Business ethics
You know how the labour market functions.
You are able to explain what social norms are.
You will be able to explain what ethics and morality are.
You will be able to analyze the relationship between ethics and economy.
You will be able to present what an ethical code is and distinguish the category of an ethical dilemma.
Imagine: you are in a shop, and you see as a customer by mistake paid 100 zlotys instead of 10 zlotys, and the seller said nothing and put the banknote down. Would you react if you saw such an event?
Economics and economy are not deprived of ethical challenges related to morality. Besides, literature often finds that economics is not a mathematical science focused on maximizing profit, but a social science that is supposed to serve human development.
Ethics (from the Greek ethos – „custom”) is a branch of philosophy dealing with the study of morality and the creation of thought systems from which moral principles can be derived. Ethics can also be called moral philosophy. Aristotle, one of the fathers of European culture, included it in practical philosophy. In his opinion, ethics makes sense when it is closely related to life, when it helps manage human behavior in specific, real situations.
Ethics should not be confused with morality.
The word “morality” (derived from the Latin “mos”, in the plural “mores”) meant “accepted customs”, “concerning customs”. Morality is from a formal point of view a set of directives in the form of commanding sentences such as „do not kill”, the validity of which cannot be proved or denied. Morality considers the behavior of people from the point of view of good and evil, it points out to norms and patterns of behavior prevailingprevailing in a given culture or social group. It can be considered at the level of an individual and at the social level, professional group or community. A moral action is born of the convictionconviction of what is good and what is bad.
One can say that morality is a set of norms practiced by people, while ethics is an orderly reflection on these norms. For this reason, it makes sense to clearly distinguish, for example, the ethics of an official from the official's morality, or the ethics of an entrepreneur from the morals of entrepreneurs. Ethics sets the norms of conduct, morality in turn may be subject to reliable description and diagnosis. It is also necessary to distinguish ethical principles from moral norms. Ethical principles are general assertionsassertions resulting from worldview, culture, religion, as well as from the nature of work and profession. On their basis, moral norms are created, which define specific duties and prohibitions. The application or non‑compliance with moral norms is the basis for the assessment of human behavior. This way, it also determines his intentions towards the other person, the society, state or natural world.
Principles and norms play an important role in life, because once we internalizeinternalize them, they become standards of out behaviour.
Paul A. Samuelson, a well‑known American economist, once said that “The market has neither a heart nor a brain. It just does what it does”. This statement, although it sounds a little heartless, is based on rational premises. There are, after all, laws governing economic life, the violation of which may bring serious consequences. An example may be a situation in which the demand for a given product is high and its supply is small. A natural activity of an entrepreneur, aimed at gaining a market advantage, would be to maximize profit and the price could many times exceedexceed the value of all production costs. If there were any first‑aid products (e.g. medicine or food), then the moral assessment of such an entrepreneur would be definitely negative: ruthlessruthless, greedygreedy, etc. On the other hand, if such a businessman was full of social sensitivity and decided to lower the prices, he would probably decrease his financial strength and lose his market position (competition law). The result could even be his bankruptcy or his company being taken over by somebody less moral or socially responsible.
Counteracting such consequences is difficult because it requires an equal distribution of the social burdenburden in an economy, i.e. not one entrepreneur has to be socially sensitive, but everyone. In the scale of one country, this could be achieved, for example, by introducing appropriate legal regulations, but - as we know from history (especially about the communist countries) - excessive state interference in the economy can cause catastrophic consequences. On a global scale, i.e. when there is the existence of transnational enterprises, it is not possible at all. Is the concept of business ethics relevant in business, or can we consider it as an element of fashion or advertising?
Running a business is not done in a vacuumvacuum – it is a part of social life. In every society, there are rules regarding acceptable behaviors and hierarchies of beliefs (values) considered desirable and valuable. These social values determine the directions of the activity of an individual and entire communities. They can be established legally, but they can also have a different character, such as religious, moral, ethical rules.
Business ethics is therefore an element of general ethics and constitutes the embodimentembodiment of the norms, assessments and ethical standards, aimed at a specific sphere of economic activity. In other words, ethics in economics formulates the ethical foundations and canons of human action in economic life, establishes a set of rules specifying the scope of management and indicates the moral standards of conduct of business people. According to Wojciech Gasparski, business ethics is „a discipline practiced at the interfaceat the interface between ethics as a branch of practical philosophy and managerial activity related mainly to the economy, trade and other types of economic activity”.
