Ethics Chapter 1 PDF

Chapter 1 Ethics and its conceptualization (week 1&2) 1.1 Ethics, Morality and Business Ethics 1.2 The stages of Moral Development 1.3 Ethics and Legality 1.4 Religion and Ethics 1.5 Ethics and its Importance in Business 1.6 Economic, Legal and Moral dimensions f...

Chapter 1 Ethics and its conceptualization (week 1&2) 1.1 Ethics, Morality and Business Ethics 1.2 The stages of Moral Development 1.3 Ethics and Legality 1.4 Religion and Ethics 1.5 Ethics and its Importance in Business 1.6 Economic, Legal and Moral dimensions for effective business decisions 1.7 Ethics, Morality and Business Ethics 1 1.1 Ethic, Morality and Business Ethics Introduction This introductory chapter begins with ethics as a concept. It will differentiate ethics from morality and outline factors that contribute to the shaping of one’s ethical values. Justifications will be drawn as to why ethics is important in life, what more in business. We often reflect and ask ourselves some basic questions: How should I lead my life? What type of person should I strive to be? What values are critical for me to lead a rewarding life? What standards or principles should I follow to conduct my life? Our self-reflection and conscience in addressing these personal issues immerse us in the study of right and wrong, or moral reasoning. Moral reasoning leads us to the study of morality, i.e ethics. What is Ethics Ethics is a set of principles that contains behavioural codes to determine what is right or wrong (Khalidah). It outlines the moral duty and obligations that any human being should practise. Ethics comes from the Greek word, ethos, which means character, spirit and attitude of a group of people or culture. (Rahman,2013). There are many definitions of ethics. The values an individual uses to interpret whether any particular action or behavior is considered acceptable and appropriate (Stanwick). It is a discipline that examines one’s moral behaviour or the moral standards of society. (Velasquez). According to Abdullah and Zainol Abidin (2011), ethics ‘concerns itself with what is good or right in human interaction’. It revolves around three central concepts: ‘self’, ‘good’ and ‘other’. Ethics is also defined as ‘a critical analysis of human acts to determine their rightness or wrongness in terms of two major criteria: truth and justice’ (Mauro et al., 1999). Imam Al Ghazali has defined ethics as ‘a study of certain religious beliefs (I’toqadat) and of the rightness and wrongness of action for the purpose of practice and not for the sake of mere knowledge’ (Mohamed Aslam Haneef et al., 2001) To conceptualize ethics as a field of study, we are trying to rationalize what actions are right and assess whether they are just or fair from different perspectives – individual, organizational or societal levels. Certainly, we have to consider the rights of others (human and non-humans) as much as we are interested in exercising ougr own individual rights and self-interests. 2 Moral Standards Moral standards are bases for moral behavior and bases for determining whether a certain act is moral or immoral and for someone to be responsible or not. These are the guides of human behavior and decision making. These standards are not only applied to individual persons but also to a group or corporation. Something is unethical if it does not conform to a particular standard of morality. They may not be written but observed and they are assumed norms of moral conduct (Articulo, 2005). Where Do Moral Standards Come From? ❖ Early upbringing – Our parents nurture us with good discipline and morality. They guide us on what is right and wrong in our actions. They are our first teacher and role model. ❖ Socialization process – When we go to school and higher learning institutional, our teachers and lecturers give us added knowledge and skills and impart ethics knowledge through moral and religious studies. ❖ Culture also influenced one’s value. For example, respect and care for the elderly have always been accepted as noble value by Asian until today. ❖ We also learn ethics from religious teachings. All religions provide their believers with a strong composition of conduct, which involves moral instructions, values and commitments. Contrast between Ethics and Morality One may ask, “Is there a significant difference between ethics and morality”? generally, these two terms are used interchangeably in everyday life. While many may agree that there is a very thin line to differentiate these two concepts from a layman;s viewpoint, in the study of ethics, however several scholars have proposed clear differences between ethics and morality. The objective behind this distinction is to clarify certain arguments (Shaw, 2011) Morality is concerned with the norms, values and beliefs embedded in social processes which define right or wrong for an individual or a community (Shaw, 2008). Ethics, in contrast, is the study of moral standards whose explicit purpose is to determine, as far as possible, whether a given moral standards or judgements based on that standard is more or less correct (Velasquez,2012). Ethical judgment thus demands for analytical thought and application of reason to determine specific rules, principles, or ethical theories that determine right or wrong 3  for a given situation. In addition, these rules and principles must give an account of the rights or entitlement we have and what is just or fair (Boatright, 2012) from all aspects of life; be it business or non-business. Differentiate these two concepts by an example for clarity. We know that all religions and cultures view strongly that lying, cheating and acceptance/recognition that these values are morally wrong is termed as morality. However, when we apply a specific theory or principle to explain why lying, cheating and manipulation are wrongful acts, this is ethics. We also influenced by peers and the surrounding environment, media, internet that somewhat contributed to shaping our character and values. 