Beruflich Dokumente
Kultur Dokumente
What is BE?
Definition
Business ethics is the study of business situations,
activities, and decisions where issues of right and wrong are
addressed.
Systematic study
Helps us decide whether a decision is ethical/ unethical
Morally right/ wrong & not commercially
Not just for business but organisations/ corporations
(government, NGOs, Political Party, Educational organisation....)
What is BE?
Ethics & Law
Law is essentially an institutionalisation or codification of
ethics in to rules, regulations & proscriptions.
Law prescribes minimum acceptable standards of
behaviour
Law may involve ethics or not
Ethics begin where law ends; where values are in conflict
Eg: animal testing/ euthanasia/ executive compensation/
child labour/ persuasive marketing
Ethics is about making a better decision and not right
decision
What is BE?
.
Ethics
grey
area
Law
What is BE?
Morality, Ethics & Ethical theories
Morality: is concerned with the norms, values and
beliefs embedded in social processes which define
right and wrong for an individual or a community.
Ethics: is concerned with the study of morality and
the application of reason to elucidate specific rules
and principles that determine right and wrong for
any given situation.
These rules and principles are called ethical
theories. Eg: Rights Theory/ Justice Theory
What is BE?
Morality, Ethics & Ethical theories
to
produce
ethical
theory
Ethics
rationalize
s morality
Morality
Ethics
Ethical
theory
that can
be applied
to any
situation.
Potential
solutions to
ethical
problems
Why BE is important?
Social glare (media, consumers, public).
Being ethical makes good business sense.
Power & influence of business society is growing.
For contributing positively society & improving
human conditions
To understand ethical conflicts & make a fair
decision (Daraprim/ Valeant)
Can help tackle life situations
Problems in study of BE
Stakeholders are skeptical
Business ethics industry (both corporate and
consumer)
Globalisation & BE
Creation of TNCs, that promote race to the bottom
Created westernisation
Change in social connections (from local global)
Globalisation & BE
Issues
Cultural issues affecting business practices (gender,
treatment of workers, business practices)
Legal issues (as global companies are subjected to
different rule, there is an increased need for ethics)
Accountability issues with less government control
(Greek government vs Wal-Mart)
Employees
Consumers
Suppliers &
competitors
Suppliers in developing countries face regulation from MNCs through supply chain management.
Small scale indigenous competitors exposed to powerful global players.
Civil society
(NGOs, etc)
Global business activities brings the company in direct interaction to local communities with
possibility for erosion of traditional community life; globally active pressure groups emerge with
aim to police the corporation where governments are weak and tolerant.
Government &
regulation
Globalization weakens governments and increases the corporate responsibility for jobs, welfare,
maintenance of ethical standards, etc. Globalization also confronts governments with
corporations from different cultural expectations about issues such as bribery, corruption,
taxation, and philanthropy.
(ubuntu/ guanxi)
What are the key issues in BE?
What is the key stakeholder management approach?
N. America
Asia
The individual
Top management
Government, trade
unions, corporate
associations
The corporation
Government,
corporations
Negotiated legal
framework of business
Corporate codes of
ethics
Managerial
discretion
Social issues in
organizing the
framework of business
Misconduct and
immorality in single
decisions situations
Corporate
governance and
accountability
Formalised multiple
stakeholder approach
Focus on shareholder
value
Implicit multiple
stakeholder
approach, benign
managerialism
Large
corporations
Small
businesses
Civil society
organizations
Public sector
organizations
Main priorities
in addressing
ethical issues
Financial integrity,
employee/customer
issues
Financial integrity,
employee/customer
issues
Delivery of mission to
clients; integrity of
tactics; legitimacy and
accountability
Approach to
managing
ethics
Formal, public
relations and/or
systems-based
Informal, trustbased
Informal, values-based
Formal, bureaucratic
Responsible
and/or
accountable to
Shareholders and
other stakeholders
Owners
Main
constraints
Shareholder
orientation; size and
complexity
Lack of resources
and attention
Inertia, lack of
transparency
BE Sources of difference
Religion & culture
Historical roots
Political roots
BE & Sustainability
Sustainable development is development that
BE & Sustainability
Triple Bottom-Line (John Elkington)
Econom Social
ic
Environment
al
BE & Sustainability
Environmental Sustainability
Economic Sustainability
Social Sustainability
Impact on communities
Social justice
Equality (MDG)
What is a corporation?
