ETHICS

Ethics is the study of principles relating to right and wrong conduct while behavior is human conduct
relative to social norms.

“Ethics is knowing the difference between what you have a right to do and what is right to do”

Business Ethics – the moral principles, policies, and values that govern the way businesses and
individuals engage in business activity.

Being a Professional of Integrity

Whenever you think about the behavior you expect of yourself in your personal life and as a
professional, you are engaging in a philosophical dialogue with yourself to establish the standards of
behavior you choose to uphold, that is, your ethics.

Stakeholders in a business are individuals and entities affected by the business’s decisions. Stakeholders
typically value a leadership team that chooses the ethical way to accomplish the company’s legitimate
for-profit goals.

Business ethics guides the conduct by which companies and their agents abide by the law and respect
the rights of their stakeholders, particularly their customers, clients, employees, and the surrounding
community and environment.

Integrity - that is, unity between what we say and what we do—is a highly valued trait. Acting with
integrity means we adhere strongly to a code of ethics, so it implies trustworthiness and incorruptibility.

Compliance in terms of business ethics generally refers to the extent to which a company conducts its
business operations in accordance with applicable regulations, statutes, and laws.

Ethical acts - generally considered as voluntary and personal—often based on our perception of or stand
on right and wrong.

Common Areas Ethics are Being Tested in Business

- Advertising

- Personal Selling

- Suppliers

- Contracts

- Pricing
Ends, Means, and Character in Business

Normative ethical theories focus on how people ought to behave; descriptive ethical theories are based
on scientific evidence, primarily in the field of psychology, and describe how people tend to behave
within a particular context.

- The first normative approach is to examine the ends, or consequences, a decision produces in
order to evaluate whether those ends are ethical. Variations on this approach include
utilitarianism, teleology, and consequentialism. For example, utilitarianism suggests that an
ethical action is one whose consequence achieves the greatest good for the greatest number of
people.

- The second approach does examine the means, or actions, we use to carry out a business
decision. An example of this approach is deontology, which essentially suggests that it is the
means that lend nobility to the ends.

- The third normative approach, typically called virtue theory, focuses on the character of the
decision-maker—a character that reflects the training we receive growing up. In this view, our
ethical analysis of a decision is intimately connected with the person we choose to be. It is
through the development of habits, the routine actions in which we choose to engage, that we
are able to create a character of integrity and make ethical decisions.

Ethics and Profitability (Stockholders, Stakeholders, and Goodwill)

Understanding the impact of a business decision on the stockholder and various other stakeholders is
critical to the ethical conduct of business. Indeed, prioritizing the claims of various stakeholders in the
company is one of the most challenging tasks business professionals faces. Considering only
stockholders can often result in unethical decisions; the impact on all stakeholders must be considered
and rationally assessed.
 A stockholder is a person who is the owner or holder of stock within a corporation. It would be
accurate to call a stockholder a “shareholder”.

A stakeholder is a person who has an interest in a corporation or is affected by the actions

taking by the corporation. A stakeholder may be an employee, the family of an employee, the vendors
who work within the company, its customers, and even the community where business operates.

The positive feeling stakeholders have for any particular company is called goodwill, which is an
important component of almost any business entity, even though it is not directly attributable to the
company’s assets and liabilities. Among other intangible assets, goodwill might include the worth of a
business’s reputation, the value of its brand name, the intellectual capital and attitude of its workforce,
and the loyalty of its established customer base. Even being socially responsible generates goodwill. The
ethical behavior of managers will have a positive influence on the value of each of those components.
Goodwill cannot be earned or created in a short time, but it can be the key to success and profitability.

Multiple versus Single Ethical Standards

- Having a single ethical standard maximizes ethical behavior no matter who the other party is
and supports an internally consistent rule of behavior toward all family, friends, customers,
clients, and others with whom we interact.
- Multiple ethical standards are acting differently in different situations.

