LESSON 8.1.

Ethics

LESSON OBJECTIVES:

At the end of the lesson, the students should be able to

1. explain the meaning of ethics,

2. discuss what business ethics is,

3. elaborate on "code of ethics" or "code of conduct":

4. explain the different ethical approaches that may help someone make the most ethical
decision, and

5. elucidate on why business ethics might be more challenging in the international setting.

The field of ethics is a branch of philosophy that seeks virtue. Virtue is conformity of one's life
and conduct to moral and ethical principles. Ethics deals with morality about what is considered
"right" and "wrong" behavior for people, organizations, governments, and countries. Ethics, also
called moral philosophy. are moral principles that rule a person's or an organization's behavior. It
is the discipline concerned with what is morally good and morally bad and what is morally right
and morally wrong. The term is also applied to any system of moral values or principles.

Business ethics, therefore, is the set of moral rules and principles that govern how businesses
operate, how business decisions are made, and how people are treated. It refers to the rules,
principles, and standards for deciding what is morally right or wrong when doing business; the
system of moral and ethical beliefs, values. and principles that guide behaviors and decisions of a
business organization and the individuals within that organization. Companies doing their social
responsibility conforms to ideal business ethics. They do not throw harmful wastes into the
environment. They are environment-friendly. Whatever business ethics individuals.
organizations, and even government do in the domestic market, the same business ethics
should, likewise, apply in the international market. Business is business wherever you do it.

International business ethics emerged quite late globally compared, to the business ethics that
came up in the 70s. It was only in the late 1990s, when economic developments, occurred on a
worldwide scale, that international business ethics came to the fore. International business
ethics is important to aid in regulating

We discussed what ethics is. So, what is ethics not? Experts on ethics agree that the
identification of ethical standards can be very difficult, but they have reached some agreement
on what ethics is not.

Let us look at this five-point excerpt from the Markkula Center for Applied Ethics at Santa Clara
University about what ethics is not

1. Ethics is not the same as feelings, but feelings provide important information for our ethical
choices. Some people have highly developed habits that make them feel bad when they do
something wrong, but many people feel good even though they are doing something wrong. And
often our feelings will tell us it is uncomfortable to do the right thing if it is hard
2. Ethics is not following the law. Being ethical does not always mean being legal. While a good
system of law does incorporate many ethical standards, law can deviate from what is ethical. Law
can be a function of power and designed to serve the interests of narrow groups. Law can
become ethically oppressive, as some totalitarian regimes have made it Totalitarianism is a
system of government with the state holding absolute control and under which the people are
allowed virtually no authority. It is considered an extreme form of authoritarianism. Law may
have a difficult time designing or enforcing standards in some important areas and may be slow
to address new problems in these areas.

3. Ethics is not religion. Many people are not religious, but ethics applies to everyone. Most
religions do advocate high ethical standards, but sometimes do not address all the types of
problems we face. Another factor worth considering for international marketing participants is
ethical traditions. Ethics, tradition, and religion do not always concur

4. Ethics is not following culturally accepted norms. Some cultures are quite ethical, but others
are blind to certain ethical concerns. Slavery is not ethical, but was practiced centuries ago. The
cliché "When in Rome, do as the Romans do," is not a satisfactory ethical standard. Doing what is
the norm may not be ethical. Business and trade in Christian-dominated countries is different
from the business and trade in Islamic countries; the same is true for business and trade in a
democracy versus one in a socialist country. However, we cannot deny that business practices
are influenced, to a large extent, by how strong the impact of religion or ethical traditions is on
business practices.

5. Ethics is not science. Social and natural science can provide important data to help us make
better ethical choices. But science alone does not

tell us what we ought to do. Science mainly provide an explanation for what humans are like. But
ethics provides reasons for how humans ought to act. And just because something is
scientifically of technical possible, like biotechnology advances (cloning), it may not be ethical to
pursue and do it. A lot of people, and, perhaps, countries, are divided on this issue. The
subtleties of the issue are above and beyond man's knowledge and experience. Business
managers should have a good understanding of which norms their ethical standards are based
on and why and how they believe they should apply it both in their domestic and international
environments.

The subject of ethics is important in almost any context-be it medicine. science, law, or business.
Business managers should have a good understanding of which norms their ethical standards are
based on and why and how they belleve they should apply in other national contexts.

