DEFINING BUSINESS ETHICS

ZAHURUL ALAM

CONTENTS
Stakeholders of Corporate Business
Activities of Corporate Business
Why the Question of Ethics?
Factors impacting on Business Ethics
Defining Ethics
Principles of Ethics
Defining Business Ethics
Law and Ethics in Business

3. STAKEHOLDERS OF CORPORATE BUSINESS

External:
Shareholders
Debtholders
Trade creditors
Suppliers
Customers
Communities affected by the corporations activities

4.STAKEHOLDERS OF CORPORATE BUSINESS

Internal:
Board of Directors
Executives
Other employees

5. ACTIVITIES OF CORPORATE BUSINESS

Production
Sale
Employment
Storage
Transportation
Research
Business Promotion

6. WHY THE QUESTION OF ETHICS?

As a general rule of performing certain activities or

doing something
As the agencies who deal with large segments of
the population/community
As activities of the corporations concern interests
of the people in different manners (financially,
environmentally, socially, economically with long
term effects, and even politically).

7. FACTORS IMPACTING ON BUSINESS ETHICS

In defining concrete activities to be performed ethically it

is important to consider companys goals and objectives

Ethical business is also one of the requirements of
compliance with the rules, regulations, custom and
culture of the land
International business ethics have considerable impact
International buyers and laws of the buyer countries are
instrumental
Nature of the company determines nature of ethical
norms to be complied with.

8. DEFINING ETHICS-1
Ethics, also known as moral philosophy involves

systematizing, defending, and recommending

concepts of right and wrong behavior.
The principles of conduct governing mans
behavior.
The study of morality.
Morality: Standards that governs us to distinguish
right from wrong.

9. DEFINING ETHICS-1
The discipline that examines moral standards of

individual or society with sufficient reasoning.

The reasons must be good.
Defining good or bad is another dimension of
thought in defining ethics or our behavior.
This must be related to the moral, social, economic,
legal and psychological values.
Good moral values inevitably would establish
comfort to social elements.

10. PRINCIPLES OF ETHICS

Honesty
Objectivity
Integrity
Carefulness
Openness
Respect for others (rights, properties, etc)
Confidentiality
Responsibility including Social responsibility
Non-discrimination
Competence
Legality
Caring for others
Human subjects protection

11. DEFINING BUSINESS ETHICS-1

A set of corporate values and codes of principles,

which may be written or unwritten, by which a

company formulates and implements proper
business policies and strategies and evaluates its
actions and business-related decisions.
Business ethics invariably balance the interests of
business and the stakeholders and address core
issues of corporate governance, corporate social
responsibility, bribery, discrimination, accountability,
participation, transparency and responsibility.

12. DEFINING BUSINESS ETHICS-2

BE is a specialized science of right and wrong.
Special nature lies in:

BEs concentration on moral standards pertaining to

business policies, institutions, behavior.
Businesss relationship with stakeholders
Business management approach

In simplest terms, business ethics refer to the propensity to

differentiate right from wrong, and the resiliency to choose

to do whats right in terms of actions and decisions. It
applies to the employees both rank-and-file and managers
as well as the company as a whole, including the
shareholders, and the society/community.

12. DEFINING BUSINESS ETHICS-3

SCHOOLS OF THOUGHT

There are two schools of thought, each providing a

different definition for business ethics.
i) Shareholder-focused school of thought. It
maintains that ethical business decisions can be made
when individuals within the organization and the
company as a whole always keep the best interest of
the owners in mind. For those who see business
ethics from the shareholders perspective, actions and
decisions should be geared towards generating more
profit.

13. DEFINING BUSINESS ETHICS-4

SCHOOLS OF THOUGHT

ii) Stakeholder-focused Approach: Emphasizes Corporate Social

Responsibility (see Zahurul Alam: Corporate Helping Hand. The Daily Star.
4.1.2011).
Proponents suggest protection of interests of all stakeholders. Thus under
this concept, ethical companies are those that act and decide with the interest
of all stakeholders.
Ethical business means striking a balance to service all groups that have an
impact on, or are impacted by the companys decisions and actions.
These stakeholder groups can include the employees, the supply chain, the
end consumers, relevant government and non-government organizations,
and the community where the company operates, among others.
Given this, the stakeholder perspective emphasizes the need to make
business decisions that will work well for all the stakeholder groups.

14. LAW AND ETHICS IN BUSINESS

Are law and ethics the same?

15. LAW AND ETHICS IN BUSINESS

THE ANSWER IS NO
There is close relationship between the two both in
business and in other fields. However, the difference
between those is that:
Ethics is what you should do
Law is what you are obligated to do.
Ethical issues in business can sometimes have legal
ramifications, including criminal penalties, civil
disputes and contract disputes.

16. CRIMINAL
Business

may face criminal penalties in some cases.

There are certain ethical transgressions in business that
cannot be dealt with through the civil system alone.
When a business damages the environment, engages in false
advertising or hires employees without proper documentation,
that business could potentially face criminal charges.
The reason these ethical breaches can lead to criminal
charges is because they are cases where the company
breached a contract, not just with an individual, but with society
at large.
While an ethical breach affecting just one individual can be
dealt with through a lawsuit, a blatantly antisocial act requires a
criminal remedy.

17. CIVIL
(continued)

The

contractual relationships between people are addressed by civil

law.
Businesses generally have more written and unwritten duties than
private citizens.
Businesses typically engage in more transactions than a private
citizen.
Whenever a business runs into ethical trouble for not taking proper
care of employees or customers, the potential for civil lawsuits is
never far away. This is because civil law is firmly rooted in ethics.
When a judge makes a decision on a civil lawsuit, he is deciding what
one person owes another, not whether one person violated a written
law. Businesses that deal with money, health or privacy are therefore
responsible for respecting their clients' rights and freedoms.

18. REGULATIONS
Regulations

are laws that apply specifically to businesses in certain

industries.
There are regulations for environmental protection, banking, leasing
materials and making transactions.
The relationship between ethical issues and business regulation is a
complex one. On one hand, not all regulations are based on ethics; on the
other hand, ethical issues can often have regulatory consequences. For
example, if a lawyer in a law firm obtains information from a client that
could help solve a crime, he might feel ethically obligated to tell the police.
However, the rule of the legal profession known as "attorney-client
privilege" says that he can't. In general, regulations sometimes make it
difficult to act in ways we may think are ethical.
.

19. INTERNATIONAL LAW

International law is somewhat different from national law.
Whereas national law generally has a central authority, such
as a government, international law is decentralized. For this
reason, international law is rarely, if ever, as clear as national
law. The end effect of this is that ethical and political disputes
in international business dealings end up forming the basis of
international treaties and case law. For example, if a TV
provider and a foreign outsourcing company get into an
ethical dispute over what constitutes a fair rate for the
outsourcer's employees, that dispute could escalate into a
breach of contract that results in the creation of totally new
international case law.

LITERATURE
Philosophy of Business

Fort, Timothy (2001) Ethics and Governance: Business

as Mediating Institution, Oxford University Press USA,

New York.
Friedman, M (1962) Capitalism and Freedom, University
of Chicago Press, Chicago, 1962
Rawls, J. (1971) A Theory of Justice, Harvard University
Press, Cambridge Massachusetts 1971.
Strasnick, T. (1981) "Neo-utilitarian Ethics and the
Ordinal Representation Assumption", in Philosophy in
economics, edited by J. Pitt, Reidel Publishing, 1981.

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