Chapter 3

Emerging ethical business issues

An ethical dilemmas
Ethical dilemmas are situations where individuals face a difficult choice between two or more
morally conflicting options. These dilemmas often arise when one's actions or decisions may result
in harm to others or violate fundamental ethical principles. Here are a few examples of ethical
dilemmas:
The Trolley Problem: You are standing by a switch that controls a trolley on a track. If you do
nothing, the trolley will continue on its current path and run over five people. However, if you pull
the switch, the trolley will be diverted to another track, but it will run over one person. What do
you do? Is it morally justifiable to sacrifice one life to save five?
Whistleblowing: You work for a company that is engaged in illegal activities that could harm the
public. You discover this information and face a dilemma: Should you report the misconduct to
the authorities, potentially risking your job and the well-being of your colleagues, or should you
remain silent and protect your own interests?
Organ Transplants: You are a doctor responsible for allocating a scarce organ for transplant.
Two patients urgently need the organ to survive, but there is only one available. How do you decide
who gets it? Is it based on medical criteria, such as who is more likely to benefit, or other factors
like age, social status, or personal relationships?

Ethical issue
Ethical issues is defined as Problem, situation or opportunity that require an individual, group or
organization to choose among several actions that must be evaluated as Right or wrong Ethical or
unethical.

Ethical issues and Dilemmas in business

1. Misuse of company resources: This refers to the improper or unauthorized use of company
assets, such as money, equipment, or time, for personal gain or non-work-related purposes. It
can include actions like using company funds for personal expenses or using company
computers for personal entertainment. Misuse of resources not only leads to financial losses
but also violates the trust and ethical obligations between employees and the organization.
2. Abusing or intimidating behavior: This involves treating colleagues, subordinates, or other
stakeholders in a disrespectful, hostile, or intimidating manner. Examples can include
bullying, harassment, or verbal abuse. Such behavior creates a toxic work environment that
can negatively impact employee well-being, job satisfaction, and overall productivity.
3. Bribery: Bribery occurs when someone offers, gives, receives, or solicits something of value
with the intention of influencing the actions or decisions of an individual in a position of
authority. This can include providing cash, gifts, or other favors to gain an unfair advantage
or secure favorable treatment. Bribery undermines fair competition, distorts business
decisions, and erodes trust in both individuals and institutions.
4. Discrimination: Discrimination involves treating individuals or groups unfavorably based on
their characteristics, such as race, gender, age, religion, or disability, rather than their
qualifications or merits. Discrimination in the workplace can manifest in hiring practices,
promotions, salary discrepancies, or creating a hostile environment. It is not only illegal but
also perpetuates inequality and restricts equal opportunities for individuals.
5. Conflict of interest: A conflict of interest arises when an individual's personal or financial
interests conflict with their professional responsibilities or obligations. For example, a
manager may have a financial interest in a company that competes with their employer,
creating a conflict between their loyalty to the employer and their personal gain. Conflict of
interest can lead to biased decision-making, compromised integrity, and potential harm to the
organization's interests.
6. Sexual harassment: Sexual harassment involves unwelcome sexual advances, requests for
sexual favors, or other verbal, non-verbal, or physical conduct of a sexual nature that creates
a hostile or offensive work environment. It can include actions like unwanted touching,
explicit comments, or the use of power dynamics to coerce or intimidate others. Sexual
harassment violates the rights of individuals, contributes to a toxic work culture, and can result
in legal consequences for both individuals and organizations.
7. Fraud: Fraud refers to deliberate deception or misrepresentation of information with the
intent to gain an unfair advantage or cause harm to others. It can include actions like falsifying
financial statements, misappropriating funds, or misleading investors or stakeholders.
Fraudulent activities can lead to significant financial losses, damage an organization's
reputation, and result in legal penalties for those involved.
The Role of Integrity:
Integrity refers to consistently adhering to moral and ethical principles. It involves being honest,
trustworthy, and having strong moral character. In business, integrity means acting in a manner
that is consistent with ethical standards and being accountable for one's actions. Individuals and
organizations with integrity are transparent, follow through on commitments, and demonstrate a
commitment to doing the right thing, even when faced with difficult choices.
1. Guides ethical decision-making: Integrity provides a moral compass that guides individuals
and organizations in making ethical choices, even when faced with difficult situations or
temptations.
2. Builds trust and credibility: Demonstrating integrity through consistent ethical behavior
fosters trust among stakeholders, including employees, customers, investors, and partners.
3. Enhances reputation: Acting with integrity promotes a positive reputation for the business,
attracting customers, partners, and top talent.
4. Encourages ethical conduct: When leaders and employees model integrity, it sets an
example for others and promotes a culture of ethical behavior throughout the organization.
5. Supports long-term success: Businesses that prioritize integrity are more likely to cultivate
lasting relationships, enjoy repeat business, and benefit from positive word-of-mouth
referrals.

