KEY CONCEPTS AND DISTINCTIONS IN ETHICS LEARNING OUTCOMES

2. KEY CONCEPTS AND DISTINCTIONS IN ETHICS LEARNING OUTCOMES

On Completion of this Topic The Student Should Be Able To:

 Understand the key concepts and distinctions in ethics.  Understand the difference between ethics and values

STUDY : Chapter 1 in

Rousseau & Van Vuuren (2010: 3-10)

2.1 BUSINESS

The concepts ‘business’ can have different meanings, as is illustrated in the expression that ‘the business of business is business’. We will thus do well to clarify what we mean by business before defining what we mean by business ethics. Business, or economic activity, is any situation where individuals or parties voluntarily enter into transactions of economic exchange for goods or services. These goods or services can be provided by the state, public or private enterprises, and individuals. In narrow definitions of business ethics, the domain of business is confined to the economic activities of private enterprises and individuals, in broader understanding of business ethics, the economic activity of the state and public enterprises are also included. The broader understanding will be used in this module guide.

Activity

What are the three different levels of economic activity? Study page 3-6 of your prescribed book to find the answer.

It has become commonplace in business ethics to distinguish three broad dimensions of business (Enderle, 2003):

The macro or systemic dimension- This is the economic system or the wider socio- political framework within which business is conducted. The framework is determine d at national level by political decisions, laws and regulations as well as social norms that determine the contours of the economic playing field and the rules that govern economic play. When economic activity transcends national boundaries, international trade agreements also come into play. The macro- economic framework determines to a large extent what freedoms and responsibilities economic players will have and also which economic priorities will

be pursued.

The organisational dimension- this relates to the role and responsibilities of business organisations. Business organisations developed their own system of governance according to which they direct and control their own internal activities. But businesses also inevitably find themselves in relationships of responsibility with a wide range of external parties such as the state, competitors, suppliers, customers, and organisations of civil society. The organisational of business thus encompasses the collective behaviour of the business organisation towards both its internal and external stakeholders.

The macro- or individuals dimension- this concentrates on the economic actions and decisions of individuals interacting with the business organisation. Although the structures, policies and culture of a business organisation pose distinct constraints within which employees, suppliers, constraint the freedom and responsibility of these individuals. To the contrary, they retain considerable freedom to display initiative and discretion. Although these three dimensions are clearly distinguishable in theory, in practice they are interrelated. Often a single phenomenon has simultaneous implication for all three dimensions of business. A good illustration is economic empowerment for women, Creating conditions that will ensure that they take their rightful place in the economy might become a strategic objective in the government ‘s macro-economic policy. On the organisational level, a company might decide to change its hiring, promotion, and procurement practices in order to support the empowerment of women. On the individual level, employees, suppliers and other stakeholders of the business will be affected by both the government policy and organisational practices related to the empowerment of women. With a better understanding of what we mean by business and the three dimensions thereof, let us do a similar exploration of what we mean by ethics.

2.2 ETHICS

Sometimes people try to maintain a distinction between the meanings of the concepts ‘ethics’ and ‘morality’. In ordinary language, however the two concepts are almost indistinguishable. People tend not to make any fine distinctions between ethical and moral behaviour on the other side. In this book both words will be used to mean the same thing.

Ethics concerns itself with what is good or right in human interaction. It revolves around three central concepts: ‘self’, ‘good’, and ‘other’. Ethical behaviour results when one does not merely consider what is good for oneself, but considers what is good for others. It is important that each of these three central concepts be included in a definition of ethics. Should the concept ‘good’ be neglected, the unique nature of ethics collapses: ethics is not merely concerned with the interaction between a ‘self’ and an ‘other’, but with the quality of interaction. It wants to determine whether the interaction between the self and the other is good or bad for one or both of the parties.

Activity

Demonstrate your understanding of the three central concepts of self, good and other.

