MULTIMEDIA UNIVERSITY OF KENYA

FACULTY OF BUSINESS AND ECONMICS

BBM 2217 : BUSINESS ETHICS
INTRODUCTION TO ETHICS
1.1 Foundation of ethics
The term ethics is derived from Greek word ‘ethos’ which refers to character or
custom.
From this, one can state that ethics is discipline that is concerned with character of
individuals and secondly the character of an entire society.
Ethics is the study of the values and moral guidelines by which we ought to live as
well as the justification of these values and moral guidelines.
Ethics is the study of moral behavior, its underlying moral principles and their
rational justification.
In ethics we can evaluate what is good or bad what should or should not be, and
how we sought or sought not to conduct ourselves if we want good society.
1.2 Concept of morality
Morality is the ability to distinguish right from wrong. The ability to experience
pride when we do the right things and guilt and shame. When we do something
wrong. It also refers to the goodness of people as reflected in their beliefs and
behavior. Morals are the standards of behavior based on certain values by which
people assess the rightness or wrongness of behavior.

Morality has 3 basic components

i) The effective/emotional components which emphasizes feelings of guilt
and concern for others. Feeling that emanate from actions of right or wrong.
ii) The cognitive component – This deals with how we conceptualize right and
wrong and how we make decisions as how to behave.
iii) The behavioral component deals with how we behave when we are faced
with challenging situations e.g being tempted to cheat or being called up to
help a needy person.
1.3 Key terms and concepts used in the study of ethics
1.3.1 Morality
The term morality is derived from the Latin word moralis which means customs
and manners. The term morality can be used in two senses.
The first sense refers to quality or moral situation of an ethical action.
In the second sense, it is used to refer to society’s system of rules, attitudes, beliefs,
principles or practices that prohibit or require an individual or members of a
society to act in certain ways. It is an organized system of rules of conduct which
tell us what we ought to do or what we ought to avoid doing or being.
Morality refers to a collection of morals rules designed to guide us in the living of
our lives. Its main goal is to make social life better.
1.3.2 Ethics and morality
Mappes and Dagrazia (1996)
Defines ethics as philosophical study of morality. This definition helps us
immediately to have an idea of the difference between ethics and morality.
This means that ethics is a discipline that teaches morality (actual moral rules) and
their rational justification. Morality is the material on object of study by ethics,
while ethics is the of inquiry into morality. We can therefore, conclude that
whereas ethics is a discipline or branch of study of morality, in the material or
object studied.
1.3.3 Moral agent
A moral agent is any human being who is normal, with a stable mental capacity
and therefore capable of understanding the consequences of his or her action. Such
an individual can be praised as blamed, rewarded or punished for his or her actions
or conduct because he or she can be responsible person.
1.3.4 Ethical action/ moral action
An ethical or moral action is any action that satisfies the following conditions.
i)Should be performed by a moral agent
ii)Should be an action that can be blamed or praised.
All actions which are performed by responsible human beings and which are liable
to be blamed or processed are ethical actions. Any other actions that fall outside
the above descriptions are non-ethical actions.
1.3.5. Ethical terms
These are words which are used in evaluating ethical actions. They include words
such as good, right, beautiful, fine, bad, wrong, evil, awful.
An ethical statement or judgement must have an ethical term.eg
(1) is good to help people It in need
(ii)It is good that you helped your sick neighbor.
1.3.6 Ethical judgement
This is any ethical statement that makes a judgement on the moral status of an
ethnical action. It’s a statement on whether or not an ethical action is moral e.g
- You did the right thing to donate to the needy
- What Kamau did was awful
- It’s good that you kept your promise.
-
1.3.7. Virtue
This is a functional excellence in an individual that makes the individual morally
or intellectually superior or excellent. Moral virtues makes a person character and
actions moral upright. The term virtue has been used to mean righteousness or
excellence in moral character or disposition. A virtue is a kind of character trait
whose possession improves an individual’s character or disposition. The opposite
of virtue is vice.
1.3.8. Value
The term is used to refer to anything – material or immaterial to which human
beings attach desirability or importance and which they attempt to promote, or
acquire.
1.3.9 A moral
This term is used to refer to an individual who has no moral sense or who is
indifferent to right and wrong. This term has been used in reference, for example
to animals who appear to have no sense of remorse, regret or concern for what they
have done.
1.4 Importance of studying Business and Social Ethics
(i) Study of ethics helps influence behavior in business environment.
(ii) Their emphasis on case studies help to make one aware of the potential
consequences of one’s action.
(iii) Ethical theories help define what a valid ethical argument looks like. They
teach one to make distinctions and avoid fallacies’ that are so common when
people make decisions.
(iv) It gives one an opportunity to think through, at once’s leisure, complex ethical
issues that are likely to arise later, when there is no time to think.
(v) It introduces one to such specialized areas as product liability, employment,
intellectual property, environmental protection and cross-cultural management.
vi) It gives one practice on articulating of ethical position, which can help resist
pressure to compromise.
vii) The study of ethics help learners think critically and apply moral lessons to
specific situations and defend the conclusions at that reasoning.
2. SOURCES OF ETHICS/MORALITY
1.Society
a) Sense of Community
The African idea of security and its values depends on personal identification with
and within the community. Community offers the African the psychological and
ultimate security as it gives its members both physical and ideological identity. In
African mentality, the community as an entity remains, while individuals as
persons, come and go. Africans emphasize community life and communication as a
