1. BUSINESS ETHICS
1. AN INTRODUCTION
2013/2014
Ana Cláudia Campos
1º Semestre
1

2. 1.1 Morality, Ethics, and Business Ethics
1.2 The Emergence of Business Ethics: Globalization,
Sustainability, and Competitiveness
1.3
Conceptual
Network:
Stakeholders,
Social
Responsibility and Corporate Governance
2

3. 1.1 Morality, Ethics, and Business Ethics
3

4. Morality
“… is concerned with the norms, values,
and beliefs embeded in social processes
which define right (√) and wrong (×) for an
individual or a community.”
(Crane & Matten, 2010)
4

5. Sources of Morality
RELIGION
5

6. SOCIETY
6

7. 7

8. 8

9. ETHICS
“… is concerned with the study of morality and
the application of reason to elucidate specific
rules and principles that determine right and
wrong for a given situation. These rules and
principles are called ethical theories.”
(Crane & Matten, 2010)
9

10. “… deals with individual character and the
moral rules that govern and limit our
conduct. It investigates questions of right
and wrong, duty and obligation, and moral
responsibility.”
(Shaw, 2011)
10

11. Theoretical/philosophical study that
analyses ethical theories
(Popkin & Stroll, 1956)
11

12. “… the wisdom of living or the art of living.”
(Savater, 1991)
12

13. “ Ethics originates in
everyday life.”
(Popkin & Stroll, 1956)
… in the moral dilemmas arising
in particular situations of
individuals’ lives, that challlenge
consciousness and claim the need
of a decision making
13

14. “An ethical dilemma is a situation that requires a
choice regarding a possible course of action that,
although offering the potential for personal or
organizational benefit or both, may be considered
unethical. It is often a situation in which action must
be taken but for which there is no clear consensus
on what is «right» and «wrong»”.
(Schermerhorn, 2002)
14

15. The ethical reflection of everyday life becomes a
philosophical investigation when transcends the
individual’s particular issues and questions and
develops a general approach to them.
15

16. Perspective
Context
Should I lie to him or tell him the truth about
my whereabouts last night?
Particular
Can I have this baby under the present
circumtances?
Everyday life
This payoff is particularly advantageous in
face of my political ambitions? Should I
accept it?
Is lying morally
circumstances?
acceptable
under
any
Is abortion morally defensible?
General
Philosophy
To buy off and be bought off are the two sides
of the same coin: the use of any means to
achieve the ends. Is any means worthy of
moral appraisal?
16

17. BUSINESS ETHICS
“… is the study of what constitutes right and
wrong (or good and bad) human conduct in
a business context.”
(Shaw, 2011)
17

18. 18

19. “… is the study of business situations,
activities, and decisions where issues of
right and wrong are addressed.”
(Crane & Matten, 2010)
19

20. 20

21. Comments
•
By ‘right’ and ‘wrong’ it is meant ‘morally right’ and
‘morally wrong’, against ‘commercially’, ‘strategically’ or
‘finantially right or wrong’;
•
Business Ethics covers issues related to business
organizations but also other types of organizations
(governmental organizations, non-governmental/nonprofit, pressure groups, etc.)
21

22. •
Many people believe ‘ethics’ and ‘business’ don’t
match because businesses are either imoral
(against morality) ou non-moral (outside morality)
•
However Business Ethics is increasingly becoming
a topic of attention for both scholars
and
professionals in all fields
22

23. Reasons for the increasing importance of
Business Ethics
23

24. •
The power and influence of business and firms in
society is increasing everyday
•
Companies contribute to society (employment, taxes,
economic and personal development...) and it is
necessary to understand how this contribution occurs
•
Bad business practices have the potential to cause
harm to individuals, communities and the environment
24

25. •
Stakeholders
(consumers,
control
and
pressure
groups, the media, competition ...) increasingly require
businesses to behave responsibly and ethically
•
There is lack of formal training in the area of ethics,
and this training may contribute to problem analysis
and more informed decision making
25

26. •
Ethical violations (fraud, injustice at work, corruption,
abuse of trust ...) continue to happen in a daily basis
discipline and an ethical approach helps to understand
the reasons behind them
•
Studies show that companies with best ethical
performance are also those with improved financial
performance, increased productivity and quality, higher
sales and customer loyalty
26

27. •
An ethical attitude contributes to improving brand
image and corporate reputation, thus capturing more
easily the attention of investors and consumers and
facilitating the retention of employees
27

28. “Business ethics can be said to begin when the law ends.
Business ethics is primarily concerned with those issues
not covered by the law, or where there is no definite
consensus on whether something is right or wrong. (…)
For this reason, it is often said that business ethics is
about the ‘grey areas’ of business, or where values are in
conflict.”
(Crane & Matten, 2010)
28

29. • It is expected that all legal conduct is also ethical, however much
of what has once been legal is nowadays seen as immoral, nonethical (slavery, political inequality and so forth)
• On the other hand, a non-illegal action is not necessarily ethical,
which means ethics transcends legality:
Is it ethical for an employee to take longer than the necessary to do a
job?
Is it ethical to make personal telephone calls during working time?
Is it ethical to call in sick to take a day off work?
Is it ethical not to report a co-worker misconduct?
…
29

30. 1.2 The Emergence of Business Ethics:
Globalization,
Sustainability,
and
Competitiveness
30

31. “Globalization is a process which diminishes
the necessity of a common and shared
territorial basis for social, economic, and
political activities, processes, and relations.”
(Crane & Matten, 2010)
31