A similar distortion occurs when the ‘self’ is excluded from the definition of ethics. Then the concern is merely about what is good for others, without taking the interests of th e’ self’ into consideration. This form of altruism is probably unattainable, as it almost impossible for someone to ignore their own interests. It is also dangerous to neglect your own interests, as a sense of your own wellbeing is a prerequisite for balanced and on-going interaction with other people. Alisdair Macintyre (1999:160). capture this insight well when he said; ‘Self-

sacrifice is as much of as selfishness ’ Equally, the ‘other’ cannot be concern merely for what is good for the self neglects the very nature of ethics, which is to ensure the interests of both oneself and others. Ethical behaviour thus can be self-interested but not merely selfish. When you know your behaviour may have negative consequences for others, but care only about what is good for yourself, such action is selfish and unethical. If, on the contrary, you seek to serve your own interests, whilst simultaneously caring about the interests of others, then your behaviour is self-interested whilst also being ethical.

2.3 BUSINESS ETHICS

When ethics is applied to business we consider the implications of business on the interest of all who are affected by its activity. Business ethics is about identifying and implementing standards of conduct in and for business that will ensure that the interests of its stakeholders are respected. Business ethics thus refers to the values and standards that determine the interaction between business and its stakeholders. From this definition it is clear how the three concepts of the ‘self’, ‘good’ and ‘other’, which are integral to the definition of When ethics is applied to business we consider the implications of business on the interest of all who are affected by its activity. Business ethics is about identifying and implementing standards of conduct in and for business that will ensure that the interests of its stakeholders are respected. Business ethics thus refers to the values and standards that determine the interaction between business and its stakeholders. From this definition it is clear how the three concepts of the ‘self’, ‘good’ and ‘other’, which are integral to the definition of

Activity

Who are the internal and external stakeholders of an organization? Read your textbook page 5 and identify the answer. Provide examples

of the various stakeholders at Richfield.

2.4 RIGHT, WRONG AND DILEMMAS

Ethics is often perceived as a grey area where there is little clarifies about what is right or wrong. This perception of ethics is mistaken. There is a broad consensus within and amongst societies about what is considered to be either ethically right or wrong. Both within and across societies there is, for example, a consensus that the protection of innocent life and telling the truth is ethically right. There is a similar consensus that the killing of innocent people and blatant lying is wrong. The same goes for ethics in business. There are certain behaviours that are considered ethically right, such as the respect for the dignity of employees and for company property. On the other hand discrimination against employees and theft of company property is considered wrong. Whether companies and their employees live up to these standards is another question, but they would generally agree to these standards of behaviour. However, difficult situations in business arise where it is hard to tell what should be considered right or wrong in a given situation. These tough choices are called moral dilemmas. Consequently it is important in business to distinguish between what is ethically right, what is ethically wrong and what is an ethical dilemma. Companies need to be as clear as possible on what they considered right or acceptable behaviour. They need to be equally clear on what they consider being ethically wrong and regards as unacceptable behaviour. They also need to acknowledge that ethical dilemmas arise and should provide guidance on how moral dilemmas need to be approached. Moral dilemmas arise when the distinction between what is ethically right and wrong becomes blurred. From time to time incidents arise in business where people are no longer certain whether an action should be Ethics is often perceived as a grey area where there is little clarifies about what is right or wrong. This perception of ethics is mistaken. There is a broad consensus within and amongst societies about what is considered to be either ethically right or wrong. Both within and across societies there is, for example, a consensus that the protection of innocent life and telling the truth is ethically right. There is a similar consensus that the killing of innocent people and blatant lying is wrong. The same goes for ethics in business. There are certain behaviours that are considered ethically right, such as the respect for the dignity of employees and for company property. On the other hand discrimination against employees and theft of company property is considered wrong. Whether companies and their employees live up to these standards is another question, but they would generally agree to these standards of behaviour. However, difficult situations in business arise where it is hard to tell what should be considered right or wrong in a given situation. These tough choices are called moral dilemmas. Consequently it is important in business to distinguish between what is ethically right, what is ethically wrong and what is an ethical dilemma. Companies need to be as clear as possible on what they considered right or acceptable behaviour. They need to be equally clear on what they consider being ethically wrong and regards as unacceptable behaviour. They also need to acknowledge that ethical dilemmas arise and should provide guidance on how moral dilemmas need to be approached. Moral dilemmas arise when the distinction between what is ethically right and wrong becomes blurred. From time to time incidents arise in business where people are no longer certain whether an action should be

Have you ever been confused in your life? How does that confusion compare with the theory on dilemma?

