Business Ethics

What are ethics? Why does business need to be ethical? How can business become ethical ?

Business Ethics
In the business world, ethics is the study of morally appropriate behaviors and decisions, examining what "should be done. Ethics are the standards by which behaviours are evaluated for their morality - their rightness or wrongness.

Business interact with civil society 1) Accountability to investors and lenders- the financial domain (corporate accounting, auditing, corporate law & stock market regulators, corporate governance) 2 Accountability to direct participants in corporate value creationcustomers, employees, vendors; the domain of consumer protection, labour laws, commercial contracts (this is the direct focus of corporate management).

Business interact with civil society 3) Accountability for the effect of their operations on the physical environment (domain of environental regulations) 4) Accountability for the human condition around their operations health, education, employment, and cultural needs in the community (here corporate responsibility is not much regulated and this factor is the focus of most corporate philanthropy)

Business interact with civil society 5) Accountability for the political health of the societies where they operate- human rights, fair democratic process These five domains are like steps of a ladder for Business ethics and CSR.

Business Ethics Development



 

The cultural context influences organizational ethics Top managers also influence ethics The combined influence of culture and top management influence organizational ethics and ethical behaviors

The Evolving Context for Ethics

 

From domestic where ethics are shared To international where ethics are not shared when companies:
Make assumptions that ethics are the same Ethical absolutismthey adapt to us Ethical relativismwe adapt to them

 

To global which requires an integrative approach to ethics

Emergence of a Global Business Ethic

 

Growing sense that responsibility for righting social wrongs belongs to all organizations Growing business need for integrative mechanisms such as ethics
 

Ethics reduce operating uncertainties Voluntary guidelines avoid government impositions

Ethical conduct is needed in an increasingly interdependent worldeveryone in the same game Companies wish to avoid problems and/or be good public citizens

Ways Companies Integrate Ethics



  

Top management commitment in word and deed Company codes of ethics Supply chain codes Develop, monitor, enforce ethical behavior Seek external assistance

External Assistance with Ethics

  

ndustry or professional codes Certification programs, e.g., ISO 9000 Adopt/follow global codes
Caux Round Table Principles

Reasons for Businesses to Engage in Development of a Global Code of Business Ethics



   

Create the same opportunity for all businesses if there are common rules Level the playing field They are needed in an interconnected world They reduce operating uncertainties If businesses dont collaborate, they may not like what others develop

Four Challenges to a Global Ethic

Global rules emerge from negotiations and will reflect values of the strong Global rules may be viewed as an end rather than a beginning Rules can depress innovation and creativity Rules are static but globalization is dynamic