The German Jordanian University

(GJU)
Second Semester 2012
MGT 316
Instructor: Montaser Tawalbeh


Business Ethics
School of Managerial and Logistic Sciences
Business Ethics A Real World Approach
Andrew W. Ghillyer
2
nd
Edition


New York, NY
ISBN 9780071100656
Part 1. Defining Business Ethics
Chapter 1. Understanding Ethics

- Definition of Ethics/What is Ethics
- Understanding Right and Wrong
- The Golden Rule
- Ethical Theories
- Ethical Relativism
- Ethical Dilemmas
- Ethical Reasoning

Part 1. Defining Business Ethics
Chapter 2. Defining Business Ethics

- Defining Business Ethics
- Who Are the Stakeholders
- An Ethical Crisis: Is Business Ethics an
Oxymoron?
- The History of Business Ethics
- Justifying Unethical Behaviour
- Building and Operating an Ethical Business
Part 1. Defining Business Ethics
Chapter 1. Understanding Ethics

Definition of Ethics
- We begin by exploring how people live their
life according to a standard of Right and
Wrong behaviour.
- Where do people look for guidance in
deciding what is right or wrong or good or bad?
- Once people have developed a personal set
of Moral Standards or Ethical Principles, how do
they then interact with other members of their
community or society as a whole who may or
may not share the same ethical principles?

Part 1. Defining Business Ethics
Chapter 1. Understanding Ethics

With a basic understanding of ethics, we can
then examine the concept of business ethics,
where employees face the dilemma of
balancing their own moral standards with
those of the company they work for and the
supervisors or managers to whom they report
on a daily basis.
Ethics is about how we meet the challenge
of doing the right thing when that will cost more
than we want to pay
The Josephson Institute of Ethics
Part 1. Defining Business Ethics
Chapter 1. Understanding Ethics

Doing the Right Thing
Frontline Focus (Hypothetical Scenarios on ethical dilemmas)

Case study (Megan the rental agent) page 5
Answer: Q1, Q2, and Q3.

Key Elements of the case:
- Nice couple
- Stable work history
- More than enough income
- Good reference from their former landlord
- Dont rush their application through... In my
experience, those people usually end up breaking their
lease or skipping town with unpaid rent.
Part 1. Defining Business Ethics
Chapter 1. Understanding Ethics

What is Ethics?
The field of ethics is the study of how people
try to live their lives according to a standard of
Right or Wrong behaviour, how we think
and behave toward others and how we would
like them to think and behave toward us.
For some, its a conscious choice to follow a set
of moral standards or ethical principles that
provide guidance on how they should conduct
themselves in their daily lives.
Part 1. Defining Business Ethics
Chapter 1. Understanding Ethics

For others, where the choice is not so clear, they
look to the behaviour of others to determine
what is an acceptable standard of right and
wrong or good and bad behaviour.
How they arrive at the definition of whats right or
wrong is a result of many factors , including how
they were raised, religion, traditions and beliefs of
their society (Society: A structured community of people bound
together by similar traditions and customs).
Part 1. Defining Business Ethics
Chapter 1. Understanding Ethics

Understanding Right and Wrong

Moral standards are principles based on
religious, cultural, or philosophical beliefs by
which judgments are made about good or bad
behaviour. (Culture: A particular set of attitudes, beliefs, and practices
that characterize a group of individuals).
Part 1. Defining Business Ethics
Chapter 1. Understanding Ethics

These beliefs can come from many sources:
- Friends
- Family
- Ethnic background
- Religion
- School
- Media
- Personal role model/mentors
Part 1. Defining Business Ethics
Chapter 1. Understanding Ethics

Your personal set of morals your morality
represents a collection of all these influences as
they are built up over your lifetime. These
personal moral standards would provide a moral
compass to guide you in the choices you make in
your life.

