BBB2154 | Business Ethics · PDF file• Normative ethics builds on the whole that descriptive ethics provides and attempts to supply and justify a coherent moral system based on it

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BBB2154 | Business Ethics Prepared by Dr Khairul Anuar

L1 - Ethics and Business

Chapter Overview

• Business is an important part of contemporary society and it involves all of us, in one way or another.

• Business is not something separate from society or imposed on it—it is an integral part of society.

• Morality consists of rules of human behavior and specifies that certain actions are wrong or immoral and that others are right or moral.

• Because business activity is human activity, it can be evaluated from the moral point of view, just as any other human activity can be so evaluated.

What Is the Aim of Business Ethics?

• It is neither defense of the status quo nor its radical change.

• Rather, it should serve to remedy those aspects or structures that need to change, and it should protect those that are moral.

The Myth of Amoral Business • Expresses the ambivalence of many toward business

and a popular, widespread view of American Business.

• The myth has several variations: – Business is amoral insofar as ethical considerations

are inappropriate to business, because business is business. Ethical language is simply not the language of business

– Many businesses act unethically not because of a desire to do evil, but simply because they want to make a profit and therefore disregard some of the consequences of their actions.

The Breakdown of the Myth of Amoral Business

1. By the reporting of scandals and the concomitant public reaction to these reports;

2. By the formation of popular groups such as the environmentalists and the consumerists;

3. By the concern of business in ethics, as expressed in conferences, magazine and newspaper articles, and the burgeoning of corporate codes of ethical conduct and of ethics programs.

The Relation Of Business And Morality

• The business of business • The moral background of business • The changing mandate for business

The Business of Business

• What is considered to be business and its business varies from society to society.

• Defining business per se and its proper concern is a social question that must be answered in a social context.

• The limits and demands imposed on business by society are frequently moral ones.

The Moral Background of Business

• Morality consists of rules of human behavior and specifies that certain actions are wrong or immoral and that others are right or moral.

• Because most businesses value their reputations, we do not really live in a “dog-eat-dog” business world. It is because the ordinary person does not need to be told that lying and stealing are wrong that they form part of the background of business.

• The limits set by society on business are often moral, but they are also frequently written into law.

• The retreat to law as the sole norm by which to guide business is in part a reflection of the fact that most managers do not know how to handle many moral issues in business.

The Changing Mandate for Business

• The social mandate to business is not only given in law.

• Today the mandate to business is more complex.

• Corporations are asked to consider the impact of their decisions and actions on the environment, the public, and the common good.

• Business must consider what structures promote moral responsibility and facilitate the weighing of moral and other values.

Ethics Studies Morality

• Morality is a term used to cover those practices and activities that are considered importantly right and wrong; the rules that govern those activities; and the values that are embedded, fostered, or pursued by those activities and practices.

• Ethics is a systematic attempt to make sense of our individual and social moral experience, in such a way as to determine the rules that ought to govern human conduct, the values worth pursuing, and the character traits deserving development in life.

• Normative ethics is the study of ethical action. It is the branch of philosophical ethics that investigates the set of questions that arise when considering how one ought to act, morally speaking.

• Normative ethics is distinct from meta-ethics because it examines standards for the rightness and wrongness of actions, while meta-ethics studies the meaning of moral language and the metaphysics of moral facts.

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Ethics Studies Morality

• Normative ethics is also distinct from descriptive ethics, as the latter is an empirical investigation of people’s moral beliefs. To put it another way, descriptive ethics would be concerned with determining what proportion of people believe that killing is always wrong, while normative ethics is concerned with whether it is correct to hold such a belief. Hence, normative ethics is sometimes called prescriptive, rather than descriptive.

• However, on certain versions of the meta-ethical view called moral realism, moral facts are both descriptive and prescriptive at the same time.

Copyright © 2011 Pearson Education. All Rights Reserved.

Ethics Studies Morality

General Ethics

• Descriptive ethics is closely related to anthropology, sociology, and psychology

• Normative ethics builds on the whole that descriptive ethics provides and attempts to supply and justify a coherent moral system based on it

• Metaethics is the study of normative ethics, and, to some extent, both normative and descriptive ethics involve some metaethical activity

Special Ethics

• Causitry is the art of solving difficult moral problems, cases, or dilemmas through careful application of moral principles.

• Applying general ethics to specialized fields yields business ethics, medical ethics, engineering ethics, professional ethics, etc.

Definition of Business and Business Ethics

• “Business” includes any and all economic transactions between individuals, between individuals and profit-making organizations, and between profit-making organizations and other such organizations.

• Business ethics as a field is defined by the interaction of ethics and business

Business Ethics Involves 5 Activities

1. The application of general ethics principles to particular cases or practices in business.

2. The second is metaethical: whether moral terms that are generally used to describe individuals and the actions they perform can also be applied to organizations, corporations, businesses, and other collective entities.

3. The analysis of the presuppositions of business - both moral presuppositions and presuppositions from a moral point of view.

Business Ethics Involves 5 Activities (cont’d)

1. Fourth, those in business ethics are sometimes led by embedded problems to go beyond the field of ethics into other areas of philosophy and into other domains of knowledge, such as economics and organization theory.

2. The fifth activity in which business ethics is typically involved is describing morally praiseworthy and exemplary actions, of either individuals in business or particular firms.

3 traditions of ethics (cont’d)

• Literature on ethics can be broadly categorized into three large themes:

1. The actions or “means” people use to achieve their goals.

2. The agents or “persons” who are acting in the situation. 3. The ends or “goals” that are outcomes of actions.

3 traditions of ethics (cont’d)

1. The actions or “means” people use to achieve their goals.

• This dimension of ethics is concerned with identifying the intrinsic moral value of particular actions.

• For example, many philosophers will agree that the act of lying, by itself, is morally wrong while the act of halting the exploitation of small children for sweatshop labor can be considered morally virtuous.

3 traditions of ethics (cont’d)

2. The agents or “persons” who are acting in the situation. • This tradition of thought sees ethical behavior and

ethical people as one in the same: people who behave ethically and virtuously are people of good character.

• This branch of ethics explores what it means to be a good person – to not only practice ethics, but to live it.

3 traditions of ethics (cont’d)

3. The ends or “goals” that are outcomes of actions.

• This branch of ethics evaluates the moral value of an action in terms of the consequences of that action.

• Under this analysis, for example, lying to a mass-murderer may be considered a virtuous act if lives are saved as a consequence of the lie; and banning child labor in sweatshops may be considered a deplorable act if the lack of sweatshop employment forces the children to work in mines or prostitution.

3 guides to avoid rationalizations

• Three tests that could be used to help avoid rationalizations include: The Publicity Test The Reversibility Test The Generalizability Test

3 guides to avoid rationalization (cont’d)

• The Publicity Test Could you defend your decision if it appeared on the

front page of the Wall Street Journal?

• The Reversibility Test If the situation were “reversed” and you had to bear

the burden of the negative consequences of your decision, could you still endorse the decision?

3 guides to avoid rationalization (cont’d)

• The Generalizability Test Is there a consistent, general rule that underpins your

decision? For example, if you decide to fire an employee, are you doing so for potentially biased personal reasons, or is there an underlying rule that supports your decision?