Business Ethics PDF

Business Ethics: The Sustainable and Responsible Way © Sunil G. Savur  Chapter 1 Introduction, history and purpose of business Learning objectives Distinguish between morality and ethics. Appreciate origin and history of ethical thought. Classification of ethics. Three lev...

Business Ethics: The Sustainable and Responsible Way © Sunil G. Savur  Chapter 1 Introduction, history and purpose of business Learning objectives Distinguish between morality and ethics. Appreciate origin and history of ethical thought. Classification of ethics. Three levels of moral judgements. Define business ethics and understand its evolution. The business case for business ethics. Understand and explain purpose of business. Elaborate the process from purpose to action with its challenges. Business Ethics: The Sustainable and Responsible Way | © Sunil G Savur 2024 | 3 SAGE Publishing Morality and ethics (1 of 5) Moral dilemmas Define Morality Define Ethics Link between Morality and Ethics Business Ethics: The Sustainable and Responsible Way | © Sunil G Savur 2024 | 4 SAGE Publishing Morality and ethics (2 of 5) Moral dilemmas – Confront us in small and big ways, from time to time. – When faced with choices to decide a course of action could be: o something that seems wrong to achieve good. o doing the right thing to produce a bad outcome. – Examples? Business Ethics: The Sustainable and Responsible Way | © Sunil G Savur 2024 | 5 SAGE Publishing Morality and ethics (3 of 5) Morality – Practices and activities that are considered importantly right or wrong. – Rules that govern those activities and practices. – Behavioural rules accepted by society at a particular time in that society’s history. – For example: in the past slavery was accepted, abortion and same sex-marriages were not. – Now, these practices have changed. Business Ethics: The Sustainable and Responsible Way | © Sunil G Savur 2024 | 6 SAGE Publishing Morality and ethics (4 of 5) Ethics – Systematic attempt to make sense of the rules that govern human conduct, – Involves judgements on what ought to be, – Role ethics is to study morality using ethical theories through observations and analysis, and – If necessary, remedy any unjustifiable norms. Business Ethics: The Sustainable and Responsible Way | © Sunil G Savur 2024 | 7 SAGE Publishing Morality and ethics (5 of 5) Business Ethics: The Sustainable and Responsible Way | © Sunil G Savur 2024 | 8 SAGE Publishing Origins and history of ethical thought (1 of 2) First ethical percepts passed down by word of mouth from elders based on needs for reciprocity, survival and kinship altruism, followed by the written word. Egypt – 3000 BCE – how to live happily and ideals of conduct. Code of Hammurabi – 1750 BCE. Ten commandments in the Hebrew Bible. Indian ethics – from 1500 BCE gave rise to four systems – Hinduism, Jainism, Buddhism and Sikhism. Business Ethics: The Sustainable and Responsible Way | © Sunil G Savur 2024 | 9 SAGE Publishing Origins and history of ethical thought (2 of 2) Chinese – Laozi and Confucius 6th century BCE – living in simple, honest manner, and as a human motivated to do good rather than by personal profit. Islamic – Muhammad 6th century BCE – purpose of human life is to achieve success in life by being practicing righteousness, piety and worship. Western thoughts – from Greek philosophers Socrates, Plato, Aristotle to Bentham, Mill, and Kant, among others. Business Ethics: The Sustainable and Responsible Way | © Sunil G Savur 2024 | 10 SAGE Publishing Classification of ethics Descriptive ethics – the study and description of the morality of people, culture or society. Prescriptive ethics – also known as ‘normative ethics’ – justification of a moral system based on the outcomes of descriptive ethics. Includes ethical theories such as utilitarianism, deontological and virtue ethics. Metaethics or analytical ethics – studies both descriptive and prescriptive ethics by analyzing meaning of moral terms. Business Ethics: The Sustainable and Responsible Way | © Sunil G Savur 2024 | 11 SAGE Publishing Three levels of moral judgment processing (1 of 3) Abstract or general principles – include principles such as ‘greater good’, ‘utility’, ‘justice’, ‘duty’, ‘moral rules’, ‘the Golden Rule’. – Helps guide individuals and businesses through ethical issues using ethical theories. – Useful because they can explain why actions are right or wrong. – Includes ethical theories such as utilitarianism, deontological and virtue ethics. Business Ethics: The Sustainable and Responsible Way | © Sunil G Savur 2024 | 12 SAGE Publishing Three levels of moral judgment processing (2 of 3) Intermediate-level concepts – Include codes or policies developed for specific professionals in law, medicine, engineering, accountancy and insurance among others. – Apply to a range of situations – individuals are required to interpret and apply them in context. – Examples: