Business Ethics

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Business Ethics

• Lecturer Piet Westerhuis
• Windesheim University,Zwolle
• The Netherlands

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Introducing Business Ethics

• Lecture 1

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Overview

• What is business ethics?
• Why is business ethics important?
• Globalization a key context for business ethics?
• Sustainability a key goal for business ethics?

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What is business ethics?

• Business ethics is the study of business
  situations, activities, and decisions where
  issues of right and wrong are addressed.

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Ethics and the law
Ethics
Law
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Defining morality, ethics and ethical theory

• Morality is concerned with the norms, values and
  beliefs embedded in social processes which define
  right and wrong for an individual or a community.
  
• 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 any given situation.
• These rules and principles are called ethical
  theories.

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The relationship between morality, ethics and
ethical theory
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Why is business ethics important?

• Power and influence of business in society
• Potential to provide major contribution to
  society
• Potential to inflict harm
• Increasing demands from stakeholders
• Lack of business ethics education or training
• Continued occurrence of ethical infractions
• 7. Interesting and rewarding

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Types of misconduct across sectors
Source Ethics Resource Center (2008)
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Observed ethical misconduct across sectors
Source Ethics Resource Center (2008)
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Differences across organizational types
Stakeholders
Public sector organizations
Civil society organizations
Small businesses
Large corporations
Main priorities in addressing ethical issues
Rule of law, corruption, conflict of interest
procedural accountability issues
Delivery of mission to clients integrity of
tactics legitimacy and accountability
Financial integrity, employee/customer issues
Financial integrity, employee/customer issues
Approach to managing ethics
Formal, public relations and/or systems-based
Formal, bureaucratic
Informal, values-based
Informal, trust-based
Shareholders and other stakeholders
Responsible and/or accountable to
General public, higher level government
organizations
Donors and clients
Owners
Inertia, lack of transparency
Lack of resources and formal training
Lack of resources and attention
Shareholder orientation size and complexity
Main constraints
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Globalization a key context for business ethics?
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What is globalization?

• Globalization is not the same as
• internationalization
• westernization
• Globalization is a process which diminishes the
  necessity of a common and shared territorial
  basis for social, economic, and political
  activities, processes, and relations.
• deterritorialization

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Relevance of globalization for business ethics

• Cultural issues
• Legal issues
• Accountability issues
• Globalization can affect all stakeholders of the
• corporation

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Ethical impacts of globalization
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International perspectives on business ethics
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Different approaches to business ethics

• Who is responsible for ethical conduct in
  business?
• Who is the key actor in business ethics?
• What are the key ethical guidelines for ethical
  behaviour?
• What are the key issues in business ethics?
• What is the most dominant stakeholder management
  approach?

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Regional differences Europe, North America, Asia
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Sustainability a key goal for business ethics?
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Defining sustainability

• Sustainable development is development that meets
  the needs of the present without compromising the
  ability of future generations to meet their own
  needs. (World Commission on Environment and
  Development 1987)
• Sustainability refers to the long-term
  maintenance of systems according to
  environmental, economic and social considerations

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The three components of sustainability
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Triple bottom line

• Coined by John Elkington
• Bottom line thinking suggests sustainability as a
  goal
• Three dimensions
• Environmental perspectives
• Economic perspectives
• Social perspectives

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Corporate commitments to sustainability
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Summary

• Definition of business ethics
• Business ethics is vital for business in
  contemporary capitalism
• Global view is essential to understand ethical
  issues
• Different regions have distinctly different
  perspective on business ethics issues
• Sustainability is an important goal for business
  ethics