Introducing Business Ethics
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Transcript of Introducing Business Ethics
Business EthicsLecture One
Introducing Business Ethics
[Shd]
Overview
Introducing Business Ethics What is business ethics? Why is business ethics important? Globalization: a new context for business ethics? Sustainability: a new goal for business ethics?
What is business ethics?
Business ethics is the study of business situations, activities, and decisions where issues of right and wrong are addressed.
( Crane and Matten, 2004:8)
Ethics and the Law
Ethics
Ethics = Law
Law
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.
The relationship between morality, ethics and ethical
theory Ethics
rationalizes
morality
Morality Ethics Ethical
theory
Potential
solutions to
ethical
problems
Why is business ethics important?
____________________________ Power and influence of business in society Potential to inflict harm Increasing demands from stakeholders Lack of business ethics education or training Continued occurrence of ethical infractions Evaluating different ways of managing business
ethics Interesting and rewarding
Globalization: a new context for business ethics
What is globalization?
According to Scholte (2000) globalization is not: ‘internationalization’ ‘liberalization’ ‘universalization’ ‘westernization’
Globalization is: the progressive eroding of the relevance of territorial bases for social, economic and political activities, processes and relations
‘deterritorialization’
Relevance of globalization for business ethics____________________________
Cultural issues Legal issues Accountability issues
Globalization can affect all stakeholders of the corporation
Stakeholders Impact of globalization (Crane and Matten, 2004,20, fig 1.3)
Shareholders Lack of regulation of global capital markets, leading to financial risks and instability
Employees Corporations outsource production to LDCs in order to reduce costs in global marketplace; raised potential for exploitation of employees with different cultural backgrounds and divergent moral standards
Consumers Global products face protests about cultural imperialism and westernization. Vulnerable consumers in LDCs face possibility of exploitation by MNCs
Suppliers and Competitors
Suppliers in LDCs face regulation from MNCs through supply chain management. Small scale indigenous competitors exposed to powerful global players
Civil Society (pressure groups, NGOs, local communities)
Global business activities brings the company in direct interaction to local communities with possibility for erosion of traditional community life; globally active pressure groups emerge with aim to ‘police’ the corporation in countries where governments are weak and tolerant
Government and regulation
Globalization weakens governments and increases the corporate responsibility for jobs, welfare, maintenance of ethical standards, etc.
Sustainability: a new goal for business ethics
Crane and Matten, 2004, 21, fig 1.4
Company Sustainability Statement Source
BP “We are committed to respond to the challenges posed by the objective of sustainable development. In our view sustainable development is a long term strategic issue that will involve business in considerations beyond its normal responsibilities”
Environmental and Social Review, 2000
Carlsberg
Breweries
“Carlsberg Breweries seeks to meet the needs of its consumers, customers and employees in an environmentally sound and sustainable manner”.
Environmental Report, 1998-2000
Nokia “Global industries are moving towards operating by social and ethical principles, such as environmentally sustainable practices. We wholeheartedly support this development and also participate actively in the global initiatives that support it”.
http://www.nokia.com
Shell “Shell companies are committed to contribute to sustainable development”.
People, Planets and Profits: The Shell Report, 2000
Volvo “Volvo’s environmental programmes shall be characterised by a holistic view, continuous improvement, technical development and resource efficiency. Volvo shall, by these means, gain competitive advantage and contribute to a sustainable development.”
Environmental Report, 2000
Defining sustainibility
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 (Crane and Matten, 2004: 24)
The three components of sustainability
____________________________
Economic Social
Environmental
Source: Crane and Matten, 2004, fig 1.5 p.22
Triple bottom line
Coined by John Elkington Bottom line thinking suggests
sustainability as a goal Three dimensions:
Environmental perspectives Economic perspectives Social perspectives
Summary
Definition of business ethics Business ethics is vital for business in
contemporary capitalism Global view is essential to understand
ethical issues Sustainability is an important goal for
business ethics