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com
Ethics and Business
Afrinda Gita Shofia
Egga Pramuditya
Roberto Fernando Siahaan
Rossmansi Wahid Suro
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Ethics and Morality








Morality :

The standards that an individual
or a group has about what is right
and wrong, or good and evil.
Example: B.F. Goodrich A7-D
Fraud


Moral Standards :

Norms about the kinds of actions
that are morally right and wrong,
as well as the values placed on
what is morally good or bad.

Non-Moral Standards :

The standards by which we judge
what is good or bad and right or
wrong in a non-moral way.


Ethics :

The study of morality


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Six Characteristics of Moral Standards
1. Involve significant injuries or benefits

2. Not established by authority figures
3. Should be preferred to other values including self-interest

5. Based on impartial considerations
6. Associated with special emotions and vocabulary
4. Felt to be universal

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What is Business Ethics?








Broadly, ethics is the discipline that examines ones moral
standards or the moral standards of a society to evaluate their
reasonableness and their implications for ones life.

Business ethics is a specialized study of moral right and
wrong that concentrates on moral standards as they apply to
business institutions, organizations, and behavior.

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Types of Ethical Issues








Systemic :
ethical questions
about the social,
political, legal, or
economic
systems within
which companies
operate.

Corporate :
ethical questions
about a particular
corporation and
its policies,
culture, climate,
impact, or
actions.

Individual :
ethical questions
about a particular
individuals
decisions,
behavior, or
character.

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Can ethical qualities be attributed to corporations?








corporations, like people, act intentionally and have moral
rights, and obligations, and are morally responsible.

it makes no sense to attribute ethical qualities to
corporations since they are not like people but more like
machines; only humans can have ethical qualities.

humans carry out the corporations actions so they are
morally responsible for what they do and ethical qualities
apply in a primary sense to them; corporations have ethical
qualities only in a derivative sense.

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Arguments
Supporting Business
Ethics
In a free market economy, the
pursuit of profit will ensure
maximum social benefit so
business ethics is not needed.

A managers most important
obligation is loyalty to the company
regardless of ethics.

So long as companies obey the
law they will do all that ethics
requires.

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Arguments Against
Business Ethics
Ethics
applies to all
human
activities.

Business
cannot survive
without ethics
Ethics is
consistent with
profit seeking.
Customers,
employees, and
people in general
care about ethics.
Studies suggest
ethics does not
detract from
profits and seems
to contribute to
profits.

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Corporate social responsibility
refers to a corporations
responsibilities or obligations
toward society.

Business ethics is both a part of
corporate social responsibility and
part of the justification for corporate
social responsibility.

Shareholder vs. Stakeholder
Theory
Corporate
Social
Responsibility
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New Issues in Business Ethics


Advances in technology often create new issues for
business ethics.
Currently, advances in information
technology are creating new issues in
business ethics.

Increasing connections between the economic
and social systems of different nations, known
as globalization, has also created new issues in
business ethics.

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Resolving Cross-Cultural Ethical Differences


Moral Relativism
The theory that there are
no ethical standards that
are absolutely true and
that apply or should be
applied to the
companies and people
of all societies.


a. Some moral standards are found in
all societies
b. Moral differences do not logically
imply relativism
c. Relativism has incoherent
consequences
d. Relativism privileges whatever moral
standards are widely accepted in a
society.





Objections to Moral
Relativism :
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Resolving Cross-Cultural Ethical Differences


According to the Integrative Social
Contracts Theory (ISCT), there are
two kinds of moral standards :
Hypernorms, those
moral standards that should
be applied to people in all
societies.

Microsocial norms, those
norms that differ from one
community to another and that
should be applied to people only
if their community accepts those
particular norms.

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Kohlbergs Three Levels of Moral Development


First Level:
Pre-conventional
Stages

Stage One:
punishment and
obedience
orientation

Stage Two:
instrumental and
relative orientation

Second Level:
Conventional Stages


Stage One:
interpersonal
concordance
orientation

Stage Two:
law and order
orientation

Third Level: Post-
conventional Stages


Stage One:
social contract
orientation


Stage Two:
universal principles
orientation

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Moral Reasoning
The reasoning process by which human behaviors,
institutions, or policies are judged to be in accordance
with or in violation of moral standards.

