INSTRUCTIONAL MODULE

IN ABM 8
Business Ethics and Social
Responsibilities
TOPIC: Continuation of Chapter II “The Role of Business in Social and
Economic Development”

LEARNING COMPETENCIES:
At the end of the week, learners are expected to formulate a “code of ethics”
that reflect core principles derived from analyses.

LEARNING RESOURCES:
Book:
1. Roa, F. (2016), Business Ethics and Social Responsibility 2nd Edition:
Unlimited Books Library Services and Publishing Inc.
2. Flores, M. (2017), Organization and Management: Mindshapers Co., Inc.
3. Medina, R. (2010), Entrepreneurship and Small Business Management:
Rex Book Store

DISCUSSION:
Continuation of Chapter II “The Role of Business in Social and Economic
Development”

Operating with integrity and with reference to codes of right conduct is

playing an increasingly significant role for sustainable business today. This
means businesses must operate using good and morally acceptable policies
and practices. Keeping away from expensive crises and scandals is of
importance to businesses. Reputation punches can be difficult to recover
from without a foundation of trust. Furthermore, having clearly articulated
values and an ethics policy is seen to be one of the hallmarks of a well-run
business.

Common vs. Greatest Good

The common good is that principle that whatever serves the most
number of members in a community is considered good. The common good
is usually whatever rules or actions are required to reduce the disharmony
in the community. While, the greatest good is the principle that there is a
standard that people must cooperatively strive for to maximize the harmony
in the community.

The common good, being about peaceful co-existence, is normally

good under every system of objective or subjective measure. Paying taxes
in exchange for services, or following laws and social norms in order not to
break other people’s enjoyment are examples of common good. Provided
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that the common good is mostly good, people are contented and engaged in
society and committed to stay the same. The greatest good is the higher
order of good. It can be used for good purposes to address areas where the
common good is not inclusive of groups of people.

Codes of Right Conduct

Every organization must have a code of right conduct. A code has

value just like an internal guideline and an external statement of corporate
values and commitments.

A well-written code of conduct spells out an organization’s mission,

values and principles, connecting them with standards of professional
conduct. The code expresses the values the organization desires to promote
in leaders and employees. Simply speaking the code defines preferred
behavior. As a consequence, written codes of conduct or ethics can turn out
as yardsticks against which individual and organizational performance can
be measured.
In addition, a code is a fundamental guide and reference for employees
to support everyday decision making. A code pushes discussions of ethics
and obedience, authorizing employees to manage ethical problems they
come across in daily work. It can also provide as a helpful reference,
assisting employees trace pertinent documents, services and other
resources connected to ethics in the organization.

The company’s code of right conduct talks about the company. It tells
a story about what the company believes and cares about, what it is truly
committed to and the way it can be expected to act. For this reason, a
company should pay close attention to the story it is telling through its
code. The best of codes serves as strategic communication that effectively
conveys a company’s commitment to act responsibly and accept
accountability for doing so.

A code is a statement of shared values that prescribed for right action.

Therefore it necessitates that a code must share characteristics with moral
theory. A good code, like a good moral theory, should encompass internal
consistency. Accordingly, what is right for one person will be right for
another, in every one, or at least most situations. A code is analogous to
moral theory of behavior in that equally they are concern on proper conduct
of behavior. Simultaneously, a moral code should leave room for analysis.

There are two types of moral theory namely consequentialist and non-
consequentialist.

Consequentialist focuses on the outcomes of actions, settling on

whether or not an action is good by knowing the results. Utilitarianism
is a common theory under this kind. “The greatest good for the greatest
number,” is a familiar phrase that shows this attitude.

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 Non-consequentialist theory centers on the principle that an action
is good based on the principle people follow and regardless of the
results of the action. Deontological approach is an example of this
theory. Deontological, means for duty or obligation from the Greek word
“deontos”. A phrase that shows the attitude using this approach is
“People have an obligation to respect the rights of the individual.”

