Chapter 1: The Importance of Business Ethics
Business ethics defined
Ethics is defined as behavior or decision made within a groups’ values.
Morals: a person’s personal philosophy about what is right or wrong
Business ethics: organizational principles, values, and norms
Principles: specific and pervasive boundaries for behavior that should not be violated / basis
for rules / human rights, freedom of speech, fundamentals of justice
Values: beliefs and ideals that are socially enforced / teamwork trust, integrity
The difference between an ordinary decision and an ethical one lies in the point where the
accepted rules no longer serve, and the decision-maker is faced with the responsibility for
weighing values and reaching a judgment in a situation that is not quite the same as any he
or she has faced before. Values and judgments play a critical role when we make ethical
decisions.
Why study business ethics?
Financial services have the lowest ratings in the “global trust in industry sectors”. Decreased
trust leads to a reduction in consumer satisfaction and consumer loyalty, which can
negatively impact the firm or industry.
Workplace integrity (measured by GBES): pressure to compromise organizational standards,
observed misconduct, reporting of misconduct when observed, and relation against reports.
Examples of misconduct: misconduct of company resources, abusive behavior, harassment,
accounting fraud, conflicts of interest, defective products, bribery, product knockoffs, and
employee theft.
If society judges an action to be unethical or wrong, new legislation usually follows, which
directly affects a company’s ability to achieve its business goals. The more successful a
company, the more the public is critical when misconduct occurs. However, the public is
more tolerant of questionable consumer practices than of similar business practices (double
standards).
A moral dilemma: a situation, where the person is faced with multiple choices, all of which
are undesirable as defined by the person.
A value dilemma: same, but the individual’s beliefs are grounded in societal norms
Business ethics defined
Ethics is defined as behavior or decision made within a groups’ values.
Morals: a person’s personal philosophy about what is right or wrong
Business ethics: organizational principles, values, and norms
Principles: specific and pervasive boundaries for behavior that should not be violated / basis
for rules / human rights, freedom of speech, fundamentals of justice
Values: beliefs and ideals that are socially enforced / teamwork trust, integrity
The difference between an ordinary decision and an ethical one lies in the point where the
accepted rules no longer serve, and the decision-maker is faced with the responsibility for
weighing values and reaching a judgment in a situation that is not quite the same as any he
or she has faced before. Values and judgments play a critical role when we make ethical
decisions.
Why study business ethics?
Financial services have the lowest ratings in the “global trust in industry sectors”. Decreased
trust leads to a reduction in consumer satisfaction and consumer loyalty, which can
negatively impact the firm or industry.
Workplace integrity (measured by GBES): pressure to compromise organizational standards,
observed misconduct, reporting of misconduct when observed, and relation against reports.
Examples of misconduct: misconduct of company resources, abusive behavior, harassment,
accounting fraud, conflicts of interest, defective products, bribery, product knockoffs, and
employee theft.
If society judges an action to be unethical or wrong, new legislation usually follows, which
directly affects a company’s ability to achieve its business goals. The more successful a
company, the more the public is critical when misconduct occurs. However, the public is
more tolerant of questionable consumer practices than of similar business practices (double
standards).
A moral dilemma: a situation, where the person is faced with multiple choices, all of which
are undesirable as defined by the person.
A value dilemma: same, but the individual’s beliefs are grounded in societal norms