Part 1. Defining Business Ethics
Chapter 1. Understanding Ethics

How should I live?
Standards of ethical behaviour are absorbed by
osmosis (English: diffusion . Arabic: , , ) as you
observe the examples (both positive or
negative) set by everyone around you, and
everyone else. Your adoption of these standards
is ultimately unique to you as an individual. You
may be influenced by your familys religious
beliefs and grow to believe that behaving
ethically towards others represents a
demonstration of religious devotion (loyal).
Part 1. Defining Business Ethics
Chapter 1. Understanding Ethics

However, that devotion can be easily motivated
either by fear of a divine (discover by guesswork or intuition)
punishment in the afterlife or anticipation of a
reward for living in virtuous life.
Alternatively, you may choose to reject religious
morality and instead base your ethical behaviour on
your experience of human existence rather than
any abstract concepts of right and wrong as
determined by a religious doctrine.
When individuals share similar standards in a
community, we can use the terms value and value
system.
Part 1. Defining Business Ethics
Chapter 1. Understanding Ethics
The Value and Value System
The terms morals and values mean the same thing
(Value system: A set of personal principles formalized into a code of behaviour
you aim to live your life).
The word Value used to denote the worth of an
item or a humans. That worth can be expressed into
two ways:
1- An Intrinsic Value where a value is a good thing
in itself and pursued for its own sake such as
Happiness, health, and self-respect.
2- An Instrumental Value where the pursuit of
that value is a good way to reach another value
such as money (Money cant buy happiness).
Part 1. Defining Business Ethics
Chapter 1. Understanding Ethics

Value Conflicts
The impact of a persons or a groups value system can be seen in
the extent to which their daily lives are influenced by those
values. However, the greatest test of any personal value system
comes when you are presented with a situation that places those
values in direct conflict with an action.
For example lying is wrong however what if you were lying to
protect the life of a loved one?
So how do you resolve such conflicts? Are there exceptions to these
rules? Can you justify these actions based on special circumstances?
It is this grey area that makes the study of ethics so complex. The
fact, there is no fine line between right or wrong, however, the
situation may require exceptions to those rules. Its how you
choose to respond to those situations and the specific choice
you make that really define your personal value system.
Part 1. Defining Business Ethics
Chapter 1. Understanding Ethics
Doing the right thing
There are four basic categories to explain what is Ethics:
1- Simple truth - Right or wrong, good or bad.
It may be expressed as simply doing the right thing something
that most people can understand and support.

2- A question of someones personal character persons
integrity.
Its also called personal integrity, demonstrated by someones
behaviour The person looks at ethics from an external rather than
an internal viewpoint. E.g. Superman and Batman. Here a person
lives a life that is true to his or her moral standards, often at the
cost of considerable personal sacrifice.
Part 1. Defining Business Ethics
Chapter 1. Understanding Ethics

3- Rules of appropriate individual behaviour.

The idea that these moral standards we develop for
ourselves impact our lives on a daily basis in our
behaviour and the other types of decisions we make.

4- Rules of appropriate behaviour for a community or
society.

Its that group of people who live with confidence that
comes from knowing they share a common standard.

Part 1. Defining Business Ethics
Chapter 1. Understanding Ethics

On one level, the study of ethics seeks to
understand how people make the choice they make
how they develop their own set of moral
standards, how they live their lives on the basis of
those standards. On a second level, then trying to
use that understanding to develop a set of ideals or
principles by which a group of ethical individuals
can combine as a community with a common
understanding of how they ought to behave.
Part 1. Defining Business Ethics
Chapter 1. Understanding Ethics

The Golden Rule
For some, the goal of living an ethical life is
expressed by the Golden Rule:

Do unto others as you would have them do unto you
or
Treat others same as you would like to be treated
Part 1. Defining Business Ethics
Chapter 1. Understanding Ethics

Life Skills - What do you stand for, or what will you stand
against?
- Your personal value system will guide you throughout
your life, both in personal and professional matters.
Lawrence Kohlbergs work, points out that;
- Your understanding of moral complexities and ethical
dilemmas grows as your life experience and education
grow.
- For that you measure every choice you make against
your value system you developed as a child from parents,
friends, society and your religious upbringing.