. Case Study- Right/wrong Dilemmas: Read the case study and answer the questions that follow

A few years ago a young man faced an ethical dilemma where he had to make a choice between two responsibilities. One responsibility related to his job as Chairman of the Accounting Department at a small Midwestern university. The other responsibility related to his role as a father. He had made a commitment to attend an awards dinner that was being sponsored by a major employer of the accounting graduates. The employer had paid for his dinner and the dinners of some of the best accounting students. He had agreed to attend the dinner to represent the School and the Accountancy program, and to show support for the employer’s interest in the students. Failure to

attend the dinner would likely disappoint the employer who had spent considerable resources to arrange for the dinner, and could damage a relationship that had been built over many years. The employer had hired many of the program’s graduates and wanted to continue to recruit more of its students. The department chairman did not want to appear ungrateful for the employer’s support.

On the afternoon before the dinner the young man learned that his two sons were having their long- awaited Eagle Scout ceremony at the same time as the dinner. The scout master had worked hard to arrange for the ceremony. Guests were invited. The program was well-planned except for one oversight. The scout master had forgotten to let the young man know about the time and day. Of course, the young man wanted to attend the ceremony to celebrate the accomplishments of his sons. Receiving the Eagle awards was the culmination of many years of work. His wife and sons wanted him there, and would be disappointed if he did not attend. His family was free to attend the ceremony, but he had already promised to attend the dinner, and it was too late to arrange for another faculty member to attend the dinner in his place. A problem of this kind is termed a “right-versus-right dilemma,” where the alternatives have conflicting virtues. The young man had conflicting

responsibilities. Fulfilling his promise to an important accounting employer was his responsibility as a Chairman of the Accounting Department, and he had promised to be there. Supporting his sons on such an important occasion was his responsibility as their father. No matter what he did, he could not avoid disappointing someone. In meeting one responsibility, he would fail to meet the other one.

 If you were in the above situation what choice would you make?  Justify your choice.  Which course of action will do the most good and the least harm?

 Which alternative best serves others' rights, including shareholders' rights?  . What plan can I live with, which is consistent with basic values and commitments?  Which course of action is feasible in the world as it is?

2.5 ETHICS AND VALUES

Although there is a definite link between ethics and values, the two concepts are not identical. Values can be defined as relatively stable convictions about what is important. Since it is possible to have values that have either nothing to do with ethics or that run counter to ethics, values cannot be equated with ethics It is not only individuals that have values. We also find values within organisations. By looking at the different kinds of values that we typically find within business organisations, the relation between values and ethics will become clear. Normally, three different kinds of values can be distinguished within business organisations. They are strategic values, work values and ethical values. Strategic values refer to the shared conviction of the organisation about its desired objectives. As such, strategic values indicate the direction in which the organisation wishes to move. The strategic values of organisations are usually reflected in their vision and mission statements. In order to move the organisation in the direction indicated by its strategic values, all members of the organisation need to do their jobs in the specific manner. The priorities that organisation member should adhere to in their jobs are called work values. Typical work values include punctuality, innovation, and quality. For any organisation to function optimally, good relations and interactions between stakeholders are required. In order to ensure that such good relations and interactions are maintained, members of organisations need to commit themselves to specific ethical values. Typical ethical values ensures that stakeholders inside and outside the organisation get along well with one another. Ethical values are thus a subset of values within the broader set of values of an organisation.

Highlight the values you place on your education? Why do students engage in dishonest academic practices? What does it say about their values in life?

Discuss How important Business Ethics is in Our Lives?

