Business Ethics and Corporate

WELCOME
Social Responsibility
(MBA 681)

St. Mary’s University

Delivered By: Muluadam Alemu (Ph.D)

Addis Ababa, Ethiopia

Page 1 09/23/2023
 Dear Students
 Pair up yourself first with a classmate near to
you.
 Do short interview to your partner for about
1. Self Introduction
five minutes & then introduce each other to
the class.
 Points for short interview
1. Who are you ?
2. Do you have previous experience in
project management?
3. From with sector /office did come?
4. What is your prior role in the
implementation of projects?

2 09/23/2023
 The course leader will
invite selected
Dear Students;
participants to report
their expectations

What do you expect from

this course right away?

2. Expectations
Get out a blank sheet of
paper, and think about the
question in depth.

List down at least five of your

Trainings will neither make a fish expectations which will be
fly nor a bird swim, compared with the actual content
But and objective in the later stages.
It certainly will help the fish to
swim faster and the bird fly higher

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 • Keep on wearing Face mark, if you like
 Share You Practical Experience
 Arrive On Time
 Listen To Others
3. Course Delivery  Do Not Interrupt
Ground rules for
 Do Not Engage In Side Talk
the course
 Mobiles silent or switch off!
 Ask questions anytime!
 Bring good mood!
 Attendance Mandatory
 Any Other……መጨመር ከፈለጋችሁ…

4 09/23/2023
 Dear Trainees;

 Feel free to share an

5. Suggestions for
Effective Participation illustration

 Feel free to ask for

clarification

 Respect the ideas of other .

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 Module Topic Estimated
No. Time

1 Ethics and Theory of Moral 4 Hours

Development
4 Hours
6. Course 2 Theories of ethics and
approaches
overview 3 Legal aspects and ethical issues 4 Hours
in employees’ rights and duties
4 Business ethics in operations, 4 Hours
marketing and competition
5 Corporate social responsibility 6 Hours

6 Business and Corporate Social 6 Hours

Responsibility
7 Assignment Presentation and All time left
Evaluation

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 On completion of the course, you are expected to:

1. Gain a basic understandings on Ethics and Theory of Moral

Development

2. Understand the Theories of ethics and approaches;

7. Learning
Objectives 3. Understand Legal aspects and ethical issues in employees’ rights
and duties

4. Acquainted with the basic skills of business ethics in operations,

marketing and competition

5. Gain understanding on the models, practice and challenges

Corporate social responsibility; and
Aim: To strengthen business
management structures and 6. Acquainted with the basic skills of business and Corporate Social
practices in the real world
Responsibility

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 8. Teaching
approaches

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 Level 1. REACTION
Assessment of trainees’ reactions or attitudes on the course delivery

Level 2. LEARNING
Measures the knowledge acquired, skills improved,
9. Course Performance or attitudes changed as a result of the training.
Evaluation Model

Level 3. Behavior
Will be used to measures the transfer of training or if trainees
are applying new knowledge, skills, or attitudes
on the job

Level 4. Result
Measures the result of training as it relates to
Kirkpatrick’s four-level model factors such as sales, productivity, profit,
of course delivery costs, employee turnover, and product/service
/ training evaluation will be quality
used .

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 Mode of Assessment:

Assessment 1: Assignment(Group) - Weighting:

35%
 Task: Writing a full-fledged organizational BECSR
Mode of
Assessment: practice analysis report.

 Case Synthesis……Weighting: 15%

Assessment 2: Final Examination (Individual) -

Weighting: 50%
 Task : Final examination assesses student
performance in relation to the achievement of all
objectives of the course

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 UNIT ONE
Ethics and
Theory of Moral
Development

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 Chapter 1
Ethics and Theory of Moral Development

1.1 Why study ethics?

1.2 Defining Ethics
1.3 What is business ethics?
1.4 Roles of business ethics
1.5 Moral Development Theory
 Dear Students; this chapter;
 provides an overview of business
ethics.
 develops a definition of business
ethics and discusses why it has
become an important topic in
What this chapter
is all about business education.
 examines the evolution of business
ethics and explores the benefits of
ethical decision making in business.
 provides a framework for examining
business ethics
 provides an overview of Moral
Development Theory

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 Dear Students; we study business Ethics
as it:

1.1 Why study

business ethics?  Comprises principles and standards
that guide behavior in the world of
business

 Provides instruments to differentiate

on what is right or wrong, acceptable
or unacceptable behavior within the
organization

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 Dear Students; we study business
Ethics because:
-Reports of unethical behavior are on
the rise
1.1 Why study
business ethics? -Society’s evaluation of what is right or
wrong affects its ability to achieve its
business goals

-Studying business ethics is a response

to SH demands for ethics initiatives

-Studying business ethics helps identify

ethical issues to key stakeholders
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1.2 Defining Ethics and related terms

1. Ethics
Ethics are moral codes that govern the
behavior of a person or group of people.

Ethics is concerned with the following:

Good vs Bad Right vs Wrong
Fair vs Unfair Praise vs Blame

Broadly, ethics refers to the study of moral

values, principles, and rules, including the
determination of standards of conduct and
obligations for individuals and organizations.
 1. Ethics
• Ethicists use the term ethics to refer
primarily to the study of morality.