In trying to clarify what “right action” is, codes of conduct are often a
combination of both deontological and utilitarian approaches. They are
expressions of the deontological approach, in that they are saying, “Here
are the principles to stand for.” Yet they have a utilitarian flavor in that they
say, “Everyone will be more contented if all observe the same standards.”

There is a third approach to defining right action, neither

consequentialist nor non-consequentialist, which is called virtue theory.
Here, one decides that “the right thing to do” is based on an idea of how a
virtuous person would behave in such a situation.

The fourth approach that of care ethics, is unusual. Here, instead of

intellectual analysis, right action consists of feeling from the heart. This
simply means that what makes an action right is how greatly the action will
increase the network of caring relationships.

Most codes like professional codes are actually a blend of all four
approaches. The idea of following the rules is vital to a code, as is the idea
of the code acting for the general welfare. There is also the connotation that
following a code is an act of virtue. Also codes delicately bring out the care
ethics approach as well. A good code will work to make stronger ties
between professionals and between professionals and the public. Whether a
professional group follows a more consequentialist or non-consequentialist
scheme when devising ethical codes of conduct, they are comparable.
Equally they are centering on clarifying the obligations of people both to
each other and to the public they serve.

Utilitarianism

Utility is any net benefits produced by an action. The principle of utility

affirms that actions or behaviors are right if they encourage happiness or
pleasure, wrong if they generate unhappiness or pain.

Utilitarianism attempts to answer the question about what a man ought

to do. The answer to this is that he ought to act to create the best
consequences. These consequences includes all of the good and bad
produced by the act, whether after the act has been performed or during its
performance. If the discrepancy in the consequences of alternative acts is
not big, the choice between them is less considered as a moral issue.
According to Mill, acts to be considered right or wrong only if the
consequences are of such significance.

Utilitarianism calls to produce the best consequences which appears to

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be a simple. However, utilitarianism is complex because this single principle
has to reflect on three things namely what is good, whose well-being it is
intended and the actual consequences.

1. What is good - Jeremy Bentham equated utilitarianism to a view

called hedonism. Hedonism means the only thing that is good in itself is
pleasure or happiness. Hedonists regard food, friends, freedom, and
many other things as “instrumental” goods. They are only important
because they play a “causal” role in producing pleasure or happiness.
Pleasure and happiness are categorized as “intrinsic” goods. Intrinsic
goods are good in themselves and not because they make some further
valuable thing. Similarly, on the negative side, the absence of food,
friends, or freedom is instrumentally bad for the reason that it produces
pain, suffering, and unhappiness. Pain, suffering and unhappiness are
bad in themselves and not because they create some further bad thing.

2. Whose well-being - Utilitarian logic can be used both for moral

reasoning and rational decision-making. In addition, it can also be used
for discussions on the interests of different persons and groups.

a. Individual self-interest - Individuals consider only their own utility

when deciding what to do. For instance, if a person’s favorite is
mango flavored ice cream, the utilitarian view is that he should
choose the flavor that will give him the most pleasure. If he enjoys
mango flavored ice cream but hate ube flavored ice cream, he would
pick mango flavored ice cream for the happiness it will bring and
avoid ube flavored ice cream because it will bring unhappiness. In
this illustration, utilitarian reasoning is being applied to a decision on
which action is best for an individual person. It highlights only on
how the various possible choices will influence this single person’s
interest and does not think about the interests of other people.

b. Groups - People also need to judge what is best for groups, like
friends, families, religious groups, one’s country, and even the world.
Bentham and other utilitarian were concerned in political groups and
public policies. Hence, they often focused on finding out which
actions and policies would maximize the well-being of the relevant
group. The well-being of a group was determined by adding up the
benefits and losses that the members of the group would experience
as a consequence of implementing one action or policy. For instance
suppose a person is buying an ice cream for a party that ten people
will attend. His only flavor options are mango flavored Ice cream and
ube flavored ice cream. Some of the visitors attending like mango
flavored ice cream while others like ube flavored ice cream. As a
utilitarian, he should select the flavor that will result in the most
happiness for the entire group. If seven like mango flavored ice
cream and three like ube flavored ice cream and if all of them get
similar amount of happiness from the flavor they like, then he should
select mango flavored ice cream. This will is what is meant by
Bentham as “the greatest happiness for the greatest number.” The
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 utilitarian method requires counting everyone’s interests equally.
Therefore the host of the party should choose mango flavored ice
cream even if he is one of the three people who enjoy ube flavored
ice cream. In the same situation, a government must choose a policy
that will give identical consideration to the well-being of all
constituents of the society.