LESSON SUMMARY

1. The field of ethics, also called moral philosophy, is a discipline, a branch of philosophy that
seeks virtue

2. Virtue is conformity of one's life and conduct to moral and ethical principles. It deals with
morality about what is considered "right" and "wrong" behavior for people, organizations,
governments, and countries.
3. Business ethics, therefore, is the set of moral rules, principles, and standards that govern how
businesses operate, how business decisions are made, and how people are treated. It refers to
the rules, principles, for deciding what is morally right or wrong when doing business; the system
of moral and ethical beliefs, values, and principles that guide behaviors and decisions of a
business organization and the individuals within that organization.

4 International business ethics emerged quite late globally compared to the business ethics that
came up in the 70s. It was only in the late 1990s, when economic developments occurred on a
worldwide scale, that international business ethics came to the fore. International business
ethics is important to aid in regulating international business and trade and create winning
situations for international marketing participants

5. Ethical decision-making is tricky; therefore, it is imperative that there be a specific decision-

making framework that will help decision makers make ethical decisions. Generally, this
framework is embodied in a company's code of ethics.

. Organizations have their code of conduct or code of ethics that embodies the principles defined
by the organization, reflecting the organizational culture of the company, to help employees
conduct business properly and any violation may mean disciplinary remedies like suspension or
even termination. An organization may also extend its code of ethics/conduct to partners,
suppliers, customers, subcontractors, and contractual counterparts.

7. If the violation of a company's code of conduct violates a law or a government regulation, it

can be punishable by the government agencies concerned like the Securities and Exchange
Commission (SEC) or the Bureau of Internal Revenue (BIR).

8. Professionals like doctors, accountants, lawyers, and teachers have their code of ethics and
violation will mean banning the violator from practicing the profession. If the violator violates'a
law or a government regulation, it can be punishable by the government agencies concerned like
the Professional Regulation Commission (PRC), Board of Accountancy (for accountants),
Philippine Bar Association, Inc. (for lawyers), and other government agencies in charge of the
different professions.

9. Groups within the government, like parliamentary and other legislative bodies, also adopt a
code of conduct or a code of ethics. The enforcement and sanctioning is separate from any other
actual legal proceedings. Thus, someone may be both in violation of the law and in violation of
company ethical standards. Alternatively, someone may be in violation of company ethical
standards, but not in violation of the law.

10. Issues handled falling under business ethics in the international marketing environment,
includes child labor, transfer pricing, fair trade movement, bioprospecting, and biopiracy.

11. Child labor involves using children to do jobs for companies or small business owners. Some
cottage industries employ children as part of their labor force.

12. Transfer pricing involves how entities price products/services that they market to affiliates
and subsidiaries. Most of these affiliates and subsidiaries are in other countries.
13. Fair trade movement involves agreement between and among countries to encourage free
trade and remove barriers to entry.

14. Bioprospecting is defined as the collection, research, and commercialization of biodiversity

for new medicines and other useful natural products (perfumes, cosmetics, agro-chemicals, and
functional foods). Bioprospecting projects are meant to facilitate scientific and technology
transfer between global pharmaceutical firms and source-country public and private
laboratories.

15. Biopiracy refers to the usage of bio-resources by foreign corporations and other
organizations without appropriate authorization from the countries and individuals concerned
without compensation. It is the practice of exploiting naturally occurring genetic or biochemical
material in commerce.

16. Ethics is not the same as feelings. Feelings provide important information for our ethical
choices. Some people have highly developed habits that make them feel bad when they do
something wrong, but many people feel good even though they are doing something wrong. And
often our feelings will tell us it is uncomfortable to do the right thing if it is hard.

17. Ethics is not following the law. Being ethical does not always mean being legal. While a good
system of law does incorporate many ethical standards. law can deviate from what is ethical. Law
can become ethically oppressive, as some totalitarian regimes have made it.

18. Totalitarianism, an extreme form of authoritarianism, is a system of government with the

state holding absolute control and under which the people are allowed virtually no authority.

19. Ethics is not religion. Many people are not religious, but ethics applies to everyone. Another
factor worth considering for international marketing participants is ethical traditions. Ethics,
tradition, and religion do not always concur.

20. Ethics is not following culturally accepted norms. Some cultures are quite ethical, but others
are blind to certain ethical concerns. Slavery is not ethical, but was practiced centuries ago.
Doing what is the norm may not be ethical.

21. Ethics is not science. Social and natural science can provide important data to help us make
better ethical choices. But science alone does not tell us what we ought to do. Science may
provide an explanation for what humans are like. But ethics provides reasons for how humans
ought to act. And just because something is scientifically or technologically possible, like
biotechnology advances (cloning), it may not be ethical to pursue and do it.

