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Business Ethics and Society
Study Guide

business ethics dsst

Welcome to the study guide on Business, Ethics and Society. As business becomes more tightly regulated and is, in the internet age, held more accountable as the reputations of companies are both quickly gained and quickly lost, the study of business ethics has become increasingly important. All major companies, particularly public companies (those listed on the stock market) have ethics and compliance policies and typically employ ethics and compliance specialists to investigate issues of concern. In addition, Anti -Bribery Legislation in Countries like the United Kingdom, The United States of America and Canada have global implications for businesses. Here we will examine business ethics from both a legal and practical perspective as well as look at a particular company SNC Lavalin.

  • What is Ethics Moral Philosophies

    Before going into detail on the issues surrounding business ethics it is first necessary to understand the concept of ethics. Ethics comes from the ancient Greek word ethos and while it can mean many things to many people a common definition of ethics is well-founded standards of right and wrong that set out what we ought to do. Put simply, what is the common good? Early ethics writers included Greek Philosophers such as Plato and Aristotle and Roman Philosophers such as the Stoic Philosophers while more modern writers on the subject included the Utilitarians such as Jeremy Bentham and Thomas Hobbes.

  • What is Business Ethics

    So, how does the concept of ethics apply to business? If you look at it from one point of view business is competitive and the concept of a competitive business environment may not be at all fours with the ethical framework, but business ethics is defined and studied in a separate way from ethics. Business ethics is the study of important issues such as proper corporate governance, insider trading, bribery, discrimination and recruitment and hiring practices and the policies and procedures developed by a company to regulate them. This process is done by a company to ensure that they are a good corporate citizen in the global community and that they comply with both national and international obligations.

    Cultural differences also play a part. What is unethical in one place may be ethical in another, but this is being settled to an extent with globalization.

    You can gauge quickly what the attitude of a company of any size will be to questions of business ethics by going to the “our values “section of the website of any public company. The Canadian Construction Company SNC Lavalin is a classic case in point. The values listed by SNC Lavalin on their website are:

    • Teamwork and Excellence
    • Customer Focus
    • Strong Investor Return
    • Health and Safety, Security and Environment
    • Ethics and Compliance
    • Respect

    You can see that the fifth point in their list of values, Ethics and Compliance deals effectively with the business ethics question. SNC Lavalin makes the claim in their values that they are committed to ethical business and they, like public companies and private companies of any size the world over, tend to set out the way in which they deal with questions of Business Ethics through the development of a code of ethics.

  • Code of Ethics

    Firstly, what is a code of ethics. A code of ethics is a document, developed by major companies which basically sets out the rules that each company lives by and how they deal with situations where those rules have not been complied with. Typically, and the SNC Lavalin (our case study company) Code of ethics is a good example, deals with a range of issues including, but not limited to, the following:

    • Bribery Corruption and Illegal Conduct – This refers to issues where there are allegations that criminal conduct has occurred
    • Workplace Bullying and Harassment – This refers to harassment in the workplace including sexual harassment
    • Discrimination – This is to ensure that company policies and, to the extent necessary, the law, is complied, and that people are treated fairly and equally regardless of age, gender, race, marital status, sexual orientation or any other head of power set out in the code of ethics or indeed in the relevant legislation that may apply in the jurisdictions where the company may do business.
    • Conflicts of Interest – This is where you declare any relationships or situations which would impede your capacity to act properly on behalf of the company. For example, does your brother work for a client company?
    • Acceptance of Gifts – The Code of Ethics sets out guidelines by which you can accept gifts from people as an officer of the company. Usually gifts above a particular value set out by the Code of Ethics must be declared
    • Social Responsibility – This refers to the company policies and their desire to be good corporate citizens, both in their country of origin and internationally
    • Protection of Assets – This usually refers to issues surrounding protection of the intellectual property held by the company

  • How is a Company Code of Ethics administered?