living principle of which the basic ideology is community-identity. Its aim is to
produce and present an individual as a community – culture – bearer of culture is a
community property and must be community protected.
b) Sense of good human relations
Life in the African community is based on the philosophy of live and let live. This
principle is based on the concept of the clan vital practices and applies to a
concrete community culture. Inter community relationship realized in the
interaction between individuals of different communities is different from the
intra-community relationship based on interpersonal relationship realized in a
definite community, among its members to express the practical traditional African
concept of human living.
c) Sense of sacredness of life
Africans do not like violence because shedding of blood is despised. People who
were killed were those whose continued existence was a threat to the life of others
and the peace of the community. In such cases the principle that it is better for one
man to die than for all the community to perish.
d) Sense of hospitality
This is one of the African values that is still quite alive. Africans have symbolic
ways of expressing welcome.
2. Customary Law
Law can be imposed from above by some coercive authority such as a king, a
legislature, or Supreme Court. Law imposed from the top authoritative requires the
support of a powerful minority, law developed from the bottom up. The customary
law requires widespread acceptance.
3. Human Person
Moral development refers to the process through which individuals acquire to
distinguish between good and bad. Through this process children acquire traits that
shape character, behavior and personality. The process of moral development is a
gradual one and it’s facilitated by age, parents, peers, learning institutions and
religions institutions.
Characteristics of a moral person
a) A moral person is one who confirms to rules and regulations and is friendly
and helpful.
b) The moral person possess inner good will and is committed to doing what is
good whole heartedly.
c) Behaves well without selfishness and his/her behavior is not controlled by
fear of punishment.
d) Behaves in accordance to a system of values which are self-enforced.
2. Breakdown of the myth of a moral business
A moral business – These are business transactions that take place in a moral and
social vacuum in which anything goes and only profits are concerned. Being a
moral means is a sense of indifference or disregard for moral values. It is also
having or showing no concern about whether behavior is morally right or wrong.
Immoral refers to a conscientious rejection of typical moral standards and has a
connotation of evil or wrongdoing.
Myths of the myth of a moral business
1. Business ethics is more a matter of religion than management. Altering
peoples values out souls isn’t the aim of an organizational ethics program –
managing values and conflict among them is.
2. (a)Our employees are ethical so we don’t need attention to business ethics,
most of the ethical dilemmas faced by managers in the workplace are highly
complex.
b) Real alternatives that are equality justifiable
c) Significant consequences on stakeholders were presented with complex
ethical dilemmas most people realize there is a wide gray area when trying
to apply ethical principles.
3. Business ethics is a discipline best by philosophers, academics and
theologians.
Lack of involvement of leaders and managers in business ethics literature
and discussions has led to believe that business ethics is have little to do
with the day-to-day realities of running an organization. They believe
business ethics is a primarily a complex philosophical debate or a religion.
However, business ethics is a management discipline with a programmatic
approach that includes several practical tools.
4.Business ethics is superfluous. It only asserts to the obvious do good.
Many people react that code of ethics or lists of ethical values to which the
organization aspires are rather superfluous because they represent to which
everyone should naturally aspire. However, the value of codes of ethics that
all people should be honest, However, if an organization is struggling around
continuing occasions of deceit in the workplace a priority on honesty is very
timely and honesty should be listed in the organizations code of ethics. Note
that a code of ethics is an organic instrument that changes with the needs of
society and organization.
5. Business ethics is a matter of the good guys preaching to the bad boys
some writers do seem to claim a moral high ground while lamenting the
poor condition of business and its leaders. However, those people well
versed in managing organizations realize that good people can take bad
actions particularly when stressed or confused. (stress and confusion are not
excuses for unethical actioned they are reasons). Managing ethics in the
workplace include all of us working together to help each other remain
ethical and to work through confusing and stressful ethical dilemmas.
6. Business ethics in the new police person on the block
Many believe business ethics is a recent phenomenon because of increased
attention to the type in popular and management literature. However,
business ethics was written about even 2000 years ago. Business ethics was
gotten more attention recently because of the social responsibility movement
that started in the 1960’s.
7. Ethics can’t be changed.
Ethics is always managed but too often, indirectly, for example, the behavior
of the organizations founder influence or directive if you will on behavior or
employees in the workplace. Strategic priorities (profit, maximization,
expanding market share, cutting costs) Can be very strong influence on
morality, Law regulations and rules directly influence behaviors to the more
ethical, usually in a manner that improves the general good or minimize
harm to the community. Some are still skeptical about business ethics,
believing you can’t manage values in an organization. Donaldson and Davis
(Management in Decision V28,V6) note that management, after all is a value
system. Skeptics might consider the tremendous influence of several code
of ethics such as 10 commandments. Codes can be very powerful in smaller
organizations as well.
8. Business ethics and social responsibility are the same thing. The social
responsibility movement is one aspect of the overall discipline of business
ethics. Madson and Shafritz refine the definition of business ethics to be:

a) an application of ethics to the corporate community.

