Part One

Introduction
 Objectives

❖ 1. Explain the nature of business ethics

❖ 2. Identify reasons why the study of business ethics is
important.
❖ 3. Make a stand whether ethics matter in business
What is business ethics?
 - It is the application of our
understanding of what is good and
right to that assortment of
institutions, technologies,
transactions, activities, and pursuits
that we call business
- A specialized study of moral right
and wrong that concentrates on
moral standards as they apply to
business institutions,
organizations, and behavior
- It studies moral standards and how
these moral standards apply to
social systems and organizations
that produce and distribute goods
and services
Business ethics considers the
following questions:
What are the framework of basic
principles for understanding
GOOD and RIGHT?
Why study business ethics?
 What are the ethical values
necessary for a successful business?
Should we seriously consider ethics
in business?
 Short Activity

❖ Identify ethical values that are helpful for a successful

business
❖ Identify values and practices that are not helpful in
business
❖ Identify situations in business organizations where
these values are practiced
Doest ethics matter in business?
 Yes: Manuel Velasques

❖ Ethical behavior is more profitable, more rational and

more intrinsically valuable than unethical behavior
❖ Ethical behavior and the development of the virtues that
results in ethical behavior are the best predictors of
profit in business organizations
 No: David M. Messick

❖ Velasques conclusion is oversimplified if they aim to

predict that the rational businessperson will regularly
follow ethical rules of conduct
❖ He asserts that actual behavior, in business and in other
areas of life, tends to be nuanced combination of
egotistical and justice-oriented-profit-maximizing
actions
❖ Ethics is not the ONLY thing that matters in business
❖ If we agree that ethics matter, along with a variety of
other, we my see some wisdom in the view that
unethical actions may occur not because ethics doesn't
matter but because other matter more or mistakes are
made
 Synthesis

❖ Shall i live a moral life?

❖ Someone cant answer that in a day or week, however,
the less we think about it, the more definitely it will be
answered by our action
Globalization, Multinationals, and
Business Ethics
Many of the most pressing issues in
business ethics are related to the
phenomenon of globalization
 Globalization is the worldwide
process by which the economic and
social systems of nations have
become connected together so that
the goods, services, capital,
knowledge, and cultural artifacts are
traded and moved across national
borders at an increasing rate.
 Its components includes

- the lowering of trade barriers and

the rise of worldwide open markets
 - the creation of global
communication and transportation
systems such as internet and global
shipping
- the development of international
trade organizations such as WTO
- the establishment of international
financial institutions such as the
World Bank and the International
Monetary Fund that facilitated the
flow of capital
Thus, the spread of Multinational
Corporations
Multinational Corporations (MC)
are at the heart of the process of
globalization and responsible for
the enormous volume of
international transactions
 MC maintains manufacturing,
marketing, service, or
administrative operations across
bounderies
 MC draws capital, raw materials,
and human labor from wherever in
the world they are cheap and
available
Globalization has brought the world
significant economic benefits.
 Multinationals like NIKE,
MOTOROLA, and FORD build
factories and establish assembly
operation in countries with low
labor cost, they bring jobs, skills,
income and technology raising the
standards of living
Globalization has enabled nations
to specialize in producing and
exporting goods and services that
they can produce most efficiently
 Many studies have shown that
growth is correlated with openness
to globalization
 The more willing a nation to lower
its trade barriers and to allow free
trade with other nations, the higher
its economic growth rate
BUT...
 Globalization is also accused of
inflicting significant harms on the
world
 While globalization has been
especially beneficial for develop
nations that have high-valued
products to sell (high-tech
products), many poorer nations in
Africa have been left behind for they
can only sell cheap raw materials
WB reports, as globalization has
spread, inequality has increased
both between nations and within
nations
Giving MC free at hand resulted to
global decline in labor,
environmental and wage standards
 MC have introduced sweatshops
working conditions and exploitative
wages
MC closed factories in their home
countries, leaving thousands of
workers there without jobs
 Thus, globalization has posed
important ethical questions for MC
 Ethical Questions for MC
❖ What are their obligations to displaced workers in their home countries?
❖ Do multinationals have obligations to try to improve the labor,
environmental and wage standards of the various countries?
❖ Do they have any obligation to refrain from exploiting workers in other
countries?
❖ Or should they simply look toward lowering their labor cost by
whatever means?
❖ Do MC have any obligations to ensure that foreign users of their
technologies can protect themselves against the risk they pose?
❖ How should MC behave when operating in other cultures?
Business Ethics and Cultural
Differences
Faced with the fact that different
cultures have different moral
standards, managers of some MC
adopted the theory of Ethical
Relativism
 Ethical Relativism (ER) is the
theory that, because different
societies have different ethical
beliefs, there is NO rational way of
determining whether an action is
morally right or wrong
 ER is the view that there are no
ethical standards that are absolutely
true and that apply or should be
applied to the companies and
people of all societies
Is ER reasonable view to hold?
 There are numerous practices that
are judge immoral by some societies
that other societies have deemed
morally acceptable, including
polygamy, abortion, infanticide,
slavery, homosexuality, racial and
sexual discrimination, genocide,
patricide and the torture of animals
However, there are also certain
moral standards that any society
should accept if that society will
survive.
 All societies have norms against
injuring or killing other members of
society, norms about using
language truthfully when
communicating, and norms against
taking the personal goods of
another
Thou shall not kill...
Thou shall not lie...
Thou shall not steal...
 Objections to the Theory of ER

❖ Some moral standards are found in all societies

❖ Moral differences do not logically imply relativism
❖ Relativism is incoherent theory
❖ Relativism privileges the current moral standards of a
society
Technology and business ethics
Almost all issues raised by new
technologies are related to the
question of risk
❖ Are the risk of new technologies predictable?
❖ How large are the risk and are they reversible?
❖ Are the benefits worth the potential risks and who
should decide?
❖ Do those persons on whom the risk will fall know about
the risk and have they consented to bear these risk?
❖ Will they be justly compensated for their losses?
 Many of the ethical issues new
technologies have created
especially information technology
are related to privacy
 Computers enable us to collect
detailed information on individuals
on a scale that was never possible
before
 Such as

❖ Tracking users on the internet

❖ Gathering information on customers at cash registers
❖ Collecting information on credit card purchases
❖ Retrieving information from applications for licenses,
bank accounts, credit cards, email, monitoring
employees working at computers
They have the power to quickly link
this information to other databases
 Like
❖ Containing financial information
❖ Purchase histories
❖ Addresses
❖ Phone numbers
❖ Driving record
❖ Arrest records
❖ Credit history
❖ Medical and academic records