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CHAPTER 2BUSINESS ETHICS
ETHICS: The study of right and wrong and the morality of the choices individuals
make.
BUSINESS ETHICS: Application of moral standards to business situations.
ETHICAL ISSUES
Ethical issues often arise out of a business’s relationships with investors, customers,
employees, creditors or competitors. Each of these has specific concerns:
Investors: Want management to make sensible financial decisions that will
boost sales, profits and returns on their investments.
Customers: Expect a firm’s product to be safe, reliable, and reasonably
priced.
Employees: Demand to be treated fairly in hiring, promotion, and
compensation decisions.
Creditors: Require accounts to be paid on time and the accounting
information to be accurate.
4 GENERAL ETHICAL ISSUES
FAIRNESS AND HONESTY
Besides obeying all laws and regulations, businesspeople are expected to refrain
from knowingly deceiving, misrepresenting or intimidating others. E.g., casino
contracts
ORGANISATIONAL RELATIONSHIPS
A businessperson may be tempted to place his or her personal welfare above the
welfare of others or the welfare of the organisation. Relationships with customers
and co-workers often create unethical problems. Unethical behavior in these areas
includes taking credit for others’ ideas or work, not meeting one’s commitments in a
mutual agreement and pressuring others to behave unethically.
CONFLICT OF INTEREST
Results when a businessperson takes advantage of a situation for his or her own
personal interest rather than for the employer’s interest. Such a conflict may occur
when payments and gifts make their way into business deals. E.g., car salesperson
, COMMUNICATIONS
Business communications, especially advertisements, can present ethical questions.
False and misleading advertising is illegal and unethical and it can infuriate
customers. The Federal Commission has issued guidelines on the use of labels such
as low fat, fat free and light.
FACTORS INFLUENCING ETHICAL BEHAVIOUR
INDIVIDUAL FACTORS AFFECTING ETHICS
Individual knowledge of an issue - How much an individual knows.
Personal values - Moral values and central, value-related attitudes influence
business behavior.
Personal goals - Types of personal goals and the manner in which these goals
and pursued have a significant effect of an individual’s behavior in the
workplace.
SOCIAL FACTORS AFFECTING ETHICS
Cultural norms - Behavior in the workplace is determined by cultural norms.
Co-workers - Actions and decisions of co-workers affect your sense of ethics.
Significant others - Moral values of spouses, friends and relatives affect
employee’s perception of what is ethical and unethical.
Use of the internet.
“OPPORTUNITY” AS A FACTOR AFFECTING ETHICS
Presence of opportunity – Refers to the amount of freedom an organisation
gives an employee to behave unethically if he or she makes that choice. In
some organisations, certain company policies and procedures reduce the
opportunity to be unethical.
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