Code of Ethics for Engineers, International Code of Ethics for Professional Accountants, The Code of Medical Ethics. – Legislations and Acts for public companies. Business Ethics: The Sustainable and Responsible Way | © Sunil G Savur 2024 | 13 SAGE Publishing Three levels of moral judgment processing (3 of 3) Concrete-level concepts – Include code of ethics and conduct at organizational level. – Directs individual behaviours in very clearly defined situations. – Lists specific prescriptions and prohibitions as action guides – e.g., what exactly to do when a bribe is offered. – Derives coherence from intermediate-level concepts which in turn derive from abstract and general principles. Business Ethics: The Sustainable and Responsible Way | © Sunil G Savur 2024 | 14 SAGE Publishing Business ethics Involves the application of general ethical concepts to solve particular problems in business. When there’s evidence of unethical behaviour: – there’s a need to understand and give an account of why does it happen. – under what circumstances does it happen. – what theories and principles can explain it. – what can be done to mitigate and manage it. Business Ethics: The Sustainable and Responsible Way | © Sunil G Savur 2024 | 15 SAGE Publishing Evolution of business ethics Baumhart in 1961 indicated executives desire to raise the level of business ethics. Study in 1976 reported increased public awareness and concern over business ethics. Business ethics as an academic field begins mid-1970s – founders from philosophy. Activists like Greenpeace appeared in 1970s and 1980s. Concept of Corporate Social Responsibility follows. Business degrees start including courses on business ethics. Well established from 1990s with textbooks, case studies and journal articles. Business Ethics: The Sustainable and Responsible Way | © Sunil G Savur 2024 | 16 SAGE Publishing Business case for business ethics (1 of 2) Is ethics getting better in business? – answer not very clear. A 2021 survey show (1) ethical culture strength is high in workplaces but (2) pressure on employees to compromise standards is also high. Whose interests should businesses exist to serve? Two views: – shareholder concept that businesses exist to increase shareholder wealth. – stakeholder concept that growth in values of other stakeholders is equally important. Business Ethics: The Sustainable and Responsible Way | © Sunil G Savur 2024 | 17 SAGE Publishing Business case for business ethics (2 of 2) One view – Return on Investment (ROI) for ethics is difficult to justify – hard to prove ethics bring profits. Second view – ROI for ethics has real value because it effects expenses such as costs of unethical conduct, averting law suits, legal fees, insurance policies. 2019 analysis shows ethical and stakeholder-focused companies yield higher returns than S&P 500 over a 20- year period. There are factors that influence unethical behaviour. There are motivations for businesses to be ethical. Business Ethics: The Sustainable and Responsible Way | © Sunil G Savur 2024 | 18 SAGE Publishing Purpose (1 of 2) Common responses for purpose of business: make profit, satisfy customers, design and deliver products and services. They do not address fundamental questions: – why do businesses need to exist? – what contributions do they make to society & environment? – what do they want to be known for? Business Ethics: The Sustainable and Responsible Way | © Sunil G Savur 2024 | 19 SAGE Publishing Purpose (2 of 2) Purpose is a definitive statement about the difference a business makes in making the world a better place. Strong correlation between purpose, ethical leadership and financial performance. Purpose must form the basis for ethical business conduct. Brands need to clearly reason why they exist beyond profit. More people are now preferring to work for firms that have a genuine purpose beyond profit. Business Ethics: The Sustainable and Responsible Way | © Sunil G Savur 2024 | 20 SAGE Publishing From purpose to action (1 of 3) Three main sections 1. Why we exist? – Purpose and Meaning 2. What we aim to achieve? – Mission and Vision 3. How we plan to achieve it? – Strategy and Action Business Ethics: The Sustainable and Responsible Way | © Sunil G Savur 2024 | 21 SAGE Publishing From purpose to action (2 of 3) Challenges for Purpose – Demand and desire to align purpose with investments. – Finding right balance between shareholder creation and sustainability. – Leaders cannot work alone – they need to work together with all entities. – Hard to embrace purpose due to existing business arrangements and pressures. – Purpose needs to be embedded throughout the organization and that takes time. Business Ethics: The Sustainable and Responsible Way | © Sunil G Savur 2024 | 22 SAGE Publishing From purpose to action (3 of 3) Business Ethics: The Sustainable and Responsible Way | © Sunil G Savur 2024 | 23 SAGE Publishing