1.2 The Stages of Moral Development Kohlberg’s Model of Cognitive Moral Development Kohlberg’s model, one of the well-recognized normative theories, was developed by psychologist Lawrence Kohlberg (1969) who expanded on Piaget’s three stage framework of cognitive development. In Kohlberg’s framework, an individual’s ethical behaviour depends on his/her moral reasoning. The individual’s level of cognitive moral development strongly influences his/her decisions regarding what is right and what is wrong: the rights, duties and obligations involved in a particular ethical dilemma (Trevino, 1986). Kohlberg’s theory proposes a sequence of three levels, each level comprising 2 stages for moral judgment development that result in six stages. The three levels which define Kohlberg’s (1963, 1975 and 1981) view on the stages of cognitive development are: 1. Pre-conventional, where judgment is based solely on a person’s own needs and perceptions. 2. Conventional, where the expectations of society and law are taken into account, and 3. Post-conventional, where judgments are based on abstract, more personal principles that are not necessarily defined by society’s laws. Kohlberg’s model helps an individual to understand how his/her moral capacities develop. In addition, it reveals how increasingly sophisticated and critical one can be in the understanding and application of the moral standards that he/she upholds. 4 Table below: illustrates Kohlberg’s model which has divided moral development into 3 levels. Each of these three levels is then sub-divided into sequential stages. Level 1: Pre-conventional Moral Reasoning Judgment is based on personal needs and the rules of others Stage 1 Punishment- Rules are obeyed to avoid punishment. A Obedience Orientation good or bad action is determined by its physical consequences Stage 2 Personal Reward Orientation Personal needs determine right and wrong. Favors are reciprocated along the lines of “Yo scratch my back, I’ll scratch yours.’ Level 2: Conventional Moral Reasoning Judgment is based on others’ approval, family expectations, traditional values, the law of society, and loyalty to country. Stage 3 Good Boy-Nice Girl Orientation Good means ‘nice’. It is determined by what pleases, helps and is approved by others. Stage 4 Laws and Order Orientation Laws are absolute. Authority must be respected and the social order maintained. Level 3: Post-conventional Moral Reasoning Stage 5 Social Contract Orientation Good is determined by socially agreed- upon standards of individual rights. This is a morality similar to that of the U.S. Constitution Stage 6 Universal Ethical Principle Good and right are matters of individual Orientation conscience and involve abstract concepts of justice, human dignity and equality. *Adapted from Kohlberg, 1975 1.3 Ethics and Legality Some people equate being ethical with abiding by the law or a set of stipulated rules and regulations. This is in ,line with the views of Aristotle, a renowned Greek philosopher and scientist. In his attempt to outline universal justice, Aristotle opines that a good person is one who obeys the law. Societies normally adopt formal laws that reflect prevailing ethical standards or social norms. It is true that obeying laws is an important first step ethical, as laws promote justice and fairness in human actions. 5 The Employment Act 1955 in Malaysia protects the rights of employees; employers must comply with this Act. Even so, we still hear about exploitation of labour at the workplace by irresponsible employers. Wrongful acts, greed and selfishness are still apparent within the public and private sectors, despite pledges to comply with stipulated government and business laws. Legality Legality thus carries a narrower scope in ethics, although it is expected that ethical beings will respect and follow laws and regulations. Legality refers to laws that have been written to protect society members from fraud, theft and violence. However, many immoral and unethical acts fall well within stipulated laws. They need not necessarily drive one’s conscience to internalize good values. Laws do not make people honest, reliable or truthful. Established corporations without doubt have a clear code of ethics as a governance mechanism to compel their employees to behave ethically, but this does not necessarily result in internalization of good ethical values. Ethics goes beyond mere compliance to policies, rules, regulations and laws which normally involves rewards and punishments. Law compliance, though a feature of ethics, does not necessarily reflect an ethical person. An ethical person with a conscience will do good deeds as a duty and moral obligation. The ethical person is also committed and responsible towards others, e.g. in how he/she should treat others as well as how his/her actions will have an impact on others. Ethical behaviour, thus, rests upon one’s full conscience and accountability to do good deeds as a social responsibility under all circumstances as one plays his/her role as khalifah(vicegerent)and leader on Earth. 