Although the ethical standard we adopt is always a choice, certain life experiences can have more
profound effects on our choice than others. Among the most formative experiences are family
upbringing and cultural traditions, broadly defined here to include religious and ethnic norms, the
standard patterns of behavior within the context in which we live.

Ethics consists of the standards of behavior to which we hold ourselves in our personal and professional
lives. It establishes the levels of honesty, empathy, and trustworthiness and other virtues by which we
hope to identify our personal behavior and our public reputation. In our personal lives, our ethics sets
norms for the ways in which we interact with family and friends. In our professional lives, ethics guides
our interactions with customers, clients, colleagues, employees, and shareholders affected by our
business practices.

ETHICS FROM ANTIQUITY TO THE PRESENT

Greek philosophers are still relevant today for the reason of their development of the ancient concept of
virtue. The person who is closely associated with virtue ethics is Plato’s famous pupil, Aristotle.

Plato - Like most other ancient philosophers, Plato maintains a virtue-based eudaemonistic conception
of ethics. That is to say, happiness or well-being (eudaimonia) is the highest aim of moral thought and
conduct, and the virtues (aretê: 'excellence') are the requisite skills and dispositions needed to attain it.
Aristotle- He made pioneering contributions to all fields of philosophy and science, he invented the field
of formal logic, and he identified the various scientific disciplines and explored their relationships to
each other. Aristotle was also a teacher and founded his own school in Athens, known as the Lyceum.

Aristotelian Virtue Ethics

Virtue ethics is a philosophy developed by Aristotle and other ancient Greeks. It is the quest to
understand and live a life of moral character. This character-based approach to morality assumes that
we acquire virtue through practice. Virtue ethics is currently one of three major approaches in
normative ethics. It may, initially, be identified as the one that emphasizes the virtues, or moral
character.

“The nature of human being is not what he is born us, but what he is born for”

For Aristotle, everything that exists has a purpose, or end, and has been designed to meet that end.

Teleology - from the Greek word telos meaning goal or aim, is the study of ends and the means directed
toward those ends.

Eudaimonia, or happiness - is the telos of the human beings. Could be attained through the exercise of
the function that distinguishes humans from the natural world: reason; was supreme and best used to
increase not wealth but character.

According to Aristotle, eudaimonia is achieved by leading a virtuous life, which is attained over time.
“Happiness is a kind of activity; and an activity clearly is developed and is not a piece of property
already in one’s possession.”

Two Types of Virtues identified by Aristotle:

1. Intellectual - knowledge, wisdom, and prudence (common sense, and practical wisdom)

2. Moral – relating to the standards of good or bad behavior, fairness, honesty, etc. that each
person believes in, rather than to laws.

Honorable Behavior in Business

Business, as a human invention based on self-interest, also had no appreciable ideal or end.
After all, what was the purpose of making money if not having more money? Any end beyond that was
not evident. In other words, money existed simply to replicate itself and was fueled by avarice (the love
of money) or greed (the love of material goods).

Aristotle considered greed an excess that tipped the scales of justice and led to scandal. Money
might constitute the bait, but greed causes the person to reach out and grab as much as possible, falling
into the trap of scandal. The Greeks considered the exercise of greed an irrational, and therefore
ignoble, act. Only attention to honor and deliberative prudence could save someone from acting so
foolishly.

Honor - adherence to what is right or to a conventional standard of conduct (integrity, honesty, upright).

Prudence - the state of being careful in the way you make decisions or spend money so that you avoid
unnecessary risks.

Honor was not just an individual characteristic but also a function of the group to which an
individual belonged, and the person derived self-esteem from membership in that group. Civic virtue
consisted of honorable living in community.

According to Thomas Aquinas, only when ends and means were aligned and worked in harmony were
those engaged in the transaction considered virtuous; lead to the happiness toward entire system of
virtue ethics aimed.

