Business Ethics and Social Responsibility

Introduction to Ethics

Ethics is a system of moral principles. They affect how people makes decisions and lead their lives. It is concerned with what is good for individuals and society and also described as moral philosophy. Underinflated football issue in NFL, Turing increases drug price by 5000%, Uber’s billing policies are examples for ethics. Ethics is people feel “its just not right” like discuss seeing two movies for the price of one, disclosing your salary cut after the loan application is submitted.

It involves normative standards, generally accepted rules of conduct that govern society.

•  Normative standards - Standards which says how we behave on an average, how we treat each other, expectations on contracts beyond legal interpretations.

Business Ethics

Business ethics connotes the form of applied ethics, which studies ethical principles, morals and problems that takes place in business environment. It involves three main layers and it also involves the study of fairness and ethical standards.

•  Three layers of business ethics- Basic values (honesty), Notions of fairness (how we treat others), Issues related to community and the environment.
•  Ethical standards- are derived from different sources

1.  Positive law – establishes one standard for ethical behavior. But, compliance with positive law is not always ethical.
2.  Natural law and ethics – this school of ethical thoughts support the notion that some standards do not exist because of law.
3.  Moral relativism – establishes ethical standards accordingly to the situation in which dilemma is faced.
4.  Religion and ethics – the source of standards can be the Bible, the Quran or any inspired book or writing that is a cornerstone of a religion or faith.

Ethical Dilemmas: There are 12 categories of ethical dilemmas

•  Taking things that don’t belong to you
•  Saying things, you know are not true
•  Giving or allowing false impressions
•  Buying influence or engaging in conflict of interest
•  Hiding or divulging information
•  Taking unfair advantage
•  Committing acts of personal decadence
•  Perpetrating interpersonal abuse
•  Permitting organizational abuse
•  Violating rules
•  Condoning unethical actions
•  Balancing Ethical Dilemmas

Analyzing ethical dilemmas 

• Make sure you have a grasp of all the available facts.
• list any information you would like to have but don’t and what assumptions you would have to make, if any, in resolving the dilemma.
• Take each person involved in the dilemma and list the concerns they face or might have on what to do about a product and its safety issue.
• Develop a list of resolutions for the problem. Apply the various models for reaching this resolution.
• Evaluate the resolutions for costs, legalities, and impact. Try to determine how each of the parties will react to and be affected by each of the resolutions you have proposed. Make a recommendation for the actions that should be taken.

Resolution of dilemmas – the resolution of ethical dilemmas in business is often difficult, even in firms of codes of ethics and cultures committed to compliance with ethical models for decision making. Blanchard and Peale, The Front-Page-of-the-Newspaper Test, Laura Nash and Perspective, The Wall Street Journal Model, are some models developed by prominent scholars to make ethical decisions.

Why we fail to reach good ethical decisions – Rationalizations like

•  “Everybody else does it”
•  “If we don’t do it, someone else will”
•  “That’s the way it has always been done”
•  “We’ll wait until the lawyers tell us it’s wrong”
•  “It doesn’t really hurt anyone”
•  “The system is unfair”
•  “I was just following orders”
•  “You think this is bad, you should have seen…”
•  “It’s a gray area”

Social responsibility – It is another layer of business ethics. It consists of four school of thoughts that is inherence, enlightened self interest, invisible hand, social responsibility.

Importance of ethics - Executives feel ethical behavior strengthens a firm’s competitive edge.

Leadership and ethics – making choices before liability.

Ethics as a strategy - Ethical behavior plays an important role for long term success of business. One of the benefit is goodwill. Loss of goodwill and trust can destruct the firm. The mistakes of bluebell ice creams gives an unforgettable example for it.

Creating an ethical culture - Developing an Ethics Stance, Watch for Dangers of Unethical Environment, Being Careful About Pressure and Signals, A Possible Uniform Standard for Ethical Choices, A Possible Uniform Standard for Ethical Choices.

International business – Interdependence of trust and business, it includes corruption issues and economic systems and ethics.

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