Chapter 8 - Legal Aspects

LEGAL ASPECTS AND ETHICS IN BUSINESS: 

LEGAL ASPECTS AND ETHICS IN BUSINESS CHAPTER 8

Introduction: 

Introduction Ethics are broadly applied social standards for what is right or wrong in a particular situation, or process for setting those standards.

Definition: 

Definition Business Ethics: The principles and standards that define acceptable conduct in business (Ab. Aziz yusof, selvan Perumal & Faizuniah Pangil, 2005) Ethics - A set of principles prescribing a behavioral code that explains what is good and right or bad and wrong. ( Kuratko & Hodgetts, 2007)

Ethics and Business Decisions : 

Ethics and Business Decisions In addition to the normal challenges of business decisions, the entrepreneur is faced with specific ethical dilemmas. Figure 1 illustrates four main themes of ethical dilemmas: i. conflict of interests ii. Personality traits iii. Responsibility to stakeholders iv. Level of openness

The conflict of interests: 

The conflict of interests It involve the constant tension of trying to separate the “person” from the ‘business decisions”. It also concerning morality and economic trade-offs.

Personality Traits: 

Personality Traits Relate more specifically to relationships and personal issues. In many instances, the personal issues or individual personalities cause the dilemma.

Social Responsibility to Stakeholder: 

Social Responsibility to Stakeholder Theme incorporates the pressure of managerial rationalization and emphasizes the important of having a code of conduct.

Level of Openness: 

Level of Openness Suggests that entrepreneurs need to be more public about their values and expectations.

Complexity of Decisions: 

Complexity of Decisions The business decisions of entrepreneurs are highly complex for five reasons: 1. Ethical decisions have extended consequences. They often have a ripple effect in that the consequences are felt by others outside the venture. For example, the decision to use inexpensive but unsafe products in operations will affect both workers and consumers of the final good.

Complexity of Decisions cont…: 

Complexity of Decisions cont… 2. Business decision involving ethical questions have multiple alternatives. It is not always “do” or “don’t do.” Many decisions have a wide range of alternatives that may allow a mixture of less important decisions. In reference to the first example about the use of unsafe products, the entrepreneur may have the alternative of using still less expensive but nevertheless safe products.

Complexity of Decisions cont…: 

Complexity of Decisions cont… 3. Ethical business decisions often have mixed outcomes. Social benefits as well as cost are involved with every major business decision, as are financial revenues and expenses.

Complexity of Decisions cont…: 

Complexity of Decisions cont… 4. Most business decision have uncertain ethical consequences. It is never absolutely certain what actual consequence's) a decision will have even when it appears logical; in other words, a decision is never without ethical risk.

Complexity of Decisions cont…: 

Complexity of Decisions cont… 5. Most ethical business decisions have personal implications. It is difficult for an entrepreneur to divorce himself or herself from a decision and its potential outcome.

The Importance of Ethics: 

The Importance of Ethics Responsibility to society. Committed to the profession Time management Willing to take the initiative Continuous improvement