b) A way to determine responsibility in business dealings.
c)The identification of important business and social issues
d) A critique of business writings about social responsibility often do not
address practical matters of managing ethics in the workplace e.g developing
codes updating policies and procedures, approaches to resolving ethical
dilemmas.
9.Our organization is not in trouble with the law, so we are ethical. One can
often be unethical yet operate within the limits of the law e.g. withhold
information from superiors. judge on budgets, constant complain about
others . However, breaking the law often starts with unethical behavior that
has gone unnoticed. The boil the frog phenomena is a useful parable here. If
you put a frog in hot water it immediately jumps out. If you put a frog in
cool water and slowly heat up water, you can eventually boil the frog. The
frog does not seem to notice the adverse change in its environment.
10. Managing ethics in the work place has little practical relevance.
Managing ethics in the workplace involves identifying and prioritizing
values to guide behaviors in the organization and establishing associate
policies and procedures to ensure those behaviors are maintained. One might
call this values management; values management is also highly important in
other managements practices e.g. managing diversity total quality
management and strategic planning.

10.Relation of business and morality

The relationship between business and ethics has long been debated. If
classical economists like Adam Smith and Milton Friedman were of the
opinion that the only objective of business was profit maximization and
business had no right to meddle with ethics, the church in pre-medieval
times, was the spokesman and judge for all spheres of the society including
business.
In medieval and pre-medieval period, the church took upon itself to regulate
the moral functioning of business, making moral functioning of business,
making moral declarations like all businesses must remain closed on
Sunday, the hold day when Jesus Christ was supposed to have taken a rest
and it was morally correct to stop working on Sunday.
These two are extreme views, known as the Unitarian view and the separatist
view. However, around the decade of 1950 Talcott Parsons founded the
integration view which stated that neither was business an extension of
morality and ethics nor can business keep itself absolutely aloof from the
ethical practices of the society wherein it exists and operates. The view to
integrate the two previous views presenting a more realistic picture.
(a) The Unitarian View
This view is of the opinion that business is only a subject or substructure
of the society. According to this view business and morality cannot be
separated and business must play by the rules of molarity and ethics of
the community which guides the activities of the community.
This view was emphasized more by the Church in the European countries
and the church prescribed that business must exist only to do good for the
society, and it had no other role to play apart from serving society and
 ushering in society welfare. This view stated that business must conduct
its affairs purely through motives and that profit was dirty word.
(b) Separatists’ View
Dramatically opus ale to the Unitarian view, classical economists like
Adam Smith asserted that the only goal of business should be profit
maximization and that ethics and morality may not part in business
conduct.
Milton Friedman hold the view that business should go on with the
business of producing goods and services efficiently and leave the
solution of social problems to government agencies and concerned
individuals.
Managers should focus on what they know best that is how to make
profits. It was Friedman who forwarded the classical view that the only
responsibility of business to earn profits.
Adam Smith and Friedman were of the opinion that business should be
left alone to play by the rules of the introduction of ethics would make an
in balance of the market dynamics.
The separatists is of the view of the opinion that business too have its
own set of principles like reduce cost of production, optimize labor and
so on.
Theodore, the well known Psychologist believed that if ethics and
morality were allowed to enter the realms of business, then there is a
danger of business values ultimately dominating over social value.
(c) The Integration view
This view was proposed by Talcult Parsons, wherein the sought to
integrate ethical behavior and business in a new area called business
ethics. This is a new area called business ethics. This view states that
business in a economic entity and it has the right and the need to market
profits but it must discharge its obligation to the society where it exists
and operates profits is certainly not a dirty word, but neither is morality
and ethics in business. This view states that society consists of a number
of sub systems and business and morality are just two of these sub
systems. Since all subsystems within the society are interlinked and inter
dependent, so also are business and morality interlinked.
Business and ethics overlap and hence many business decisions are
guided by moral considerations. In fact, business itself is considered to
 constitute of ethics as it does soo much good to so many people and
specially for the society it serves.
What is a Business
The term refers to an organization or enterprising entity engaged in
commercial, industrial, as professional activities. The purpose of a
business is to organize some sort of economic production i.e of goods
and services. Businesses can be for profit entities or non-profit
organization fulfilling a charitable mission or furthering a social cause.
Business range the scale and scope from sole proprietorships to large,
international corporations. Business also refers to the efforts and
activities undertaken by individuals to produce and sell services for
profit.

