Business Law - Chap 8

Ethics is a set of moral principles on values that governs the conduct of an individual or a group.

A number of morals theories have been applied to business ethics.

Under the moral theory of ethical fundamentalism, person look to an outside source (e.g., bible, Koran) or a central figure to set ethical guidelines.

Under the moral theory of utilitarianism, persons choose the alternative that would provide the greatest good to society.

Under the moral theory of Kantian ethics, also called duty ethics, a set of universal rules establishes ethical duties. The rules are based on reasoning and require (1) consistency in application and (2) reversibility.

Under Rawls's social just theory, moral duties are based on an implied social contract . Fairness is justice and the rules are establised from an original position of a "veil of ignorance".

Under the moral theory or ethical relativism, individuals decide what is ethical based on their own feelings of what is right or wrong.

A number of theories of social reesponsiblity have been posited

The goal of the maximizing profits theory is to maximize profits for shareholders.

the goal of the moral minimum theory is to make a profit and avoid harm and to compensate for harm caused.

the of the stakeholder interest theory is to consider the interests of stakeholders other than shareholders, such as employees, suppliers, customers, creditors and the local community.

The goal of the corporate citizenship theory is to do good and help solve social problems.

A social audit is an audit of corporation by independent auditors that examines how well employees have adhered to the company's code of ethics and how well the company has met its duty of social responsiblity.