Ethical Advice for Nobles and Civil Servants in Ancient China

Confucian Virtue Ethics

Junzi - a person who was gracious, magnanimous, and cultured: in other words, a flourishing human
being. A junzi exhibited refinement, self-control, and balance in all things, acting neither rashly nor
timidly.

A Confucian Business Model

Confucius was interested in the same thing that concerned Aristotle—namely, the character of the
person or persons making decisions rather than the decisions themselves.

Business schools now offer seminars for executives integrating virtue ethics—both Aristotelian- and
Confucian-inspired models—in leadership development.

Comparing the Virtue Ethics of East and West

Aristotle – Happiness

Confucius – Harmony
In a business context, control bears directly on managerial ethics, which is a way of relating to self,
employees, and the organization that balances individual and collective responsibility, and in which
management also includes planning, organizing, and leading to achieve organizational goals.

Personal and Professional Roles

Another important characteristic of Eastern and Western systems of virtue ethics is the
integration of personal and professional life. A person could not act one way at home and a completely
different way in public, especially civic leaders, merchants, teachers, and rulers.

Character was not ultimately what defined the virtuous individual, family, city-state, or nation.
Instead, it was the individual’s transformation, through education, into a different kind of being who will
act virtuously even if no one is watching. When the person concentrates on the means used to achieve
an end, eventually the means become a way of life even more important than the end itself. It is not
merely that the means must match the end, but that they come to define the virtuous person.

The integration of personal and professional lives has two effects:

1. Motive - is the willingness to do the right thing because it is the right thing, even though there may
be no perceived benefit.
2. Awareness - is the ability to see the ethical dimension in all events, choices, decisions, and actions.
Many business scandals could be avoided if more people understood the value of human capital
and the need to see the larger picture; to put it differently: responsibility over profitability.

Is There a Universal Ethics?

Ethics is not a science but an art. The best way to answer the question is to consider the
methods used for moral decision-making. This strategy would be in line with Aristotelian and Confucian
models if we assume that once they attain insight, most people will follow their conscience and act in
reasonable, responsible ways. Methods of decision-making then could be adapted to any context or
dilemma.

Aristotle and Confucius stressed the importance of schooling. This touches the core of both
Aristotelian and Confucian teachings: training and education. Training and education help internalize in
us more altruistic business practices. They also permit greater integration between our personal and
professional understandings of the way we should treat friends, family, customers, and clients.

Utilitarianism: The Greatest Good for the Greatest Number

Jeremy Bentham - believed that the concept of good could be reduced to one simple instinct: the search
for pleasure and the avoidance of pain. The fundamental unit of human action for him was utility—solid,
certain, and factual.

Utilitarianism emphasizes the consequences or ultimate purpose of an act rather than the character of
the actor, the actor’s motivation, or the particular circumstances surrounding the act.
It has these characteristics:

1. universality, because it applies to all acts of human behavior, even those that appear to be done
from altruistic motives;

2. objectivity, meaning it operates beyond individual thought, desire, and perspective;

3. rationality, because it is not based in metaphysics or theology; and

4. quantifiability in its reliance on utility.

The Role of Utilitarianism in Contemporary Business

As for Mill’s harm principle, the first question in trying to arrive at a business decision might be, does
this action harm others? If the answer is yes, we must make a utilitarian calculation to decide whether
there is still a greater good for the greatest number. The lesson for contemporary business, especially
with the rise of big data, is that we need both numbers and reasoned principles. If we apply the
Aristotelian and Confucian rule of the mean, we see that balance of responsibility and profitability
makes the difference between sound business practices and poor ones.

Deontology: Ethics as Duty

Categorical Imperatives has two suppositions as described by Kant:

1. We must act on the basis of goodwill rather than purely on self-interested motives that benefit
ourselves at the expense of others; and
2. We must never treat others as means toward ends benefitting ourselves without consideration
of them also as ends in themselves.

