EMA EMITS COLLEGE PHILIPPINES

(Formerly: Eastern Mindoro Institute of Technology & Sciences)

Del Pilar St. Pinamalayan, Oriental Mindoro
Telefax No. (043) 284-3974

BA CORE 4

Good Governance & Social

Responsibility
Week 1-5
Course Description:
This course is designed to inform and stimulate discussion issues of ethics and social
responsibility encountered in the business setting.

This module belongs to:

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 EMA EMITS COLLEGE PHILIPPINES
(Formerly: Eastern Mindoro Institute of Technology & Sciences)
Del Pilar St.; Pinamalayan, Oriental Mindoro
Telefax No. (043) 284-3974

Good Governance and Social Responsibility

Business Ethics and Corporate Social Responsibility:

Fundamentals
For inquiries and clarification, contact the
Telefax No. (043) 284-3974
module developer:
FB Acct – Janine Jalac Saguid
Intended Learning Outcomes:

At the end of this Module, you should be able to:

 define the meaning of business ethics;

 identify the role and importance of business ethics in the management;
 describe the nature of business;and
 explain the importance of ethics in business.

What is Business Ethics?

Business Ethics as oxymoron

• Is a form of applied ethics that examines moral rules, theories, and
principles in a business context.
• Is a normative discipline, whereby particular ethical standards are
advocated and then applied.
• It makes specific judgments about what is right or wrong, as it teaches
what ought to be done and what ought not to be done (De George, 1999).
• In the traditional sense, people get into business to maximize profit
(huge profit, that is), while ethics deals with anything other than profit.
• In the field of philosophy, ethics is specialized study of what is right or
wrong.
• The dilemma about “doing the right thing,” for it seems the one who abides to moral principles is usually
poorer and the crook is richer.
• The contradiction arises because ethical behaviour is not always rewarded and unethical behaviour is not
always punished.

What is the role of ethics in the management?

The Anthropology of Business Ethics

“The need for ethics in economic life” covers a myriad of both
practical and moral problems that arise out of specific functional
areas of management.
The person who works for or manages business is not just an
abstract being or mere intelligent being but a human person with
dignity who is subject to socio-political, moral, and economic
issues.

 Ethical management in the workplace. Ethical management, is the foundation of CSR in the
workplace, covers those ethical issues arising from the employer-employee relationship, such as the
rights and obligations justly owed between them.

 Ethical management regarding intellectual property rights. Issues regarding copyright, patent, and
trademark infringement, business intelligence, employee trading, leaking information or industrial
espionage.

 Ethical management in sales, advertising, and marketing. Issues on price fixing, moral dimension
of the antitrust law, bait and switch, viral marketing, and pyramid scandal, among others.
  Ethical management in production. The stakeholders involved are the consumers, the general
public, and the environment – where problems arise out of new technologies such as mobile phone
radiation and genetically modified food.

 Ethical management in finance, accounting, and auditing. The issues comprise executive
compensation, (criminal) manipulation of the financial markets, bribery, facilitation payments, fraud, and
false reporting.

Benefits of Business Ethics

The importance of business ethics reaches far beyond employee loyalty and morale or the strength of a
management team bond. As with all business initiatives, the ethical operation of a company is directly related
to profitability in both the short and long term.
The reputation of a business in the surrounding community, other businesses, and individual investors is
paramount in determining whether a company is a worthwhile investment. If a company is perceived to not
operate ethically, investors are less inclined to buy stock or otherwise support its operations.
Companies have more and more of an incentive to be ethical as the area of socially responsible and ethical
investing keeps growing. The increasing number of investors seeking out ethically operating companies to
invest in is driving more firms to take this issue more seriously.

What does it mean to be ethically accountable in a globalizing society?

• “We have seen significant consequences that ethical

failings can have on an organization and industry at
large. However, we have also observed the profound
positive impact that sound corporate ethics can have on
the long-term success and sustainability of a company” –
Stefan Linssen (cited in Crampton, 2012)

• In the corporate level, there is an increasing recognition

of fundamental international rights and corresponding
duties, codified into what are referred to as codes of
conduct. The usual codes of conduct cover four major
business areas: basic human rights, employee practices and policies, consumer protection, and environment
stewardship. - Forbes, 2012

The nature of business

Business is as old as human civilization. In the beginning of human existence, men took care of their own
needs and wants. They hunted animals and cultivated the land for food and clothing and people simply
provided for their own. For as long as people have needs and wants, there will always be business. Those who
have capital will continue to produce and sell goods and services that will satisfy the needs and wants of
customers.
Business is an activity that is part and parcel of human society. Society will not exist without business. Since
business is an integral part of the society, its activities must be examined from the ethical perspective, in the
same way that society examines politics, economics, government, culture and religion from the moral point of
view. Without ethics, business will be chaotic human activity because there will be no common understanding
and agreement about what is the right and wrong human conduct.

