Ethical Standards in Business Organizations

Dr.Syed Ahmed Owais 1

Ethical Standards in Business Organizations:

By: Syed Ahmed OwaisTo: Sir. Abuzar Wajidy

Course: Strategic Management

2007 - 2010



Topics:

1. Ethical Behavior.2. Values.3. Alternate views of ethics.4. Cultural Issues in Ethical behavior.5. Ethical Dilemmas at Work Place.6. Rationalization for Unethical Behavior.7. Factors influencing Ethical Behavior.8. Maintaining high ethical standards.9. Corporate Social Responsibility.10. Perspective on Corporate Social Responsibility.11. Evaluation of Corporate Social Performance/

2007 - 2010


1. Ethical Behavior:

Ethics:

Ethics sets standards of good or bad, or right or wrong, in one’s conduct.

Ethical Behavior:

Ethical behavior is “right” or “good” in the context of a governing Moral code.

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2. Values:

Values: Values are broad beliefs about what is

appropriate behavior.

(i) Terminal Values: Terminal Values are preferences about

desired end states. e.g. Self-respect, family security, freedom, inner harmony and happiness.

(ii) Instrumental Values: Instrumental Values are preferences

regarding the means to desired ends. e.g, Honesty, ambition, courage, imagination, and self-discipline.

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3. Alternate Views of Ethics:

Moral-rights View. Individualism View. Utilitarian View. Justice View.

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Moral-rights View:

In the moral rights view ethical behavior respects and protects fundamental rights.

Individualism View: In the individualism View ethical

behavior advances long-term self-interests.

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Utilitarian View: In the Utilitarian view ethical behavior

delivers the greatest good to the most people. Justice View: In the justice view ethical behavior treats

people impartially and fairly.

A. Procedural Justice. B. Distributive Justice. C. Interactional justice.

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Justice View:

a.Procedural Justice: Procedural justice is concerned

that policies and rules are fairly applied.

b.Distributive Justice: Distributive justice is

concerned that people are treated the same regardless of personal characteristics.

C. Interactional justice: Interactive justice is the degree

to which others are treated with dignity and respect.

2007 - 2010 Dr.Syed Ahmed Owais


4. Cultural Issues in Ethical behavior:

Cultural Relativism. Universalism. Ethical Imperialism.

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4. Cultural Issues in Ethical behavior:

Cultural Relativism:

Cultural Relativism suggests there is no one right way to behave; ethical behavior is determined by its cultural context.

Universalism: Universalism suggests ethical standards

apply absolutely across all cultures.

Ethical Imperialism: Ethical imperialism is an attempt

to impose one’s ethical standards on other cultures.

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5.Ethical Dilemmas at Work Place:

Ethical Dilemma: An ethical dilemma is a situation that

although offering potential benefit or gain is also unethical.

(i) Discriminations. (ii) Sexual Harassment. (iii)Conflicts of Interest. (iv)Customer Confidence. (v)Organizational Resources.

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Discriminations: Denying promotion or appointment

to a job candidate’s race, religion, gender, age or other non-job-relevant criterion.

Sexual Harassment: Making a coworker feel

uncomfortable because of inappropriate comments or actions regarding sexuality; or a manager requesting sexual favors in return for favorable job treatment.

(iii)Conflicts of Interest: Taking a bribe or kickback

or extraordinary gift in return for making a decision favorable to the gift giver.

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(iv)Customer Confidence: Giving to another party

privileged information regarding the activities of a customer.

(v)Organizational Resources: Using official stationary or

a company e-mail account to communicate personal or make personal opinions or make request from community organizations.

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6.Rationalization for Unethical Behavior:

Convincing yourself that that the:

-Behavior is not really illegal.-Behavior is in everybody’s interest.-That nobody will ever find out what you’ve done.-Organization will “protect” you.

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7.Factors influencing Ethical Behavior:

Personal. Organizational. Enviroment.