A corporation is essentially defined in terms of legal
Why CSR?
Positive Reasons
Better brand reputation
Attract and commit employees
Prevent legal scrutiny and provide independence
Social investment improves business context
Negative/ ethical Reasons
Cause social problems such as pollution
Powerful social actor with substantial resources
All corporate actions have social impact
Co-exist with a much wider set of constituents
CSR
Corporate social responsibility includes the
economic, legal, ethical, and philanthropic
expectations placed on organizations by society at a
given point in time
(Carroll and Buchholtz 2009:44)
Expected by society
Required by society
Legal
Responsibilities
Required by society
Economic
Responsibilities
responsibilities in Europe
In Anglo-American view law is considered to be an
invasion of private liberty.
Asia has a mixture legal & other institutional mechanism.
Corporate mistrust high in Europe & Asia (genetic
engineering)
Philanthropy in US is personal, in Europe legal & in Asia
social.
Shareholders
Customers
Firm
Suppliers
Employees
Competitors
Government
Shareholder
s
Customers
Firm
Suppliers
Employees
Civil
society
Government
Customers
Shareholders
Customer
stakeholder 3
Firm
Suppliers
Employees
Employee
stakeholder 1
Civil society
Supplier
stakeholder 1
Civil society
stakeholder 2
Civil society
stakeholder 1
Employee
stakeholder 2
institutional economics
Agency problem- not share holders short term
interest but larger stakeholders long term interest
(Freeman)
Stakeholder democracy
Corporate governance
Limited view
Equivalent view
Extended view
Focus
Philanthropy, focused on
projects, limited scope
Main
stakeholde
r group
Local communities,
employees
Motivation
Primarily philanthropic;
also economic where
citizenship is strategic
Political
Moral
grounding
Industry &
origin
Source
BHP
Billiton
Mining,
Australia
Sustainability
Report, 2008
Citibank
Banking &
financial
services, USA
We define citizenship as the positive impact that Citi has on society and the
environment through its core business activities, philanthropy, diversity efforts,
volunteerism and public policy engagement, as well as the philanthropic
initiatives undertaken by the Citi Foundation.
2007
Citizenship
Report
Microsoft
Software, USA
Citizenship
Report 2009
Total
Toyota
Automobiles,
Japan
CSR Report,
2007
Sustainability
Report, 2008
Extended view of CC
CC describes the corporate function for governing citizenship
rights for individual
Social rights
Positive rights
Ensures freedom to participate in society like education, healthcare,
welfare
Civil rights
Political rights
Right to participate in governance
Corporations do not have some of the rights but can impact citizens rights
Extended view of CC
Corporate citizenship
Social role of the corporation in governing citizenship
Social rights corporation as provider/ignorer
Civil rights corporation as dis-/enabler
Political rights corporation as channel/blockage
Extended view of CC
Social rights: Marks & Start, ICICI youth skilling
programme.
Civil rights: Shell & Ongoi issue, GM South African
government
political rights: McEurope, TATA tea
CC may be
Voluntary
Self-interest driven
Compulsory
Public pressure driven..
Ethical Theories
Like personal situations, business situations also
Ethical Theories
Normative ethical theories are those that
century.
