ISL452U-BUSINESS ETHICS
Chapter 1: Introduction to Business Ethics
Introduction
Because of the current legal regulations and increased awareness of both individuals and businesses, nowadays the relationship between ethics and business is almost inevitable.
The Concept of Business Ethics
The concept of business ethics is an important issue that we hear very often in daily life. In order to fully understand the concept of business ethics, it is aimed to reveal the following subheadings as follows; the definition of ethics and the ethical questions, relationship between business and ethics, definition of business ethics, reason for studying business ethics, defining the core concepts related to ethics and ethical levels.
Definition of Ethics and the Ethical Questions
Ethics is a discipline that answers certain kinds of questions such as what is right, what is good, and what is a good life. Also, it is a set of principles that are both standards and expectations for behavior generally accepted in society.
The Relationship Between Business and Ethics
Weiss explains some reasons why business and ethics should be properly correlated:
• Firstly, there might be some gray fields between the relation of business and society which hasn’t been covered with legal regulations yet, • Secondly, free-market and regulated-market mechanisms don’t provide sufficient guidance to instances with ethical consequences, • And the third argument expresses that, especially complex ethical issues could require a common understanding of justice among society.
The relationship between business and ethics may be based on different motivations and levels. Becker (2019, p. 2-6) proposes two different approaches as instrumental perspective and philosophical perspective. The instrumental perspective explains the functional extension of ethics for business. Most businesses implement ethical norms optimally just for supporting business success and use it as a tool for business strategies, operations, and organizational design. On the other hand, the philosophical perspective explains the meaning of business from an ethical viewpoint. This perspective takes the main question of ethics which is “what is a good life?” and adapts that understanding into the business activities.
Definition of Business Ethics
Defining “business ethics” is a challenging task. Based on the perspective of this book, it’s possible to consider the subject in a normative or descriptive way. While normative perspective concerns rules and principles that are expected to shape behaviors, descriptive perspective
concerns the way how things are done instead of how it should be.
It’s possible to define business ethics as a form of applied ethics that examines ethical rules and principles within a commercial context (Jones Christensen et al., 2007, p. 351). According to Epstein (1987, p. 104), business ethics focuses specifically on how ethical standards should be applied to business policies, institutions, and behavior.
Why Studying Business Ethics is Important?
It will be also useful to elaborate on the results of ethical behaviors in practical terms to observe their reflections on businesses. For example, Lawrence and Weber (2020, p. 97-101) summarize these results as follows:
• Enhance business performance • Comply with Legal Requirements • Prevent or Minimize Harm • Meet Demands of Business Stakeholders • Promote Personal Morality
Defining the Core Concepts Related to Ethics
Value: In general, values are beliefs or standards that incline us to behave or choose in one way rather than another. There are types of values that address different issues in life such as religious values, financial values, or ethical values (DesJardins, 2014, p. 8). Behaviors like trust, accountability, honesty, etc. could be given as examples of desired ethical values at a workplace.
Norm: Norms can be defined as a reflection of social values that are shared by the individuals. In addition to identifying the correct behaviors and relationships, successful and rational norms may also direct behaviors by articulating the associated rights and obligations with reasonable consistency and concreteness (Ip, 2009, p. 471).
Principles: Principle is a general statement and a sort of obligation that identifies correct behaviors set by an individual or group. In this sense the meanings of principles and norms are very close and sometimes they could be used synonymously. However, their degree of specification distinguishes their meanings. While principles are more abstract, norms are established at the moral level (Neves, 2016, p. 1174-1175).
Morality: Typically, morality means a collection of values, a set of rules and norms that people live accordingly.
Law: With a general understanding it’s possible to define law as the formal written rules of society on what constitutes right and wrong actions in different areas of life.
Corporate social responsibility: Corporate social responsibility is mainly about producing results from organizational actions on particular problems or issues that have positive effects on relevant corporate stakeholders rather than detrimental effects (Epstein, 1987, p. 104).
Levels of Business Ethics
Individual Level: It deals with ethical problems and dilemmas encountered in daily life.
Organizational (Managerial) Level: This level refers to the ethical problems faced by individuals as employees or managers.
Association Level: This level refers to ethical problems faced by professional groups (e.g., accountants, bankers, civil engineers, or journalists)
Societal Level: This level explains new developments that affect societies such as technology.
Global (International) Level: Businesses operating in various countries could follow different practices between the home and the host country. These differences could depend on many factors including law, culture, the system of government, or socioeconomic atmosphere.