Part 1. Defining Business Ethics
Chapter 1. Understanding Ethics

Ethical Theories
Ethical theories can be divided into three categories:
Virtue ethics, Ethics for the greater good & universal
ethics.
1- Virtue Ethics (Moral Excellence):
The Greek Philosopher Aristotles belief in individual
character and integrity established a concept of living
your life according to a commitment to the
achievement of a clear ideal What sort of person
would I like to become, and how do I go about becoming
that person?
Part 1. Defining Business Ethics
Chapter 1. Understanding Ethics

Criticism of Virtue Ethics theory :
Societies can place different emphasis on different
virtues therefore, if the virtues you hope to achieve
arent a direct reflection of the values of the society
in which you live, there is a real danger of value
conflict.
Part 1. Defining Business Ethics
Chapter 1. Understanding Ethics

2- Ethics for the Greater Good (Utilitarianism):
Its been firstly proposed by the Scottish philosopher
David Hume.
- The theory is more focused on the outcome of
your actions more than the apparent virtue of the
actions themselves Ethical choices that offer the
greatest good for the greatest number of people.
- The end justifies the means
Part 1. Defining Business Ethics
Chapter 1. Understanding Ethics

Criticism of Ethics for the Greater Good:
- The problem with this approach to ethics is the
idea of The Ends Justify the Means. E.g. When
Adolf Hitler and his Nazi party launched a national
genocide against Jews and defective people on
the utilitarian (useful function) grounds of restoring the
Aryan race; on the other hand when Jews, with the
States and U.Ks support and watch, have launched
the same national genocide (systematic killing of a racial or
cultural group) against Palestinians and all defective
people on the utilitarian grounds of restoring the
Hebrew race in one place.
Part 1. Defining Business Ethics
Chapter 1. Understanding Ethics

3- Universal Ethics
- Originally attributed to a German philosopher
Immanuel Kani.
- Universal Ethics argues that there are certain
and universal principles that should apply to all
ethical judgments.
- Actions are taken out (Removed) of duty and
obligation to a purely moral ideal rather than based
on the needs of the situation; its applied to
everyone, everywhere, at all times.
Part 1. Defining Business Ethics
Chapter 1. Understanding Ethics

Criticism of the Universal Ethics
- The problem with this theory is the reverse of the
weakness in ethics for the Greater Good.
- If all you focus on is abiding by a universal principle,
no one is accountable for the consequences of the
actions taken to abide by those principles.
- E.g. Does the potential for curing many major
illnesses such as cancer make stem cell ethically
justifiable? If not, how do you explain that to families
who lose their loved ones waiting unsuccessfully for
organ transplants?
Part 1. Defining Business Ethics
Chapter 1. Understanding Ethics

Ethical Relativism
- There is no truly comprehensive theory of
ethics, only a choice that is made based on your
personal value system.
- Ethical Relativism is where the traditions of
peoples society, their personal opinions, and the
circumstances of the present moment define their
ethical principles.
- Although of the flexibility of this theory, it may
have negative consequences according to the
pressure derived from the majority expectations.
Part 1. Defining Business Ethics
Chapter 1. Understanding Ethics

Ethical Dilemmas
- Applied Ethics: The study of how ethical theories
are put into practice.
- Ethical Dilemmas: A situation in which there is no
obvious right or wrong decision, but rather a right
or right answer.
When making the right choice you are:
- Leaving an equal right choice undone.
- Likely to suffer something bad as a result of that
choice.
Part 1. Defining Business Ethics
Chapter 1. Understanding Ethics

- Contradicting a personal ethical principle in
making that choice.
- Abandoning an ethical value of your community
or society in making that choice.
Part 1. Defining Business Ethics
Chapter 1. Understanding Ethics

Case Study
Case study 1.1 (Overcrowded Lifeboat) page 12
Progress Check Point
Answer: Q1, Q2, Q3 and Q4.
Key elements of the case:
- 30 survivors were crowded into a lifeboat intended
to hold 7.
- Captain forced weakest individuals to go over the
side and drown.
- All rescued and captain was tried for his action.