They are generally absolutist in nature
Provides unequivocal solutions
Normative in nature
Motivation
/
Principles
Action
Outcomes
Non-consequentialist Ethics
Consequentialist Ethics
(Deontological)
Ethics of Duties
Rights & Justice
(Teleolological)
Egoism
Utilitarianism
Egoism
Utilitarianism
Ethics of duties
Contributors
Adam Smith
Jeremy Bentham
John Stuart Mill
Immanuel Kant
John Locke
John Rawls
Focus
Individual desires or
interests
Collective welfare
Duties
Rights
Rules
Maximization of
desires/self interest
Act/rule utilitarianism
Categorical imperative
Concept of
human
beings
Man is controlled by
avoidance of pain and
gain of pleasure
(hedonist)
Man is a rational
moral actor
Type
Consequentialist
Consequentialist
Non-consequentialist
Non-consequentialist
Egoism
Theory of egoism - an action is morally right if the
decision-maker freely decides an action to pursue either
their (short-term) desires or their (long-term) interests.
Justified by the underlying concept of man
Man has limited insights in to consequences of his action
Suitable strategy for good life is pursuit of self interest
This produce morally desirable action by the invisible
hand Eg: furniture maker.
Egoism has to be differentiated from self interest/
selfishness (indicated by insensitivity to others).
Egoism
Criticism
Based on desire, that makes it indifferent to the
different approach used. Eg: student life
Markets are imperfect
The notion of enlightened egoism
Application to ethical dilemma 3
Utilitarianism
Most accepted ethical theory (Bentham & Mill).
Utilitarianism
Utilitarianism
Disadvantages
Subjectivity
Problems of quantification
Distribution of utility
Lead to refinement
Act utilitarianism
Looks to single actions and bases the moral judgement on the amount
of pleasure and the amount of pain this single action causes.
Rule utilitarianism
Ethics of Duty
German philosopher Kant
Not dependent on consequence or situation
Based on a priori moral laws (unchangeable)
God was not a necessity for ethical behaviour
Man was rational enough to decide W/R
Developed the categorical imperative
Ethics of Duty
3 maxims of Kant
1. Check if the action could be performed by everyone &
reflect the aspect of consistency (golden rule)
2. Humans need respect as autonomous, rational actors
and this human dignity should be never ignored
(human beings should be an end & not means)
3. Element of universality. i.e. will the principles of our
action be acceptable to all human beings? (New York
times test)
Stakeholder concept has been substantially derived from
Kantian thinking.
Ethics of Duty
Moral dilemma-3
Would you want everybody act like you. i.e. exploit
the low cost of child labour?
The question of whether children have freely &
autonomously decided to work? (they are for
meeting your ends rather than ends in themselves)
Would you like the kith & kin to know about your
decision?
Ethics of Duty
Disadvantages
Undervalues outcomes
Complexity
Optimism (about human rationality)
(virtue ethics)
Ethical theories based on relationship &
responsibility (feminist ethics)
Ethical theories based on procedures of norm
generation (discourse ethics)
Ethical theory based on empathy & moral impulse
(post-modern business ethics)
Acquired traits
Intellectual virtues
Moral virtues
Key elements
Relationships
Responsibility
Experience
Discourse ethics
Aims to solve ethical conflicts by providing a process of
Key elements
Ultimate goal of ethical issues in business should be the
Pluralism?
Crane and Matten (2010) argue that for the
practical purpose of making effective decisions in
business:
Not suggest one theory or one approach as the best or
Ethical
Dilemma
Pluralistic Perspective
Ethical
dilemma
Prism of
ethical theories
Variety of normative considerations in
solving the ethical dilemma
Theory
Egoism
Social consequences
Entitlements of
others
Fairness
Moral character
Care for others a nd
relationships
Process of resol ving
conflicts
Moral impulse a nd
emotions
Utilitarianism
Ethics of duty
Ethics of rights
Theories of justice
Virtue ethics
Feminist ethics
Discourse ethics
Postmodern ethics
Make
moral
judgement
Establish
moral
intent
Engage in
moral
behaviour
Given at birth
Acquired by experience and socialisation
Work context
The issue itself including
Intensity
ethical framing
Recognise
moral issue
Make moral
judgement
Establish
moral intent
Situational factors
Engage in
moral
behaviour
Results contradictory
However experiences may have impact
Gender
Individualism/collectivism
Power distance
Uncertainty avoidance
Masculinity/femininity
Long-term/short-term orientation
business as amoral
Stage
1
Preconventional
2
3
II Conventional
4
Obedience
and
punishment
Instrumental
purpose and
exchange
Interpersonal
accord,
conformity
and mutual
expectations
Social accord
and system
maintenance
Explanation
Individuals define right and
wrong according to expected
rewards and punishments from
authority figures
Illustration
Whilst this type of moral reasoning is usually
associated with small children, we can also
see that businesspeople frequently make
unethical decisions because they think their
company would either reward it or let it go
unpunished (see Gellerman 1986).
