man’s attempts to establish the moral contours of commercial activity.
- Aristotle’s Politics (300s B.C.) addresses explicitly commercial relations in the discussion of household management.

Classical philosophies of Socrates, Plato, Aristotle, Immanuel Kant, and Jeremy Bentham and John Stuart Mill
SOCRATES
- The Gad-fly at the Marketplace
- “the unexamined life is not worth living”-Socrates
- Son of a mason and sculptor
- Born in 469 B. C. and died in 399 B.C. or at 70 years, he was put to death at the hands of his fellow citizens on charges of impiety and
corruption of the youth.
- Did not write any books
- According to Socrates, knowledge is the propagation of what is good, a virtue, or excellence; whereas ignorance is the focus on what is
bad, evil and not useful. In conclusion, we are responsible for what we know and what we do not know.

Socratic Method – this technique focused on giving the students questions rather than answers.
- Describe by Gregory Vlastos, a philosophy professor at Princeton University as “one of the greatest achievements of humanity”
because it encourages a high degree of mental alertness and at the same time upholds the virtues of sincerity, humility, and courage.

PLATO
- The Philosopher – King
- Born in 427 B.C and died on 347 B.C.
- “Good people do not need laws to tell them to act responsibly, while bad people will find a way around the laws.”- Plato
- He obtained a good education in Athens and devoted much of his life to politics and writing poetry
- Founded a philosophical school, the Academy, which stood from 387 BC until 86 BC
- Most brilliant student of Socrates and the teacher of Aristotle
- Wrote book about Socrates titled “The Apology” and “Crito”
- Wrote Laches which dealt with courage; Charmides which was about common sense; Euthyphro which was about piety; Lysis which
was about friendship and Protagoras which taught of goodness
- One of the famous works is The Republic where Socrates is the main character; that deals with Socrates discussion on justice and its
meaning to individuals and city-states.

- There were three classes in a city-state: rulers, guardians, and workers.

o The rulers are those emerge from the population as the most intelligent members of the state.
o The guardians are those who implement peace and order;
o while the workers are those who perform tasks to ensure that the city state runs smoothly
ARISTOTLE
- All or Nothing
- Born in 384 B.C. and died in 322 B.C.
- “Happiness is the meaning and the purpose of life, the whole aim and end of human existence.” – Aristotle
- A Greek philosopher and scientist who developed the scientific method. His interest in science was inspired by his father who was a
physician.
- Making contributions to logic, metaphysics, mathematics, physics, biology, botany, ethics, politics, agriculture, dance and theater
- Joined Plato’s Academy for 20 years.
- Also founded a school named the Lyceum, located near a shrine of Apollo Lyceus
- Influenced by Plato and The Academy
- Earliest writings in the form of dialogue such as Rhetoric, Eudemus (On the Soul), On Philosophy, On Prayer, and On Education.
- Other writings include The Topics and the Analytics which dealt with logic, a study of reasoning, and dialect, which is a method of
argument

IMMANUEL KANT (1724 – 1804)

- Duty-Based Ethics
- “Act only according to that maxim (saying) by which you can at the same time will that it should become a universal law.” – Immanuel
Kant
- A German philosopher who advanced the theory of deontology or deontological ethics –the theory of duty and obligation.

DEONTOLOGY – is a moral theory that is dependent on the Scriptures – which may refer to rules, moral laws, and intuition.
- From the Greek words “deon” and logos”” means the “study of duty”.

Two types of duty:

1. The hypothetical imperatives – is when an individual will perform a certain action in order to achieve the desired end result
2. The categorical imperative – involves an individual performing a certain action as compulsory regardless of the end result or away
from any personal influence

Kant believes that categorical imperative is the basis to determine whether one’s action is deemed to be ethically correct. There are three
maxims that can serve as a guide to managers and professionals on managing an organizations:
1. First maxim: an action can only be considered as ethically correct if it can be accepted or made into a universal law
2. Second maxim: that a person should be treated as an end and not the means to achieve an end.
3. Third maxim: each individual should act as a member of an ideal kingdom where he or she both the ruler and subject at the same
time

JOHN STUART MILL (1806 – 1873)

- “A person may cause evil to others not only by his action but by his inaction, and in either case; he is justly accountable to them for the
injury.” – John Stuart Mill
- Morality has it that people will justify or not the end and the means. Not only that it directs individuals to do what is right or wrong;
moreover, it makes them do what is in the best of their conscience.