Ethical issues are the rights, responsibilities and duties between a company and its employees, suppliers, customers and neighbors. Business ethics is therefore a form of professional ethics. Its major application in businesses is to control moral or ethical problems that come up within the business environment. Business ethics, also known as corporate ethics, studies good business policies and Ethical issues are the rights, responsibilities and duties between a company and its employees, suppliers, customers and neighbors. Business ethics is therefore a form of professional ethics. Its major application in businesses is to control moral or ethical problems that come up within the business environment. Business ethics, also known as corporate ethics, studies good business policies and

2.6 Guidelines for enhancing good economic and corporate governance in Africa

These guidelines grew out of a NEPAD meeting that resolved to prioritize the enhancement of good governance and are intended to provide a framework of policies, processes, instruments, codes, standards, indicators, best practices, and enforcement mechanisms that can be adopted and/or adapted by African countries to demonstrate their commitment to good economic and corporate governance practices. They aim to offer African countries a general framework for thinking about how they can approach and attain reputable and beneficial systems of economic and corporate governance. They also provide guidance on the key elements of a well-performing economic and corporate governance system. The document argues that good economic and good corporate governance matter to Africa because

they contribute to macroeconomic stability

they enhance a government’s ability to implement development and poverty reduction policies with scarce resources

they enable public management functions to be executed in an accountable manner

they contribute to the creation of a credible policy environment in which domestic and international investors can have confidence and trade can be advanced

they lead to the strengthening of absorptive capacity to attract and mobilize development assistance flows

they enable the demonstration of transparent and participatory economic policy-making and execution as well as an open flow of information available to all stakeholders

they signal a government’s adherence to standards of institutional functioning free of corruption or other such rent-seeking behaviour

they represent a source of competitive advantage

they attract private domestic and foreign investment

and they broaden and deepen local capital markets

2.7 INTEGRITY

Integrity is so closely aligned to ethics that it is sometimes used as a substitute for ethics. Persons with a strong commitment to ethical standards are often referred to as persons of integrity. Similarly, the term organisational integrity is often used to refer to the organisational ethics. Despite such equations between ethics and integrity, integrity is a much more restricted concept than ethics. Integrity refers specifically to the moral character of a person or organisation. A person is regarded as someone with integrity when s/he consistently adheres to a set of ethical standards. For this reason integrity is often associated with concepts like fairness, consistency, uprightness and wholeness. These characteristics make a person of integrity will always adhere to her or his values. The same applies to organisations with moral integrity. Apples, barrels and warehouses

A last important distinction in business ethics is the one between personal (apple) and organisational (barrel) ethics (Ashkanasy, Windsor &Trevino, 2006). Unethical behaviour is often attributed to the defective moral upbringing of an individual. Such individual are termed ‘bad apples’ as it is believe that their upbringing has spoiled their moral character and they cannot be changed into morally responsible persons (good apples). This is a gross oversimplification. Individuals are affected by the organisational culture in which they find themselves, in the same way that apples are affected by the environment in which they are stored. The business organisations (barrels) that individuals work in can also have either a constructive or a corruptive influence on their moral character. People with dubious or even good moral character can turn to unethical behaviour if they find themselves in organisations where unethical conducted is the norm. Thus bad barrels can corrupt dubious or even good apples. The opposite is equally true. Dubious or even bad apples can be restrained from unethical behaviour should they find themselves in organisations that do not tolerate unethical behaviour, but reward ethical behaviour. Refer to the table below for an illustration of this point.

Bad barrels Good apples Bad apples

Good barrels

The distinction between apples and barrels reminds us that ethical behaviour should not only be addressed on the individual ’s level, but also on the level of organisational culture and practices. Organisations are not isolated from the broader society and social norms within which they operate. It therefore makes sense to introduce the notion of the warehouse in which the barrels are kept, thus acknowledging the interplay between business and the broader socio- culture setting. Here there is also an intricate interplay between business and The distinction between apples and barrels reminds us that ethical behaviour should not only be addressed on the individual ’s level, but also on the level of organisational culture and practices. Organisations are not isolated from the broader society and social norms within which they operate. It therefore makes sense to introduce the notion of the warehouse in which the barrels are kept, thus acknowledging the interplay between business and the broader socio- culture setting. Here there is also an intricate interplay between business and

Activity What does integrity mean to you? Have you ever used this concept when interacting with your colleagues or your lecturers? Provide examples.

REVIEW QUESTIONS

1. Explain the difference between Ethics and Values.

2. What is integrity associated with?

3. Discuss how actions can be deemed ethical and legal.

4. Why is ethics referred to as a grey area?

TOPIC 3

ETHICS ON THE MACRO-ECONOMIC LEVEL