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Chapter 4
Ethics, Law, Business
I. Ethics and Values
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Why Study Ethics?
What is Ethics?
Value Systems and Moral Beliefs
6 Influences That Shape Value System
Values in Conflict
A. Why Study Ethics?
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The primary goal of American business is to make a
profit and our laws influence the daily activities of
business.
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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?
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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?
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ETHICS and MORALITY are not the same
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Ethics – philosophical, rational basis for fair and honest
conduct
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Morals – are more universal guidelines that determine action
or character
C. Value Systems and Moral Beliefs
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Everyone’s moral beliefs and value system start to
form early in life based on observations of others
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Individuals bring their own value systems and moral
beliefs into the workplace to make decisions about
what is right and wrong
D. 6 Influences That
Shape the Value System
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Family (greatest influence)
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Proximity (peer) groups
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Educational systems
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Religious organizations
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Media
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Role Models
E. Values in Conflict
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Our values often come into conflict with one
another
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When conflict arises, the values compete to
form a structured system for making future
decisions
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In a workplace setting, values in conflict, may
make relationships uncomfortable or even
hostile
II. Ethical Theories
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Egoism
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Consequential Approach
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Deontological Approach
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Social Contract Theory
A. Egoism
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An EGOIST believes that people should act only in
their own self interest
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Me, me, me
B. Consequential Approach
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Outcome-Based
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A CONSEQUENTIALIST believes that the
rightness or wrongness of an action depends on
its consequences
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Utilitarianism – the greatest good for the great
number
C. Deontological Approach
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Duty-Based
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“Do unto others as you would have done
unto you.”
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Immanuel Kant – “Do unto others as you would have them do
unto everyone.”
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Prima Facie Duty – moral rules that bind us unless they conflict
with other more compelling prima facie duties.
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Rights Theory – a mixed deontological theory emphasizing
rights rather than duties
D. Social Contract Theory
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A SOCIAL CONTRACT is an unwritten agreement
establishing certain standards of behavior and
rights among members of society.
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Governments rely on social contracts to avoid
anarchy.
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Relativist – “ When in Rome, do as the Romans do.”
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Libertarians - emphasize individual freedom based
on property rights and a minimal role for government.
III. Business Decision
Making
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Profit Maximizing
Ethics and the Law
Ethical Decision Making
A. Profit Maximizing
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Is it profitable?
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Businesses will cease to exist without profit
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The desire to maximize profit can be a powerful
influence on a person’s decision resolving an ethical
dilemma
B. Ethics and the Law
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Is it Legal?
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Obeying the letter of the law is the minimum standard
of behavior we expect from business
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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
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Is it ethical?
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Ethical decisions may arise in business because of the
conflict to maximize profits and the welfare of those
affected by that goal
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7 General Rules:
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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
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A. Optimizing Profits
Optimizing profits involves making profits while at
the same time staying within legal and ethical limits
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Public opinion
Self-Critical Analysis
Codes of Ethics
Self-Governing Organizations
B. Steps to Solving
Ethical Dilemmas
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8 Decision-Making Steps
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Determine the true facts
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Establish the major issues
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Determine the options available
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Are the options legal?
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Determine how each option would look in the light of day
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Does the option violate company policy? Or company code
of ethics?
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Deontology
Chapter Summary
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Ethics and Values
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



Why Study Ethics?
What is Ethics?
Value Systems and Moral Beliefs
6 Influences That Shape the
Value System
Values in Conflict
Ethical Theories




Egoism
Consequential Approach
Deontological Approach
Social Contracts Theory

Business Decision
Making
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Profit Maximizing
Ethics and the Law
Ethical Decision Making
Balancing Corporate
Responsibility


Optimizing Profits
Steps to Solving
Ethical Dilemmas