BUSINESS

ETHICS
Prof. Romeo G. Pajigal, MBA, CMITAP
 Ethics and its Concepts
■ Ethics comes from the Greek word “ethos,”
meaning character, or “a characteristic way of
acting.”
■ Morality (comes from the latin word “moralis,”
meaning customs or manners).
Therefore, Ethics seems to pertain to the
individual character of a person that is based on
opinions, beliefs and values that guide him towards
life and decisions. Whereas morality appears to
point to the relationships among human beings. A
person’s personal philosophies about what is right
or wrong (ethical/unethical, moral/immoral)
Ethics is the study of moral behavior or conduct of
man as viewed from ultimate principles insofar as
these principles are known by human reason.
Briefly, ethics is a philosophical science (fall under
moral philosophy) dealing with the morality of the
human act.
 Human Act and Act of Man
■ Human Act is one that proceeds from the deliberate free will of
man. It is an act that is deliberately and knowingly performed by
one having the use of reason. Therefore, both intellect and will are
in play. It is an act proper to man as man.
Ex.: Decisions, choices, and actions taken with intention and conscious
awareness
■ Act of Man is one that is not dependent upon intellect and free will.
It is done by a human person but is not proper to him as a person
because it does not stem (to stop something unwanted from
spreading) from those faculties which are peculiar (unusual or
strange) to man, namely, intellect and will. Thus, in everyday
language, an act of man is essentially an animal act.
Ex.: Events or disasters that are caused by human actions, as opposed to
natural causes. Some examples of acts of man includes industrial
accidents such as explosions, chemical spills, or other incidents that occur
at factories or other industrial sites.
 What is Business Ethics?
■ is concerned primarily with the relationship between
business goals and techniques to specifically human
ends. It studies the impacts of laws for the benefit of the
individual, the company/firm, the business community,
and society as a whole.
■ study the unique obligations that a man, and a citizen
accept when he becomes a part of the world of
commerce.
■ comprises organizational principles, values, and norms
that may originate from individuals, organizational
statements, or from the legal system that primarily
guide individual and group behavior in business.
Note: The purpose of business ethics is to ensure a
consistent moral attitude within the company, from
Importance of Business Ethics in the
Workplace (tangible and intangible benefits)
■ Improved employee retention. Encourage managers to
show appreciation for an employee’s hard work (employee
commitment and trust).
■ Stronger collaboration. Respect for one another and
work well together, has a sense of camaraderie (a feeling
of trust and friendship, fellowship). This will boost investor
loyalty, customer satisfaction and trust).
■ More effective leadership. Teams are more inclined to
follow their lead, minimize discipline issues, trust
■ Increased professional value. Positive attitude towards
your work and those you work with will increase the quality
of your work, increases value to your team and company
 Common Types of Business Ethics
1. Personal responsibility is a vital attribute for employees in both entry-level
and senior positions. This could entail completing tasks your manager has
assigned or simply fulfilling the duties of your job description. If you make a
mistake, you acknowledge your fault and do whatever you need to do to fix it
(incident report).
2. Corporate responsibility. Businesses have responsibilities to their
employees, their clients or customers and their board of directors. Some of
these may be contractual or legal obligations, others may be promises. For
example, a commitment to conduct business fairly and to treat people with
dignity and respect. Whatever those obligations are, the business has a
responsibility to keep them.
3. Loyalty. It is a valuable quality for both corporate leaders and team members.
It's important for team members to be loyal to their coworkers, managers and
the company. This might involve speaking positively about the business in
public and only addressing personnel or corporate issues in private. Customer
or client loyalty is important to a company not only to maintain good business
relations but also to attract business by cultivating a positive reputation.
 Common Types of Business Ethics
4. Respect. It is an important business ethic, both in the way the business
treats its clients, customers and employees and in the way its team members
treat one another. When you show respect to someone, that person feels like
a valued member of the team or an important customer. It indicates that
you care about their opinions, you keep your promises to them and you work
quickly to resolve any issues they may have.
Common Types of Business Ethics
5. Trustworthiness. A business cultivates
trustworthiness with its clients, customers and
employees through honesty, transparency and
reliability. Team members should feel they can
trust their companies to keep to the terms of
their employment. Clients and customers
should be able to trust the business with their
money, data, contractual obligations and
confidential information. Being trustworthy
encourages people to conduct business with
you and helps you maintain a positive
reputation.
 Common Types of Business Ethics
6. Fairness. When a business exercises fairness, it applies the
same standards for all team members, regardless of rank. The
same expectations of honesty, integrity and responsibility placed
upon the entry-level employee also apply to the Chief Executive
Officer (CEO). Fairness means that a business strives to treat its
customers with equal respect, offering the same goods and
services to all based on the same terms.
7. Social and Environmental responsibility. Corporate social
and environmental responsibility means that a company
recognizes its impact outside of the marketplace. Many
companies look for ways to help their communities through
volunteer work or financial investments. They may also adopt
measures to reduce waste and promote a safe and healthy
environment.
 Examples of Business Ethics
1.Data protection- Companies that collect customer data usually promise
to secure that information and not share it without the customer's
permission. The same applies to employee information. (Republic Act No.
10173, also known as the Data Privacy Act of 2012 (DPA), aims to
protect personal data in information and communications systems
both in the government and the private sector).
2.Customer prioritization- to provide recompense (make amends,
compensate). If it's a faulty product, the business may offer a replacement
or a refund. If the customer experienced poor service, the company usually
apologizes and offers a discount or some other form of compensation.
3.Workplace diversity- means using fair/equitable recruiting practices
that give equal opportunity to people from different ethnic, gender and
social groups.
4. Whistleblower protection. With these protections, employees don't need
to fear losing their jobs or encountering disciplinary action for notifying the
company about unethical behavior.
 Examples of Business Ethics
5. Corporate transparency. A business that practices transparency is clear
in its communication both with employees and customers. Transparent
corporate communications are also honest and truthful (reporting).
6. Community outreach. Having an ethical obligation to help the
communities in which they conduct business. Various projects and
programs not only help those in need but also help develop respect and
trust within the community.
7. Environmental compensation. Many companies take environmental
concerns seriously, whether that means reducing waste or cleaning local
land, water and air.
8. Employee compensation. Companies adhering to principles of fairness
and respect strive to pay their team members a fair wage for the work they
do based on their experience, education and job duties. Businesses often
reward outstanding performance with employee bonuses. These are good
incentives for team members to work hard and remain with the company.
They're also a way for the business to express gratitude for their efforts.
 Two Fundamental Questions
1. Why should I be moral (do what is right, just and
proper)? – to reflect and find meaning of your journey with this
course.
Note that Socrates pointed out, it is still far better for one
to be rational and in control of his or her appetite rather
than be enslaved by it. It is still better to get an honest
failing mark than a perfect score out of cheating.
What then is a good life Socrates argument against
Glaucon?
■ According to him, a man who is truly just is one who is
motivated by reason and morality rather than
selfishness or the desire for power. Socrates defined the
"Good Life" as one in which decisions are made based
on virtue and reason, and where one's actions are
consistent with the natural course of events.
 Two Fundamental Questions
 Doing the right thing promotes self-interest (gratifying the senses or
the ego) of Glaucon or the self-interest (self-control, exercise of reason
and true happiness) of Socrates.
 Doing the right thing is what the law demands. One has no choice but
to do it because doing otherwise will bring one into trouble.
 Doing the right thing is what God expects of me. One will suffer eternal
damnation if one doesn’t do it.
 Doing the right thing will preserve the integrity of the society. To ensure
the continued survival of the society, one must do the right thing.
2. What does it mean to be a moral person?
Ans. A moral person behaves in a way that is believed by most people to be good
and right. The people who will be on the committee are moral, cultured, competent
people.
Synonyms: good, just, right, principled. Morality is the behavior and beliefs that a
society deems acceptable.
Difference between Moral Standards and
other rules of lives
■ Moral standards refers to the norms and values that a society
uses to determine reasonable, correct, or acceptable. Believing
to be morally acceptable and morally unacceptable.
■ Some standards are universally accepted; for example, most
societies believe killing is wrong, but some make an exception
for killing in a war fought to protect the country or killing in self-
defense.
■ Therefore, moral standards involves the rules people have
about the kinds of actions they believe are morally wrong or
right, thus guide individuals in making moral decisions.
 Identifying Moral/Ethical Dilemma in Business