Types of business
(a) Limited liability companies
(b) Sole proprietorship
(c) Corporations
(d) Partnerships
Some businesses run as small operations in a single industry while others
are large operations.
Types Business sizes
(a)Small businesses
(b) Mid-sized enterprises
© Large businesses
 Business Ethics
This refers to the standards for morality right and wrong conduct in business.
Law partially defines the conduct but legal and ethical aren’t necessarily the
same. Business ethics enhances the law by outlining acceptance behaviors
obey and government control.
Reasons why Ethics are important in business
1.Ethics lays the strategic decision makings
2.They increase employee retention
3.Ethical business attracts investors
4.Ethics minimizes costs
5.An ethically oriented company is bound to avoid fines
6.Prevents any kind of malpractices
7.Increases trust among the public
8.Increases customer satisfaction
9.Protection to society

Some ethical principles in Business

1. Honesty
2. Integrity
3. Loyalty
4. Fairness
5. Respect
6. Trustworthiness

3.1 The role of business in society

(a) Satisfying needs and wants
(b) Creating added value to inputs
© Creating jobs
(d)Income generations
(e)Economic development
(f)Improvement of living standards
(g) Community empowerment

3.2. (a) The cost of unethical conduct for firms

1. Impact on business performance
2. Difficulties accessing financing
3.Risk to business reputation

(b)Benefits of business ethics

1.Reputation and performance benefits
2.Positive work culture and employee satisfaction
3.Attractiveness to international markets
4. Business ethics attracts investment
5.Business ethics promotes benefits to the organization
6.Business ethics adjust employee behavior
7.Business ethic improves public image of the company
8.Attention to business ethics has substantially improved society
9.Ethics programs help maintain a moral course in turbulent times
10.Ethics programs cultivate team work and productivity
11.Ethics programs support employee growth and meaning
12.Ethics programs are an insurance policy they ensure that policies are legal
13.Ethics programs help avoid criminal acts of omission and can lower fines.

5. Stakeholders relationship, social responsibility and corporate governance

(a) Stakeholders in business
A stakeholder has a vested interest in a company and can either affect or be
affected by a business operations and performance
typical stakeholders are:
i) Investors
ii) Employees
iii) Customers
iv) Suppliers
v) Communities
vi) Governments
vii) Trade associations
Types of stakeholders
a) Internal stakeholders-They are part of the management of the company
and have voting powers. They are the major investors in the company and a
part of board of directors. Therefore, they have all the powers that other high
–level management have and can change the direction of the company.
b) External stakeholders-Unlike internal stakeholders their major role is to
invest or disinvest in the company. They hardly can bring any change in the
company’s direction. They do not take part in any internal operations or
decision making of the company.

Role of stakeholders
a) Direct the management-The stakeholders can be part of the board of
directors and therefore help in taking actions. They can take over certain
departments like service human resources or research and development
and manage them for ensuring success.
b) They bring money-Stakeholders are large investors of the company and
they can anytime bring in or take out money from the company. Their
decision shall depend on the company’s financial performance.
Therefore, they can pressurize the management for financial reports and
change tactics, if necessary, some stakeholders can even increase or
decrease the investment to charge the share price in the market and this
make the auditions favorable for them.
c)Helping in decision making. major stakeholders are part of the board
of directors therefore they take decisions along with other board
members. They have the power to disrupt the decisions as well. They
bring in more ideas that threaten the management to obey them. The
stakeholders also have all powers to appoint senior level management.
They also take decisions regarding liquidations and also acquisitions.
d) corporate conscience-large stakeholders are the major stakeholders of
the company and have monitored over all the major activities of the
company. They can make the company abide by human rights and
environmental law. They also monitor the outsourcing activities and may
vote against any business decision if it harms the long-term goals of the
company.

Social Responsibility
Social responsibility means that business in addition to maximizing
shareholder value, must act in a manner benefitting society not just the
bottom line. Social responsibility has become increasingly important to
investors and customers who seek investment that not only are profitable
but also contribute to the welfare of the society and environment.
The crux of this theory is to enact policies that promote an ethical
balance between the dual mandates of striving for profitability and
benefitting the society as a whole. These policies can be either
commission (philanthropy donations of money, time or resources) or
omission (e.g go green initiatives such as reducing greenhouse gases.

Key ways in which a company embraces social responsibility include:

a) Philanthropy
b) Promoting volunteering practices
c) Ethical Labour Practices
d) Environmental Changes

Benefits of Corporate Social Responsibility/CSR)

1. Increases employee engagement
2. Improves bottom-line financials
3. Supports local and global community
4. Contribute to the United Nations
5. Increases investment opportunities
6. Increases customer retention and loyalty
7. It builds trust
8. It enhances positive relationships
9. Suitability
10.Increases profits
11.Encourage professional and personal growth.

