INTRODUCTION (CONTD.)

<< INTRODUCTION:Business Issues

THEORY OF ETHICAL RELATIVISM >>

Business Ethics MGT610

LESSON 02

INTRODUCTION (CONTD.)

Although ethics is a normative study of ethics, the social sciences engage in a descriptive study

of ethics Other fields, such as the social sciences, also study ethics; but they do so

descriptively, not normatively. That is, they explain the world but without reaching conclusions

about whether it ought to be the way it is. Ethics itself, on the other hand, being normative,

attempts to determine whether or not standards are correct.

A normative study is an investigation that attempts to reach normative conclusions--that is,

conclusions about what things are good or bad or about what actions are right or wrong. In

short, a normative study aims to discover what should be.

A descriptive study is one that does not try to reach any conclusions about what things are

truly good or bad or right or wrong. Instead, a descriptive study attempts to describe or explain

the world without reaching any conclusions about whether the world is as it should be.

Business ethics is a specialized study of right and wrong applied to business policies,

institutions, and behaviors. This is an important study since businesses are some of the most

influential institutions within modern society. Business organizations are the primary economic

institutions through which people in modern societies carry on the tasks of producing and

distributing goods and services. They provide the fundamental structures within which the

members of society combine their scarce resources--land, labor, capital, and technology--into

usable goods, and they provide the channels through which these goods are distributed in the

form of consumer products, employee salaries, investors' return, and government taxes. Today

large corporate organizations dominate our economies. In 2003, General Motors, the world's

largest automobile company, had revenues of $195.6 billion and employed more than 325,000

workers; Wal-Mart, the world's largest retailer, had sales of $258.7 billion and 1,400,000

employees; General Electric, the world's largest maker of electrical equipment, had sales of

$134 billion and 305,000 employees; and IBM, the world's largest computer company, had

revenues of $89 billion and 319,000 employees.'

Modern corporations are organizations that the law treats as immortal fictitious "persons" who

have the right to sue and be sued, own and sell property, and enter into contracts, all in their

own name. As an organization, the modern corporation consists of (a) stockholders who

contribute capital and who own the corporation but whose liability for the acts of the

corporation is limited to the money they contributed, (b) directors and officers who administer

the corporation's assets and who run the corporation through various levels of "middle

managers," and (c) employees who provide labor and who do the basic work related directly to

the production of goods and services. To cope with their complex coordination and control

problems, the officers and managers of large corporations adopt formal bureaucratic systems of

rules that link together the activities of the individual members of the organization so as to

achieve certain outcomes or objectives. So long as the individual follows these rules, the

outcome can be achieved even if the individual does not know what it is and does not care

about it.

Though business ethics cover a variety of topics, there are three basic types of issues:

1. Systemic issues ─ Questions rose about the economic, political, legal, or other social

systems within which businesses operate. These include questions about the morality of

capitalism or of the laws, regulations, industrial structures, and social practices within

Business Ethics MGT610

which American businesses operate.

2. Corporate issues ─ Questions rose about a particular company. These include questions

about the morality of the activities, policies, practices, or organizational structure of an

individual company taken as a whole.

3. Individual issues ─ Questions about a particular individual within an organization and

their behaviors and decisions. These include questions about the morality of the

decisions, actions, or character of an individual.

Table of Contents: