week2
BUSINESS ETHICS (BUSS 215)
Instructor Information
Instructor: Dr. Alejandro Centeno
Email: ar96@aub.edu.lb
Institution: American University of Beirut
School: Suliman S. Olayan School of Business
Key Concepts
Difference Between Morals and Ethics
Morals:
Refers to personal values
Highly subjective and influenced by close relationships (e.g., family)
Ethics:
Refers to principles of how we should properly live our lives
Focuses on broader societal principles rather than personal beliefs
Associated with codes, norms, overall fairness, and wellness
Considered more objective than morals
Normative & Descriptive Ethics
Normative Ethics
Concerned with how people ought to behave
Constitutes rules of behavior
Descriptive Ethics
Explains how people do behave and how they think they should behave
More prevalent in society
Relationship Between Normative and Descriptive Ethics
There is often a relationship between the two; they can coincide but may also diverge
Question raised: Is Business Ethics a normative field?
Ethics & Law
Key Points
Law is an important guide to ethical decision-making, but:
Legal norms and ethical norms are not identical
They do not always align
Differences Between Legal and Ethical Responsibilities
Legal Responsibilities: Obligations to adhere to the law
Ethical Responsibilities: Moral obligations that may go beyond legal standards
Law is constantly evolving (example: segregation laws)
The law is not representative of universal morals or personal morals
The law is not always morally correct
Law does not resolve all ethical dilemmas; it can only serve as a baseline
Underdeveloped Legal Systems
Challenges
In countries with underdeveloped legal systems, laws may be ineffectively applied
Not every immoral action is illegal (example: tobacco industry)
Laws develop slowly and have lagged behind on numerous social issues (e.g., discrimination, maternity leave, women's voting rights)
Laws may not sufficiently protect consumers (example: labeling on products)
Economic Perspective
Adam Smith’s Argument:
Advocates for a Free Market
Government’s role is to ensure conditions for a free market
Emphasis on economic efficiency
This perspective presupposes perfect market conditions, which often do not exist
Omits non-economic needs of consumers
Observations on Ethics and Law
Noteworthy Observations:
A. Obedience to the law is NOT sufficient to fulfill one’s ethical duties
B. The law is often NOT effective at promoting “goods”
C. The law cannot anticipate every new dilemma that businesses might face
D. An individual’s ethical responsibility can run counter to the law
Stakeholders in Business
Definition
A stakeholder is anyone affected, positively or negatively, by business decisions
Stakeholders apply personal values and standards to diverse issues, sometimes unrelated to their own welfare
Types of Stakeholders
Primary Stakeholders: Indispensable for the firm’s survival
Employees
Customers
Investors
Governments
Communities
Secondary Stakeholders: Do not engage directly in transactions; not essential for the firm’s survival
Media
Trade associations
Special interest groups
Stakeholder Resources
Tangible Resources
Shareholders: Provide capital
Suppliers: Provide materials
Customers: Generate revenue
Intangible Resources
Suppliers: Offer expert knowledge
Managers: Contribute commitment
Customers: Provide loyalty
Reasons for Ethical Failures
Factors Leading to Unethical Actions
Lack of understanding regarding the wrongness of an action
Insufficient reflection on ethical issues
Obedience to authority
Incremental steps toward unethical behavior
Focus on specific financial or strategic goals
Trying to conform to social expectations
Unfair organizational practices
Bad role models within organizations
Renaming wrongdoing to avoid accountability
The detrimental aspects of power
Emotional influences
Indifference and lack of motivation
The significant influence of situational context