A Theory of Justice (Justice in Business)

1. Businesses become interdependent and globalized, they must pay more attention to quality
control, human resources, and leadership in diverse settings. What will give greater legitimacy to an
organization in these areas than fairness? Fairness is a value that is cross-cultural, embraced by
 different social groups, and understood by nearly everyone. However, what is considered fair
depends on a variety of factors, including underlying values and individual characteristics like
personality.
2. Justice theory provides a method for attaining fairness, which could make it a practical and valuable
part of training at all levels of a company.

Justice theory may also provide a seamless way of engaging in corporate social responsibility
outwardly and employee development inwardly. Fairness as a corporate doctrine can be applied to all
stakeholders and define a culture of trust and openness, with all the corresponding benefits, in
marketing, advertising, board development, client relations, and so on.

DEFINING AND PRIORITIZING STAKEHOLDERS

Stakeholder – a party that has an interest in a company and can either affect or be affected by the
business.

Adopting a Stakeholder Orientation (Stakeholder Relationships)

Internal stakeholders are the board of directors responsible for defining and evaluating the
ongoing mission of a business after its founding. Internal stakeholders operate within a company and
can include employees, managers, business owners, and shareholders.

External stakeholders are usually those outside of the organization who most directly influence
a business’s bottom line and hold power over the business. External stakeholders are not part of the
company but are affected by the company's actions. Examples of external stakeholders include
customers, suppliers, financiers, local communities, trade associations, competitors, the government,
and society.

Many companies go beyond the legally required minimum as employers is to offer lavish amenities—
that is, resources made available to employees in addition to wages, salary, and other standard benefits.
Astute business leaders see the increased costs of amenities as an investment in retaining employees as
long-term stakeholders.

Stakeholder welfare must be kept at the heart of each company’s business operations for these
significant, twin reasons:

(1) It is the right thing to do

(2) It is good for business
Diffused Stakeholders - stakeholders who do not have frequent interaction with the organization but
become involved based on the actions of the organization.

Stakeholder Theory

- Refers to the ethical concept that addresses the outcome of business decisions, trends, profits,
etc., and its collective impact on all stakeholders, including the shareholders, employees,
financers, government, customers, suppliers, etc.
- A view of capitalism that stresses the interconnected relationships between a business and its
customers, suppliers, employees, investors, communities, and others who have a stake in the
organization. The theory argues that a firm should create value for all stakeholders, not just
shareholders.

Why Is Stakeholder Theory Important?

To identify, understand, and engage with stakeholders, a company can conduct stakeholder
engagement research and stakeholder analysis. The benefits of engaging stakeholders include:

• Shared value creation: Business leaders who factor stakeholder theory and ethical
responsibilities into the decision-making process create a shared value between the business
and society.

• Financial gain: When all stakeholders in a company feel valued, a company's public reputation
improves, which can lead to financial profit. Employees will likely be more productive,
customers more loyal, and financiers more trusting of the company.

• Societal gain: The tenets of stakeholder theory can encourage scientific innovation, improve a
company's local community, create a healthy competitive market for other companies, and
benefit the mental health of all stakeholders.

According to Donaldson and Preston, there are three theoretical approaches to considering stakeholder
claims: a descriptive approach, an instrumental approach, and a normative approach.

Descriptive approach sees the company as composed of various stakeholder groups, each with
its own interests that affect the company in various ways. These interests impinge on the company to a
greater or lesser degree; thus, the main point of the descriptive approach is to develop the most
accurate model and act on it in ways that weigh and balance these interests as fairly as possible.

Instrumental approach connects stakeholder management and financial outcomes, proposing

that appropriate management of stakeholder interests is important and useful because it contributes to
a positive bottom line. It considers the performance consequences for firms of highly ethical
relationships with stakeholders, characterized by high levels of trust, cooperation, and information
sharing.

Normative approach considers stakeholders as ends in themselves rather than simply as means
to achieve better financial results. According to Donaldson and Preston, in the normative approach “the
interests of all stakeholders are of intrinsic value. This approach follows the principle that the interests
of all stakeholder groups have value outside of benefiting the company and shareholder’s interests.

