Hen faced with a decision, few business professionals refer
Specifically to Kant or Rawls, nor do many of us proceed
Through formal utilitarian calculations. Instead, we factor ethical norms and personal values into our
daily decisions in an informal way.
« Often, non-explicit consideration of ethical issues is nadequate. Confronting ethical issues requires
time and energyand sometimes courage. All of us are tempted to put ethical issues aside. Ethical
theories provide a framework for analyzing and understanding problems, but on a daily basis, we
sometimes need more specific and direct guidelines in order keep ethical responsibilities at the
forefront. A list of fundamental principles or a code of business ethics can provide this intermediate link
between ethical theory and daily decision-making.
Numerous professional groups, including legal, medical, engineering, and accounting associations,
publish ethical codes and establish review boards to sanction members who fail to abide by those codes.
These codes establish guidelines for ethical behavior that can be applied directly to the daily decision-
making process. No single association of business professionals has equal penetration within the total
business environment; and no single business organization has equivalent sanctioning authority to bar
and medical associations. It is probably because of this lack of a single dominating professional
organization that no widely accepted code of business ethics has been devised.
But the value of such a code is undeniable. It would set terms for evaluating the ethics of business
decisions and would provide increased consistency in the standards we use to judge behaviors.
In support of the adoption of such a uniform ethics code for businesses, Thomas Dunfee, Chairman of
the Wharton School’s Legal Studies Department, has proposed a list of eight fundamental Principles of
business ethics.
Dunfee supports each of these principles on three key criteria: he believes that they are realistic,
workable, and valid. They are realistic because they can be understood and implemented by managers.
They are workable because the principles are not inefficient in the context of general business practice;
adoption will not impose serious costs on the workings of the marketplace. They are valid because they
can be justified by formal ethical analysis;
That is, they are supported by one or more of the philosophica] theories of ethics.
Although what is generally accepted cannot define what is ethical in a broader sense, recognition by
practitioners that a principle is desirable is a necessary condition for widespread observance. Dunfee has
found wide-reaching consensus that these principles are correct and applicable, and he believes it is
reasonable to expect that managers will voluntarily comply with them.
As any list of standards will, the principles on first impression appear to be deontic or duty-based. But
most, if not all, of the principles are justifiable on rule utilitarian grounds and on the basis of certain
theories of social justice. Few of us adhere rigidly to a single school of ethical theory. We mix
deontological, utilitarian, and social justice arguments. It is when arguments coincide that the clearest
principles result. Wide-ranging theoretical views and a strong business consensus converge on this set of
principles.
Foundation Principles of Business Ethics 1. Exercise due care. Confidentiality. Fidelity to special
responsibilities. Avoidance of the appearance of a conflict of interest. Willing compliance with the law.
Acting in good faith in negotiations. Respect for human well-being. Respect for the liberty and
constitutional rights of others.
SNAP WN
Let us examine each of the principles individually: 1. Exercise Due Care
All professionals are held to a special standard of competency and care in their work. Business managers
should aspire to a similarly high standard of care. This obligation exists in regard to all work whether it
be as an employee of a corporation or as a sole practitioner who provides services to customers. Firms
must exercise due care in foreseeing and resolving potential problems. Failing to foresee consequences
which
Prudent circumspection would have revealed represents
Professional negligence. Examples: a. Managers have a responsibility to oversee the actions of
subordinates. B. Firms have a responsibility to test products adequately.
c. Firms must assess and justify negative environmental consequences of products and production
processes.
2. Confidentiality.
Many business relationships require the exchange of confidential information. Managers have a
responsibility to restrict uses of that information to the business situation. They should not use that
information for purposes other than those expected or approved
By the discloser. Managers have further responsibility to safeguard confidential information so that
access is restricted to those who have a need to know.
Examples:
a. A firm involved in merger negotiations has a responsibility to safeguard information provided by
a prospective merger partner. Employees should not use inside information to trade shares of
the partner, and confidential information
About the partner should not be disclosed to the public.
b. Managers have a responsibility to keep employee performance evaluations confidential and to
disclose them only to others in the firm who have
A legitimate need to know.
c. Management and union negotiators who have
Agreed to keep negotiations confidential until
A tentative agreement is reached have a responsibility not to leak information to the press.
3. Fidelity to Special Responsibilities Fidelity is a principle of devotion to duty. Duties may arise from law,
contract, or implicit business relationship. Managers having special duties must give first priority to
those duties. Examples:
a. Trustees have special responsibilities to clients, as do agents and stockbrokers.
b. Managers have special responsibilities to shareholders, employees, and all stakeholders.
c. Employees have special responsibilities to their employer.
4. Avoidance of the Appearance of a Conflict of Interest
Business people should not place themselves in positions where they have personal incentives to take
actions which could be harmful to their firms or chents — whether those incentives result from external
business affairs, family relationships, friendships, or even internal firm politics.
Full disclosure may in some cases resolve conflicts between competing interests. Disclosure alone may
not be adequate where those who may be harmed are unable to take action to resolve their concerns.
In such instances, withdrawal from the decision-making process or reference to independent authonties
may be required. A personal judgment that objectivity can be maintained, even when made with great
sincerity, is inadequate by itself. The standard requires avoidance of an appearance of a conflict of
interest.