• Ethicists define Ethics as the discipline that

1.2. examines one’s moral standards or the
moral standards of a society to evaluate
Definitions their reasonableness and their implications
for one’s life.

• The subject of ethics consists of the

fundamental issues of practical decision
making, & its major concerns include the
nature of ultimate value and the standards
by which human actions can be judged right
or wrong.

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 2. Morality

• The standards that an individual or a

group has about what is right and
wrong or good and evil.

1.2. 3. Moral standards

Definitions  The norms about the kinds of actions
believed to be morally right & wrong
as well as the values placed on what
we believe to be morally good and
morally bad.
 Moral standards deal with matters that
are serious
 Examples
- Theft, rape, enslavement, murder, child
abuse, assault, slander, fraud,
lawbreaking, and so on.

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 Six Characteristics of Moral
Standards
- Involve serious wrongs or
significant benefits

- Should be preferred to other

values including self-interest
1.2.
Definitions - Not established by authority
figures

- Felt to be universal

- Based on impartial
considerations

- Associated with special

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emotions and vocabulary
 1.2. 4. Nonmoral standards
Definitions
 The standards by which we
judge what is good or bad
and right or wrong in a
nonmoral way.

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 Dear Students
How do we distinguish between moral and
nonmoral or conventional standards?
Look at the two lists of norms below and see if
you can tell
which is the list of moral norms and which is the
list of nonmoral norms:

Group Work
Group A Group B

1. “Do not harm 1. “Do not steal what

other people,” belongs to others.”
2. “Do not eat with 2. “Do not chew gum in
your mouth class,”
open,” 3. “Do not wear sox
3. “Do not lie to that do not match.”
other people,”

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 • Shall we aim at happiness or at
knowledge, virtue, or the creation
of beautiful objects?

Questions
Ethics deals
• If we choose happiness, will it be
our own or the happiness of all?

• What of the more particular

questions that face us: is it right
to be dishonest in a good cause?
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 • Can we justify living in richness
while elsewhere in the world
people are starving?

Questions
• Is going to war justified in cases
Ethics deals
where it is likely that innocent
people will be killed?

• Is it wrong to clone a human

being or to destroy human
embryos in medical research?
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Summary
• Although ethics has always been viewed as a branch of
philosophy, its all-embracing practical nature links it with
many other areas of study, including anthropology, biology,
economics, history, politics, sociology, and theology.
• Yet, ethics remains distinct from such disciplines because it
is not a matter of factual knowledge in the way that the
sciences and other branches of inquiry are.
• Rather, it has to do with determining the nature of
normative theories and applying these sets of principles to
practical moral problems.
 Group Work (5 minutes)

• What we have said about ethics so

far has been meant to convey an
idea of what ethics is.
1.3 What is
business ethics? • Here, however, we are not
concerned with ethics in general,
but with a particular field of ethics:
business ethics.

Question:

1. Discuss in group your

understanding on business ethics
and report it to the class
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 Definition
• It is a specialized study of moral right &
wrong that concentrates on moral
standards as they apply to business
institutions, organizations, & behavior.

• Business ethics are moral principles

1.3 What is
business ethics? that guide the way a business behaves.

• These are set of moral standards that

are relied upon to reach conclusions
and make decisions.

• In a business environment, ethics are a

key factor in decision-making.

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 Definition
BE is concerned with truth and justice,
and has a variety of aspects:
• the expectations of society,
• fair competition,
• advertising,
1.3 What is • public relations,
business ethics?
• social responsibility,
• consumer autonomy, and
• corporate behaviour
 BE examines ethical principles and
morals that can arise in a business
environment
 BE promote non-economic values
under a variety of headings (e.g.
ethics code, social responsibility,
27 09/23/2023
charters)
 BE is a Study of:

 Our moral standards in so far as

these apply to business

 How reasonable or unreasonable

1.3 What is
business ethics? these moral standards we have
absorbed from society are

 The implications our moral

standards have for business
activities.
In general, BE is the study of the
complex business practices &
behaviors that give rise to ethical
issues in organizations
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 Kinds of Ethical Issues in Business

1. Systemic
• Ethical questions about the social,
political, legal, or economic systems
1.3 What is within which companies operate
business ethics? • E.g. The morality of the laws,
regulations, industrial structures, and
social practices within which
businesses operate.
2. Corporate
• Ethical questions about a particular
corporation and its policies, culture,
climate, impact, or actions
3. Individual
• Ethical questions about a particular
individual’s decisions, behavior, or
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character
 Group Work (5 minutes)

Question
1.3 What is
business ethics?
• Should Ethical Qualities be
Attributed Only to People or Also
to Corporations?