Although Donaldson and Preston stress that the descriptive and instrumental approaches are integral
to stakeholder theory, they contend that the fundamental basis of stakeholder theory is normative.

Ethical Decision-Making and Prioritizing Stakeholders

Stakeholder prioritization is confronting an organization’s management and begins with understanding

these multiple and sometimes conflicting expectations and ethically deciding which stakeholders to
focus on and in what sequence, if not all stakeholders cannot be addressed simultaneously. It helps to
actively gather information about all key stakeholders and their claims.

Another way to prioritize stakeholder relationships is with a matrix of their power and interest. A
stakeholder group can be weighted on the basis of its influence (or power) over and interest in its
relationship to the firm. A stakeholder with a high level of both power and interest is a key stakeholder.
If this type of stakeholder group encounters a problem, its priority rises.

Managing Stakeholder Expectations

There are three major components to bringing about change in customer or donor expectations:

1. Customer receptivity to a product or service offered by the company

 2. Acknowledgement of the gap between customer receptivity and corporate action to reduce it;
and
3. A system to bring about and maintain change in customer desires to bring it in line with
precisely what the corporation can deliver.

Corporate Social Responsibility (CSR), is a philosophy in which the company’s expected actions include
not only producing a reliable product, charging a fair price with fair profit margins, and paying a fair
wage to employees, but also caring for the environment and acting on other social concerns.

CSR and the Environment

Sustainability is the practice of preserving resources and operating in a way that is ecologically
responsible in the long term. As instances of this type of pressure on corporations increase around the
world, stakeholder groups become simultaneously less isolated and more powerful. Firms need
customers. Customers need employment, and the state needs taxes just as firms need resources. All
stakeholders exist in an interdependent network of relationships, and what is most needed is a
sustainable system that enables all types of key stakeholders to establish and apply influence.

People, Profit, Planet: The Triple Bottom Line

TBL is a measure described in 1994 by John Elkington, a British business consultant, and it forces us to
reconsider the very concept of the “bottom line.” The TBL concept recognizes that external stakeholders
consider it a corporation’s responsibility to go beyond making money. If increasing wealth damages, the
environment or makes people sick, society demands that the corporation revise its methods or leave the
community.

CSR as Public Relations Tool

For some, CSR is nothing more than an opportunity for publicity as a firm tries to look good through
various environmentally or socially friendly initiatives without making systemic changes that will have
long-term positive effects. Carrying out superficial CSR efforts that merely cover up systemic ethics
problems in this inauthentic way (especially as it applies to the environment) and acting simply for the
sake of public relations is called greenwashing.
The Ultimate Stakeholder Benefit

CSR used in good faith has the potential to reshape the orientation of multinational corporations to
their stakeholders. By positioning themselves as stakeholders in a broader global community,
conscientious corporations can be exemplary organizations.

They can demonstrate interest and influence on a global scale and improve the way the manufacture of
goods and delivery of services serve the local and global environment.

They can return to communities as much as they extract and foster automatic financial reinvestment so
that people willing and able to work for them can afford not only the necessities but a chance to pursue
happiness.

In return, global corporations will have sustainable business models that look beyond short-term growth
forecasts. They will have a method of operating and a framework for thinking about sustained growth
with stakeholders and as stakeholders. Ethical stakeholder relationships systematically grow wealth and
opportunity in dynamic fashion. Without them, the global consumer economy may fail. On an alternate
and ethical path of prosperity, today’s supplier is a consumer in the next generation and Earth is still
inhabitable after many generations of dynamic change and continued global growth.