Importance of ethics in business

The study of business ethics paves the way for a common ground in our understanding of the fundamental
idea of what is good and what is bad in our human conduct. Without ethics, people, especially businessman,
will set their own moral standards, moral rules and moral principles. This will result into a kind of subjective
morality, in which case, what is good for one may be bad for another and vice versa. Business ethics opens a
novel way of resolving moral problems and ethical dilemmas affecting business transactions and the
interactions of people in the corporate. The study of business ethics will also enhance the human and
interpersonal skills of managers so they can be more effective in managing the human side of the organization.
The businessman’s Myths about business ethics

Businessmen are not immoral. And it would be disastrous to judge and conclude that business people commit
unethical acts in doing business. Business is certainly is a good and productive human activity.

Myth #1: Ethics is a personal affair and not a public debatable

In one sense, this is true because one’s concept of morality is a result of the environmental factors like religion,
culture and family values that have had a great impact on the development of the ethical person.

Myth #2: Ethics and business do not Mix

Some businessmen claim that ethics has no place at all in business.

Myth #3: Ethics in business is relative

Some business claim that morality is relative, which means, the
fundamental concepts of right and wrong depend on cultural and religious
values of people.

Myth #4: Good business means good ethics

The study of ethics in business encourages businessmen and managers
to look closely into the end and the means of doing business. The end does not justify the means.

Myth #5: Business is a war

For them, the market is an arena of gladiators trying to fight for survival and vying for the number one position.

The Relationship between ethics and business

Ethics plays an important role in business. Without morality, business will be a chaotic human activity.
Ethics is not a study of positive laws intended to govern and regulate the actions of people doing
business. The concern of ethics as philosophical science is to discover that there are unwritten laws,
written in the hearts of men that should govern our human conduct where positive laws may be
absent, and in some cases, not very clear. The following arguments justify the significant role that
ethics plays in the world of business.

Moral Reasoning in business

The essence of studying business ethics is to provide the manager as a decision maker with a
framework for the resolution of moral issues and problems affecting business activities and
organization itself. Moral reasoning is a process which ethical issues and problems are benchmarked
against a moral standard so that the moral judgement is made possible.

Characteristics of a good moral Standard (Shaw,1999)

1. A good moral standard is one that looks at the issues as something that is very serious, e.g.,
murder, graft and corruption, stealing.

2. A good standard must be grounded on the good moral argument. A good argument is an
argument that always tells the truth. A solid moral argument leaves no room for loopholes and
counter arguments.

3. A good standard should be objective and not subjective. It should be universally accepted and
should apply to all. What is good for one person should be at the same time good for
everybody.
 4. A good standard, when violated, brings about feelings of guilt, shame and remorse of
conscience.

Morality of profit motive

People go into business for number of reasons. Some go into business for personal satisfaction.
Others are in business to earn livelihood. Still others are in business because they want to serve the
society through the goods and services they offer to the customers. But the most common, if not the
most dominant reason why people go into business, is to make a profit. Business as an activity is
unthinkable without profit as motive.

The good and the bad side of profit motive

Just like other ethical issue, profit motive has two sides-the good and the bad.

A. The good side of profit-motive:

1. Profit-motive motivates people to do something meaningful, e.g., it gives human life a goal
to pursue and something to live for
2. Profit-motive promotes ingenuity and cleverness in running a business, e.g., business
leaders and entrepreneurs have to struggle hard to overcome obstacles in order to achieve
success.
3. Profit-motive makes people productive.
4. Profit-motive generates potential capital for the business.

B. The bad side of Profit-motive

1. Profit-motive promotes rivalry among competitors.

2. Profit-motive makes people focus only on making money, that is, to sell as many goods as
possible without considering whether or not these products satisfy the needs and wants of
consumers and end-users.
3. Profit-motive turns the businessman from being a reflective and a questioning person
because he focuses his attention only on the practical activity of making money.
4. Profit-motive promotes self-interest rather than the common good.

Business ethics defined

Business ethics is the study of what is the right and wrong human behavior and conduct in business

Business ethics is a study of the perceptions of people about morality, moral norms, moral rules and
ethical principles as they apply to people and institutions in business.

Businnes ethics is a study, evaluation, analysis and questioning of ethical standards, policies, moral
norms and ethical theories that managers and decision makers use in resolving moral issues ethical
dilemas affecting business.

