Business and Ethics Seminar (March 15, 2013) Orhun O. MOLYER MSc.IS 1
Business and EthicsSeminar
(March 15, 2013)
Orhun O. MOLYERMSc.IS
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2PARADOX
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• Where the ethics comes in
• Ethics … Some definitions …
• Business Ethics
• Ethical Issues / Dilemmas
• Ethical Norms
• Moral Theories
• How to solve an ethical issue / dilemma
• Code of Ethics, of Conduct, of Practice
PRESENTATION PLAN
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• A father is explaining ethics to his son, who is about to
go into business.
• “Suppose a woman comes in and orders a hundred
dollars worth of material. You wrap it up, and you give
it to her. She pays you with a $100 bill. But as she
goes out the door you realize she’s given you two
$100 bills.
• Should you or should you not tell your partner?”
(Henny Youngman)
WHERE THE ETHICS COMES IN
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• One of your colleagues, a close friend of yours,
told you that her application for a managerial
position in the competitor company was
accepted, and would quit at the end of the
month. You were asked to keep it as a secret.
Afterwards, your boss called you and said that he
was going to get your colleague friend promoted
to the position which you were after.
• What should you do? (1) tell the boss that
she would quit; or (2) keep her secret. Why?WHERE THE ETHICS COMES IN
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• A vast of field of study that really addresses only
one question: How should we live our lives?
(DesJardens)
• Currently a general term for concerns about
what people should do. (Schultz)
• The study of what is good or right for human
beings. It asks what goals people should
pursue and what actions they should
perform. (Hoffman, Fredercik, Schwartz)
ETHICS … SOME DEFINITIONS …
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• Philosophical ethics denies “ethos”.
• Philosophical ethics seeks
– a reasoned analysis of custom and
– a reasoned defense of how we
ought to live
ETHOS vs ETHICS
ήθος• Derived from Greek word “ethos”
(usual/predictable)
• “ethos” is to conform to what is typically
done, to obey the conventions of and
rules of one’s society and religion.
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• Ethos what people DO value
– Sociology, psychology, anthropology
• Ethics what people SHOULD value
– Step back and rationally evaluate the
customary beliefs and values that people
hold!
– Abstract yourself from “what is normally /
typically done”.
– Think deeply upon whether or not “what is
done should be done”, and “what is
valued should be valued”.ETHOS vs ETHICS
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• Etiquette
– Behavior that is considered
socially acceptable, as opposed to
morally right or wrong.
– Politeness, manners, one’s dress; One
to use handkerchief upon sneezing;
one to shake hand of a person one is
meeting for the first time
– Some may cross over the line into the
domain of Ethics: in some countries
acceptance of gifts can be considered
proper etiquette!
WHAT IS NOT ETHICS
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• Law
– Tends to reflect or embody the moral
norms of society.
– Generally what is legal is also ethical.
– Sometimes what is legal may be
unethical (previous apartheid laws in
South Africa, withholding information from
superiors, constantly complain about
others, etc.).
– Breaking the law often starts with
unethical behavior that has gone
unnoticed.
WHAT IS NOT ETHICS
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• Religion
– Many of ethical prescriptions
derive from religious doctrine.
– They may overlap in some
cases (abortion, euthanasia,
the role of women in society).
WHAT IS NOT ETHICS
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• Moral
– Refers to what is good and right in
character and conduct.
– Essentially interchangeable with ethics,
though in common usage, “morality”
often implies particular dogmatic (i.e.
rigid, inflexible) views of propriety (i.e.
decency, politeness), especially as to
sexual and religious matters.
WHAT IS NOT ETHICS
ETHICS
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• Different from ordinary decision
• Surfaced at the point
– where the accepted rules no
longer serve, and
– Where the decision maker is
faced with the responsibility
for weighing values, and
reaching a judgment in a
situation which is not quite
the same as any he or she
has faced before.
ETHICAL DECISIONS
14ETHICAL ISSUES
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• A branch of applied ethics.
• Studies the relationship of what is good and
right to business.
• Refers to values, standards, and principles that
operate within the business.