c. Everyone affected - Peter Singer emphasized that utilitarian moral

theory requires that moral judgments which he framed as the “equal
consideration of interests.” In that case, utilitarianism moral theory
includes the important idea that the calculation | of utility of actions,
laws, or policies must be from an impartial perspective and there
should be no partiality. In partiality there is favoring of the person
himself, his friends, or others he particularly care about. If this
impartial viewpoint is perceived as indispensable for a utilitarian
morality, then both self-interest and partiality to specific groups will
be discarded as deviations from utilitarian morality. To illustrate, the
concept of “egoism,” or the promotion of self-interest, would be
abandoned either as a false morality or as not a morality at all.

3. Actual consequences or foreseeable consequences - Utilitarian

opposed the idea that judgments of right and wrong should be based
on the actual consequences of actions or their foreseeable
consequences. This subject crops up when the real effects of actions
differ from what are expected. The famous example of J. J. C. Smart
taken from his experience of saving a drowning person in 1938
explains this difference by visualizing the action of a rescuer. Saving a
drowning person for him is the right thing to do. He admires people for
such heroic actions. In Smart’s imagined example, the person saved
from drowning turns out to be Adolph Hitler. Had Hitler drowned,
millions of other people might have been saved from suffering and
death during World War II. If rescuer’s action would be analyzed based
on its actual consequences, then the rescuer did the wrong thing
based from utilitarian principle. It would be a mistake of course to
blame or criticize the rescuer because the bad results of his act were
unforeseeable to him at the time of the rescue. However, if the
rescuer’s action is judged from its foreseeable consequences, then
rescuer did the right thing. Meaning the rescuer himself could not
predict the negative effects of saving the person from drowning.

Deontology

Deontology is an approach that focuses on the rightness or wrongness

of actions themselves. Thus, to a deontologist, whether a situation is good or
bad depends on whether the action that brought it about was right or wrong.
What makes a choice “right” is its conformity with a moral norm. Right is
more significant than good. In the case of a big parcel of land with squatters,
if someone proposed to kill everyone so that the land could be used for
agriculture to end starvation, a deontologist would disagree that ending
starvation is wrong because it was brought about by killing people. A
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consequentialist would argue that the final result gave justice to the drastic
action. A virtue ethicist would concern himself with neither, but would look at
whether the perpetrator acted in accordance with worthy virtues.

Immanuel Kant concluded that to be truly good the act must be chosen
and done out of a feeling of moral duty. He also believed that if an action is
not done with the motive of duty, then it is without moral value and
therefore worthless.

Kant developed his moral philosophy in three works: “Groundwork of

the Metaphysic of Morals” (1785), “Critique of Practical Reason” (1788) and
“Metaphysics of Morals” (1797), and he formulated it in three different ways:

1. Act only in such a way that one would want his actions to become a
universal law, applicable to everyone in a similar situation.
2. Act in such a way that one always treat humanity (whether oneself or
other), as both the means of an action, but also as an end.
3. Act as though one was a law-making member (and also the king) of a
hypothetical “kingdom of ends”, and therefore only in such a way that
would: harmonize with such a kingdom if those laws were binding on all
others.

Other Types of Deontology

1. Divine command theory - This is a form of deontological theory
which means an action is right if God has declared that it is right, and
that that an act is obligatory if and only if it is commanded by God.
Thus, moral obligations arise from God’s commands. While the
rightness of any action depends upon that action being performed
because it is a duty, not because of any good consequences arising
from that action. For instance, if God commands people not to work
on the Sabbath and they do not work on the Sabbath, then the
people act rightly. The reason simply it’s because God has
commanded it. However, if they do not work on the Sabbath because
they are lazy, their action then is not truly speaking of rightness,
even with the same performance of actual physical action.