The Nature of the human Act

Human acts are actions that proceed from the deliberate free will of a man. These actions are
therefore done with knowledge and consent and wilfully carried out by the person. Human acts are
characterized as:

1. The free and voluntary acts of man;

2. Acts done with knowledge and consent
3. Acts which are proper to man as rational being since man has been gifted with rationality and
freedom of will; and
4. Act which are conscious and under our control and for which we are responsible.
Human acts are subject to the eternal moral law of God, and are either good or evil, in and of
themselves. They do not take their inherent morality, that is, their moral nature, from the intention of
the person who acts. They do not take their morality from the purpose for which the act was chosen
(which is just another way of referring to the intention or intended end of the act). And they do not
take their morality from the reasonably anticipated good or bad consequences of the act. Every
human act is moral or immoral, in and of itself, by its very nature, quite apart from the ulterior
intentions of the one acting and the circumstances.

The moral nature of an act is its type, in terms of morality. It is the moral species of the act, in other
words, the ethical type of the act. The act’s species or type is inherent to the chosen act, such that its
morality cannot change, regardless of intentions or circumstance

Acts, therefore in order to be truly human, must be done deliberately, intentionally and wilfully carried
out by the agent. Without knowledge, consent and wilful choice on the part of the doer of the act, ther
can be no human acts.

Acts of man, on the other hand, refer to certain types of actions that are naturally exhibited by man
and such they are morally indifferent (or neutral) because we cannot judge them to be either ethical
or unethical. There are two categories acts of man:

1. Natural involuntary actions-these are actions of man performed intuitively or involuntarily, e.g.,
blinking of the eyes, metabolism, perspiration, beating of the heart.
2. Natural voluntary action-these are actions that are within the controls of man’s will but only for
some period of time, e.g., breathing, sleeping, eating, walking.

Human acts in relation to reason

 Good acts are those done by man in harmony with the dictates of right reason.
 Evil acts are those actions done by man in contradiction to the dictates of right reason.
 Indifferent acts are those acts that are neither good nor evil.

The voluntariness of the human acts

The concept of voluntaries is important in ethics because only voluntary acts have moral bearing.
This means that because human acts are performed by man with knowledge and consent, he is
therefore responsible for his actions.

a. Perfect voluntariness actions performed with full knowledge and with full consent
b. Imperfect voluntariness actions that occur when there is no perfect knowledge or consent, or
when either both of the knowledge or consent is partial.
c. Direct voluntary actions that are intended for its own sake, either as a means or as an end,
e.g., murder, stealing.
d. Indirect voluntary actions that are not intended for its own sake but which merely follows as a
regrettable consequence of action.

The determinants of Morality

The factor that link human acts with their norms are called the determinants of morality. As the
link, the determinants of morality serve as the measure of the goodness and the evilness of the
human act. There are three determinants of morality-the end of the action, the end of the agent, and
the circumstances of the act.

1. The end of the action - this refers to the natural purpose of the act or that in which the act in
its very nature terminates result, thus the end of the action of studying is learning.
2. The end of the actor – this refers to the intention or the motive of the doer of the act.
3. Circumstances of the act – refer to the conditions that affect the human body increasing or
decreasing the responsibility of the actor. These circumstances of the act are not
considered part of the action itself which means acts per se can exist without the
circumstances.

 Who refers to the person or the one to whom the act is ascribed
 What refers to the quality or the quantity of the object to be act
 Where refers to the place where the act is performed
 How refers to the manner or mode by which the act is performed.
 By what means refers to the means employed by the actor
 When refers to the circumstance of time
 Why refers to the circumstances of end or intention of the act

EMA EMITS COLLEGE PHILIPPINES

(Formerly: Eastern Mindoro Institute of Technology & Sciences)
Del Pilar St.; Pinamalayan, Oriental Mindoro
Telefax No. (043) 284-3974
 Telefax No. (043) 284-3974

Long Test

Name: Instructor:
Course & Section:
Good Governance & Social Responsibility

Directions: Answer the following questions briefly.

1. What is business ethics?

2. Describe the nature of business.
3. Why ethics is important to business?

EMA EMITS COLLEGE PHILIPPINES

(Formerly: Eastern Mindoro Institute of Technology & Sciences)
Del Pilar St.; Pinamalayan, Oriental Mindoro
Telefax No. (043) 284-3974
 Telefax No. (043) 284-3974

Prelim Exam

Name: Instructor:
Course & Section:
Good Governance & Social Responsibility

Directions: Answer the following questions briefly.

1. What are the businessman’s myths about business ethics?

2. In your own words, define the relationship between ethics and business
3. What is your personal view on profit-motive?

Identification. Write if it is Good or Bad profit motive on the space provided.

____________1.Profit shows that entrepreneurs are welcome

____________2.Profit provides the means for social transformation in society.

____________4.Profit motive promotes self-interest rather than common good.

____________3.Profit motive makes people focus only on making money.

___________5.Profit is the reward for putting capital at risk