The Role of Honesty:

Honesty involves truthfulness, sincerity, and openness in communication and interactions.
Honesty requires providing accurate information, not misleading others, and being transparent
about intentions, capabilities, and limitations. Honesty builds trust among employees, customers,
and other stakeholders, fostering strong relationships and facilitating ethical decision-making.
1. Builds trust: Honesty forms the foundation of trust within relationships, as individuals and
organizations are perceived as reliable and truthful.
2. Fosters open communication: Honest communication encourages transparency, effective
collaboration, and the sharing of accurate information.
3. Prevents deception and fraud: Honesty helps to identify and address deceptive practices,
preventing fraud and unethical behavior.
4. Encourages accountability: Honest individuals take responsibility for their actions, admit
mistakes, and seek ways to rectify them, fostering a culture of accountability within the
organization.
5. Enhances customer loyalty: Businesses that prioritize honesty in their dealings with
customers build trust, loyalty, and long-term relationships, leading to customer satisfaction
and retention.

The Role of Fairness:

Fairness involves treating all individuals with impartiality, equity, and justice. It means making
decisions and taking actions based on objective criteria and without favoritism or discrimination.
Fairness ensures that individuals are evaluated and rewarded based on their merit and contributions
rather than personal biases or prejudices. By promoting fairness, businesses create an inclusive
and diverse environment that values equal opportunities and respects the rights and dignity of all
individuals.
1. Promotes equal opportunities: Fairness ensures that all individuals have equal access to
opportunities, resources, and rewards, regardless of personal characteristics or backgrounds.
2. Encourages diversity and inclusion: Fairness creates an inclusive environment that values
diversity, fostering innovation, creativity, and a broader range of perspectives within the
organization.
3. Minimizes bias and discrimination: Fairness helps to identify and address biases,
prejudices, and discriminatory practices, promoting a culture of equality and respect.
4. Boosts employee morale and engagement: Fair treatment motivates employees, increases
job satisfaction, and fosters a positive work environment, resulting in higher productivity and
employee retention.
5. Enhances reputation and stakeholder relationships: Businesses that prioritize fairness in
their interactions with employees, customers, suppliers, and the community build a positive
reputation and earn the trust of stakeholders.

Challenges of determining ethical issues in business

1. Complexity and Subjectivity: Ethical issues in business are often multifaceted and involve
conflicting values, principles, and interests. Different stakeholders may have varying
perspectives on what is ethical, making it challenging to reach a consensus on the presence
and nature of the ethical issue.
2. Lack of Clarity: In some situations, it may not be immediately apparent whether an ethical
issue exists. Business decisions can be influenced by legal, economic, and social factors,
making it difficult to distinguish between purely ethical concerns and other considerations.
3. Rapidly Changing Landscape: Business environments evolve rapidly, and new
technologies, practices, and regulations constantly emerge. Keeping up with these changes
and identifying potential ethical issues associated with them can be a challenge.
4. Conflicting Priorities: Businesses often face competing priorities, such as profitability,
shareholder value, customer satisfaction, and societal responsibility. Balancing these
priorities and determining the ethical implications can be complex, as trade-offs may be
necessary.
5. Limited Information: Identifying ethical issues requires access to accurate and
comprehensive information. However, gathering all relevant data may be challenging,
especially in situations involving complex supply chains, hidden practices, or confidential
information.
6. Bias and Conflicts of Interest: Personal biases, conflicts of interest, or pressure from
stakeholders can cloud judgment and hinder the objective recognition of ethical issues. It is
important to maintain awareness of these biases and actively seek diverse perspectives to
mitigate their influence.
7. Cultural and Contextual Differences: Ethical standards and norms can vary across cultures,
regions, and industries. What is considered ethical in one context may not be seen the same
way in another. Navigating these cultural and contextual differences requires sensitivity and
a deep understanding of the specific business environment.
8. Legal Compliance vs. Ethical Considerations: Compliance with laws and regulations is
essential, but it does not guarantee ethical behavior. Ethical issues can arise even when actions
are legally permissible. Distinguishing between legal compliance and ethical considerations
can be challenging, requiring careful analysis and judgment.
Stakeholders and corporate social responsibility
Ethical decision-making
Ethical decision-making refers to the process of evaluating and choosing actions or behaviors that
align with ethical principles and values. It involves considering the potential consequences of
decisions, weighing various ethical perspectives, and making choices that are morally right and
socially responsible.

Social responsibilities of business

1. Environmental Protection: Businesses have a responsibility to minimize their negative
impact on the environment and actively work towards sustainability. This includes reducing
carbon emissions, conserving natural resources, managing waste responsibly, and adopting
eco-friendly practices. By incorporating environmental considerations into their operations,
businesses can contribute to the long-term well-being of the planet and help address pressing
issues such as climate change.
2. Fair Trade Practices: Businesses should uphold fair trade practices, which involve treating
all stakeholders involved in their operations ethically and fairly. This includes suppliers,
employees, customers, and local communities. Fair trade practices encompass paying fair
wages, providing safe working conditions, avoiding child labor and exploitative practices, and
promoting diversity and inclusion. By engaging in fair trade, businesses can contribute to the
overall economic and social development of the communities in which they operate.
3. Safeguarding Health and Well-being of Customers: Businesses have a responsibility to
prioritize the health and well-being of their customers. This includes ensuring the safety and
quality of products and services, providing accurate information about potential risks, and
addressing customer concerns effectively. Additionally, businesses should strive to promote
products and services that enhance the overall well-being of their customers, such as offering
healthy options or actively supporting wellness initiatives.