How businesses incorporate social responsibilities and ethics

a. Develop a mission and objective statements
b. Create and maintain core values
c. Focus on impact in the local community
d. Support environmentally and socially conscious initiatives.
e. Encourage communication
f. Consider ethics during the hiring process.
g. Lead by example
h. Empress compassion

Corporate Governance
Corporate governance is the system by which companies are directed and
directors are responsible for the governance of their companies. The
shareholders role in governance is to appoint the directors and the
auditors and to satisfy themselves that an appropriate governance
structure is in place.
Principles of Corporate Governance (Boards Responsibilities)
1. Lay solid foundations for management and oversight
2. Structure the board to add value
3. Promote ethical and responsible decision making
4. Safeguarding integrity in financial reporting
5. Make timely and balanced disclosure
6. Respect the rights of shareholders
7. Recognize and manage risk
8. Encourage enhanced performance
9. Remunerate fairly and responsibility
10.Recognize the legitimate interests of stakeholders

What is the importance of corporate governance?

1. Minimize agency problems
2. Protect stakeholders
3. Attract investors
4. Promotes accountability
5. Mitigate risks
6. Ensure compliance
7. Improve efficiency
8. Ensure corporate social responsibility

Corporate Governance and implementing a stakeholder’s perspective.

Stakeholders could be any groups or individuals in a n organization and
enable effect or affected by a company’s operating. The aim of
stakeholders’ theory is to find what are the best interests based on
different stakeholders’ groups.

These stakeholders have the following characteristics.

a) Shareholders: Shareholders could exercise power such as voting and
transfer ownership when shareholders receive dividends from a company,
they will buy more shares and help the company maintain stability
through their rights.
b) Employees: Company gives employees more attention such as good
training and generous welfare, they will work more effectively to bring
better profits to the company employees could own a part of the shares in
the company, as long as the company stocks rise employees can benefit
from it
c) Bank and Financial Institution: When a company provided a
confident financial report with them, these financial institutions will not
recall funds and would lend the company move money in the future. In
addition, the company will be able to borrow funds at low rate
d) Government: The government collects a large amount of fiscal
revenue through tax collection while at the same time providing a
convenient trading environment for enterprises even the government will
give allowance to support company improvement.
e) Community: Local residents will provide the company large number
of labor resources and the company can rely on them for efficient
production, local residents will also prefer to purchase the company’s
products or services when the company supports community building
through charity activities such as help the community develops
traditional culture.
f) Environment: A number of environmental lobby groups considered
as one part of the stakeholders and these lobby groups requested all
companies to meet environmental standards during production.

Ethical decision making and ethical leadership. A frame work of ethical

decision making in business and role of leadership in corporate culture
issues in advertising publicity and solicitation.

a) What is ethical decision making ethical decision and inspire trust and
with its fairness responsibility and care for others. Ethical decision
making process recognizes these conditions and requires renewing all
available options, eliminating unethical views and choosing the best
ethical alternative.
b) Good decisions are both effective and ethical. In professional
relationships good decisions build respect, trust and are generally
consistent with good leadership.
c) Effective decisions are effective when they achieve what they were
made for. A choice that produces unintended results is ineffective and
therefore not good.
d) Making ethical decisions requires a certain sensitivity ethical issue a
method of examining all the considerations associated with a decision.

Ethical decision-making process and road map

1. Gather the facts-Don’t jump to conclusion until the facts are on the
table. Ask yourself questions about the issue at hand such as the 5 whys
methods. Facts are not always easy to find especially in situations where
ethics play an important part some facts are not available or clearly
demonstrable. Also indicate which assumptions are made.
2. Define the ethical issue-Before solutions or new plans can be
considered the ethical issue is clearly defined. If there are multiple ethical
focal points only the most important should be addressed first.
3. Identify the stakeholders-Identify all stakeholders who are those
primary stakeholders? And who are the secondary stakeholders? Why are
they interested in this issue?
4. Identify the effects and consequences –Think about the possible and
negative consequences associated with the decision. What is the
magnitude of these consequences? And what is the probability that these
consequences will actually occur. Distinguish between short term and
long term consequences.
5. Consider integrity and character. Consider what the community thinks
would be a good decision in this context. How would you like it if the
national newspaper wrote about your decision? What is public opinion?
How does your character and personality influence the decisions to be
made?
6. Get creative with potential actions. Are there other choices or
alternatives that have not yet been considered. Try to come up with
additional solutions or choices of small number is considered.
7. Decide on the right ethical actions consider the options based on each
options, consequences, duties and character aspects which arguments are
most suitable to justify the choice?