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(i)Personal: -Personal Needs. -Personal Standards. -Family Influence. -Religious Values.

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ii) Organization: Boss can have a major impact on their

subordinate’s behavior.

(iii) Environment: Organizations operate in competitive

environments influenced by government laws and regulations and social norms and values.

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8.Maintaining high ethical standards:

Ethical Training. Ethical Role Model. Ethical Code of Conduct. Whistle Blower.

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i) Ethical Training: Ethical training seeks to help people

understand the ethical aspects of decision making and to incorporate high ethical standards into their daily behaviour.

(ii) Ethical Role Model: All managers are in a position to

influence the ethical behavior of the people who work for and with them.

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(iii) Ethical Code of Conduct: A code of ethics is a

formal statement of values and ethical standards.

(iv) Whistle Blower: A whistleblower exposes the

misdeeds of others in organization.

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9.Corporate Social Responsibility:

Corporate Social Responsibility:

Corporate Social Responsibility is the obligation of an organization to serve its own interests its own interests and those of society.

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Organizational Stake Holders:

1.Employees:

Employees and contractors who work for the

organization.

2.Customers:

Consumers and clients that purchase the organization’s

goods and/or use its services.

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3.Suppliers: Providers of the organization’s human,

information,material, and financial resources.

4.Owners: Stockholders, investors, and creditors with

claims onassets and profits of the organization.

5.Competitors: Other organizations producing the same

orsimilar goods and services.2007 - 2010



6.Regulators: The local, state and national government agncies

that enforce laws and regulations.

7.Invest Group: Community groups, activists, and others

representing interests of citizens and society.

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10.Perspective on Corporate Social Responsibility:

Arguments in Favor of CSR:

1. Add long run profits for business.2. Improve the public image of business.3. Help them avoid government regulations.

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10.Perspective on Corporate Social Responsibility:

Arguments against CSR:

1. Increase cost.2. Reduce profit.3. Gives too much social power.4. Do so without business accountability.

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11.Evaluation of Corporate Social Performance:

Social Responsibility Audit: A social responsibility

audit assesses an organization’s accomplishments in areas of social responsibility.

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11.Evaluation of Corporate Social Performance:

Criteria for Evaluating Social Performance:

1. Economic Responsibility: Is it profitable?

2. Legal Responsibility: Does it obey law?

3. Ethical Responsibility: Is it doing the “right” things?

4. Discretional Responsibility: Does it contribute to the broader

community?

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Social Responsibility Strategies:

Obstructionist Strategy. Defensive Strategy. Accommodative Strategy. Proactive Strategy.

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(i) Obstructionist Strategy: An obstructionist strategy

avoidssocial responsibility and reflects mainly economic priorities.

(ii ) Defensive Strategy: A defensive strategy seeksprotection by doing the minimum legally required.

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(iii ) Accommodative Strategy: An accommodative

strategy accepts social responsibility and tries o satisfy economic, legal, and ethical criteria.

(iv) Proactive Strategy: A proactive strategy meets all

the criteria of social responsibility, including discretionary performance.

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13.Government’s Role:

How Government influence organizations:

1. Occupational Safety and Health: The Occupational

Safetyand Health Act of 1970.

2. Fair Labor Practices: Equal Opportunity Act of 1972.

3. Consumer Protection: The Consumer Protection Act of

1972.

4. Enviromental Protection: Air Pollution Control Act of 1962.2007 - 2010


14.Organization’s influence on Governments:

How Organizations influence Governments:

1. Personal Contacts & Networks:

2. Public Relation Campaigns:

3. Lobbying: Lobbying expresses opinions and preferences to

government officials.

4. Political Action Committees: Political action committees

collect money for donation to political campaigns.

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15.Corporate Governance:

Corporate Governance:

Corporate Governance is the

oversight of op management by a board of directors.

2007 - 2010



Reference:

“Strategic Management Concepts and cases “ 12 th edition, Fred R David.

2007 - 2010

Ethical Standards in Business Organizations

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