JEREMY BENTHAM (1748 – 1832)

- “The said truth is that it is the greatest happiness of the greatest number that is measure of right and wrong.” – Jeremy Bentham
- An English philosopher and political radical
- Known to his moral philosophy, especially his principle of utilitarianism, which evaluates actions based upon their consequences

VIRTUE ETHICS
Virtue – is a term which is equivalent to the Greek word arête, which means excellence. Human excellence in ancient Greek philosophy
did not include moral virtues. Therefore, an excellent human should include moral virtues in order to achieve happiness. The achievement
of happiness is the end goal of human life.

Virtue ethics – is defined as a person-based ethics which looks at the moral character of the person carrying out a particular action. It is
necessary for virtue ethics to focus on helping people become good members of society.
It does not focus on following rules but the development of good traits which will help the person make decisions in life. Examples of these
character traits are generosity, prudence, kindness, and the like. When these character traits are developed, the person also learns how to
break bad habits like anger, greed, and boastfulness.

8 Major Religions
1. Judaism
2. Christianity
3. Islam
4. Hinduism
5. Buddhism
6. Confucianism
7. Taoism
8. Shintoism

JUDAISM
- About 12 to 17 million Jews in the US and in Israel
- Three groups of Jews
o Middle Eastern or Oriental Jews
o Sephardic Jews from Spain and Portugal
o Ashkenazi Jews from Europe
- Traces its roots from the covenant made between God and Abraham. The covenant also includes the Ten Commandments which
embody the core values of Christianity
- The eleven core Jewish values that form the basis of ethics in Judaism
o Honesty – the Jews are taught to be always truthful
o Integrity – it is the consistency in words and actions
o Brit – it means always keeping one’s word
o Loyalty – it is developing a trusting relationship with God, parents, friends, and tradition
o Tzedakah – it means refraining from being judgmental and doing acts of charity to the poor
o Chesed – it means being kind and merciful to others
o Respect for human dignity – it is respect for human life sincere all of us are created in image and likeness of God.
o Respect of law – it is the practice of good citizenship by abiding by the laws of the community
o Accountability – it means each individual is held accountable for his/her actions and is therefore answerable to God and
others
o Taking responsibility – ethical people takes responsibility for their decisions and set example for others
o Tikkun Olam – we can contribute something to make the world better place by fighting oppression, corruption, and
exploitation.
The Jews principles / beliefs:
1. Have a high regard for work
2. Concerned with the welfare of others (same with Christian beliefs)
3. Jews believe that to acquire wealth through profit in business is wrong because it leads to envy or greed
4. Also believe that a person should have the things needed for survival and happiness (like Buddhism)

Rules followed by Jews in the business organizations

1. Employers and employees follow different sets of rules because they have different positions
2. Employers should be aware of the extent of their employees capacity and are not allowed to insult or embarrass them
3. Not permitted to withhold salaries because of debt
4. Jewish employees should be allowed to go home before the sun sets during Sabbath and holidays
5. Employees should always be productive

CHRISTIANITY
- Has around two billion followers with many branches and churches
- Three main branches of Christianity
o Catholic
o Orthodox
o Protestant
- The Christian Bible is the main guide to determine what is ethical and moral. All of the 72 books in the Bible are believed to be
inspired by God, thus, it has become the source of knowledge on what is right and wrong
- Traces its roots to Judaism which based its ethical and moral principles on the Old Testament (God and Abraham). Old Testament laid
the foundation of the New Testament (ministry of Jesus and the Apostles to the world).
- Ethics in Christianity is three-fold:
o First – the values propagated in Christian belief are based on the Christian Scriptures
o Second – behavior is related to the behavior of Christian prophets
o Third – ethics is based on the standards of behavior taught by Jesus
- The supreme norm for Christian ethics is Jesus Christ, which is the central figure in all Christian teachings.
- Emphasizes justice in the form of honoring contracts or agreements and working for a common good.

HINDUISM
- Primarily centered in South Asia and nearly 85% of Hindus live in India. It has about a billion followers
- The Hindus worship Brahman who is considered the source of ultimate oneness in the form of gods and goddesses. These
representations can be idols, temples, animals, mountains, rivers, and so on.
o The Hindus present life is brought about by whatever actions or behaviors they had in the past or the LAW OF KARMA
o They believe that there is a continuous cycle of reincarnation. Their end goal is freedom from the law of karma.
Karma – is a tem for an act or deed, whether good or bad, which may result in either happiness or misfortune.
- Can be described a cause and effect or “what you sow, you reap.”