1.4 Religion and Ethics Shaw (2011) states that some people believe that morality is but a function of what a particular society happens to believe in, instead of something that stems from religion. Some may also find it misleading and inappropriate to link morality with spirituality and religious beliefs, since this may violate individual or human rights which promote freedom of choice in religion and privacy. After all, one’s choice of religion is a negative right (free from interference of others) and is clearly stated in the 1948 United Declaration of Human Rights. 6 While we respect these westernized, liberal and universal views on the role of religion towards shaping one’s ethical values, the point remains: a belief in religion and internalization of the principles and teachings will shape a person’s character and values. Most religions have an ethical component. In the words of Simon Blackburn (2001), in his book, Ethics: A Very Short Introduction: ‘For many people, ethics is not only tied up with religion, but is completely settled by it. Such people do not think too much about ethics, because there is an authoritative code of instructions, a handbook of how to live.’ The Rukun Negara or National Principles of Malaysia clearly states ‘Belief in God’ as doctrine for all Malaysians, irrespective of religious and cultural differences. This implies the importance of religion in the Malaysian society, despite its racial and cultural diversity. Four main religions – Islam, Buddhism, Christianity and Hinduism – in shaping the ethical values of their values of their followers or believers. Islamic Ethics: Ethics of the Soul Islam is derived from the Arabic root, Salema: peace, purity, submission and obedience. In the religious sense, Islam means submission to the will of God and obedience to His law. Islam is recognized as a religion; in fact a way of life for Muslims. Prophet Muhammad (PBUH) once said in a hadith narrated by Muslim: ‘Religion is advice’ The foundation of Islamic ethics is Al Quran and Sunnah, ie the sayings and practices of Prophet Muhammad (PBUH). Islamic ethics integrates the inner and outer aspects of an individual’s life. It concerns the individual’s physical development with priority on the development of the soul, the crux of the individual’s behaviour and character development. Therefore, regardless of their environment, humans, especially, Muslims, are believed to have a moral responsibility to submit to Allah’s orders and to strictly follow Islamic principles without compromise (i.e as revealed in Al-Quran and Sunnah). Buddhist Ethics Buddhism comes from the word budhi which means ‘to awaken’. Buddhist ethics is traditionally based on the enlightened perspective of the Buddha, or his enlightened followers. The Buddha was neither a prophet nor did he claim to be one. He was a man who taught a path to enlightenment from is own experience. 7 Christian Ethics Christianity offers a view of human beings as unique products of a divine intervention that have been endowed with consciousness and the ability to love (Shaw, 2011). Christian ethics in general stresses the need for love, grace, mercy and forgiveness because of sin. In sum, the key principles of Christianity are based on the following: (a) Humility or faith and trust in God (b) Communication with God through prayer and self-denial (c) Observance of The Law which is written in Scripture and in the hearts of those who love the truth (d) The offering of sacrifice to God and partaking of the sacrificial offering (various animal and bird offerings in the Old Testament, the Lamb of God in the New Testament, the sacrifice of the Mass in the Catholic Church) Hindu Ethics Hinduism is related to reincarnation, which is a way of expressing the need for reciprocity, as one may end up in someone else’s shoes in their next incarnation. Hindu ethics places emphasis on one’s intention. Therefore, selfless action for the benefit of others is an important principle in Hinduism. This is known as the doctrine of karma yoga. Kindness and hospitality are key Hindu values. Also, more emphasis is placed on empathy compared with other traditions. 1.5 Ethics and its Importance in Business Managing a business ethically is related to being socially responsible, as businesses are a part of society. Any unethical business conduct will have negative impacts on society. Although businesses are set up to generate profit, they must be responsible and accountable in their undertakings while serving the society. Reputable multinational organizations, such as Klyveld Peat Marwick Goerdeler (KPMG) and Shell Group of Companies, have all emphasized the importance of managing businesses ethically through their code of business ethics. In Malaysia, most private organizations such as commercial banks and government-owned corporations also abide by their own code of conduct and business ethics. Some examples are Maybank, Tenaga Nasional Malaysia (TNB), United Engineers Malaysia (UEM) and Khazanah Nasional Berhad. 