BUSINESS ETHICS
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• The goal is to focus on the cognitive and
intellectual side of ethics.
• More a matter of ethical reasoning and
thinking than ethical behavior.
• Comprises principles and standards that guide
behavior in the world of business.
BUSINESS ETHICS
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• An individual ‘s personal values and moral philosophies are
only one factor in the ethical decision-making process.
• Being good person and having sound personal ethics
may not be sufficient to handle the ethical issues that
arise in a business organization.
• The values people learn from family, religion, and school
may not provide specific guidelines for complex business
decisions.
THE IMPORTANCE OF BUSINESS ETHICS
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• Helps business people
– Begin to identify ethical issues
– Recognize the approaches
available to resolve them
– Learn about the ethical decision-
making process and ways to
promote ethical behavior
– Begin to understand how to cope
with conflicts between personal
values and organizational
values.
THE IMPORTANCE OF BUSINESS ETHICS
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• 2000 B.C. The code of Hammurabi -
honest prices.
• 400 B.C. Aristotle – Discussions on the
vices and virtues of tradesmen and
merchants.
• The Old Testament and the Jewish
Talmud – discussions on the proper way to
conduct business.
• The New Testament and the Islamic
Koran – business ethics related to wealth
and poverty
EVOLUTION OF BUSINESS ETHICS
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• 1200 A.D. “Ahilik (Brotherhood) – Ahi Evran” code of
business conduct
EVOLUTION OF BUSINESS ETHICS
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• 1920-1960: A moral activity; ethics and social responsibility rarely mentioned.
• 1960s: Civil rights, the environment, safety in workplace, consumer issues
• 1970s: Business ethics in academia
• 1980-85: journals, research centers, and conferences.
• 1985-95: integrated into large corporations, code of ethics, ethics training, ethic hotlines, ethics officers
• 1995-now: issues related with international business activities, bribery and corruption, use of child and slave labor abroad.
EVOLUTION OF BUSINESS ETHICS
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• Cultural initiatives that make ethics part of core organizational values
• Communication core values to the employees by ethics programmes and assigning ethics officers
• Ethical components of a corporate culture: Relates to the values, beliefs, and established and enforced patterns of conduct that employees use to identify and respond to ethical issues
• Ethical culture: Decision making process that employees use to determine whether their responses to ethical issues are right or wrong
CURRENT TREND IN BUSINESS ETHICS
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• Employee Commitment
• Investor Loyalty
• Customer Satisfaction
• Profits
BENEFITS OF BUSINESS ETHICS
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• frequently used as a phrase to refer questions or
dilemmas which involve moral judgment.
• a situation, a problem, or even an opportunity
that requires thought and discussion to
determine the moral impact of the decision.
ETHICAL ISSUE
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• When an issue involves conflicts between
different interests
– that cannot be resolved on the level of
interests alone
• When higher level principles need to be
applied
– that provide a basis for saying “What is right”
and "What is wrong”RECOGNIZING AN ETHICAL ISSUE
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• Sense of discomfort
• Partiality in decisions based on
personal perceptions; “Loaded
(subjective)” words, like “fairness”,
“justice”, “doing right”;
• Conditions preclude (prevent) the
possibility of action
RECOGNIZING AN ETHICAL ISSUE
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• A problem, situation, or opportunity that requires an
individual, group, or organization to choose among
several wrong or unethical actions,
• Where ethical issue is a problem, situation, or opportunity
that requires an individual, group, or organization to
choose among several actions that must be
evaluated as right or wrong, ethical or unethical.
ETHICAL DILEMMA
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• Become visible through stakeholder concerns
about an event, activity, or the results of a
business decision
• Stakeholders
– Employees, Shareholders, Suppliers,
Customers, Government, Community at large
DETERMINING AN ETHICAL ISSUE / DILEMMA IN BUSINESS
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1. Abusive and Intimidating Behavior
2. Discrimination
3. Sexual Harassment
4. Lying
5. Conflict of Interest
6. Bribery
7. Corporate Intelligence
8. Environmental Issues
9. Fraud
10. Consumer Fraud
11. Insider Trading
12. Intellectual Property Rights
13. Privacy Issues
DETERMINING AN ETHICAL ISSUE / DILEMMA IN BUSINESS
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• Due to hardware problems, the mail to your site has to be
re-emailed. (This involves checking each letter in the dead
letter queue, checking to see to whom it should have been
sent, and running a program to put it into the user’s
mailbox.) While doing this you end up seeing the contents
of several messages.