32. “… one of the most powerful and pervasive
influences on nations, businesses,
workplaces, communities and lives...”
(Kanter, 1995 )
32

33. Globalization’s most influential factors
Technological
Political
Economic
33

34. Information
Job market/workplace
Social and
family relations
Economic relations
Globalization…
34

35. Positive Aspects
Negative Aspects
Economic growth
Enclavic poverty
Global well-being
Restricted access to the planet’s resources
Market interdependence
Dissemination of financial crises
Westernization of the patterns and systems
of values, thought and behavior / culture
Cultural relativism
shock
Democracy
Global dissemination of effects (social,
political, economic) of events occurred
World peace
locally
Increased risk of unethical conduct in
international business (corruption, child
labor, cheap labor ...)
35

36. Globalization and Ethics
Businesses escape the
control of national
governments
Different legal frameworks
and territorially
disseminated
Different ethical demands
Moral values
Local cultures
Which stakeholders are organizations
accountable to?
36

37. “Sustainability refers to the long-term
maintenance of systems according to
environmental, economic, and social
considerations.”
(Crane & Matten, 2010)
37

38. “Competitiveness is the ability of a firm or a nation
to offer products and services that meet the quality
standards of the local and world markets at prices
that are competitive and provide adequate returns
on the resources employed or consumed in
producing them.”
(http://www.businessdictionary.com/definition/competitiveness.html#ixzz2eXJkFcHf)
38

39. “Competitive advantage (…) refers to the utilization
of a core competency that clearly sets an
organization apart from its competitors and gives it
an advantage over them in the marketplace.”
(Schermerhorn, 2002)
•
Product
•
Price
•
Service
•
Cost efficiency
•
Quality
•
Brand image
•
Ethical management and CSR…
39

40. 1.3.
Social
Conceptual
Network:
Responsibility,
and
Stakeholders,
Corporate
Governance
40

41. “Organizational stakeholders (are) those
persons, groups, and other organizations
directly affected by the behavior of the
organization and holding a stake in its
performance.”
(Schermerhorn, 2002)
41

42. “A stakeholder of a corporation is an
individual or a group which either: is harmed
by, or benefits from, the corporation; or
whose rights can be violated , or have to be
respected, by the corporation.”
(Crane & Matten, 2010)
42

43. NGOs
Competitors
Society
Unions
Suppliers
Shareholders
Employees
Universities
Organization
Government
Directors
Opinion leaders
Customers
Media
Funding institutions
43

44. Stakeholders
Impactos éticos da globalização
Shareholders
Greater finantial risks and instability
Employees
Exploitation
conditions)
Consumers
Cultural imperialism and westernization of nations
Suppliers
Competition
and Small scale competitiors more exposed to MN
businesses
of
employees
(poor
working
Civil
Society Erosion of local communities traditional life
(pressure
groups,
NGOs,
local
communities)
Government
Decrease of government responsibility towards
employment, wellfare and ethical patterns
(Adapted from Crane & Matten, 2010)
44

45. “Corporate social responsibility is defined as
an obligation of the organization to act in
ways that serve both its own interests and
the interests of its many external
stakeholders.”
(Schermerhorn, 2002)
45

46. “Corporate social responsibility includes the
economic, legal, ethical, and philantropic
expectations placed on organizations by
society at a given point in time.”
(Crane and Matten, 2010)
46

47. Philantropic
Responsibilities
Ehtical
Responsibilities
Legal
Responsibilities
Economic
Responsibilities
(Carroll, 1991)
47

48. “Should the firm feel any responsibility
towards problems outside itself, occuring in
the social environment?”
(Neves, 2008)
48

49. The firm’s primary responsibility
To protect the owners’ /shareholders investment
and to act in their best interest…
49

50. M. Friedman’s (1970) arguments against
Corporate Social Responsibility
•
Only human beings have a moral responsibility for their
actions (he excludes organizations)
•
Managers’ responsibility is to act solely in the interests of
stakeholders (he excludes other stakeholders)
•
Social issues and problems are the province of the state
rather than corporate managers (he excludes social goals)
50

51. Organizational Arguments for CSR
Greater customer satisfaction, related to brand reputation
Attraction of the best and more committed employees
Avoidance or forestalling of industry regulation and legislation, assuring greater
business independance from government
CSR is a long-term investment in a safer, more educated, and equitable
community (stable competitive environment)
Ethical Arguments for CSR
Firms cause social and environmental problems (impacts), following production
activities, and therefore should take on the responsibility for solving them
Companies should use power and resources responsibly
Companies should include in their business vision the interests and objectives
of all stakeholders
(Adapted from Crane & Matten, 2010)
51

52. Corporate Social Responsibility Actions
• Patronage / Philanthropy (social, cultural, environmental, scientific and
technological, and educational and sports initiatives involving donations
in cash or in kind)
• Charity (social initiatives involving the raising of money or goods to the
benefit of socially disadvantaged groups)
• Social marketing (adaptation of marketing techniques to programs
designed to influence and change the behavior of stakeholders, gain or
benefit is to the public and society at large and the business perspective
(earnings) may be (or is) completely absent
• Community Integration (actions that support the creation of infrastructure
and public services in the local community where the company is
located, as villages, day care centers, schools or hospitals)
• Reforms in the company’s internal environment
52

53. “Corporate governance (…) is the system of
control and performance monitoring of top
management that is maintained by boards of
directors and other major stakeholders
representatives.”
(Schermerhorn, 2002)
53