Ancient Hindu scriptures such as the Upanishads, the Bhagavad Gita, and the Brahma Sutra have been used to develop the Vedanta, the
ethics of the Hindus for practical life.

Hindus positive outlook towards different aspects of human life:

- How the work is done (performance) is more important that what particular work is done
- Hindus value commitment to work and they are held accountable for results
- Hindus are dedicated workers and protect the interest of the organization where they work

BUDDHISM
- Nearly 2500 years ago, Siddhartha Gautama separated from Hinduism and became known as the Buddha or “Enlightened One”
- Around 350 million Buddhist or 1/3 of the population residing in China and around 90% of Thailand’s population are Buddhists
- Buddhism is based on the teachings of Buddha
- Buddhists do not worship gods or God
- Buddha is not a god but considered by Buddhists as their end goal, the one they would like to attain, to be free from the cycle of life
and death

- Just like Hindus, Buddhists believe in the cycle of rebirth and part of this rebirth is suffering. They believe that the causes of these
rebirths are cravings, aversions, and selfish motives. The end goal of a Buddhist is to let go of all these selfish yearnings and hostility
by purifying the heart. They do this through meditation until they reach Nirvana, where all these selfish attachments to oneself are
extinguished.
- Buddhists do not acknowledge companies which do not give importance to the environment and animals.
- People can engage in business activities and may become wealthy but money, status, and power should not conquer them.

ISLAM
- The history of Islam started with Muhammed. Upon his death, majority of the Arab countries adopted Islam
- Has about a billion followers
- Muslims believe that Muhammed is God’s last prophet
- Quran is the holy book that provides the basic principles on how to deal with life including business
- The Muslims believe that Allah is the Almighty God who is the creator of the universe.

- Allah is the source of good and evil and whatever happens to humans is His will.
- Considered as powerful and strict and whoever believes in Allah is his servant. Giving one’s life to Allah is a sure way of entering
Paradise

- Islamic ethics is governed by freedom, responsibility, and honesty

- Gambling is restricted among Muslims
- Not allowed to invest in the stock market because it is considered a gambling activity, but not restricted from engaging in business
activities or making a profit

CONFUCIANISM
- The religion propagated by Confucius in China in the 5th century BC
- Found in China and Korea
- One of the three traditional religions of China and the fundamental belief system of the Chinese (the other two is Buddhism and
Taoism)
- The teaching of Confucius advocate stability by organizing the society and places more emphasis on the common good and welfare of
all through interdependence

- Profit should be acquired with righteousness and a business organization should attend to the needs of its stakeholders.
- The most important core value in Chinese business practice is interpersonal relationship built on trust and reciprocity
(mutuality/exchange)
TAOISM
- Based on the Tao Te Ching or the Book of the Way and Virtue by Lao Tzu
- Many of the 30 million Taoists blend their religion with Buddhism and Confucianism
- Taoist are found in Taiwan and other Chinese minorities found in Southeast Asian countries
- Promotes inner peace within an individual and harmony with the surroundings
TAO
- means the path or the way
- considered as the cause of everything which means that if one follows the Tao, there is harmony; if not, there is chaos.
- Has three basic tenets (creeds/beliefs)
o Tao – refers to the universal nature
o Wu Wei – means letting go
o Yin and Yang – means dualism or interconnecting opposites. The black dot in the white area represents that there may be
opposing aspects of the other within itself and vice versa. This means that Yin and Yang may be opposites but they are
interdependent (mutually supporting)
SHINTOISM
- Is the ethnic religion of Japan which started around the 7th century AD
- The emergence of Shintoism is closely tied to the development of Japan as a nation

- Shinto comes from the Chinese words Shen or divine being and Tao which means way of the spirits
- Shinto considered by the Japanese not as a belief but more as a way of life because it focuses on rituals and Japanese practices.
- Shinto has no god and no commandments; they worship sacred spirits called kami which are found in nature such as wind, rain,
mountains, trees, and others geographic forms.

Shinto’s ethical principles were inspired by Confucianism.

- Its ethics based on the idea that all human beings are basically good and the world is good as well
- Shintoism leads the Japanese to respect nature since people and kami co-exist unlike the Western counterparts wherein
people control nature for profit.
- Shintoism encourages group effort which recognizes individuals in a group, such as treating employees like family.