2. Natural rights theory - This theory holds that humans have

absolute natural rights. A natural right is based on a political theory
that every person has basic rights that the government cannot deny.
These basic rights include the right to life, liberty, and the pursuit of
happiness. The theory, championed by Thomas Hobbes and John
Locke among others, was created from the concept of natural justice
or natural right of Socrates, Plato and Aristotle. They said that man’s
natural rights are life, liberty, and property. The development of this
practice of natural justice into one of natural law is usually attributed
to the Stoics. After the inclusion of the pagan concept of natural law
into Christianity by St. Thomas Aquinas, it was Hugo Grotius with his
philosophy of international law, which finally freed it from reliance
on theology, and allowed to develop as human rights.

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 3. Contractarian Ethics - Contractarianism refers to both the theory
in political philosophy on the legitimacy of political authority, and
the ethical theory concerning the origin, or legitimate content, of
moral norms. Both were developed from the concept of a social
contract. Social contract is the thought that the people give up some
rights to a government and/or other authority in order to receive, or
jointly preserve, social order. Social contract theory provides the
basis behind the historically important concept that legitimate state
authority must be derived from the consent of the governed, where
the form and content of this consent derives from the idea of
contract or mutual agreement.

4. Pluralistic Deontology - It is a description of the deontological

ethics advocated by W.D. Ross. He argues that there are seven
prime duties which should to be considered when deciding which
duty should be acted upon:
a. Duty of beneficence - to help other people to improve their
conditions like increase their pleasure, improve their character,
and so on
b. Duty of nonmaleficence - to avoid harming other people
c. Duty of justice - to ensure people get what they deserve
d. Duty of self-improvement - to improve oneself
e. Duty of reparation - to recompense someone if one has acted
wrongly towards them
f. Duty of gratitude - to return favors that others have done
g. Duty of fidelity - to keep promises both explicit and implicit
promises, including the implicit promise to tell the truth soar

In some situation, there may be disagreements or arguments

between these duties. Hence, a decision must be prepared whereby one
duty may “trump” another, although, there are no firm and fast rules and
no fixed order of significance.

Virtue Theory

Virtue ethics dates back to the ancient Greek thinkers and is therefore
the oldest type of ethical theory in Western philosophy. Plato discussed four
key virtues which are wisdom, courage, temperance and justice. The first
systematic explanation of virtue ethics was written down by Aristotle in his
famous work Nichomachean Ethics.

According to Aristotle, when people acquire good habits of character,

they are better able to control their emotions and their reason. This helps
people reach morally correct decisions when they are faced with difficult
choices. Virtue ethics is person based. It looks at the virtue or moral
character of the person carrying out an action.

This means it deals with the rightness or wrongness of individual

actions and provides guidance as to the kind of characteristics and behaviors
a good person will seek to attain. In this manner, virtue ethics is focused on
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the whole of a person’s life, rather than at ethical duties and rules, or the
consequences of particular actions. A good person is someone who lives
virtuously meaning he possesses and lives the virtues.

It is a valuable theory because human beings are frequently more

concerned in judging the character of another person than they are in
appraising the goodness or badness of a particular action.

Virtue ethics is an approach that deemphasizes rules, consequences

and particular acts and sets the focus on the kind of person who is acting.
The concern is not primarily whether an intention is right, though that is
important. It is not also significant whether one is following the correct rule
or whether the consequences of action are good, though these factors are
essential.

Virtue-based ethical theory puts minimal importance on which rules

people should follow. Instead it focuses on helping people develop good
character traits, such as kindness and generosity. In turn these character
traits will let a person make the right decisions later in life. Virtue theorists
also accentuate the need for people to find out how to break bad habits of
character such as greed or anger. These are called vices and stand as
barriers in the way of becoming a good person.