• How do you evaluate it, from

perspective of Ethical practices in
the Ethiopian Business?

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 Different Paradigms on the above question

1. One view says corporations, like people,

act intentionally and have moral rights,
and obligations, and are morally
responsible.
1.3 What is
business ethics? 2. Another view says it makes no sense to
attribute ethical qualities to corporations
since they are not like people but more
like machines; only humans can have
ethical qualities.

Question:

Which of these two views is correct?

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 Different Paradigms on the above
question….

Perhaps neither is correct. Thus, we

need to have the third view:
1.3 What is
business ethics?

3. A middle view says that humans

carry out the corporation’s actions
so they are morally responsible for
what they do and ethical qualities
apply in a primary sense to them;
corporations have ethical qualities
only in a derivative sense.

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 • Understanding BE makes you
informed of your rights as a
consumer, an employee, and a
citizen.
• It is key for managing a
sustainable business mainly
1.4 Why BE is because of the serious
important? consequences that can result from
decisions made with a lack of
regard to ethics.
• Even if some people believe that
good BE don’t contribute to profit
levels, you should be able to
recognize that poor ethics can
have a detrimental effect on the
bottom line in the long term.

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 1. Improved employee and
organizational moral.
2. Increased ability to attract new
customers.
3. Improved customer loyalty.
4. Reduced risk of negative
1.4 Why BE is exposure and public backlash
important? caused by poor ethics.
5. Attraction of new stakeholders.
6. Making a positive impact on the
community.
7. Improved employee retention
8. Stronger collaboration
9. More effective leadership
10. Increased professional value

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 • Unethical business practices can
affect your business indirectly.

• The amount you make in profits

from one unhappy customer can
1.5 Ethics translate into a lot more lost
as Good because of missed repeat
business.
Business
• Treating employees unethically
can also backfire.

• Mistreating employees leads to a

high turnover rate. This increases
the cost of hiring and training new
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employees.
 -When considering a questionable
course of action, you have to ask
yourself these important questions:
-
1. Is it against the law?
1.6 Important
Ethical
Questions 2. Does it violate company or
professional policies?

3. What if everyone did this? How

would I feel if someone did this
to me?

4. Am I sacrificing long-term
benefits for short-term gains?
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 Here are some steps if you find
yourself in an ethical dilemma:

1. Identify the ethical dilemma.

1.7 Making
Decisions on 2. Discover alternative actions.
Ethical
Issues 3. Decide who might be affected.

4. List the probable effects of the

alternatives.

5. Select the best alternative.

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 Graphic Organizer

Graphic Organizer
Important Ethical Questions
Does it violate the law or policies? YES UNETHICAL
NO

What if everyone did this, but it’s bad? YES UNETHICAL

NO

Would this sacrifice long-term benefits for MAY BE

short-term gain? YES UNETHICAL

NO

ETHICAL DECISION
 Arguments Against Ethics
in Business

1. In a free market economy, the

pursuit of profit will ensure
1.8.Objectins maximum social benefit so
to BE business ethics is not needed.

2. A manager’s most important

obligation is loyalty to the
company regardless of ethics.

3. So long as companies obey the

law they will do all that ethics
requires.
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 1. Ethics applies to all human
activities.

2. Business cannot survive without

ethics.
1.9. Arguments
Supporting
3. Ethics is consistent with profit
Ethics in Business seeking.

4. Customers, employees, and people

in general care about ethics.

5. Studies suggest ethics does not

detract from profits and seems to
contribute to profits.
09/23/2023 40
 Here are some three questions you
need to answer as part of the
Fast review:
1. How do Ethiopian companies
benefit by enforcing their own
1.10. Fast codes of ethics?
Review

2. Why does it pay to treat

customers ethically as per of the
Ethiopian culture and value?

3. What are some important ethical

questions to ask while managing
business?
09/23/2023 41
 • Kohlberg's theory of moral
development is a theory that focuses
on how people develop morality and
moral reasoning.

1.11. Moral
Development • Kohlberg's stages of moral
development constitute an adaptation
of a psychological theory originally
conceived of by Piaget.

• Kohlberg's theory suggests that moral

development occurs in a series of three
levels and six stages.

09/23/2023 42
 • The theory suggests that moral
logic is primarily focused on
seeking and maintaining justice.
1.11. Moral
Development
• Thus, the process of moral
development that is principally
concerned with justice, will
continue throughout the
individual's lifetime.

