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    Module 6 Lesson 1 Business Ethics-2

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    This document provides an overview of business ethics. It discusses three main normative theories in business ethics: the stockholder theory, which holds that managers should pursue profit legally for stockholders; the stakeholder theory, which says managers should balance interests of multiple stakeholders like customers, suppliers and communities; and the social contract theory, which posits businesses have an implicit agreement with society to benefit it. The document also outlines five stages of organizational moral development, from amoral to fully ethical organizations guided by core values.

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    Module 6 Lesson 1 Business Ethics-2

    Uploaded by

    rg
    159 views25 pages
    This document provides an overview of business ethics. It discusses three main normative theories in business ethics: the stockholder theory, which holds that managers should pursue profit legally for stockholders; the stakeholder theory, which says managers should balance interests of multiple stakeholders like customers, suppliers and communities; and the social contract theory, which posits businesses have an implicit agreement with society to benefit it. The document also outlines five stages of organizational moral development, from amoral to fully ethical organizations guided by core values.

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    This document provides an overview of business ethics. It discusses three main normative theories in business ethics: the stockholder theory, which holds that managers should pursue profit legally for stockholders; the stakeholder theory, which says managers should balance interests of multiple stakeholders like customers, suppliers and communities; and the social contract theory, which posits businesses have an implicit agreement with society to benefit it. The document also outlines five stages of organizational moral development, from amoral to fully ethical organizations guided by core values.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    159 views25 pages

    Module 6 Lesson 1 Business Ethics-2

    Uploaded by

    rg
    This document provides an overview of business ethics. It discusses three main normative theories in business ethics: the stockholder theory, which holds that managers should pursue profit legally for stockholders; the stakeholder theory, which says managers should balance interests of multiple stakeholders like customers, suppliers and communities; and the social contract theory, which posits businesses have an implicit agreement with society to benefit it. The document also outlines five stages of organizational moral development, from amoral to fully ethical organizations guided by core values.

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    © All Rights Reserved
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    Download as pptx, pdf, or txt
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    Module 6: Lesson 1

    BUSINESS ETHICS
    The world of business is oftentimes seen
    as an amoral world. It is viewed as a world
    solely driven by profit-motive and business
    people are often portrayed as ruthless, self
    interested individual. One might thus
    wonder how business and ethics can co-
    exist.
    One of the principal tasks of ethics is to
    enforce the values of justice and fairness in
    situations where there are grave abuses of
    power and a gross imbalance in the
    allocation of resources between people that
    are meant to share them.
    Business Ethics

    It negotiate a way of speaking the


    language of business, translating the
    language of normativity into a language
    that can be understood and accepted by
    those in the business community.
    Basic Normative Theories in Business
    Ethics

     The Stockholder Theory


     The Stakeholder Theory
     The Social Contract Theory
    The Stockholder Theory

    This theory states that businesses are


    merely arrangements by which one group
    of people, the stockholders, advance capital
    to another group, the managers, to be used
    to realize specified ends and for which the
    stockholders receive an ownership interest
    In the venture.
    In this theory, it is the people who
    invested money in the company that serve
    as the main source of business decisions.
    The stockholders theory holds that
    managers pursue their bottom line by legal
    and non-deceptive means.
    The Stakeholder Theory

    This theory holds that the management’s


    fundamental obligation is not to maximize
    the firm’s financial success but to ensure its
    survival by balancing the conflicting claims
    of multiple stakeholders.
    A stakeholder is defined as any group or
    individual that stands to benefit or suffer
    from decisions made by a corporation. This
    obligation is based on the principles of
    stakeholder management.
    Principles of Stakeholder Management

     Principle of Corporate Legitimacy


     Stakeholder Fiduciary Principle
    Principle of Corporate Legitimacy

    The corporation should be managed for


    the benefit ot its stakeholders; its customers,
    suppliers, owners, employees, and the local
    communities.
    Stakeholder Fiduciary Principle

    Management bears a fiduciary


    relationship to stakeholders and to the
    corporation as an abstract entity. It must
    act in the interest of stakeholders as their
    agent, and it must act in the interest of the
    corporation to ensure survival.
    The Social Contract Theory

    This normative theory states that all


    businesses are ethically obligated to
    enhance the welfare of the society by
    satisfying customer and employee interests
    without violating any of the general canons
    of justice.
    This theory posits an implicit agreement
    between businesses and society that the
    latter only tolerates the existence and
    operation of the former under the
    supposition that it can benefit from it.
    This theory is formulated in the spirit of
    the traditional political social contract
    theories crafted by Thomas Hobbes, John
    Locke, and Jean Jacques Rousseau.
    Ways on How Businesses may Enhance
    the Welfare of Society

     Benefit consumer by increasing


    economic efficiency, stabilizing levels of
    output and channels of distribution and
    increasing liability resources.
     Benefit employees by increasing their
    income potential, diffusing their personal
    liability, and facilitating their income
    allocation. resources.
     Minimizing pollution and depletion of
    natural resources, the destruction of
    personal accountability, the misuse of
    political power, as well as worker
    alienation, lack of control over working
    conditions, and dehumanization.
    The Stages of Organizational Moral
    Development

     Stage 1. The Amoral Organization.


     Stage 2. The Legalistic Corporation.
     Stage 3. The Responsive Corporation.
     Stage 4. The Emergent Ethical
    Organization.
     Stage 5. The Ethical Organization
    The Amoral Organization

    This type of organization is defined by a


    winning at any cost attitude. Ethics is the
    least of its concerns. It is an enterprise
    completely absorbed in productivity and
    profitability.
    The Legalistic Corporation

    An organization in this state of moral


    development exhibits a respect for laws,
    codes, and regulations. This firm is
    concerned with following rules, placing a
    premium on the legality of an action over
    the morality of it.
    The Responsive Corporation

    This type of corporation begins to


    acquire values other than profitability and
    legality. These firms have it in their
    interest to do right, but it considers more as
    an expediency rather than an end in itself.
    The Emergent Ethical Organization

    This type of organization actively seeks


    greater balance between profit and ethics.
    It recognizes the existence of a social
    contract between business and society.
    The Ethical Organization

    This type of organization is characterized


    by an organization-wide acceptance of a
    common set of ethical values that
    permeates the organization’s culture. These
    core values guide the everyday behavior of
    an individual’s actions.

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