    Employees of companies who have a code of ethics usually must do an online certification each year to validate that they are up to speed with their company’s code of ethics. Companies will also conduct investigations on possible breaches of their code of ethics. These investigations may be conducted by internal investigators employed by the company, external consultants or depending upon the circumstances of the case a combination of both. Some important points to note about investigating are

    • You Need to Ensure Confidentiality – Investigations are generally required because an issue which is sensitive, may breach the company code of ethics as well as the law has been raised. The onus on the Company to do what they can to protect the protect the confidentiality of the person who has raised the issue. It should be noted that protection cannot be fully guaranteed.

    • Protection of the Complainant – You need to do what you can to separate the person who has raised the complaint from the person who has been accused of the complaint. Options include vacation, a temporary transfer or a roster or shift change. You may also, if the allegation is serious suspend the accused on full pay pending the outcome of the investigation. However, the accused is always entitled to the presumption of innocence and to procedural fairness. They have the right to defend themselves against the allegations before judgement is passed.

    • Select the investigator – An investigator must have an ability to investigate objectively without bias. They should not have a stake in the outcome nor should they have a personal relationship with any party. The Investigator should have Skills that include prior knowledge of investigation techniques and a working knowledge of employment laws. They should also have the right temperament to conduct interviews and an ability to investigate objectively without bias. The investigator’s job should not depend on the outcome of the investigation. Depending upon the issue being investigated internal HR staff or outside lawyers or consultants may be used.

    • Create a Plan for the Investigation – An investigation must be properly planned to be effective. A complete and proper investigation plan needs to have an outline of the issue, a witness list, sources for relevant information and evidence, interview questions and a process for retention of documentation that could be treated as evidence.

    • Develop Interview Questions – This should always be prepared. However, as the investigations and the interviews proceed other issues may come up. You should ask open rather than closed questions. An open question is designed to draw out more information while a closed question confirms what you already know. An example of an open question is “You have been working for ABC Ltd for ten years. Tell me what it’s like to work there?” The answer will give you more information. An example of a closed question is “I understand you have been working for ABC Ltd for ten years is that correct? “You can only give a yes or no answer in this case.

    • Conduct the interview – The investigator should inform all parties involved of the need for an investigation and explain the investigation process. The investigator must remain focused on being impartial and objective. Investigators must determine the credibility of the people being interviewed. Interviews provide differing accounts and even conflicting versions of the events and the investigator must indicate ultimately the evidence that they prefer. Involvement in an investigation can be an emotional experience for parties concerned and this also needs to be considered.

    • Report – An investigators report is the final stage of the process. The report should contain findings on the facts as well as recommendations for action. The responsibility for implementing the recommendations of the report rests with HR and the relevant line managers.

    As well as conducting investigations big companies have also set up whistleblower mechanisms so that complaints can be reported anonymously

    What happens if things go wrong? – There are many examples of what happens if companies get caught with unethical conduct. Volkswagen and the German Car companies are amongst the most recent but companies such as SNC Lavalin and Siemens have also had to deal with these issues and it has cost a lot of people a lot of money in legal fees, lost share values and loss of employment.

    To conclude, Business Ethics are an important part of the business world and society in general. Doing the wrong thing will cost a company money in many cases, but even more importantly it will shred that company’s reputation. It is loss of reputation in the public domain that will cause the most severe damage to a corporation.

Business Ethics and Society
Practice Quiz

All test questions are in a multiple-choice format, with one correct answer and three incorrect options. The following are samples of the types of questions that may appear on the exam.

Please do keep in mind that we can’t guarantee the accuracy of this quiz, so we do recommend you also run through a full-length practice exam.  We’ll recommend some good options in the resources section at the bottom of this page.

Question 1: The subject of business ethics is important in the modern age because:

a) It is appropriate for business to be aware of this concept
b) A business’s reputation can be lost very quickly in this day and age if it is caught doing the wrong thing
c) Both a and b
d) It gives academics something to do

C – C is the correct answer as it both appropriate for businesses to be aware of ethical issues and there are legal and reputational consequences if these issues are not handled correctly

Question 2: Ethics can be defined as

a) Well-founded standards of right and wrong that set out what we ought to do.
b) What your church minister says that you should do
c) As John Lennon said “ Whatever gets you through the night, it’s all right”
d) Who knows its an Ancient Greek concept

A – While ethics is an ancient Greek concept and John Lennon may have been right with that classic old song the correct answer is A

Question 3: If employees of a British Company were caught bribing Government Officials in a foreign Country and arrested, the CEO of that British Company would:

a) Go to lunch – It happened in a foreign country
b) Make sure that the arrested employees had good lawyers
c) Try and bribe the Judge hearing the case to get the arrested employees “ off the hook”
d) Start working with lawyers on their own defense as they are legally responsible under the UK Bribery Act 2010

D – Before the passage of the UK Bribery Act 2010 British CEO’s probably could go to lunch if an employee was arrested in a foreign country but the passage of this legislation makes the CEO responsible under British Law for these issues so the wise CEO would start preparing their defense in this situation

Question 4: Philosophers who wrote about Ethics included:

a) Ancient Greeks such as Plato and Aristotle
b) The Stoic Philosophers of Roman Times
c) Thomas Hobbes
d) All the above

D – The correct answer is D. All of the other answers A, B and C are correct

Question 5: Business ethics is the study of proper business policies and practices in key areas of business activity. Which of the following does not fall into that category?

a) Corporate Social Responsibility
b) The local Chinese takeout menu
c) recruitment and hiring practices
d) proper corporate governance

B – B is the correct answer. The Chinese take out Menu, though important, does not fall into that category

Question 6: A Company’s attitude to ethical issues can often be seen in their values statement. A values statement typically:

a) Sets out what the Company believes in
b) Commits the Company to certain practices including ethical practices
c) Both A and B
d) Something that looks good on the website

C – C is correct as both answers A and B are correct

Question 7: Companies will often attempt to administer and control behavior through the development of a code of ethics. Which of the following is not regulated by a code of ethics?

a) Workplace Bullying
b) Whose turn it is to go to Starbucks for morning coffee and muffins for the team
c) Conflicts of Interest
d) Illegal Conduct

B – B is the correct answer unless someone is being bullied to go to Starbucks every morning

Question 8: Reporting ethics violations is key to the success of a Code of Ethics. Violations can typically be reported in the following ways:

a) To your Line Manager
b) To the Human Resources Department
c) Anonymously
d) All the above

D – All of the answers A-C are correct, so D is the correct answer

Question 9: Which of the following is not part of the investigation process:

a) Ensure Confidentiality
b) If you are an investigator going to lunch with an accused employee
c) Create a Plan for the Investigation
d) Conduct the interview

B – B is correct. If as an investigator you did that you would fail Ethics 101

Question 10: Investigations must be conducted according to the principals of

a) Procedural Fairness
b) Alexander Graham Bell
c) Silicon Valley Disruptors
d) The United Nations

A – A is correct as in a Court of Law people are entitled to defend themselves so the principles of procedural fairness apply. Individual’s personal principles, such as Alexander Graham Bell, are not relevant.

More DSST Study Resources

Are you at the beginning of your study process, or just looking for a couple more practice questions to finish prepping for your exam? In either case, you can find some of my favorite resources below. Some of the links below are affiliate (Amazon for instance), which means they’ll pay us a few bucks for every purchase through the link. Feel free to use those links if you want to support the site, but you can also just Google the title or pick the book up at your local library.

Official DSST Practice Test: Ok, so the DSST website isn’t the most inviting, but it will give you the best approximation of the real exam experience. Also, the official practice test is quite affordable (currently just $5 per practice exam).

Pass Your Class – DSST Business Ethics and Society: Textbooks are great as far as they go, but I’d generally recommend you opt for this exam guide instead. It tends to cut through the confusion and help you accelerate your learning process.

InstantCert Academy: Another website with a very dated design, but as ancient as it looks, this is actually an incredibly valuable resource. Basically, you get a massive set of flashcards that you can use to learn Ethics and to really solidify that knowledge so you’re ready for the exam.

Plenty of other resources exist – just do a quick internet search – but these are a fantastic start, and probably all you really need. I’ve personally done some exams with just InstantCert and the official practice test.

Congrats on starting your DSST study journey! Study hard, earn credit, and most of all remember to have fun.