09/23/2023 43
Kohlberg’s Levels of Moral Development
 Level 1: Preconventional Level; 0-9 years

It is typically descriptive of how people behave as infants

and children, the focus is mainly on self.

As an infant starts to grow, his or her main behavioral

reactions are in response to punishments and rewards.

Stage 1. Reaction-to-punishment stage.

If you want a child to do something (such as stay out of the

street) at a very early age, reprimand is often needed.

The orientation at this stage is toward avoidance of pain.

As the child gets a bit older, rewards start to work.

• Stage 2 is the seeking-of rewards stage.

• The child begins to see some connection between being

“good” (that is, doing what Mom or Dad wants the child to
do) and some reward that may be forthcoming.

• The reward may be parental praise or something tangible,

such as candy, extra TV time, or a trip to the movies.
At preconventional level:
• children do not really understand the moral idea of “right” and “wrong”
• Rather they learn to behave according to the consequences
—punishment or reward—that are likely to follow.

• Though we normally associate the preconventional level with the

moral development of children, many adults in organizations are
heavily influenced by rewards and punishments.

• Consequently, the preconventional level of motivation may be

observed in adults as well as children and is relevant to a
discussion of adult moral maturity.

• Like children, adults in responsible positions react to punishments

(organizational sanctions) or seek rewards (approval).
 Level 2: Conventional Level, 10-15 years

• As the child gets older, she/he learns that there are

“others” whose ideas or welfare ought to be
considered.
• Initially, these others include family and friends.

• At the conventional level of moral development,

the individual learns the importance of conforming
to the conventional norms of society.
• The conventional level is composed of two stages.

• Stage 3 has been called the “good boy/nice girl”

morality stage.

• The young person learns that there are some

rewards (such as feelings of acceptance, trust,
loyalty, or warmth) for living up to what is expected
by family and peers, so the individual begins to
conform to what is generally expected of a good
son, daughter, sister, brother, friend, and so on.
• Stage 4 is the law-and-order morality stage.

• Not only does the individual learn to respond to:

• family, friends, the school, and the church, as in Stage 3,
but the individual now recognizes that there are certain
norms in society (in school, in the theater, in the mall, in
stores, in the car, waiting in line) that are expected or
needed if society is to function in an orderly fashion.

• Thus, the individual becomes socialized or

acculturated into what being a good citizen means.
• At Stage 4, the individual sees that she/he is part of
a larger social system and that to function
in and be accepted by this social system requires a
considerable degree of acceptance of and
conformity to the norms and standards of society.

• Therefore, many organizational members are

strongly influenced by society’s conventions as
manifested both in Stages 3 and 4 as described.
 Level 3: Postconventional, Autonomous, or
Principled Level, 16+
• At this third level, which Kohlberg argues few people
reach (and those who do reach it have trouble staying
there), the focus moves beyond those “others” who
are of immediate importance to the individual to
humankind as a whole.
• At the postconventional level of MD, the individual
develops a concept of right and wrong that is more
mature than the conventionally articulated notion.
• Thus, it is sometimes called the level at which moral
principles become self accepted, not because they are
held by society but because the individual now
perceives and embraces them as “right.”
• Kohlberg’s third level seems to be easier to
understand as a whole than when its two individual
stages are considered.
Stage 5 is the social-contract orientation.
• At this stage, right action is thought of in terms of
general individual rights and standards that have
been critically examined and agreed upon by
society as a whole.
• There is a clear awareness of the relativism of
personal values and a corresponding emphasis on
processes for reaching consensus.
• Stage 6 is the universal-ethical-principle orientation.

• Here, the individual uses his or her conscience in

accord with self-chosen ethical principles that are
anticipated to be universal, comprehensive, and
consistent.

• These universal principles (such as the Golden Rule)

might be focused on such ideals as justice, human
rights, and social welfare.
• The discussion to this point may have suggested that
we are at Level 1 as infants, at Level 2 as youths, and,
finally, at Level 3 as adults.
• There is some approximate correspondence between
chronological age and Levels 1 and 2, but
the important point should be made that Kohlberg
thinks many of us as adults never get beyond Level 2.
• The idea of getting to Level 3 as managers or
employees is desirable, because it would require us
to think about people, products, and markets at a
level higher than that generally attained by
conventional society.
• However, even if we never get there, Level 3 urges
us to continually ask “What ought to be?”
• The first two levels tell us a lot about moral
development that should be useful to us as
managers.
• There are not many people who consistently
operate according to Level 3 principles.
• Sometimes a manager or employee may dip into
Level 3 on a certain issue or for a certain period of
time.
• Sustaining that level, however, is quite challenging.
Why managers and employees behave ethically?
Chapter End