Part 1. Defining Business Ethics
Chapter 1. Understanding Ethics

Resolving Ethical Dilemmas
- An ethical Dilemma cannot be resolved in the
sense that a resolution of the problem implies a
satisfactory answer to the problem.
- Since, in reality the answer to an ethical
dilemma is often the lesser of two evils, its
questionable to assume that there will always be an
acceptable answer. Its more a question of whether
or not you can arrive at an outcome you can live
with.
Part 1. Defining Business Ethics
Chapter 1. Understanding Ethics

Joseph L. Badaracco Jr. Captures this notion of living
with an outcome in a discussion of
sleep-test ethics (Its whether you sleep well or not according
to your right or wrong choice).
Sleep-test ethics rests on a single, fundamental
belief that we should rely on our personal insights,
feelings, and instincts when we face a difficult
problem. It also advises us to follow our hearts
when our minds are confused.
Part 1. Defining Business Ethics
Chapter 1. Understanding Ethics

There are two distinct approaches to handling
ethical dilemmas:
1- To focus on the practical consequences of what
we choose to do the ends justify the means.
(Ethics for the Great Good)
2- To focus on the actions themselves and the
degree to which they were the right actions to take.
Some actions are wrong in and of themselves.
(Universal Ethics)
Part 1. Defining Business Ethics
Chapter 1. Understanding Ethics

Consider the three-step process for solving an
ethical problem:
Step 1- Analyse the consequences.
Whatre the outcomes when preferring side on another. What side you
want to benefit more or harm less. How does it look on the long run.
Step 2- Analyse the actions.
Consider the options from different perspective ignoring the
consequences. How actions measure against moral principles.
Step 3- Make a decision.
Take both parts of analysis into account and make a decision.
Part 1. Defining Business Ethics
Chapter 1. Understanding Ethics

Progress check questions (p. 16).
Answer: Q9, Q10, Q11 and Q12.

Part 1. Defining Business Ethics
Chapter 1. Understanding Ethics

Arthur Dobrin identified eight questions you should
consider when solving an ethical dilemma:
1- What are the facts?
2- Your guesses about unknown facts (predictions) and your
assumptions?
3- What do the facts mean. Interpret the info in light of your values?
4- What does the problem look like through the eyes of the people
involved?
5- What will happen if you choose one thing rather than another?
6- What do your feeling tell you?
7- what will you think of yourself when you decide one thing or
another?
8- Can you explain and justify your decision to others?
Part 1. Defining Business Ethics
Chapter 1. Understanding Ethics

Ethical Reasoning

When attempting to resolve an ethical dilemma, we
follow a process of ethical reasoning.

Ethical reasoning: looking at the information
available to us in resolving an ethical dilemma, and
drawing conclusions based on that information in
relation to our own ethical standards.

Part 1. Defining Business Ethics
Chapter 1. Understanding Ethics

Lawrence Kohlberg developed a framework that
presents the argument that we develop a reasoning
process over time moving through six distinct stages
(classified into three levels of moral development)
as we are exposed to major influences in our lives.
Part 1. Defining Business Ethics
Chapter 1. Understanding Ethics

Level Stage Social Orientation
Preconventional 1 Obedience and punishment
2 Individualism, instrumentalism, and exchange
Conventional 3 Good boy/nice girl
4 Law and order
Post conventional 5 Social contract
6 Principled consciences
Part 1. Defining Business Ethics
Chapter 1. Understanding Ethics

Process Check Questions
Q13, Q14, Q15, and Q16.

But what happens when the decision that is
expected of you by your supervisor or manager
goes against your personal value system?
Part 1. Defining Business Ethics
Chapter 1. Understanding Ethics

Frontline Focus
Doing the Right Thing Megan Makes a Decision (p.19)
Key Points:
- Several applications but less attractive as potential
tenants than the Wilsons.
- Kate made her feelings very clear about the Wilsons
- Megan has either take the risk of going against the
wish of her boss and approve the Wilsons application
as they are the perfect tenants.
- Or follow Kates instructions and bury the Wilsons
application in favour of another couple.
Part 1. Defining Business Ethics
Chapter 1. Understanding Ethics

- Not approving the Wilsons application for no
convincing reason is a type of discrimination and
can expose the Real-estate and concerned employees
to legal action if the Wilsons new about that.
- Kates opinion is based solely on a previous bad
experience with other similar-situation couple.
- Megan approved the Wilsons application and
informed them with that.
1- Did Megan make the right decision?
2- What do you think Kates reaction will be?
3- What would have been the risk for Oxford Lake if Megan had
decided not to rent the apartment to the Wilsons?