Role of leadership culture issues in corporate advertising

a) Boosting team confidence
b) Improving weaknesses of the marketing team
c) Promoting fundamental values of marketing
d) Create, communicate and secure the company’s marketing strategy
e) Develop quantifiable objectives and measure results and ROI
f) Craft the company’s story, manage consistent communications of the
marketing message with press, analysts and the market at large.
g) Own the company’s brand including assets and web properties as well
as any content or touch points along the buyer’s journey.
8. White collar Crime
a) White collar crime is a non-violent crime where the primary motive is
typical financial in nature. White collar criminals usually occupy a
professional position of power and prestige and one that commands well
above average compensation.
b) Insider trading-This trading done with the benefit of founder
possessing material nonpublic information that gives him or her an
advantage in the financial markets.
c) Ponzi Scheme-Named after Charles ponzi, the original perpetrator of
such a scheme, a Ponzi scheme is an investment scam that offers
investor’s extremely high returns. It pays such returns to the initial
investors with the newly deposited funds of new investors.
d) Identity theft and other cybercrimes-Identity theft and computer
hacking are two of the most widespread computer crimes.
e) Embezzlement-It’s a crime of theft that can range from an employee
taking a few dollars out the cash drawer to a complex scheme to transfer
million from a company’s accounts to the embezzler’s accounts.
f) Counterfeiting-With today’s computers and advanced laser printers,
the old currency was just too easy to copy.
g) Money laundering-Money laundering is a service essential to the
needs of criminals who deal with large amounts of cash. It involves
funneling the cash through several accounts and eventually into
legitimate business.
h) Espionage-Referred to as spying a typically white collar crime as an
agent of a foreign government that wants to obtain part of apple
technology may approach an employee and offer to pay them $10,000 if
they will provide a copy of the desired technology.

Classification of white-collar crime

1. Individual Crimes-Individual crimes are financial crimes committed

by an individual or a group of individuals. An example of an individual
white collar crime is a Ponzi scheme. Other individual’s crimes in this
category include identity theft, hacking, counterfeiting and other fraud
schemes.
2. Corporate Crimes
3. Some white collar crime occurs on a corporate level for example a
brokerage firm may let its trading desk employee engage in an insider
trading scheme. Money laundering may be conducted on corporate level.

Role of individual factors in business ethics

1. Knowledge level
2. Moral values
3. Attitudes
4. Personal goals
5. Personality
6. Motivation
7. Gender
8. Age
9. Experience

Characteristics of low integrity organizations are:

a) High employee turnover rates
b) Lack of trust(suspicion) honesty, transparency
c) Broken promises
d) Disrespect
e) Reluctance to put policies and procedures into written format
f) Exaggeration of leadership accomplishments
g) Limited board access to information officers and employees

Role of Integrity and performance in business

a) Great places to work
b) Governance ratings high
c) Earnings quality are very high
d) High attraction of investors
Confidentiality
Confidentiality is a set of rules that limits access or places restrictions o
the use of certain types of information. It is usually executed through
confidentiality agreements and policies.
Examples of confidential information
1. Medical information
2. Names, dates of birth, addresses, contract details of (staff, clients,
patients, pupils)
3. Personal bank details and credit cards information.
4. Payroll numbers
5. Exams results
6. Business and marketing plans
7. Company initiatives
8. Customers information and lists
9. Company financial accounts information
10.Information relating to intellectual property, invention or patent
11.Research data
12.Passwords and related IT information

Importance of confidentiality
a. Builds trusts
b. Promotes confidence (in healthcare system, school and workplace)
c. Prevents misuse of confidential information (illegal or immoral use)
d. Protects reputation
e. Employment may depend on it (non-disclosure agreement)
f. It ensures compliance with the law
g. Computer professional codes of ethics.

Computers and ethics

Computers are devices that have some of the most personal information
and useful programs in them.
Ethics for computer professionals are a set of standards that ensure good
practices within the profession issues surrounding ethics for computer
professional include:
a. Workplace computer use
b. Computer related crimes
c. Privacy
d. Intellectual property and professional responsibility

Ethics
Computers professionals are expected to conduct themselves in an ethical
manner. Code of ethics in this fields to help these professional make
good decisions about the manner of their professional work.

General moral imperatives

Computer professionals should contribute to society and the well-being
of others, not harm others through theft or vandalism, discriminate
against others, be honest and trustworthy, act fairly, honor property, not
take credit for others ideas, respect the privacy of others and uphold
confidentiality.
They should not act in a way that discredits their reputation or the
integrity of the profession.

Professional responsibilities
Computer professionals must strive to provide the highest quality of work
possible be acquiring and maintaining professional competence. He
should be knowledgeable in the laws pertaining to his profession and not
violate them.
Computer professionals have the obligation to uphold contracts and
agreements keep a party informed about the progress towards completing
a project and let his supervisor know if he cannot complete an
assignment.

Leadership responsibilities
Leaders within the community of computer professionals should
encourage acceptance of the social responsibilities outlined in the code of
ethics among other professional organizational leaders are also to ensure
computer systems enhance the quality of professional work life taking
into consideration personal and professional development safety and the
dignity of the professional under their supervision.

Compliance
The future of the computing profession depends on both technical and
ethical exceedance. As a result, those in the field who do not uphold the
code of ethics for computer professionals can have licenses memberships
and certification revoked.

Ethics and Legal use of software

1. Unauthorized copying of software is illegal. This includes distributing
the software over the network or internet not just burning a copy of CD
or DVD copying law protects software authors and publishers just as
patent law protects investors.
2. Misuse of software constitutes a violation and may subject an
employee to disciplinary action.
3. Unauthorized copying of software by individuals can harm the entire
academic community.
4. Unauthorized copying and use of software can deprive publishers and
developers of a fair return of their work, increases prices reduce the level
of future support and enhancement and inhibit the development of new
software products.
5. Respect for the intellectual work and property of others is essential to
the mission of academic community.

