Ethics, Law, Business

Chapter 4

Ethics, Law, Business

I. Ethics and Values

  • Why Study Ethics?
  • What is Ethics?
  • Value Systems and Moral Beliefs
  • 6 Influences That Shape Value System
  • Values in Conflict

A. Why Study Ethics?

The primary goal of American business is to make a profit and our laws influence the daily activities of business.

Does this mean that whatever activities the business engages in are acceptable as long as the activities pursue profit and are legal?

B. What is Ethics?

ETHICS is the process by which we make decisions, the value system we apply when making moral choices, and the inherent rightness or wrongness of those decisions?

ETHICS and MORALITY are NOT the same

  • Ethics – philosophical, rational basis for fair and honest conduct
  • Morals – are more universal guidelines that determine action or character

C. Value Systems & Moral Beliefs

Everyone’s moral beliefs and value system start to form early in life based on observations of others

Individuals bring their own value systems and moral beliefs into the workplace to make decisions about what is right and wrong

D. Six Influences That
Shape the Value System

Family (greatest influence)

Proximity (peer) groups

Educational systems

Religious organizations

Media / Social Media

Role Models

E. Values in Conflict

Our values often come into conflict with one another

When conflict arises, the values compete to form a structured system for making future decisions

In a workplace setting, values in conflict, may make relationships uncomfortable or even hostile

II. Ethical Theories

  • Egoism
  • Consequential
  • Deontological
  • Social Contract

A. Egoism

An EGOIST believes that people should act only in their own self interest

Me, me, me

B. Consequential Approach


A CONSEQUENTIALIST believes that the rightness or wrongness of an action depends on its consequences

  • Utilitarianism – the greatest good for the great number

C. Deontological Approach


“Do unto others as you would have done unto you.”

  • Immanuel Kant – “Do unto others as you would have them do unto everyone.”
  • Prima Facie Duty – moral rules that bind us unless they conflict with other more compelling prima facie duties.
  • Rights Theory – a mixed deontological theory emphasizing rights rather than duties

D. Social Contract Theory

A SOCIAL CONTRACT is an unwritten agreement establishing certain standards of behavior and rights among members of society.

Governments rely on social contracts to avoid anarchy.

Relativist – “ When in Rome, do as the Romans do.”

Libertarians – emphasize individual freedom based on property rights and a minimal role for government.

III. Business Decision Making

  • Profit Maximizing
  • Ethics and the Law
  • Ethical Decision Making

A. Profit Maximizing

Is it profitable?

Businesses will cease to exist without profit

The desire to maximize profit can be a powerful influence on a person’s decision resolving an ethical dilemma

B. Ethics and the Law

Is it Legal?

Obeying the letter of the law is the minimum standard of behavior we expect from business

Anti-trust laws and environmental protection legislation are examples of ways in which the law imposes rules for corporations to follow

C. Ethical Decision Making

Is it ethical?

Ethical decisions may arise in business because of the conflict to maximize profits and the welfare of those affected by that goal

7 General Rules:

  • Honor confidentiality
  • Avoid conflict of interest
  • Obey the law
  • Exercise due care
  • Act in good faith
  • Respect the liberty and rights of others
  • Respect human well-being

IV. Balancing Corporate Responsibility

  • Optimizing Profits
  • Steps to Solving Ethical Dilemmas

A. Optimizing Profits

Optimizing profits involves making profits while at the same time staying within legal and ethical limits

Public opinion

Self-Critical Analysis

Codes of Ethics

Self-Governing Organizations

B. Steps to Solving
Ethical Dilemmas

8 Decision-Making Steps

Determine the true facts

Establish the major issues

Determine the options available

Are the options legal?

Determine how each option would look in the light of day

Does the option violate company policy? Or company code of ethics?

How does the option fit under utilitarianism?