BookReview6.doc

The Importance of Ethics in Business

      Ethical behavior supports the market system, and unethical behavior distorts the market. Buyers benefit from ethical behavior which creates the needed trust to support exchange relationships. Sellers also benefit from exchange relationships made possible by trust supported by ethical behavior. There is strong motivation to build trust among employees and management. Trust promotes productivity. Trust requires ethical behavior.

Moral Standards

    Social Contracts Theory combines a universalist and relativist perspective that recognizes moral diversity among cultures, this is accomplished by its two-tier framework. There is a set of universal hypernorms applying to all cultures and multiple sets of relative community. When in conflict, hypernorms dominate community-based norms. Hypernorms comprise a set of rights that may not be violated. Community normsmay be consequentialist or non-consequentialist base, but they always are subordinate to hypernorms.

    Thus, this theory is neither universalist nor relativist but is a hybrid of the two approaches. It appears to rather well the type of practices we see in the world today. There are certain practices such as stealing, killing, and slavery which are not accepted by any community worldwide. However, there are many community norms that are not acceptable in other communities. For example, certain forms of insider trading are acceptable in Hong Kong but not in the US.

Ethics and Decision Making

    The addition of personal values as a major input into the decision making process offers a means of understanding how organizational forces interact with individual decision makers to influence the ethical aspects of their decisions. The type of interaction that occurs likely depends on the composition and strength of the decision maker’s personal values as well as the strength and the nature of the organizational mediating factors. Although the specific relationships among these variables remain to be discovered, the framework is in place.

    An understanding of the personal values-organizational mediating factors relationship will help explain the development of public ethics as separate from an individual’s private ethics.

Reference: Business Ethics, Author: David J. Fritzsche

BACK TO FRONTPAGE