■ It occurs when a financial decision may impact various

stakeholders, including customers, clients, investors, and
employees.
■ Is a problem in the decision-making process between two
possible options, neither of which is absolutely acceptable from
an ethical perspective.
■ These dilemmas can arise at different levels within the finance
industry, such as investment management, corporate finance,
accounting, and banking.
■ A moral (ethical) dilemma is a situation that involves a choice,
decision, act/action, solution that may include an unpleasant
problem or situation where you feel you simply do not know what
to do or which way to turn.
How to Solve an Ethical Dilemma?
■ Refute the paradox (dilemma): The situation must be
carefully analyzed. In some cases, the existence of the
dilemma can be logically refuted.
■ Value theory approach: Choose the alternative that
offers the greater good or the lesser evil.
■ Find alternative solutions: In some cases, the problem
can be reconsidered, and new alternative solutions may
arise.
Examples of ethical dilemma include:
o Taking credit for other’s work.
o Offering a client a worse product for your own profit.
Stakeholder Relationships
and Social Responsibility
■ Stakeholders, these are customers, stakeholders, employees,
suppliers, government agencies, communities, and many others
who have a “stake” or claim in some aspect of a company’s
products, operations, markets, industry, and outcomes.
Two types of stakeholders:
1. Primary stakeholders- those whose continued association and
resources are absolutely necessary to a firm’s survival.
2. Secondary stakeholders- those who do not typically engage
directly in transactions with a company and are therefore not
essential to its survival.
Note: The degree to which a firm understands, and addresses
stakeholder demands can be referred to as a stakeholder
orientation, which involves activities and processes within a system
 Sustainability
■ Falls into the social responsibility domain of maximizing positive and
minimizing negative impacts on stakeholders.
■ From a strategic business perspective is the potential for the long-term well-
being of the natural environment, including all biological entities, as well as
mutually beneficial interactions among nature and individuals, organizations,
and business strategies.
■ Includes the assessment and improvement of business strategies, economic
sectors, work practices, technologies, and lifestyles in the maintaining of the
natural environment.
■ Sustainable development involves meeting the needs of the present without
compromising the ability of future generations to meet their own needs, with
an emphasis on the natural environment.
■ Relates to ethical decision making.
■ Global environmental issues: air and water pollution, acid rain, climate
change, waste management, deforestation (should have environmental
legislation).
■ Business Response to Sustainability Issues (green marketing, greenwashing,
List of References
■ Padilla, Reynaldo A. (2016). Business ethics and social responsibility. JFS Publishing
Services, Manila, Philippines. ISBN 978-621-415-004-5

■ DesJardins, Joseph (2024). An introduction to business ethics. McGraw Hill LLC, New
York, NY 10019. ISBN 978-1-266-19812-0

■ Ferrell, O.C., Fraedrich, J., Ferrell, L. (2022). Business ethics: Ethical decision making
and cases. Thirteenth Edition. Cengage, Boston, MA 02210. ISBN: 978-0-357-51336-1
End. Thank you for listening.