Ethics, Social
Responsibility
and Globalization
Session 3.2
TECHNOPRENEURSHIP 101
Business Ethics
• the study of what is the right and wrong human behavior and
conduct in business
• a study of perceptions of people about morality, moral norms,
moral rules, and ethical principles as they apply to peoples and
institutions in business
TECHNOPRENEURSHIP 101
Why are business ethics
important?
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.
TECHNOPRENEURSHIP 101
With consistent ethical behavior comes an increasingly positive public
image, and there are few other considerations as important to potential
investors and current shareholders. To retain a positive image, businesses
must be committed to operating on an ethical foundation as it relates to the
treatment of employees, respecting the surrounding environment and fair
market practices in terms of price and consumer treatment.
TECHNOPRENEURSHIP 101
Violations of Ethical Code
The ethical behavior of most business professionals is
regulated by codes of conduct. Common ethics
violations can include the mishandling of funds, conflicts
of interest, and lapsed licensing.
Improper or fraudulent billing are ethics violations that
can involve charging customers for services they did not
receive. This most often happens in industries where the
party who receives the bill is not the party who received
the services. The prevalence of this specific ethics
violation has led many insurance providers to issue a list
of services to clients who could be subject to these
offenses, encouraging them to report discrepancies.
TECHNOPRENEURSHIP 101
There are several ways financial professionals can
commit ethical violations. A prime example is not placing
a client’s funds into an approved escrow account.
Managing escrow accounts is also often required for
attorneys and real estate agencies. If they fail to do so
and place client funds into personal or business
accounts, they are generally in violation.
TECHNOPRENEURSHIP 101
Many professionals are required
to renew or update their
licenses and certifications.
This often requires that courses
be taken and/or fees be paid.
For various reasons, many
professionals do not renew their
documents before they expire.
Since many clients (and often
supervisors) do not check
regularly, these ethics violations
often go unnoticed if a
regulatory body does not
discover them.
TECHNOPRENEURSHIP 101
Crossing a sexual boundary is
an ethics violation that is different
than sexual harassment or sexual
abuse. In sexual boundary cases,
both parties may be willing
participants however, something
about the sexual relationship is
inappropriate due to a code of
conduct. Examples of these ethical
violations can be found in doctor-
patient relationships, consulting
practices, educational settings,
church forums or other in-person
businesses.
TECHNOPRENEURSHIP 101
Conflict of interest usually involves a professional who
violates a client’s trust or places the client at risk because
of dealings with a third-party. These situations may arise
with attorneys (a criminal defense lawyer who dates his
client’s prosecutor) or consultants. It is often experienced
on voting boards where there is a personal relationship
between a voting party and a third-party with vested
interest in the outcome of the vote. In these cases, the
potential for a biased vote, or that the subject may
provide information or engage in activities with opposing
parties that jeopardize the outcome, is an obvious conflict
of interest.
TECHNOPRENEURSHIP 101
ETHICAL DILEMMA
An ethical dilemma is a problem where a
person has to choose between a moral and
an immoral act.
TECHNOPRENEURSHIP 101
Pressure from Management
Each company's culture is different, but some
companies stress profits and results above all else.
In these environments, management may turn a
blind eye to ethical breaches if a worker produces
results, given the firm's mentality of "the end justifies
the means." Whistle-blowers may be reluctant to
come forward for fear of being regarded as
untrustworthy and not a team player. Therefore,
ethical dilemmas can arise when people feel
pressured to do immoral things to please their
bosses or when they feel that they can't point out
their coworkers' or superiors' bad behaviors.
TECHNOPRENEURSHIP 101
Ambition and Discrimination
Individual workers may be under
financial pressure or simply hunger
for recognition. If they can't get the
rewards they seek through accepted
channels, they may be desperate
enough to do something unethical,
such as falsifying numbers or
taking credit for another person's
work to get ahead.
TECHNOPRENEURSHIP 101
Used as Negotiation Tactics
While these factors can cause ethical
dilemmas for workers within their own
companies, doing business with other
firms can also present opportunities for
breaches. Pressure to get the very
best deal or price from another
business can cause some workers to
negotiate in bad faith or lie to get a
concession. Negotiators may also try
to bribe their way to a good deal. While
this is illegal in the U.S., it still
sometimes happens; in other nations, it
is more common, and sometimes even
expected, which can put negotiators in a
difficult position.
TECHNOPRENEURSHIP 101
Value Ethical Behavior
It is in an organization's best interest to
provide ethical training to its employees,
to help them identify unethical behavior
and give them tools with which to
comply. Every company should have
an ethical policy that spells out its
penalties for infractions. Moreover,
management must lead by example,
showing that the company takes ethics
seriously and that violators will be
punished according to the organization's
policies, including possible suspension
or termination.