THE IMPACT OF CULTURE AND TIME ON BUSINESS ETHICS

Culture – a pattern of shared basic assumptions learned by a group as it solved its problems of external
adaptation and internal integration, which has worked well enough to be considered valid and,
therefore, to be thought to new members as the correct way to perceive, think, and feel in relation to
those problems (Edward Schein)

Business Encounters Culture

Enculturation refers to the process by which humans learn the rules, customs, skills, and values
to participate in a society. In other words, no one is born with culture; all humans, regardless of their
origin, have to learn what is considered appropriate behavior in their surrounding cultures.

Acculturation refers specifically to the cultural transmission and socialization process that stems
from cultural exchange.

The effects of this blending of cultures appear in both the native (original) culture and the host
(adopted) culture. Historically, acculturation has often been the result of military or political conquest.
Today, it also comes about through economic development and the worldwide reach of the media.

Two major conditions affect the relationship between business and culture:

1. Business is not culturally neutral.

2. Organizations comply with legal and economic regulations but then go beyond them to effect
social change and sometimes even social justice.
Balancing Beliefs

Most business organizations hold three kinds of beliefs about themselves:

1. The first identifies the purpose of business itself. In recent years, this purpose has come to be
the creation not just of shareholder wealth but also of economic or personal value for workers,
communities, and investors.
2. The second belief defines the organization’s mission, which encapsulates its purpose. Most
organizations maintain some form of mission statement.
3. Finally, businesses also go through the process of enculturation; as a result, they have certain
beliefs about themselves, drawn from the customs, language, history, religion, and ethics of the
culture in which they are formed.

Business performance is a reflection of what an organization believes about itself. Those beliefs, in turn,
spring from what the individuals in the organization believe about it and themselves, based on their
communities, families, personal biographies, religious beliefs, and educational backgrounds. Unless key
leaders have a vision for the organization and themselves, and a path to achieving it, there can be no
balance of beliefs about profitability and responsibility, or integration of business with culture.

Consumerism and Global Marketplace

Consumerism—a lifestyle characterized by the acquisition of goods and services— has meant that
people have become defined as “consumers” as opposed to citizens or human beings.

Markets have become more diverse and interconnected.

Western consumers tend to perceive globalization as a phenomenon intended to benefit them

specifically. In general, they have few compunctions about Western businesses offshoring their
manufacturing operations as long as it ultimately benefits them as consumers. However, even in
business, ethics is not about consumption but rather about human morality, a greater end.
Considering an expansion of domestic markets, what feature of this process enables us to become more
humane rather than simply pickier consumers or wasteful spenders? It is the opportunity to encounter
other cultures and people, increasing our ethical awareness and sensitivity. Seen in this way,
globalization affects the human condition. It raises no less a question than what kind of world we want
to leave to our children and grandchildren.

Business Ethics over Time

Besides culture, the other major influence in the development of business ethics is the passage
of time. Ethical standards do not remain fixed; they transform in response to evolving situations. Over
time, people change, technology advances, and cultural mores (i.e., acquired culture and manners) shift.

What was considered an appropriate or accepted business practice one hundred or even fifty
years ago may not carry the same moral weight it once did.
 However, this does not mean ethics and moral behavior are relative. It simply acknowledges
that attitudes change in relationship to historical events and that cultural perspective, and the process
of acculturation are not stagnant.

Shifts in Cultural and Ethical Standards

Bias is built into the human psyche and expressed through our social structures. For this reason, we
should avoid making snap judgments about past eras based on today’s standards. The challenge, of
course, is to know which values are situational—that is, although many values and ethics are relative
and subjective, others are objectively true, at least to most people. We can hardly argue in favor of
slavery, for example, no matter in which culture or historical era it was practiced. Of course, although
some values strike us as universal, the ways in which they are interpreted and applied vary over time, so
that what was once acceptable no longer is, or the reverse

A Matter of Time

Business today has two purposes – profitability and responsibility – we might assume that
business ethics is in a much better position now than in the past to affect conduct across industries.
However, much of the transformation of business over time has been the result of direct government
intervention.

