DON HONORIO VENTURA STATE UNIVERSITY
Cabambangan, Villa de Bacolor 2001, Pampanga, Philippines
Tel. No. (6345) 458 0021; Fax (6345) 458 0021 Local 211
URL: http://dhvsu.cbs.ph
CHAPTER 1 ETHICS AND BUSINESS
Objectives
At the end of this chapter, the students are expected to;
1. Understand the nature of business from the moral perspective
2. Rationalize the importance of ethics in business
3. Apply the objective of moral reasoning as a framework for making ethical
decisions in business
4. Examine the morality of profit-motive in business
5. Justify the need for ethical propriety in business and the corporate world
The Importance of Ethics in Business
a. 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.
b. Ethics as a science does only evaluate the morality of human conduct
but also provides us with a common understanding of the universal,
objective, and irreversible moral principles that should govern our
human behaviour and guide our moral decisions.
c. Business Ethics opens a novel way of resolving moral problems and
ethical dilemmas affecting business transactions and the interactions
of people in the corporate world.
d. 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 organization.
The Businessman’s Myth’s about Business Ethics
Businessmen are not immoral. And it would be disastrous to judge and
conclude that business people commit unethical act in doing business.
Business, certainly is a good and productive human activity. However, it is the
businessman’s wrong perception about the role that ethics plays in the world of
business that affects the moral judgment and decision making.
Here are some myths that businessmen have about Business Ethics;
1. Ethics is a personal affair and not a public debateable matter
2. Ethics and business do not mix
3. Good business means good ethics
4. Business is a war
DON HONORIO VENTURA STATE UNIVERSITY
Cabambangan, Villa de Bacolor 2001, Pampanga, Philippines
Tel. No. (6345) 458 0021; Fax (6345) 458 0021 Local 211
URL: http://dhvsu.cbs.ph
The Relationship between Ethics and Business
Ethics play 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 a philosophical science is to discover that there are
unwritten laws, written in the hearts of man that should govern our human
conduct where positive law may be absent, and in some cases are not clear.
The following arguments justify the significant role that ethics plays in the
world of business;
1. Business is an integral part of human society. Therefore, the actions of
individuals and institutions in business must be subjected to moral rules
and moral evaluation.
2. In business, as in any other human endeavour, “what is legal may not
necessarily be moral.” People tend to be confuse legality and morality. An
action may be legal but not necessarily moral.
3. Law are insufficient.
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 activates and the organization itself. Moral
reasoning is a process in which ethical issues and problems are benchmarked
against a moral standard so that a moral judgment is made possible.
Characteristics of a Good Moral Standard;
1. A good moral standard is one that looks as the issue as something that
is very serious.
2. A good standard must be grounded on good moral argument. A good
argument is an argument that always tells the truth. A solid moral
argument leaves the room for loopholes and counter arguments.
3. A good moral standard should be objective not subjective. It should be
universally accepted and should apply to all.
4. A good standard, when violated, brings about feelings of guilt, shame
and remorse of conscience.
Requirements for a Good Moral Judgment
1. A good moral judgment must be logical.
2. A good moral judgment must be based on facts and solid evidence.
DON HONORIO VENTURA STATE UNIVERSITY
Cabambangan, Villa de Bacolor 2001, Pampanga, Philippines
Tel. No. (6345) 458 0021; Fax (6345) 458 0021 Local 211
URL: http://dhvsu.cbs.ph
3. A good moral judgment must be based on sound and defensible moral
principle. A weak ethical principle is open to a lot of criticisms.
The Morality of Profit Motive
People go into business for a number of reasons. Some go to business for
personal satisfaction. Other are in business to earn a 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.
Businessmen consider profit as a form of anticipated reward or a
compensation for the efforts they spend, skills they apply and returns for they
capital they invested in outing up and organizing the business.
The issue of profit motive is a subject matter that needs to be carefully
considered in the study of Business Ethics. Is profit motive in business good or
bad? Is it moral or immoral?
The Good and the Bad Sides of Profit Motive;
A. The Good Side of Profit Motive;
1. Profit motive motivates people to do something meaningful.
2. Profit motive promotes ingenuity and cleverness in running business.
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.
C. Ethical Considerations of Profit Motive Business
1. Earning profit is a good and valid activity in business.
2. Making excessive profits is totally wrong. It leads to greed, avarice,
and manipulation of the customers.
DON HONORIO VENTURA STATE UNIVERSITY
Cabambangan, Villa de Bacolor 2001, Pampanga, Philippines
Tel. No. (6345) 458 0021; Fax (6345) 458 0021 Local 211
URL: http://dhvsu.cbs.ph
3. Profit is not the “be-all and the end-all” of doing business. Certainly there
are factors to be considered in business such as, customer’s satisfaction,
respect for the environment, enhancement of the quality of life and the
preservation of the society.
4. The teachings of the Catholic Church do not totally condemn profit as
part of business activity. Pope Pius XI, does not prohibit the producer
from himself provided “one respects the law of God, does not prejudice the
right of others, and work according to faith and right reason.”
The Concept of Moral Responsibility
1. Moral Responsibility refers to holding to people morally accountable for
some past action or actions. This simply means assigning to people
blame or praise for particular actions that they have performed.
2. Moral Responsibility also means care, welfare, or treatment of others
as derived from the specific social role that one plays in the society.
3. Moral Responsibility likewise refers to one’s capacity for making moral
or rational decisions of his own.
Business Ethics Defined
1. Business Ethics is the study of what is the right and wrong human
behaviour and conduct in business.
2. 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.
3. Business Ethics is the study, evaluation, analysis and questioning of
ethical standards, policies and ethical theories that managers and
decision makers use in resolving moral issues and ethical dilemmas
affecting business.