This suggests that the approach to build a good society is to help its
members to be good people, rather than to use laws and punishments to
stop or discourage bad actions. Nevertheless it would not be helpful if a
person had to be a saint to count as virtuous. For virtue theory to be actually
valuable it needs to recommend only a minimum set of characteristics that a
person needs to possess to be regarded as virtuous.

In conclusion, one of the best ways to promote social cooperation and

harmony is to encourage and solidify the better sides of humanity. Rules by
themselves may offer guidelines, but they cannot create people good.
Concern with consequences is vital but without a change, person’s greater
total satisfaction or more substantial freedom for people cannot be
produced.

Care Ethics

Ethic of care is centered on the interdependence of all individuals. It

considers the reality that certain communities and people are weaker than
others, and that strong ones should give more concern to the weaker
community depending on how they are affected by their choices. Care ethics
does not endorse a dependency among people but promotes maintaining
interdependence and shared efforts and benefits. However, the implications
of the decision to maintain a relationship of mutual opportunity and benefits
should consider the implications as well as if they have the potential to be
harmful to the community.

Ethic of care also claims that there is no universal truth. It considers the
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background details of a moral situation to support the particular needs and
interests of the weak communities. It also considers the contextual details of
each place such as the local customs and traditions, culture, economy,
history and so forth.

On the other hand care ethics was developed from the understanding of
the individual as an interdependent and relational being. It emphasized the
importance of human relationships and emotion from virtues like
compassion, sympathy, concern, friendship, reconciliation, and sensitivity. In
care ethics, the family is the main sphere of morality where a person can
nurture his character. Ethics of care is sometimes called “ethics of love” or
“relational ethics,” which has several notable characteristics.

1. Emotions as the Essential Human Nature - Traditional ethics is made

upon the dominance of reason. Reason is valued as an established
faculty of mind over emotion. Emotion is viewed as unstable,
changeable, short-lived, and less important. While care ethics
recognizes the value of reason, it acknowledges the meaning of feeling
or emotion and related virtues such as benevolence, compassion,
sensitivity, responsiveness, and sympathy. The emotions that
traditional ethics have rejected are egoistic, impartial emotional
attachments which bring about favoritism, resentment, hatred, and
other negative or unhelpful feelings.

2. Prioritization of Human Relations - Traditional theories concentrate on

establishing abstract, universal rules and principles in consideration of
neutrality. Yet, in human life, not all human relationships are equal. For
instance, while caring for all children on the earth is righteous and
important, caring for one’s own child is a pressing and direct
responsibility of the parent. Care ethics knows the value of limited
impartiality and prioritization of human relationships.

3. Family as the Unit of Society - Traditional ethics function in a structure

formed by the relationship among individuals and society. Primary
ethical concepts like justice, universality, impartiality, and duty are all in
this structure. The family does not play any specific role in this
structure. In reality; the family is a private territory in which the public
or government does not and should not meddle. In contrast, the ethics
of care considers the family as the primary and morally sphere in which
to understand ethical behavior because it is the place where virtues are
cultivated and inherited.

4. Interdependency of a Person - In traditional ethical theories, a person is

viewed as independent, isolated, rational, and self-interested. Care
ethics, however, sees a person as interdependent, integral having
emotion, reason, and will, and relational. It argues that the idea of self
can be correctly defined just when the person is recognized as
interdependent and relational being.

On Writing Codes of
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Right Conduct

Organizations both businesses and non-profit ones have definite

expectations of how their staff should behave. A written code of conduct is
essential since it provides obvious instructions about what staff can and
cannot do.

Externally, a code serves several important purposes:

1. Compliance - Legislation mandates individuals serving on boards

and organizational leaders of public offices to implement codes or
clearly explain why they have not.

2. Marketing - A code serves as a public statement of what the

company promised to stand for and its commitment to high
standards and right conduct.

3. Risk mitigation - Organizations with codes of ethics can trim down

the financial risks connected with government fines for ethical
wrong doing by signifying they have made a “good faith effort” to
avoid unlawful acts.