AN EXAMPLE OF A BUSINESS CASE
1. A message seems to be bragging about getting away with
some fraud.
2. A message is giving information you know to be false about
someone you know.
3. A message is telling another user false information about
you.
4. A message seems to be setting up a drug deal.
5. A message that gives you a personal advantage.
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1. Honesty
2. Integrity
3. Promise-keeping
4. Fidelity
5. Fairness
6. Caring for Others
7. Respect for Others
8. Responsible Citizenship
9. Pursuit of Excellence
10. Accountability
11. Reciprocity
12. Optimization
ETHICAL NORMS: REFERENCE POINTS
32MORAL THEORIES
Moral Theories
Goodness
Intrinsic
Monism
Pluralism
Instrumental
Obligation
Teleology
Egoism Utilitarianism
Rule Utilitiarian
Act Utilitarian
Deontology
Rule Deontologist
Act Deontologist
Relative Perspective
Descriptive
Metaethical
Normative
Virtue Ethics Justice
Distributive
Procedural
Interactional
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• What makes a given action right or obligatory?
• Emphasizes the means and the motives by
which actions are justified.
• Teleology
• Deontology
MORAL THEORIES: OBLIGATION THEORY
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• Consequentialism
• An act is considered morally right or acceptable if it produces some desired results.
• Assesses the moral worth of a behavior by looking at its consequences.
• Egoism
– Right or acceptable behavior is defined in terms of consequences for the individual.
• Utilitarianism
– Right or acceptable behavior is defined in terms of the consequences for the greatest number of people.
MORAL THEORIES: OBLIGATION - TELEOLOGY
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• Nonconsequentialism
• Compliance with moral principles = Ethicalness
• Individuals have certain absolute rights:
– Freedom of conscience (sense of right or wrong)
– Freedom of consent (self-authority)
– Freedom of privacy
– Due process (limitation of authority)
• Rightness of an action = f(whether the action is required, prohibited, or permitted by a moral rule)
• Focus on the rights of individuals and on the intensions associated with a particular behavior.
MORAL THEORIES: OBLIGATION - DEONTOLOGY
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• Definitions of ethical behavior are subjectively
derived from the experiences of individuals
or groups.
• They use themselves or the people around them
as their basis for defining ethical standards.
• Descriptive Relativism
• Metaethical Relativism
• Normative Relativism
MORAL THEORIES: RELATIVIST PERSPECTIVE
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• Moral principles -> “what should I do?”
• Virtue ethics -> “what kind of person should I
be?”
• Emphasizes moral education and the
development of moral character
• Tries to understand the traits that enable a person
to lead a full satisfying ethical life.
MORAL THEORIES: VIRTUE ETHICS
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• Involves
– Evaluations of fairness, or
– The nature to deal with perceived injustices of
others
• The decision rules could be based on the
perceived rights and on the intentions.
MORAL THEORIES: JUSTICE
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1. What are the facts?
2. What are the ethical issues?
3. What are the major stakeholders?
4. What are the options?
5. What is the ethicalness of the options?
6. What are the practical constraints?
7. What actions should be taken?
HOW TO SOLVE AN ETHICAL ISSUE: SEVEN-STEP PROCEDURE
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• Code of ethics
– Defines the values that underpin the code
– Describes a company's obligation to its
stakeholders.
• The code
– includes details of
• how the company plans to implement its
values and vision,
• guidance to staff on ethical standards and
how to achieve them.
CODE OF ETHICS
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• Code of conduct
– is generally addressed to and
intended for employees alone.
– It usually sets out restrictions
on behavior,
– Is far more compliance or
rules than value or principle
CODE OF CONDUCT
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• Code of practice
– adopted by a profession or by a governmental
or non-governmental organization to regulate
that profession
CODE OF PRACTICE