Whistle Blowing
Whistleblowing is the term used when a worker passes on information
concerning wrong doing. It’s also called disclosure a blowing the whistle.
The wrong doing will typically be something they have witnessed at
work.
To be covered by whistleblowing law, a worker who makes a disclosure
must reasonably behave two things. The first thing is that they are acting
in public interest, this means in particular personal grievances and
complaints are not usually covered by whistleblowing law.
The second thing that a worker must reasonably believe is that the tends
to show past, present or likely future wrong doing falling into one or
more of the following categories:

a) Criminal offences e.g fraud-financial

b) Failure to comply with an obligation set out in the law.
c) Miscarriages of justice
d) Enlarging of someone’s health and safety.
e) Damage to the environment
f) Covering up wrongdoing in the above categories.

Employer’s responsibilities in regard to whistleblowing

1. Recognizing workers are valuable cars and eyes
2. Getting the right culture
3. Training and support of workers
4. Being able to respond to whistleblowing disclosure
5. Better control of disclosure without risking the whistleblowers
6. Resolve the wrong doing quickly.

Kinds of whistleblowing:
a) Internal whistleblowing- This is where an employee reports
wrongdoing to another party within the organization. This process may
be outlined in your employer’s whistleblowing policy.
b) External whistle blowing-Whistle blowing externally involves
reporting the incident to sources outside the organization such as relevant
prescribed body. When doing so employees must reasonably believe that
malpractice falls within the remit of the organization they are reporting
to, for example health and safety can be made to the health safety
executive.
c) Cyber whistleblowing-This form of whistleblowing has evolved
alongside the increased risk of security and storage of data online. These
types of whistleblowing cases cam involve security breaches, unsecure
practices, encryption deficiencies and being hacked

What Situations can result in whistleblowing?

a) A criminal offence
b) Health and Safety danger
c) Risk or actual damage to the environment
d) Miscarriage of justice
e) Someone covering up wrongdoing

Whistleblowing permitted in Kenya

1. A criminal offense e.g Fraud
2. Someone’s health and safety is in danger
3. Risk or actual damage to the environment
4. A miscarriage of justice
5. The company is breaking the law, for example does not have the right
insurance
6. You believe someone is covering up wrong doing
What is not covered with whistleblowing:
1) A disclosure of waste, fraud, abuse that includes classified disclosure
under the whistleblowing laws unless the disclosure is made in
accordance with the laws and rules that govern the proper handling and
transmission of classified information.
2) Personal grievances e.g. bullying, harassment, discrimination, unless
the case is in the public interest

Developing an effective ethics program

a) Identify and renew company values
b) Secure visible commitment from senior managers
c) Engage the board of Directors
d) Develop an ethic code or code of business conduct
e) Build ethics into mission and vision statements.

The responsibility of the corporation as a moral agent

Corporations are viewed not merely as profit making entities but also as
moral agents that are accountable for their conduct to their employees,
investors, suppliers and customers.
Publicity in the news media abort specific issues as employees benefits
executive compensation, defective products, competitive, practices and
financial reporting contribute to a firm’s reputation as a moral agent.

Need for organizational ethics programs

a) They help employees to the potential legal and ethical issues within
their work environments.
b) To reduce ethical scandals in business that have destroyed trust in top
management and have lowered the public trust of business.
c) To provide legal and ethical conduct an organization ethics program
helps by establishing communicating and monitoring the ethical values.
d) Promote legal requirements that characterize its history, culture
industry and operating environment.

Code of Conduct
Code of conduct are formal statements that describe what an organization
expects of its employees, such statements may take three different forms.
1. Code of ethics-They are guidelines to the moral principles or values
used by organizations to steer conduct, both for the organization itself
and its employees in all their business activities internal and external.
2. Code of conduct-It specifies acceptance or unacceptable types of
behavior
3. Statement of values-It serves the general public and also address
distinct groups such as stakeholders, value statements are conceived by
management and are fully developed with input from all stakeholders.

Advantages of code of ethics

(a) Provides new employees with ethical guidance and a sense of
common identity.
b) Enhances the organization reputation and inspires public confidence.
c) Signals to suppliers and customers the organizations expectation of
proper conduct
d) Promotes a culture of confidence of excellence and ethical behavior.

Advantages of code of ethics

 a) Provides new employees with ethical guidance and a sense of
common identity.
b) Enhances the organizations reputation and inspires public confidence
c) Signals to suppliers and customers the organizations expectation of
proper conduct
d) Provides explicit guidance to managers and employees so they know
what is expected of them in terms of ethical behavior.
e) Promotes a culture of confidence of excellence by demonstrating the
commitment of the organization to ethical behavior.

Ethics Training and Communications

A major step is developing an effective ethics program is implementing a training
program and communication system to educate employees about the firms ethical
standards. Training programs are useful in that:
i)They can educate employees about the firms’ policies and expectations, relevant
laws and regulations and general social standards.
ii) They can make employees aware of available resources support systems and
designated personal who can assist them with ethical and legal advice.
iii)Empower employees to ask tough questions and make ethical decisions.

