MODULE 4:foundations of The Principles of Business Ethics

MODULE 4:Foundations of
the Principles of Business

Ethics
Philosophical Ethics
• Facing an ethical dilemmas is oftentimes an uncomfortable situation.
In worse cases, it may compromise your credibility and dignity. It can
make you lose face or lose your job. In times when you need to assess
a situation if you our about to do the right thing, most people would
naturally find the answer in their religious beliefs or the values system
they grew up with. However, this is a relative viewpoint, because if
ethics is base on religion, and if different cultures have differing
religious beliefs, then what is ethically wrong in one belief may be
ethically right in another.
• Unlike religious ethics, which explains human well-being in religious terms,
philosophical ethics provides justification that must be applicable to all people
regardless of their religious viewpoint (Hartman, DesJardins, MacDonald
2014)
Study the following statements:
1. I will donate to Yolanda victims to help them rebuild their lives.
2. I will donate to Yolanda victims because God expects me to help other
people.
Both involve the same action, but the first statement is a philosophical
justification for an ethical judgment, while the second statement is primarily a
religious reasoning behind the action.
Several frameworks may guide a person’s action,base on the source of
moral activity.
Ethical Framework Source of Moral Activity
Utilitarianism • Making decisions based on ethical consequences.

• Results-based approach
• The ends justify the means
Ethics of Principles and Rights • Making decisions based on principle, and not just on
consequences
• The ends DO NOT justify the means
Virtue Ethics Grounded on character traits and emphasizes moral character

in contrast to moral rules or consequences of actions
Utilitarianism: A consequentialist (Result-
based) Approach
• Utilitarianism hold that an action is judged based on its overall
consequences. Tracing its roots to the 18th and 19th century social and
political philosophy founded by Jeremy Bentham (1748-1832) and
John Stuart Mill (1806-1873), it is just relevant in the 21st century.
• Utilitarianism is also called the consequentialist approach to ethics
and social policy ---- that each one should act in ways tha produce
better consequences or results, regardless of the means taken to
reach those results. “Better consquences” are results that promote
human well-being such as happiness, dignity, health, integrity,
freedom, and respect of the people involve of affected. This approach
also upholds the following principles:
1. A decision is morally right if it promotes the
greatest good for the greatest number of people.
• Example:
• The new environment secretary was approached by several mining
business magnates to provide them with mining permits. However,
the applications for mining permits were rejected because the new
environment secretary believes that the mining activities will have
severe negative impacts on the environment.
2. It is morally right if the net benefits over costs are greatest for all
people affected, compared with the net benefits over costs of all other
possible choices.
• Example:
• The new transportation secretary, in the pursuit of solving traffic
problems in Metro Manila, came up with a permanent solution.
However, this solution will require shutting off the MRT operations for
one year. Other solution, on the other hand, will just be temporary
and will definitely just ignite angry commuters more because of the
frequent breakdown of the MRT coaches that can happen over a
longer period of time, with no clear solution of the problems.
3. It s morally right if its benefits are greatest for each individual and if
this benefits outweigh the costs and benefits of alternatives.
• Example:
• The aggressive drive of the government to apprehend drug addicts
and rehabilitate them will not just benefit the drug addicts
themselves but also their families and the society
Rule-based Utilitarianism Act-based Utilitarianism
Definition General principles are used in The decision is based on the
making a decision on the greatest likelihood of achieving greatest
benefit that can be achieved from utility or good by analyzing
an action. particular actions or behavior.
Key Concepts Uses rules to determine ethical Uses analysis of particular actions
behavior or behavior to determine what is
the best behavior.
Application in Business Companies usually have a An employee of a company that
confidentiality clause, where manufactures milk tainted with
employees who share trades melamine (a toxic industrial
secrets, formulations, company compound that gives the
documents, etc., may be given appearance of higher protein
sanctions or terminated when content when added to milk,
the divulge this information to a which causes protein deficiency
competitor or the public. and malnutrition leading to infant
deaths) may choose to divulge
this information to the media or
public in order to save babies
from dying. While it violated the
• Utilitarian concepts are widely practiced in the government and
business environments, because utilitarianism considers both the
collective interests as well some particular interest analyzes and
formulates alternative choices based on the greatest good of
everyone involved in the decisions, and estimates the costs and
benefits of alternative choices for the affected groups.
• Utilitarianism and Business Decisions
• Utilitarianism answers the fundamental question “what should we do?”
which is always applicable in business because of the many decisions that
need to be done. In reference to maximizing overall good, business
organizations are always on the lookout for conducting cost-benefit analysis in
making a decision based on the maximum benefits that can be achieved with
minimal costs
• In the example provided in table, when an employee found out that melamine is being
used in the milk that his or her company manufactures, there are different stakeholders
that will be affected by divulging this information:
1. The consumers will benefit from the employees action as the company will most likely
be shutdown, or the milk manufactured will be withdrawn from the market, so the
baby will stay safe.
2. The company may be close down.
3. The employees will lose their jobs.
4. The suppliers of the company will lose a client.
5. The environment may benefit if the company has dismal manufacturing practices.
• By assessing effect utilitarianism will have on the different
stakeholders involved, the management or the governing body can
take action on the situation.
• However, there are also challenges in using utilitarianism in making
decisions.
• 1. there are really no exact definition of “good” for all concerned, and
there is no agreement on who decides, whose interests are prioritized
in decisions, and for whose good it is that has to be considered.
• 2. it will be hard to quantify the costs of nonmonetary stakes and
long-term effects of an action.
• 3. while utilitarianism considers the collective interest, there are times
when individual interest may need to be prioritized.
Ethics of Principles and Rights
• Considering the greatest good in decision-making is definitely an ethical way of arriving at a decision,
but it is also important to consider principles and not just consequences. This explores the relationship
between legislative and judicial branches of government---- legislative role creates policies and
regulations based on utilitarian principles, while judicial role enforces these laws to achieved justice and
fairness. The second framework in this ethical philosophy is that some decisions are needed to be made
based on principles rather than consequences. For example, paying a bribe to customs will promote
greater good for the stakeholders, as follows:
• 1. The company will be able to process the raw materials immediately so they can be turned into
products.
• 2. the consumers will not experience delay in enjoying the products.
• 3. the customs officials will receive additional compensation that they can use to feed their families.
• However, the Philippine Constitution Republic Act No. 3019, or the Anti-Graft and Corrupt Practices Act, prohibits public
officials from receiving any gift in exchange for a favor. Thus, paying a bribe is not ethical based on ethics of principles and
rights.
Virtue Ethics
Virtues can be described as the character traits that would constitute a
good and meaningful life. Being happy, friendly, joyful, and calm;
preserving integrity and dignity; having good relationships; and processing
modest things are a few of the characteristics of having a meaningful life.
Virtue ethics is grounded on character traits and emphasizes moral
character in contrast to moral rules (deontology) or consequences of
actions (consequentialist approach and utilitarianism). It has roots in
ancient Chinese and Greek philosophy and is recognized to have been
established by Plato and Aristotle. It focuses on the type of person you
want to be, grounded on good character, motives, and core values, and not
on the actions that should be taken.
Impacts of Different Belief Systems on Business Ethics.
Human beings have different personalities, different goals, different