When we look at the business ethics from the perspective of duties, the ethical attitude will be connected with the observance of the basic rules that are considered to be virtues of enterprises, e.g. diligencediligence, patience, frugalityfrugality, perseveranceperseverance. Taking the economic interests into account results in focusing on effective achievement of goals as well as optimization of a specific activity. Autocreation is emphasized here, that is, the calling of a man to be self‑realized in a particular profession. The value by which people can feel accomplished is work. Considering responsibility and conscience means emphasizing personal values, i.e. focusing on personal dignity and the dignity of others, on reliable and honest relations with each of the partners. The main value here is humanization in the economic sphere – responsibility and ability to respond to the needs of others (producers, customers).
Business ethics proves the need to re‑evaluate the goals of many contemporary entrepreneurs. Maximizing profit should be the company's goal, but one that does not restrict or violate the freedom of other stakeholdersstakeholders. This idea is close to the concept of Corporate Social Responsibility (of a business). It is a concept of business management, based on a conscious, sustainable activity oriented not only on financial profit and economic aspects, but also taking into account the needs and requirements of broad social and environmental interests in the company's surroundings.
Many people think that in economics, and in other words – in business, there is no room for ethics. They often claim that people are naturally driven by their own interest, and not the interests of other people or the public good, and that ethics and economics are mutually exclusive areas and ethics has no practical application in the economy. This state of affairs makes it seem necessary to disprove the myth that ethical behavior is a barrier to successful business. Naturally, you also need to be aware of the fact that neither professionally conducted ethics trainings nor the best structured law will exclude all imperfections of the free market economy and do eliminate all unethical activities in business. However, they may contribute to - albeitalbeit slowly but surely – changes in the mentality and perceiving the advantages and benefits of ethical behavior of business entities.
1. Primacy of ethics over economics The point of reference for the sphere of economics is morality – its source are the official documents of the Catholic Church.
2. Primacy of economics over ethics A trend associated with the Marxist theory of social development.
3. Eradication of ethics by economics This view is held by representatives of the liberal current as heirs of philosophical and scientific trends that eliminate the influence of ethics and religion on the economic sphere.
4. Economics ennobled by elements of ethical nature A postulate proposed by representatives of business ethics and ordoliberal theory.
There are many examples of the coexistence of ethical and economic aspects. One of them is performing professions in a position of trustposition of trust. The term „a profession in which the public repose confidence” appeared in the Constitution of the Republic of Poland (Article 17, paragraph 1). It is a profession consisting in the performance of tasks of a special nature from the point of view of public tasks, requiring extra care for the implementation of public interest. This kind of professions:
are connected with belonging to the professional self‑government;
create a special bond of trust between a person who performs the profession and provides services and the client;
relate to access to information regarding the privacy of an individual or a business secret;
guarantee that this information constitutes, to the extent resulting from the provisions applicable to a given profession, professional secrecy, the disclosuredisclosure of which may occur only in the cases specified in the statutory provisions.
A few examples of these professions are: attorneys, notaries, doctors, pharmacists, nurses, psychologists, tax advisors and architects.
The ethical aspect of economic life has accompanied man since he first decided to exchange and offer his goods to other people. Moral standards are binding for contemporary managers, entrepreneurs and sellers, as they were once for merchants and bankers. Professional ethics is a set of rules and norms specifying how the representatives of a given profession should behave from a moral point of view. Two ways can be distinguished in ethical education:
an attempt to discipline employees by introducing appropriate regulations (e.g. codes of ethics, codes of good practice),
developing the ethical sensitivity of decision‑makers (e.g. by promoting patterns and fair play awards).
A code of ethics is a catalog of standards of ethical behavior defining the manner of conduct and behavior of employees. It is a logically ordered set of ethical principles, the purpose of which is not to create new standards, explain the deviations from general ethics or replace one's own ethical beliefs, but to adapt general ethics to the specifics of a given profession. Ethical codes are divided into two types:
general, which are addressed to all the representatives of a professional group, e.g. the code of medical ethics, the code of ethics of the civil service, etc.,
specific – they regulate the activity of an organizational group specialized in a given field, e.g. a vet code of ethics, a code of ethics of a tax office, a city office.