Historical Development of Business Ethics
Ethics before the 1960s: This period refers to a wide time span extending to the industrial revolution. This period can be interpreted as a process in which important social developments took place and ethical issues were mainly addressed from a religious perspective.
Ethics in the 1960s: It is a period where important social issues emerged after two major world wars in the recent past. It is seen that developments such as social unrest and anti-war sensitivity dominated the ethical climate of this period. Also, civil rights issues, employee employer tensions, and environmental problems such as pollution, nuclear waste, etc. were important issues of the period.
Ethics in the 1970s: During this period, ethical issues such as human rights and employee militancy came to the fore. Also, in this period, businesses were mostly having a tendency for covering up the problems instead of solving them.
Ethics in the 1980s: During this period, very important managerial ethical scandals and corporate wrong‐doings arose. In addition, businesses had ethical negligence in issues such as price conflict, product, and environmental safety, bribery, and deceptive advertising in the 1980s.
Ethics in the 1990s: In this period, business ethics practices started the institutionalization process in the face of unethical behaviors of businesses from the 80’s, and various ethical compliance programs have been implemented in order to spread ethical behavior among businesses. On the other hand, the businesses that didn’t follow the ethical compliance programs were penalized.
Ethics in the 2000s: Business ethics, which started to institutionalize in the 90s, has become fully institutionalized in the 2000s. During this period, new ethical issues have come up in parallel with the developments in digital fields including cybercrime, privacy issues, and intellectual property theft.
Ethics in the 2010s: Income inequality, demands for more transparent management, privacy breach concerns, and various internet-based topics could be counted as the main issues of the period.
Ethical Theories
In literature, there are several approaches and distinctions about ethical theories. First of all, it is possible to divide the approaches to ethics basically into two as normative and descriptive. While normative ethics focuses on how to behave, descriptive ethics focuses on how people are currently behaving, and on their reasons (Fisher and Lovell, 2006). Also, during the examination of normative theories, there are teleological and deontological approaches (Derry and Green, 1989). Teleological approaches have a consequential view that mainly focus on outcomes and determine the badness or goodness, wrongness, or correctness of action by their results (Ciulla, 2020, p. 14). On the other hand, deontological approaches have a non-consequentialist view that considers the intentions and rights of individuals. Thus, according to the deontological approach, the ethical duties and prohibitions of the individual should be evaluated in her/his inner world rather than external rules (Bennett- Woods, 2005).
Moral Philosophy for Ethical Decision-Making
Utility‐based ethics, Kant’s duty‐based ethics, and Virtue‐ based ethics are discussed under the title moral philosophy.
Utility-Based Ethics: Essentially, in utilitarianism, there is a “good” that actions should aim for. In this sense, it has a consequential view. Utilitarianism is an approach that puts the benefit to the center of all human behaviors and defends that the basic element that motivates people for an activity is the benefit.
Kant’s Duty-Based Ethics: Kant claims that duty is the most important ethical principle. The norm for ethical behavior, for Kant, is not to maximize happiness, but rather to behave under one’s duties. According to this approach, humans are rational moral actors, and what makes an action good or bad is not the consequences of the action, but the intention underlying the action. Thus, the theory has a non-consequential ethical view.
Virtue-Based Ethics: Virtue could be defined as an exceptional, enduring quality of character that an individual learns by (inter)action, thought, and experience over time and helps a person to behave others admirably (Solomon, 1992, p. 192). Virtue based ethics have its roots in Plato and Aristotle’s moral theories and the basic assumption of the theory is that virtuous people behave virtuously. Thus, while the previous approaches are more action-oriented, virtue-based ethics focuses on imbuing the human with virtues.
Some Other Ethical Theories
Also, some other fruitful theories which allow us to recognize and analyze ethical issues, namely Natural law theory, Contract theory, and Ethics of care will be discussed in this part.
Natural Law Theory: The theory basically tells us that “actions are right just because they are natural, and wrong just because they are unnatural. And people are good or bad to the extent that they fulfill their true nature the more they fulfill their true nature, the better they are” (Shafer- Landau, 2018, p. 77).
Contract Theory: In general terms, contract theory discusses the creation of formal and informal arrangements that enable persons with competing interests to take mutually beneficial steps. Therefore, the theory suggests getting the agreement of all parties who will be affected by the decision before making it (Scharding, 2018).
Ethics of Care: Ethics of care is an important approach that succeeded in presenting an alternative perspective in moral philosophy by placing the dignity of women, the importance of women’s studies in terms of moral philosophy, and the answers that women can give to some fundamental problems of moral philosophy in a central position (Held, 2006).