Governmental regulation and legal interpretations have not been the only avenues of change
over the past century. The growing influence of consumers has been another driving force in recent
attempts by businesses to self-regulate and voluntarily comply with global ethical standards that ensure
basic human rights and working conditions.

Whenever we look at the ways in which our perception of ethical business practice changes over
time, we should note that such change is not necessarily good or bad but rather a function of human
nature and of the ways in which our views are influenced by our environment, our culture, and the
passage of time.

The Influence of Geography and Religion (Business as Global Relationships)

Global relationships teach us to be sensitive not just to other languages and customs but also to
other people’s worldviews.

Geography affects a business’s relationship with almost any type of stakeholder, from
stockholders and employees to customers, the government, and the environment. Hence the growing
importance of localization, the process of adapting a product for non-native environments and
languages, especially other nations, and cultures.

Such adaption often starts with language translation but may include customizing content or
products to the tastes and consumption habits of the local market; converting currencies, dates, and
other measurements to regional standards; and addressing community regulations and legal
requirements.

• Time

• Personal space (contact and noncontact culture: physical proximity, eye contact, touch)

Religion and Ethics

The sort of spiritual education empowers every individual to refine their character and to
contribute to an ever-advancing civilization.

Each religion has a specific set of code, which is believed to originate from their God or Gods.
They all act, aim, or intent to, based on what is in the code. They use it as the source of their moral
values as well as a basis of the kind of behavior they ought to portray to the public and which they ought
to do.

A major factor in the difference that geography and culture make in our ethical standards is the
influence of religious practice. Religions are neither uniform nor monolithic, of course, nor are they
unchanging over time.

The Universal Declaration of Human Rights, adopted by the United Nations General Assembly in
December 1948, contains a list of basic human rights such as the right to life, liberty, due process,
religion, education, marriage, and property. Business ethics will have to balance all these factors when
adopting standards of conduct and local practices.

Absolute Values versus Relative Values

Business ethics exists on three levels: the individual, the organizational, and the societal.

At the organizational and societal levels, laws, regulations, and oversight can go a long way
toward curtailing illegal activity.

Business ethics motivates managers to (1) meet legal and industry governing and reporting
requirements and (2) shape corporate culture so that corrupt practices such as bribery, embezzlement,
and fraud have no place in the organization.

At the individual level, when corruption takes place, it is a matter of conscience. Corruption can
be defeated only by individuals acting in accordance with their conscience and being supported by
systems and corporate culture that encourage such action. Transparency, whistleblower programs,
ethics training, and modeling of appropriate behavior by upper management can create the conditions
for employees to act ethically, but conscience is a personal phenomenon.

Although ethical practice has been directly influenced by religion, as noted, ethics is not religion
and religious belief is not a prerequisite for a commitment to business ethics. Furthermore, most
religions have high ethical standards but do not address many of the problems faced in business. And
although a good system of law incorporates ethical standards, the law can and sometimes does deviate
from what is ethical. Finally, in the same vein, ethics is not science. The social and natural sciences
provide data to make better ethical choices, but science cannot tell people what they ought to do (nor
should it).

Absolute values do exist. Abstaining from cheating customers, defrauding clients, lying, and
murder are fairly objective ethical values; the reason for making any exceptions must be carefully laid
out. Ethical systems, whether utilitarian, rights based, or based on natural law and virtue ethics, are
attempts to translate absolute values like these into workable solutions for people. From these systems
has emerged a basic set of ethical norms for the business world.

Business Ethics and Compliance

Many organizations focus on the letter of the law so that they can claim “good faith” in their effort to
create an ethical environment. Compliance is important, but business managers must attempt to go
above and beyond to clearly model and enforce the highest standards of ethical behavior.

Normative Business Ethics

Humanistic business model - may provide the answer for businesses that wish to achieve the dual goal
of human flourishing and responsible profits. In this model, organizations focus on employees as a vital
part of the operation and support them in their professional training, health care, education, family
responsibilities, and even spiritual concerns.

Problem: often focuses on business rather than the employees.