Inclusion in a Code of Right Conduct

The style in which the code of conduct is written, organized and

presented will have a significant force on the extent to which employees will
comprehend the code or submit to it. The code should be written in plain,
direct language as an organization normally plans its code to be read by
employees at different levels of responsibility and in a broad range of
functional areas. The sentence structure should be simple.

Guidelines for writing an ethics code:

1. Be plain about the objectives that the code is planned to achieve.
2. Obtain support and ideas for the code from all levels of the
organization.
3. Be conscious of the most recent developments in the laws and
regulations that concern the industry where the organization
belongs.
4. Write as plainly and undoubtedly as possible. Keep away from legal
terminology and clear generalities.
5. Act in response to real-life questions and situations.
6. Supply resources for additional information and guidance.
7. In all its forms, make it user-friendly since ultimately a code is a
failure if it is not applied.

The most common sections to include in a code of right conduct are:

1. ethical principles - workplace behavior and respect for all people
2. values - an honest, unbiased and unprejudiced work environment
3. accountability - taking responsibility for own actions, ensuring
appropriate use of information, exercising diligence and duty of
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 care obligations and avoiding conflicts of interest
4. standard of conduct complying with the job description,
commitment, to the organization and proper computer,-internet and
email usage
5. standard of practice - current policies and procedures and business,
operational manual
6. disciplinary actions - complaints handling and specific penalties fo,
any violation of the code

Provisions of the Code

Code provisions are the exact standards of behavior and performance

expectations that an organization selects to emphasize and tackle in the
code. Code provisions can be short or comprehensive based on the
objective. They deal with a broad range of issues, varying from legal and
regulatory concerns, to relations with the organization’s stakeholders and
the application of the organization’s values. Significantly, code provisions
inform employees which behaviors are not acceptable in the organization, so
they can stick to standards and are allowed to speak their mind if
wrongdoing happens.

The preference of topics to be part of the code will be influenced by

three factors namely:
1. The code’s purpose and objectives;
2. The organization’s overall purpose and objectives; and
3. The questions or concerns expressed by the intended users who are
employees and stakeholders.

In settling on which topics to concentrate on, the following issues could

be raised which are:
1. the primary laws and regulations relevant to the organization
2. mistakes in the past
3. other mistakes done in the past
4. guidance needed to offer to employees and
5. the gray areas that requires clarification or confirmation

Organizations are likely to label and categorize their code

provisions in many different approached based on their unique
characteristics, their goals for the code and so forth. Code content or
provisions can also vary largely across organizations depending on
their industry, regulations/ requirements and goals for the code. Below
are some common provisions found in organizational codes which not
comprehensive, nor are the category headings definitive:

1. Compliance, Integrity and Anti-corruption

a. Accuracy of corporate finances and financial reporting
b. Employee records and expense reports
c. Bribes
d. Political contributions
2. Conflicts of Interest
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 a. Gifts and gratuities d. Family members
b. Political activity e. Disclosure of financial
c. Outside employment interests
3. Employee, Client and
Vendor Information
a. Maintaining records and
information
b. Privacy and confidentiality
c. Disclosure of information
4. Employment Practices
a. Workplace harassment
b. Equal opportunity
c. Diversity
d. Fair treatment of staff
e. Work-family balance
f. Discrimination
g. Fair labor practices
h. Illegal drugs and alcohol
i. Use of organization
property and resources
j. Proper exercise of
authority
k. Employee volunteer
activities
l. Romantic relationships
with coworkers
m. Incentives and
recognition systems

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 5. Environmental Issues
a. Commitment to the b. Employee health and
sustainability safety
6. Ethics and Compliance Resources
a. Ethics advice helpline e. Anti-retaliation policy and
b. Reporting procedures protections for reporters
c. Anonymous/confidential f. Accountability and
reporting hotline discipline for violators
d. Summary of g. Ombuds program
investigations process
7. Internet, social networking
and social media
a. Internet and social network use at
work
b. Prohibited sites and content
c. Policies regarding post about company, work products or
coworkers
d. Online relationships between managers and their reports
8. Relationships with third parties
a. Procurement b. Negotiating contracts

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