Moral reasoning involves :
1. The moral standards by which we
evaluate things

2. Information about what is being
evaluated

3. A moral judgment about what is
being evaluated

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Four Steps Leading to Ethical Behavior
Requires framing it as one that
requires ethical reasoning

STEP 1
Recognizing a
situation is an ethical
situation
Situation is likely to be seen as ethical when:

involves serious harm that is concentrated,
likely, proximate, imminent, and potentially
violates our moral standards

Obstacles to recognizing a situation:

Euphemistic labeling, justifying our actions,
advantageous comparisons, displacement of
responsibility, diffusion of responsibility,
distorting the harm, and dehumanization,
and attribution of blame.

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Four Steps Leading to Ethical Behavior
STEP 2
Judging the ethical
course of action
Requires moral reasoning that applies our
moral standards to the information we have
about a situation.

Requires realizing that information about a
situation may be distorted by biased
theories about the world, about others, and
about oneself.

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Four Steps Leading to Ethical Behavior
STEP 3
Deciding to do the
ethical course of
action.
Deciding to do what is ethical can be
influenced by:

1. The culture of an organization
peoples decisions to do what is ethical
are greatly influenced by their
surroundings.

2. Moral seduction-organizations can also
generate a form of moral seduction that can
exert subtle pressures that can gradually lead
an ethical person into decisions to do what he
or she knows is wrong.


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Four Steps Leading to Ethical Behavior
STEP 4
Carrying out the
ethical decision.
Factors that influence whether a person
carries out their ethical decision include:

1. Ones strenght or weakness of will
2. Ones belief about the locus of control
of ones actions
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Moral Responsibility
Person caused or helped
cause the injury, or failed to
prevent it when he or she
could and should have
(causality).

Three
Components of
Moral
Responsibility
People dis do knowing what
he or she was doing
(knowledge)
Person did so of his or
her own free will
(freedom).
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Factors that Mitigate Moral
Responsibility
Minimal
contribution

In general, the less
ones actual actions
contribute to the
outcome of an act,
the less one is
morally responsible
for that outcome.


Uncertainty

A person may be
fairly convinced that
doing something is
wrong yet may still
be doubtful about
some important
facts, or may have
doubts about the
moral standards
involved, or doubts
about how seriously
wrong the action is.

Difficulty

A person may find
it difficult to avoid
a certain course of
action because he
or she is subjected
to threats or duress
of some sort or
because avoiding
that course of
action will impose
heavy costs on the
person.

Case Study
45% of he chocolate
consumed in USA made from
Ivory Coasts cocoa beans. It is
$13 billion industry
They used childs under aged
as labor and treat them
unproperly
Biggest chocolate producer:
Hersheys Food Corp, M&M
Mars, Inc., Nestle, and Kraft
Food
The law cannot stop producer
to use child as their worker
What are the systematic, corporate, and
individual ethical issues raised by this case?
Is it case absolutely wrong? Or relatively
wrong?
Who shares in the moral responsibility for the
slavery occuring in the chocolate industry?
What does this incident show about the view
that to be ethical it is enough for
businesspeople to follow the law?
The law is poorly enforced
The US representative seems not interested to goal law
about restricting using slave labor
Unstable economic
Systematic
No sign from companies being done on sertification
system
Companies have great lobbying on US representative
Corporate
The farmer treat the slave labor inhumane
The middleman buying cocoa beans under market price
The corporate didnt build enough infrastrucutre to
accomodate their labor
Individual
We think is relatively wrong, why?
We use utilitarianism point of view, that stated:
Utilitarianism is a theory in normative ethics
holding that the proper course of action is the
one that maximizes utility, usually defined as
maximizing happiness and reducing suffering.
Moral Relativism = the theory that there are no
ethical standards that are absolutely true and
that apply or should be applied to the companies
and people of all societies
Trafficking agent
Farmer
Middleman
Ivory Coast Government
Corporate
US Representative
Us
According to the case, weve seen that they
(chocolate Company) Lobbying the US
Senator for not create Law of Slavery,
because if they create the regulation of
Slavery, it will make a big impact for their
profit for example like decreasing margin of
profit. So, ethical issue is not most concern
matter for them. Most of them only think
how to gain more profit from less
expenditure