8 In fact, code of ethics have generally become an important feature in organizations to remind employees to practise work ethics. While ethical codes remain as common reference documents to develop an ethical organizational culture, businesses of today must realize the importance of institutionalizing ethics at the workplace and the need to manage businesses ethically for these reasons: To keep existing customers: Reputable organizations will maintain customer loyalty for business sustainability. To attract new customers: Good business or corporate image will attract new customers, and increase profitability. To avoid lawsuits: Reputable organizations will not hesitate to comply with laws and regulations to maintain their good image and dignity. To reduce employee turnover: Reputable organizations will be able to maintain employee loyalty, thus reducing employee turnover. This will subsequently increase organizational effectiveness. To please customers, employees and the society: Good organizations will strive to fulfill the needs of main stakeholders, i.e. customers, employees and the community they serve. 9 1.6 Economic, Legal and Moral dimensions for effective business decisions It is pertinent for managers to look at three dimensions while making effective business decisions, as illustrated in the following figure: The moral dimension requires an individual to be willing to seek out and act on reasons. It also suggests one to think about doing the best for the common good and well-being of others. It expects and individual to be impartial and regard the interests of everyone, including his/her own, as equally worthy of consideration, while deciding what to do. In other words, one has to place himself/herself in the shoes of others before acting. Certainty, one’s level of ethical knowledge, consciousness and internalization of ethics will describe the extent of application of the moral dimension in business decision-making as a matter of social responsibility. 10 Effective business decision-making involves an integration of all three dimensions. Business people must therefore integrate moral viewpoints with economic and legal viewpoints to make effective and ethical decisions. Business ethics is the attempt to think clearly and deeply about the ethical issues in business and to arrive at conclusions that are supported by the strongest possible arguments which will benefit all parties involved. Both economics and law are essential to business decision-making. However, it is critical to observe ethical standards in profit- making initiatives. To consolidate your learning, the learning outcomes are summarized below: 1. Define and differentiate ethics and morality. Morality is concerned with the norms, values and beliefs embedded in social processes which define right or wrong for an individual or a community. Ethics, in contrast, is the study of moral standards whose explicit purpose is to determine , as far as possible, whether, a given moral standard or judgement based on that standard is more or less correct. This thus demands for analytical thought and application of reason to determine specific rules, principles or ethical theories that determine right or wrong for a given situation. In addition, these rules and principles must give an account of the rights or entitlements we have and what is just or fair. 2. Describe how ethics is developed in an individual. Ethics comes from our inner feelings which subsequently translate into our moral behaviour. Ethics thus begins with each one of us. As humans, we are fully responsible for our ethical or unethical behaviour. According to Griffin and Ebert (2007), ethical behaviour comforms to ethical beliefs and social norms about what is right and good. Conversely, unethical behaviour comforms to individual beliefs and social norms that are defined as wrong and bad. 3. List and explain the various factors that influence ethical values of an individual. Several social, cultural and environmental factors influence one’s ethical values. To list, they include: Upbringing Socialization process Experience and critical reflections on those experiences The explicit and implicit standards of culture Religion 11 4. Compare and contrast ethics and legality Ethics covers a broader scope. It relates to questions of right and wrongdoing, rights and justice. Ethics reflects people’s relations with one another: How should people treat others? What responsibility should they feel for others? Legality carries a narrower scope. It refers to laws that we have written to protect ourselves from fraud, theft and violence. No doubt, an ethical person is someone who obeys the law. But, obeying the law need not necessarily justify that a person is ethical. Many immoral and unethical acts fall well within our laws. They need not necessarily drive one’s self- conscience to internalize good values, reflective of an ethical person. Ethics thus rests upon one’s conscience and commitment to do good deeds as a social responsibility under all circumstances. 5. Recognize ethics and its importance in the global business world The global business world presents many challenges. Apart from fulfilling the profit maximization objective which drives aggressive competition in a free market system, business have to face another challenge – managing the global workforce. Society is undergoing dramatic change in values and societal norms. There have been concerns on the decadence of moral values among the younger generation, especially GenY, born between the year 1982-2000. GenY employees who grew up in the ICT era and who represent the bulk of today’s workforce are more likely to see unethical behaviour as justifiable in pursuit of their goals. While codes of ethics business ethics guidelines remain as references for employees at the workplace, business have realized the importance of upholding ethics for the following reasons: To keep existing customers To attract new customers To avoid lawsuits To reduce employee turnover To please customers, employees and the society. 12