6 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.
7 The relationship between morality, ethics and ethical theory …that can be applied to any situation.… to produce ethicaltheory …Ethics rationalizes morality …MoralityEthicsEthical theoryPotential solutions to ethical problems
8 Why is business ethics important? Power and influence of business in societyPotential to provide major contribution to societyPotential to inflict harmIncreasing demands from stakeholdersLack of business ethics education or trainingContinued occurrence of ethical infractions7. Interesting and rewarding
11 Differences across organizational types StakeholdersLarge corporationsSmall businessesCivil society organizationsPublic sector organizationsMain priorities in addressing ethical issuesFinancial integrity, employee/customer issuesFinancial integrity, employee/customer issuesDelivery of mission to clients; integrity of tactics; legitimacy and accountabilityRule of law, corruption, conflict of interest; procedural & accountability issuesApproach to managing ethicsFormal, public relations and/or systems-basedInformal, trust-basedInformal, values-basedFormal, bureaucraticResponsible and/or accountable toShareholders and other stakeholdersOwnersDonors and clientsGeneral public, higher level government organizationsMain constraintsShareholder orientation; size and complexityLack of resources and attentionLack of resources and formal trainingInertia, lack of transparency
12 Globalization: a key context for business ethics?
13 What is globalization? Globalization is not the same as: ‘internationalization’‘westernization’Globalization is: a process which diminishes the necessity of a common and shared territorial basis for social, economic, and political activities, processes, and relations.‘deterritorialization’
14 Relevance of globalization for business ethics Cultural issuesLegal issuesAccountability issuesGlobalization can affect all stakeholders of thecorporation
15 Ethical impacts of globalization Globalization provides potential for greater profitability, but also greater risks. Lack of regulation of global capital markets, leading to additional financial risks and instability.Corporations outsource production to developing countries in order to reduce costs in global marketplace - this provides jobs but also raises the potential for exploitation of employees through poor working conditions.Global products provide social benefits to consumers across the globe, but may also meet protests about cultural imperialism and westernization. Globalization can bring cheaper prices to customers, but vulnerable consumers in developing countries may also face the possibility of exploitation by MNCs.Suppliers in developing countries face regulation from MNCs through supply chain management. Small scale indigenous competitors exposed to powerful global players.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 where governments are weak and tolerant.StakeholdersEthical impacts of globalizationShareholdersEmployeesSuppliers & competitorsCivil society (NGOs, etc)Government & regulationConsumersGlobalization weakens governments and increases the corporate responsibility for jobs, welfare, maintenance of ethical standards, etc. Globalization also confronts governments with corporations from different cultural expectations about issues such as bribery, corruption, taxation, and philanthropy.
17 Different approaches to business ethics Who is responsible for ethical conduct in business?Who is the key actor in business ethics?What are the key ethical guidelines for ethical behaviour?What are the key issues in business ethics?What is the most dominant stakeholder management approach?
18 Regional differences: Europe, North America, Asia The individualEuropeN. AmericaAsiaWho is responsible for ethical conduct in business?Who is the key actor in business ethics?What are the key guidelines for ethical behaviour?What are the key issues in business ethics?What is the dominant stakeholder management approach?Top managementGovernment, corporationsManagerial discretionCorporate governance and accountabilityImplicit multiple stakeholder approach, benign managerialismThe corporationCorporate codes of ethicsMisconduct and immorality in single decisions situationsFocus on shareholder valueSocial control by the collectiveGovernment, trade unions, corporate associationsNegotiated legal framework of businessSocial issues in organizing the framework of businessFormalised multiple stakeholder approach
19 Sustainability: a key goal for business ethics?
20 Defining sustainability 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
21 The three components of sustainability EconomicSocialEnvironmental
22 Triple bottom line Coined by John Elkington Bottom line thinking suggests sustainability as a goalThree dimensions:Environmental perspectivesEconomic perspectivesSocial perspectives
23 Corporate commitments to sustainability “At BP we define sustainability as the capacity to endure as a group: by renewing assets; creating and delivering better products and services that meet the evolving needs of society; attracting successive generations of employees; contributing to a sustainable environment; and retaining the trust and support of our customers, shareholders and the communities in which we operate.”“[Sustainability] means enhancing our relationship with host and partner governments, building consumer confidence in diamonds, and ensuring our activities contribute positively to … both present and future generations.”“Corporate responsibility (CR) at Nokia is a collective effort. We believe that management of CR issues is most effective when sustainability policies and programs are embedded in every aspect of our operations. ”“ [For Toyota, a guiding principle is] ‘contributing to the development of a prosperous society through the manufacture of automobiles.’ ‘Contributing to the development of a prosperous society’ means ‘contributing to the sustainable development of the earth.’”“Values, social responsibility and active sustainability are integral [to] our company culture. We are future-oriented in our approach to important issues such as climate change. We operate a broad range of [R&D] activities and provide trend-setting approaches to the mobility of tomorrow.”CompanySustainability statementSourceBPDeBeersNokiaToyotaVolkswagenSustainability Report, 20072009CSR Report, 2007Sustainability Report, 20082009
24 Summary Definition of business ethics Business ethics is vital for business in contemporary capitalismGlobal view is essential to understand ethical issuesDifferent regions have distinctly different perspective on business ethics issuesSustainability is an important goal for business ethics