values, and thus, have different belief systems. Companies with cultural
diversity welcome people with different backgrounds from different
cultures. These different backgrounds, especially religious orientations
or belief systems, have impacts on business ethics.
Buddhism
• Buddhism is a religion that originated in India around 525 B.C. it is a flexible
system of beliefs that allows it to adapt to country-specific customs, and agrees
with the moral teachings of other religions. Centered in the Buddhism belief are
the five percepts or training rules, which help promote peaceful coexistence and
harmony in the society. These are the minimum moral obligation of the
Buddhists, which they fulfill by refraining from
1. Harming or taking lives of beings;
2. Taking what is not given;
3. Engaging in sexual misconduct;
4. Lying or spreading gossip; and
5. Taking intoxicating substances such as alcohol or drugs.
In this sense, business must be conducted in consideration of the five
percepts. For example, in conducting its business, an organization must
ensure the sustainable views of natural resources, so as not to
endanger lives and harm the environment.
Islam
• Shariah, the Islamic religious law based on the Qur’an, is applied in all
Muslim-dominated countries. In such countries, the Shariah law is the
legal authority. Islam favors trading or business, but it has to obey
rules, and most importantly, be guided by honesty. Cheating or
deception in economic transactions is condemned by the Qur’an.
Possible gains from the trade or business should not result in
materialism, which is considered as diverting the attention from more
important spiritual concerns.
Christianity
Christian beliefs are all based on the bible containing the Old and
New Testaments. In a study conducted by DePaul University, Christians
who considered that God called them to a particular occupation or
business were naturally concerned that their actions involving their
work or business must be conducted in an ethical manner and for the
good of community. Stewardship is another Christian concept where
Christians see themselves as stewards of resources or responsibilities
which cover stewardship to other people (leading them to the right
path) or using and caring for the environment.

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MODULE 4:Foundations of

the Principles of Business

Ethical Framework Source of Moral Activity

Utilitarianism • Making decisions based on ethical consequences.

Virtue Ethics Grounded on character traits and emphasizes moral character

Human beings have different personalities, different goals, different

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