Individuals are concerned with
An employee might cover for the absence of
their own immediate interests and a co-worker so that their own absences might
define right according to whether subsequently be covered for in return a
there is fairness in the exchanges you scratch my back, Ill scratch yours
or deals they make to achieve
reciprocity (Trevio and Nelson 1999).
those interests.
Individuals live up to what is
An employee might decide that using
expected of them by their
company resources such as the telephone, the
immediate peers and those close
internet and email for personal use whilst at
to them
work is acceptable because everyone else in
their office does it.
Individuals consideration of the A factory manager may decide to provide
expectations of others broadens to employee benefits and salaries above the
social accord more generally,
industry minimum in order to ensure that
rather than just the specific
employees receive wages and conditions
people around them.
deemed acceptable by consumers, pressure
groups and other social groups.
Source: Adapted from Ferrell et al. (2002); Kohlberg (1969); Trevino and Nelson (1999)
III
Stage
Explanation
Illustration
Social
contract
and
individual
rights
Universal
ethical
principles
Postconventional
Personal integrity
Defined as an adherence to moral principles or values
Moral imagination
Concerned with whether one has a sense of the variety of
Magnitude of consequences
Social consensus
Probability of effect
Temporal immediacy
Proximity
Concentration of effect
Harmony
Efficiency
Image of power and effectiveness
Description
The actors engaged in corrupt behaviours
perceive that they have no other choice than to
participate in such activities.
The actors are convinced that no one is harmed
by their actions; hence the actions are not really
corrupt.
The actors counter any blame for their actions
by arguing that the violated party deserved
whatever happened.
The actors assume two practices that moderate
the salience of corrupt behaviour: 1. Condemn
the condemner, 2. Selective social comparison.
The actors argue that their violation of norms is
due to their attempt to realize a higher-order
value.
The actors argue that they are entitled to
indulge in deviant behaviours because of their
accrued credits (time and effort) in their jobs.
Examples
What can I do? My arm is being twisted.
It is none of my business what the corporation
does in overseas bribery.
No one was really harmed
It could have been worse.
They deserved it.
They chose to participate.
You have no right to criticise us.
Others are worse than we are.
We answered to a more important cause.
I would not report it because of my loyalty to my
boss.
Its all right for me to use the internet for personal
reasons at work. After all, I do work overtime.
Systems of reward
Adherence to ethical principles and standards stands
less chance of being repeated and spread throughout
a company when it goes unnoticed and unrewarded
What is right in the corporation is not what is right in a
Bureaucracy
Jackall (1988), Bauman
Work roles
Work roles can
Organizational norms
and culture
Group norms delineate
acceptable standards of
behaviour within the
work community
Codes of ethics
Reporting/advice channels (reporting/ resolving & advise)
Risk analysis and management (Identifying, assessing & mitigating Eg:
FCPA, S-O Act... What is the bite)
Environmental
Social
Sustainability
social accounting
No standardised process
How to assess performance
How to calculate impact
How to communicate
Which impacts to report first
Quantitative or qualitative?
Stakeholder
dialogue
Determination
of audit scope
Publication
of report
Verification
Agreement of standards
and performance
indicators
Agreement of
objectives
Preparation of
accounts and
internal reports
Stakeholder
consultation
Stakeholder
surveys
Internal
audit
Inclusivity
Comparability
Completeness
Evolution & continuous improvement
Disclosure
External verification
Reporting assurance
AA1000S Assurance Standard
Compliance orientation
Four ways of
organizing for
business ethics
management
Values orientation
External orientation
Protection orientation