Business Ethics in global Economy

The business ethics focuses on the fact that in attempt to succeed in the market and
global competition subjects forget about the principal role of economics which is
to satisfy the need of citizens in the world and take part in development and
improvement the quality of their lives.

Importance of Business Ethics in global Economy

1.Ethics lays the strategic decision-making leaders and workers of a business
characterized by ethical behavior make decision that are socially acceptable. They
allow the stakeholders to participate in the decision making process.
2.They increase employee retention
3.An ethical attracts investors
4.Ethics minimizes costs
5.Ethical practices help in building and maintaining reputation
6.An ethically oriented company is bound to avoid fines
7.Ethics in a business attracts more employees.
8.Good business ethics in the key to enhancing productivity
9.Ehics create customer loyalty
10.Ethics encourage teach work.

Ethical perceptions and international business

Ethical issues differ from one country to another. A specific practice that is
considered ethical in one country may be unethical in another country. The
managers who are with multinational companies should be very careful and have
the knowledge about ethical and unethical values and should select only ethical
actions.

Common ethical issues that arise in international business

a) Employment practices and Ethics
In most of the countries, employment practices may lead to ethical issues. Some of
the specific conditions of one country many be considered as inferior in other
countries where the multinational companies have their setups.
Some of the employment norms are common in developing countries such as 12 hr
workdays minimal pay, daily wages to the employees, protection coverage for
worker in chemical companies.
b) Human rights
Some of the basic human rights are not accepted in many countries. The human
rights that are not universally accepted are freedom of speech, freedom from
political repression, freedom of association.
c)Environmental pollution
Ethical issues with respect to environmental population arise when the concerned
regulations of the most country seems to be much inferior to the regulations of the
home country. With regard to emission of waste and pollution, many regulations
have been framed by all the countries. But these regulations may not be that strict
in developing countries because when multinational companies of the host
countries. Its not fair on the part of multinational companies to pollute the
developing countries.
d)Corruption
Corruption is also a major issue in almost all the countries and is still prevailing.
Corruption is in the government itself in all the countries.
As these officials attract towards bribe, most of the international businesses bribe
these officials and obtain in business and financial advantage this act is completely
unethical.

Business Ethics in global Economy

Sexual harassment and racial discrimination

Sexual harassment and racial discrimination are illegal in the world. Sexual
harassment can be defined as:
a) Unwelcome sexual advances
b) Request for sexual favors
c)Other verbal, non-verbal or physical harassment of a sexual nature.

Examples of sexual harassment

i)sexual suggestive notes or emails

ii)Inappropriate sexual gestures
iii)Sharing sexually suggestive or explicit images as videos
iv)Commenting on someone’s clothing body or appearance.
v)Inappropriate or unwanted touching
vi)Offensive comments about gender identity or sex orientation
vii)Bullying or cyberbullying of sexual nature

Racial discrimination
Racial discrimination can be defined as discrimination against individual on the
basis of their race or personal characteristic associated with race. Such
characteristics include hair texture skin color or certain facial features. Examples
of racial discrimination:
i) Racial slurs
ii) Offensive remarks about a person’s race or skin color
iii) Displaying racially offensive symbols
Human rights
Human rights are standards that recognize and protect the dignity of all human
beings. Human rights govern how an individual human beings live in society and
with each other as well as their relationship with state and the obligations that the
state have towards them.

Characteristics of human rights

1.Universality
2.Indivisibity
3.Inter dependence
4.Equality and non-discrimination
5. Participation and inclusion
6.Accountability and rule of law

Price discrimination
Price discrimination is selling strategy that charges customers different prices for
the same product or service based on what the seller thinks they can get the
customer to agree to. In pure price discriminating, the seller charges each
customer the maximum price they will pay. The seller places customers in groups
based on certain attribute and charges each group a different price.

Types of price discrimination

a) First degree price discrimination

First degree discrimination or perfect price determination, occurs when a business
charges the maximum possible price for each unit consumed. Because prices vary
among units, the firm captures all available consumer surplus for itself or
economic surplus, many industries involving client services practice first degree
determination.

b) Second degree price determination

Second degree price determination occurs when a company charges a different
price for different quantities consumed, such as quantity discounts on bulk
purchases.

c)Third degree price discrimination

Third degree price determination occurs when a company charges a different price
to different consumer groups. For example, a theater may divide movie goers into
seniors, adults, and children, each paying a different price when seeing the same
movie. This discrimination is the most common.

Bribery
Bribery is a white-collar crime in which money, a favor or something else of value
is promised to given to, or taken from an individual or corporation in an attempt to
sway his or its view, opinions, or decisions. For example, if an electoral candidate
offered bottle of liquor in exchange for votes, it should be considered a bribe and
therefore, a crime.

Types of bribery

1.Bribery by a public official

2.Bribery of a foreign official
3.Bank bribery
4.Bribery in sport contests.