Template - CHAPTER 2
Template - CHAPTER 2
Template - CHAPTER 2
CHAPTER 2
This chapter presents a review of foreign and local literature directly and indirectly
There are various reasons why people go into business. Some wants to give quality
products and services to the public. Some turn their hobbies and interests into living and for
public benefit, while others do this for personal satisfaction. But the most common reason is that
it opens opportunity for anyone to earn for their living. More and more enter in this field because
it is open for all, no educational attainment nor work experience required just a mind for business
and enough capital. This is why it attracts working people who has insufficient salary and those
As stated by Cortez (2016), one of the main contributions of Ronald F. Duska in the
debate regarding the purpose of business in his argument on the distinction between purpose and
motive. He observed rightly that business is seen as distinct from other organizations and
institutions such as public hospitals, public schools, charity institutions, government bodies, and
nongovernment organization. These entities are usually non-profit organizations. Business on the
other hand is for profit. Thus, people typically conclude that the main and sole purpose of
business is to make profit. But according to Duska, the purpose is not necessarily the motive and
vice versa. He said, "My motive for doing an action is not necessarily and the same as the
purpose of the action". He believe that the primary purpose of business is neither personal benefit
nor the accumulation of profit. The purpose of business is to respond to society's needs for goods
and services. Duska said, "If doing business rewards me with a profit, I will be inclined to get into
it, but the purpose of business-why society allowed it to be set up or allowed it to exist in its
profit for I enters from-was so that it would provide goods and services.
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As stated by Roa (2011) in his book Business Ethics and Social Responsibility,
businessmen, traditionally, looked that profit is the most important aspect of business.
Nonetheless, there is other important aspect of business other than profit, it is ethics. Milton
Friedman, a noted economist, stated that “the only responsibility of business is to make profit so
as long as one stays within the rules of the game and engages in open and free competition
without deception or fraud.” On the other, Peter Ducker, an equally famous management guru,
said that “the primary responsibility of business is look for customers and satisfy their needs and
wants.” He points that businessmen must also consider customer satisfaction, quality products,
after sales policies, and fair and reasonable pricing. Although both have contrasting ideas about
According to Roa, ethics deals with morality. It is a discipline or set of moral principles
and values governing an individual or institutional behaviour. He also added that ethics aimed at
qualities of an act performed by man freely and knowingly. This suggests that moral values are
He also stated that ethics is important to business for without it, people especially
businessmen, would set their own moral standards, moral rules, and moral principles. The
outcome would be a kind of subjective morality, in which, what is good for a person may be bad
for another and vice versa. For example, entrepreneurs would consider some or their actions like
According to Bhattacharyya (2016), business ethics help to attract and keep employees,
customers, and investors. She said that reputation is a very important asset of a company and
most difficult task to regain it once lost. In building a good reputation, consistent ethical
behaviour is essential. She added that potential investors and shareholders are likely to get
attracted to the companies which adhere to their moral guidelines and promises they’ve made;
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this keeps the company’s share price high. In order to retain good reputation, a business must be
environment, treatment of employees, and good market practices in terms of customer treatment
and price. She also added that employees chooses to stay in a company with strong business, this
increases the company’s productivity. When the employees does their work with honesty and
These agree with the website www.importantindia.com which cites 25 reasons why ethics
1. Ethics lays the strategic decision-making. Managers and employees with ethical values
could make sound decisions. They let the stakeholders partake in the decision-making
process.
3. An ethical business attracts investors. Investors choose to infuse capital where they are
environment.
4. Ethics minimizes cost. More employees are retained so expense for hiring new ones is
reduces.
5. Ethical practices help in building and maintaining reputation. Customers tend to ensure if
6. An ethically oriented company is bound to avoid fines. A business must abide by the
laws, file tax returns in time, ensure the quality of products and services at all times, etc.
7. Ethics in business attracts more employees. More people wants to work in a business
8. Good business ethics is the key to enhancing productivity. Employees would work better
if they know that what they are doing is ethical for they will not have doubts about it.
9. Ethics creates customer loyalty. If a business has good reputation build in ethics,
customers tend to trust the products and services and they also put a good word to their
10. Ethics encourages teamwork. Employers and employees would work together efficiently
11. A business that values ethics attracts more suppliers. Suppliers want to engage in
12. Ethics in business enhances partnership. Strong business ethics is the foundation of good
partnership.
13. Ethics reduces business risks. As trust and loyalty are built on ethics, chances of losing
14. Ethics improves a company’s bottom line (last line that shows profit or loss). The cost
15. Ethics increases business profits. A decreases in cost is likely to result to a higher profit.
increase in demand. The higher the demand, the higher the sales would be.
17. Good ethics in business boosts the morale of the employees. Rewarding the employees is
involved in good business ethics. This makes them work harder, leading to increased
profits.
18. Ethics helps in building consumer confidence. Even in difficult situations, business ethics
19. Ethics enables a company to make good use of the limited resources. The company
20. Ethics in business allows for healthy competitions. A company characterized with ethical
behavior will compete fairly with the other competitors. They will let the customers
21. Ethics leads to long-term gains. A company that values ethics believes in small, but long-
22. Ethics helps in maintaining quality. A company with ethics will ensure to provide
23. Ethics offers extra asset protection. Employees with ethics, will protect the business’s
assets.
24. Ethical practices foster community improvement. Ethically oriented companies will help
a community to be better through things like construction of roads and schools and other
social works.
