Framework for Understanding Development of Business Ethics

Topics: Ethics, Business ethics, Applied ethics Pages: 16 (4154 words) Published: January 15, 2015




Framework for Understanding the Development of Business Ethics.

To understand more about Business Ethics, it can actually be known from many way or different perspectives. It can either be approached by a normative (what should occur) or descriptive normative (what does occur). Business ethics also has macro or societal dimension and micro or firm level considerations and managerial dimensions. The context of the matrix in Figure 1 is similar to a concept of the field of marketing by Hunt (1991).

Figure 1
Business Ethics Typologies


Values/ Norms & Principles For Organizational Decisions

Norms & Principles and a Fair Economic System-i.e. Distributive Justice


Codes, Standards of Conduct, & Compliance Systems for Organizations. Public policy & the Legalization of Business Ethics – i.e. U.S. Sarbannes Oxley Act, EU Privacy Laws

Actually, the scope of ethics is so broad that it affects almost decision made in social interaction. Figure 1 is an attempt to narrow and focus on our observations to typologies from an organizational perspective. Some definitions and discussion of this framework are necessary to properly interpret and provide a basic for the understanding of the historical advancements of business ethics.

Normative decisions in an organizational culture relate to what can be, that is, what a business organization ought to consider in evaluating and improving their ethical conduct (Laczniak and Murphy, 2006). Normative decisions are based on deontological and teleological norms. Deontological norms involve hyper norms and local norms described by Donaldson and Dunfee (1994) as integrative social contracts. In deontological evaluation, the decision maker evaluates the inherent rightness or wrongness of the behaviour implied by each alternative (Hunt and Vitell, 2006). Deontology assumes there is absolute fixed norm, or expected behaviour, to resolve an ethical issue. The decision is compared to predetermined norms that could relate to honesty, fairness, and trust or other norms of behaviour. Teleological decisions are based on these four elements which are 1) perceived consequences at each decision for stakeholder groups, 2) probability that the consequences will occur to each stakeholder group, 3) desirability of each consequences, and the last is 4) importance of each stakeholder group (Hunt and Vittell, 2006). Teleology is often called consequentialism because individuals using teleology are basing decisions on philosophies, such as egoism and utilitarianism. Utilitarian believed that they are achieving the greatest benefit for all those affected by a decision. Therefore, teleological decisions are based on flexible decisions based on the consequences or the benefit to history. Descriptive or positive perspective attempt to describes, explain, predict and understand business ethics activities and phenomena that actually exist (Hunt 1991). In other words, a descriptive approach to business ethics examines what actually exists, not what organizations ought to do. In an organization, a descriptive perspective would examine policies on conflicts of interest, strategies, compliance systems and various artefacts of ethical standards in the organization.

In Figure 1, micro is referred to as the business ethics conduct of individuals units (organizations, business persons or individuals, such as an entrepreneur) while macro is referred to the impact of the business decisions on the various stakeholders in the society. The impact of the aggregation of organizations or the complete system of micro decisions on stakeholders creates macro business ethics issues that are often addressed in public policy and the formal institutionalization of business ethics through government (macro/descriptive)....

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