Ethical dilemmas in business refer to terms such as “grey areagrey area” or “corruption”.
– work of an unregistered employee,
– the functioning of a small company evading taxes,
– illegal sale of goods and services (without paying due indirect taxes),
– payable – but without reporting to the relevant authorities and meeting tax requirements – services for neighbors (e.g. home repairs or cleaning). 4. The reasons for the emergence and existence of the grey economy are found in the excessive nuisance of regulations imposed by the state. This is an important systemic reason, but the attitudes of some entrepreneurs are no less important.
1. Grey area is a term commonly used to describe the phenomenon of conducting business activities outside of the official area which is subject to state control.
2. The gray area is the part of production that is unregistered and often illegal, without paying due taxes and fees to the state.
3. Examples of the gray economy activities are:
– work of an unregistered employee,
– the functioning of a small company evading taxes,
– illegal sale of goods and services (without paying due indirect taxes),
– payable – but without reporting to the relevant authorities and meeting tax requirements – services for neighbors (e.g. home repairs or cleaning).
4. The reasons for the emergence and existence of the grey economy are found in the excessive nuisance of regulations imposed by the state. This is an important systemic reason, but the attitudes of some entrepreneurs are no less important.
Corruption – the abuse of a public office or professional position in order to achieve private benefits.
The 1999 Civil Law Convention on Corruption defines it as „requesting, offering, giving or accepting, directly or indirectly, a bribebribe or any other undue advantage or prospect thereof, which distortsdistorts the proper performance of any duty or behaviour required of the recipient of the bribe, the undue advantage or the prospect thereof”.
1. Causes of corruption: – malfunctioning of the legal system,
– inefficient administration,
– the possibility of faster and cheaper settlement of the case,
– poverty, low earnings, unemployment,
– social inequality,
– scarcity of goods in society,
– desire to avoid punishment.
2. Forms of corruption: – bribery – giving, taking or demanding property or personal advantage,
– nepotism – abuse of the position occupied by favoring relatives,
– embezzlement – misappropriation of someone's property that has been entrusted to the perpetrator for a specified period,
– paid protection – accepting material benefits in exchange for mediation in dealing with the matter.
3. The effects of corruption: – a threat to the development of democracy,
– negative impact on economic development,
– reducing state revenues – harmfulness for public finances,
– uneven, unfair competition,
– deterring foreign investors,
– limiting the achievement of social goals,
– facilitating the functioning of criminal groups,
– undermining citizens' trust in institutions and politicians.
4. Prevention of corruption: – precise determination of the competences of officials,
– increasing the penalties for corruption offenses,
– more controls and other activities leading to the detection of the phenomenon,
– declarations of financial interests, register of financial interests,
– emphasis on anti-corruption education (including social campaigns).
Unfair competition is a deceptive business practice that causes economic harm to other businesses or to consumers. The following actions are, among others, considered unfair competition:
misleading indication of the enterprise,
misleading indication of goods or services,
infringement of trade secrets,
urging for the termination or non‑performance of the contract,
imitation of products (e.g. production of counterfeitscounterfeits),
dissemination of false information about the competition,
unfair promotion and advertising,
making it difficult for other entrepreneurs to access the market,
bribery of a person holding a public office,
unfair or forbidden advertising.
The activities of unfair competition may also occur as unfair or aggressive market practices:
Providing a new price that is lower than the old one. The previous price is crossed out, but it is not consistent with reality – in fact it is overstated and the product has never been sold at such a price.
Inaccurate claims as to the change of location or termination of the business, e.g. „Store closing sale!”
Persistent and unwanted solicitation, e.g. by telephone.
Business ethics in a market economy refers to the relationships between an enterprise and its clients, business partners, employees and other enterprises. These relationships must be in accordance with applicable law and accepted rules of conduct in running your own business.
It is worth paying attention to the direct links between the company's ethics and financial results. Ethically‑active companies have a better chance of attracting and keeping effective employees, important clients, suppliers, significant investors. This in turn translates into:
access to more reliable information allowing to make better decisions,
higher quality of products and services offered on the market,
higher level of employee efficiency,
lower level of losses related to employees' bad will (theft or neglect),
less need to control employees,
increasing the flexibility of stakeholders in a crisis situation.