25. Good business ethics is an end in itself. Running an ethical business makes the
Based on all the given reasons of the various authors stated, ethics is very important in a
business operation. It helps the company attract, retain and make the investors, employees and
customers satisfied.
William Sauser, in the Journal of Business Ethics article “Ethics in Business: Answering
the Call,” explained that business organizations have four levels of responsibility: (1) Earning
profit; (2) Legal responsibility; (3) Ethical responsibility; and (4) Discretionary responsibility.
Responsibilities of business beyond profit making have come to be called Corporate Social
Responsibility or CSR. CSR, as defined by the World Business Council for Sustainable
contribute to economic development while improving the quality of life of the workplace and
their families, the local community, and society at large.” More and more companies are
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embracing CSR because of profitability, and also because more managers now believe that being
commitment to social or environmental goals. CSR in the Philippines has evolved over the last
In applying ethical values, there are various techniques that could be used. According to
Putnam, in his article “Ethical Values for Business Success” in the globalethicsuniversity.com, “it
takes a concentrated, company-wide effort, beyond inserting these words in san employee
manual, to make it happen.” He said that the management must lead example for good ethics
must be noticeable from the top and all employees must be countable for the same rules. In
addition he said that a corporate values or ethics initiative must be sold and marketed
aggressively in the company. All medium must be used to spread it. Of course, the company must
practice what it preaches. Moreover, training must be provided to get everyone in the same page
for spending time in learning have lasting impact. Furthermore, the company, entrepreneur, and
employees must be in it. It must extend to next generations because the longer it lasts the more
In his article “Tips to Improve Ethical Behavior in Organizations,” Nag mentioned tips to
foster effective ethical training in the organization. First is to develop a code of ethics. It provides
the direction and guidelines for employees’ ethical behaviors and helps them understand the
ethical expectations and rules of the organization. Second, make mangers role models, the same
with what Putnam said. Through this, the employees would be guided accordingly and they will
feel reluctant to oppose the guidelines. Third, disciplinary actions for unethical behavior. It is
better to impose sanctions to employees who resorts to malpractice or unethical behaviour to help
them understand the implications of inappropriate behaviors. Fourth, reward for ethical behavior.
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Rewarding employees for ethical behaviors makes them feel appreciated so that they will
continue to adhere ethical practices and for them to inspire other employees.
principles that could lead to success in business which include the following:
1. Do your homework. He said that he learned the principle of due diligence through
Talmudic study. He studied and debated among rabbinical scholars. He did not take
anything for granted and made sure that every argument is considered and debated. He
learned to ask why and made sure to understand the issues. He used the same approach in
business. He did his homework: researching competition and testing the market.
According to him, major mistakes can be avoided and opportunities can be found due
diligence.
2. Treat employees fairly. Employees are company asset, they are importance in running a
business. Paying employees on time is a must. “The wages of a worker shall not remain
with you all night until the morning” (Lev. 19:13). Employers must also not take
advantage on the employees. “You shall not abuse a needy and destitute labourer,
treated impartially, regardless of their race, age, gender, religion, and color.
3. Have the highest level of customer service. An entrepreneur must give what is best for the
customers at all times. Goods and services must be of high quality. “Love your neighbour
as yourself” “Lev. 18:18). Every entrepreneur must put themselves in the customers’
4. Be honest with customers. Honesty must always be practiced in business. “You shall have
just balances and just weights” (Lev. 19:36). Even they would not find out, customers
must not be cheated. “Do not… put a stumbling block before the blind” (Lev. 19:14).
This means that when another party does not know or see what one is doing, he or she
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must not take advantage. “The Lord hates anyone who cheats, but he likes everyone who
is honest” (Prov. 11:1). “The Lord doesn’t like when we cheat in business” (Prov. 16:11).
“Two things that the Lord hates are dishonest scales and dishonest measures” (Prov.
20:10).
5. Always act as if you are being watched. Someone above is always watching you. “The
6. Build reputation for integrity and honesty. Cheating is the greatest temptation in business
setting where one can earn more profits. If one can overcome the temptation, one will
reach high level of character. Honesty makes the business grow. “Being greedy causes
trouble for your family, but you protect yourself by refusing bribes” (Prov. 15:27)
7. Be humble: accept and encourage criticism. “He who loves instruction loves knowledge,
but he who hates correction is stupid” (Prov. 12:1). Pride gets in the way of success. One
must not always think that he is perfect. Entrepreneurs must accept and encourage
criticisms from employees and so as from customers. These criticisms would help the
company to be better.
Similarly, Putanam referred to the following values which have stood the test of time:
responsibility, taking responsibility for the actions; quality, offering what is best; trust; respect’
demonstration of honor, value and reverence; teamwork; leadership, providing good example that
other follow; and corporate citizenship, providing safe workplace, protecting the environment and
Padilla (2016) stated that “an individual’s ethical viewpoint does not develop or exist
apart from real world. Values developed in childhood and youth are constantly tested and on-the-
ethical behaviour affects not only his or her reputation within the company but may also
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contribute on the way in which others perceive the company. Business ethics cannot be separated
from the ethics in general, and the individual must deal with job problems by fundamental ethical
standards.”
Venturing into a business is thus not just about making or earning money, but it is about
making a lot of opportunities as well, and one of these opportunities is to integrate ethical values
into the business operation, mainly anchored on the Golden Rule, which emphasizes the need to