Examples:
a. Financial interest in client and supplier firms should be fully disclosed and resolved.
b. Personnel officers of public companies should refrain from hiring famuly members or should
defer decisions to others who have no personal involvement.
c. Special incentives or unusual compensation deriving from recommendations made to clients
should be disclosed.
5, Willing Compliance with the Law
Managers should willingly comply with the law. Further, they should comply with the spirit of the law
and avoid attempts to circumvent the intent of legal restrictions. Managers should not readily accept
weak justifications for breaking the law, e.g., “Everybody does it,” or “The law is not good policy.”
6. Acting in Good Faith in Negotiations
Good faith may be defined as acting fairly within the context of a transaction. An individual must be
appropriately forthright and make factual statements honestly. Managers acting in good faith will
conform to conventions of the industry when representing products to peers and will refrain from using
industry conventions to victimize the naïve. Firms should not misrepresent their products in advertising
or personal selling, nor should they knowingly promise to deliver products or to make payments unless
they expect to be able to do so.
7. Respect for Human Well-Being.
Managers must respect the physical and emotional well-being of employees, clients, customers, and
other stakeholders. Managers must give the highest priority to safety and must fully disclose known
risks, both to product users and to employees in the workplace. Further, employees, clients, and
suppliers should not be sexually or emotionally harassed.
8. Respect for the Liberty and Constitutional Rights of Others.
Workplace restrictions on basic rights, including those pertaining to speech, religion, freedom from
invidious discrimination, and access to government, may significantly compromise employees’ abilities
to experience the full value of those rights. Managers should give extreme priority to preserving liberties
and constitutional rights, even where specific legal sanctions do not exist.
Virtue Ethics
Socrates, as represented in Plato’s early dialogues, held that virtue is a sort of knowledge (the
knowledge of good and evil) that is required to reach the ultimate good, or eudaimonia, which is what
all human desires and actions aim to achieve. Discussion of what were known as the Four Cardinal
Virtues (prudence, justice, fortitude and temperance) can be found in Plato’s “Republic.”He also claimed
that the rational part of the soul or mind must govern the spirited, emotional and appetitive parts in
order to lead all desires and actions to eudaimonia, the principal constituent of which is virtue.
The concept reached its apotheosis in Aristotle’s “Nicomachean Ethics” in the 4th Century B.C.. Aristotle
held that eudaimonia is constituted, not by honour, wealth or power, but by rational activity in
accordance with virtue over a complete life, what might be described today as productive self-
actualization. This rational activity, he judged, should manifest as honesty, pride, friendliness, wittiness,
rationality in judgment; mutually beneficial friendships and scientific knowledge.
Non-Western moral and religious philosophies, such as Confucianism in ancient China, also incorporate
ideas that may appear similar to those developed by the ancient Greeks and, like ancient Greek Ethics,
Chinese ethical thought makes an explicit connection between virtue and statecraft or politics.
The Greek idea of the virtues was later incorporated into Scholastic Christian moral theology,
particularly by St. Thomas Aquinas in his “Summa Theologiae” of 1274 and his “Commentaries on the
Nicomachean Ethics.” The Christian virtues were also based in large part on the Seven Virtues from
Aurelius Clemens Prudentius’s epic poem (written c. 410 A.D.): chastity, temperance, charity, diligence,
kindness, patience and humility. Practice of these virtues was alleged to protect one against temptation
from the Seven Deadly Sins (lust, gluttony, greed, sloth, wrath, envy and pride).
Virtue Ethics has been a recurring theme of Political Philosophy, especially in the emergence of classical
Liberalism, the Scottish Enlightenment of the 18th Century, and the theoretical underpinnings behind the
American Revolution of 1775. However, although some Enlightenment philosophers (e.g. David Hume)
continued to emphasize the virtues, with the ascendancy of Utilitarianism and Deontology, Virtue Ethics
moved to the margins of Western philosophy.
In the second half of the 20th Century, there was a minor revival of Virtue Ethics, principally due to the
efforts of Elizabeth Anscombe (1919-2001), Philippa Foot (1920-2010), David Alasdair Macintyre (1929-
2015), Paul Ricoeur (1913-2005) and Stanley Hauerwas (1940).
Criticisms of Virtue Ethics
According to critics, a major problem with the theory is the difficulty of establishing the nature of the
virtues, especially as different people, cultures and societies often have vastly different opinions on
what constitutes a virtue. Some proponents counter-argue that any character trait defined as a virtue
must be universally regarded as a virtue for all people in all times, so that such cultural relativism is not
relevant. Others, however, argue that the concept of virtue must indeed be relative and grounded in a
particular time and place, but this in no way negates the value of the theory, merely keeps it current.
Another objection is that the theory is not “action–guiding,” and does not focus on what sorts of actions
are morally permitted and which ones are not, but rather on what sort of qualities someone ought to
foster in order to become a good person. Thus, a virtue theorist may argue that someone who commits
a murder is severely lacking in several important virtues (e.g. compassion and fairness, among others),
but does proscribe murder as an inherently immoral or impermissible sort of action, and the theory S
therefore useless as a universal norm of acceptable conduct suitable as a base for legislation. Virtue
theorists may retort that it is in fact possible to base a judicial system on the moral notion of virtues
rather than rules (modern theories of law related to Virtue Ethics are known as virtue jurisprudence, and
focus on the importance of character and human excellence as opposed to moral rules or