Recall the rules of an Oxford debate. Watch the animation below.
Film dostępny na portalu epodreczniki.pl
Film na temat debaty oksfordzkiej. An Oxford debate is a discussion on a thesis. The debating sides are the Proposition, who tries to convince the audience to believe the thesis and the Opposition, who tries to disprove and refute the thesis. Who participates in the debate? Marshal - runs the debate - makes sure the debate goes smoothly - states the rules of the debate - gives the floor - ensures the proper language use and the level of discussion - informs about the result of the debate and provides a short summary Secretary - helps the Marshal - informs about the time (30 sec. before the end of a statement, and at the end of it) The Marshal and the Secretary have to remain impartial. Speakers There are four speakers at the Proposition side of the debate, and four at the Opposition side. The first speakers are supposed to introduce the thesis of the debate and give a couple of arguments. The second speakers develop the argumentation of each side, taking into consideration the arguments of their opponents. The third speakers undermine the arguments of the opposite side. The fourth speakers sum up the argumentation of their sides. Audience The audience listens to all the statements and in the open part of the debate has the possibility to back one of the sides. Debate room set-up The fundamental thing for the debate is the division for the two sides: for and against the thesis. The Proposition and Opposition sides sit vis-à vis each other. The Marshal and the Secretary sit between the sides. Traditionally, the Proposition should sit on the right-hand side of the Marshal, and the Opposition - on his left hand side. The Audience sits in front of the Marshal and the Secretary. The thesis of the debate The debate is a discussion on the thesis that is defended by the Proposition, and attacked by the Opposition. The thesis: has to be precise, cannot be a question or sound like a choice, has to clearly state an opinion on a subject The course of the debate The first speaker of the Proposition always begins the debate. Then, alternately, speakers of each side make their statements. The debate is always closed by the fourth speaker of the Opposition. Each of the speakers has up to 4 minutes for his statement. Each statement has to begin with a short invocation to the Marshal, the opposite side, and the Audience (in exactly this order), for example “Mister Marshal, esteemed oponentes, dear Audience!”) After the statements, it is the Audience’s time to speak up. The Marshal shall give the voice to some members of the Audience, who will have no more than 2 minutes for their statement. Questions and information During each statement the Audience has the right to ask for the floor by raising their hand and yelling “question” or “information”. An interruption of such kind may last no longer than a few seconds. The speaker has the right to reject the interruption, and then the person who wanted to interfere, has to sit down without uttering a word. Interruptions without the speakers permission are strictly forbidden, and the Marshal’s responsibility is to intervene decisively. The interruptions spice up the debate and force the speaker to react to the Audience. The vote The Marshal orders the vote, and the Audience decides, whose arguments were more convincing, and whether the thesis was proved right or wrong. During the vote the Audience should only take into consideration the arguments and rhetorics of the speakers, and leave their personal views on the subject outside the debate room. The debate ends with a short summary provided by the Marshal, who also presents the results of the debate.
Listen to the abstract recording to review the material and new vocabulary. Then do the vocabulary exercise. Match the pairs: English and Polish words.
powstrzymywać, zwyciężyć, przeważyć, nagabywanie, uszlachetniać, zawód zaufania publicznego, podróbka, internalizować, uwewnętrzniać (przyjmować jako własne), podważać (zaufanie)
| to prevail | |
| to internalize | |
| to deter | |
| to undermine (trust) | |
| counterfeit | |
| solicitation | |
| to ennoble | |
| position of trust |
Keywords
ethics, morality, Corporate Social Responsibility, position of trust, code of ethics, ethical dilemma, grey area, corruption, unfair competition
Glossary
zwyciężyć, przeważyć
przekonanie
twierdzenie
internalizować, uwewnętrzniać (przyjmować jako własne)
przekraczać
bezwzględny
chciwy
ciężar
próżnia
ucieleśnienie
na styku
pracowitość
oszczędność
wytrwałość
interesariusze, zaangażowane strony
aczkolwiek
prymat, przewaga
uszlachetniać
zawód zaufania publicznego
ujawnienie
szara strefa
unikać, uchylać się (od podatków)
kłopot
łapówka
zniekształcać
przywłaszczenie
sprawca
powstrzymywać
podróbka