KEY TAKEAWAYS

1. Ethics, also called moral philosophy, is a discipline, a branch of philosophy, that seeks virtue

2. Ethics deal with morality about what is considered "right" and "wrong" behavior for people,
organizations, governments, and countries

3. Virtue is conformity of one's life and conduct to moral and ethical principles.
4. Business ethics is the set of moral rules, principles, and standards that govern how businesses
operate, how business decisions are made, and how people are treated

5. International business ethics is important to aid in regulating international business and trade
and create winning situations for international marketing participants.

6. Organizations have their code of conduct or code of ethics that embodies the principles
defined by the organization, reflecting the organizational culture of the company, to help
employees conduct business properly and any violation may mean disciplinary remedies like
suspension or even termination.

7. Professionals like doctors, accountants, lawyers, and teachers have their code of ethics and
violation will mean banning the violator from practicing the profession.

8. Child labor involves using children to do jobs for companies or small business owners. Some
cottage industries employ children as part of their labor force.

9. Transfer pricing involves how entities price products/services that they market to affiliates and
subsidiaries. Most of these affiliates and subsidiaries are in other countries.

10. Fair trade movement involves agreement between and among countries to encourage free
trade and remove barriers to entry.

11. Bioprospecting is defined as the collection, research, and commercialization of biodiversity

for new medicines and other useful natural products (perfumes, cosmetics, agro-chemicals, and
functional foods).

12. Biopiracy refers to the usage of bio-resources by foreign corporations and other
organizations without appropriate authorization from the countries and individuals concerned
without compensation.

13. Ethics is not the same as feelings, but feelings provide important information for our ethical
choices.

14. Ethics is not following the law. Being ethical does not always mean being legal. While a good
system of law does incorporate many ethical standards law can deviate from what is ethical.

15. Ethics is not religion. Many people are not religious, but ethics applies to everyone.

16. Ethics is not following culturally accepted norms. Some cultures are quite ethical, but others
are blind to certain ethical concerns.

17. Ethics is not science. Social and natural science can provide important data to help us make
better ethical choices. But science alone does not tell us what we ought to do.

DISCUSSION QUESTIONS

Instruction: Answer the following questions comprehensively

1. Explain the meaning of ethics.

2. Discuss what business ethics is.

3. Elaborate on "code of ethics" or "code of conduct."

4. Explain the different ethical approaches that may help someone make the most ethical
decision.

LESSON 8.2. Ethical Approaches to Decision-Making

LESSON OBJECTIVES:

At the end of the lesson, the students should be able to:

1. discuss the utilitarian approach to ethics;

2. explain how you make decisions based on the rights-based approach;

3. elaborate on the fairness or justice approach or the social justice approach;

4. elucidate ethical decision-making using the common good approach; and

5. discuss the virtue approach to ethical decision-making.

There are different ethical approaches that may help someone make the most ethical decision.
These approaches are the following ([Link] 2021):

1. Utilitarian approach which action results in the most good and least harm

2. Rights-based approach - which action respects the rights of everyone involved

3. Fairness or justice approach - which action treats people fairly

4. Common good approach - which action contributes most to the quality of life of the people
affected

5. Virtue approach - which action embodies the character that strengthens value

Utilitarianism is an ethical theory that determines right from wrong by focusing on outcomes. It
is a form of consequentialism. The theory was conceived in the nineteenth century by Jeremy
Bentham and John Stuart Mill to help legislators determine which laws were morally best. Both
Bentham and Mill suggested that ethical actions are those that provide the greatest balance of
good over evil, the greatest benefits and the least harm, and the greatest good for the greatest
number. It is the most common approach to moral because of the way in which it accounts for
costs and benefits (ethicsunwrapped [Link] 2021) Utilitarianism posits that ethical actions
favors the greater good

The second important approach to ethics is the rights-based approach, which has its roots in the
philosophy of the eighteenth-century thinker Immanuel Kant who focused on the individual's
right to choose for himself or herself. According to Kant, what makes human beings different
from mere things is that people have dignity based on their free will and they have the right to
make choices and they have a fundamental moral right to have these choices respected. Humans
have the ability to choose freely how they live their lives, and they have a moral right for these
choices to be respected as free, equal, and rational people, and they also have a moral duty to
respect others in the same way. People have the right to truth, the right to privacy, the right not
be injured, and the right to what has been agreed upon or the right to fulfillment of promises.
What is important is that the moral rights of everyone is respected. If we violate the rights of
people, then that is unethical and totally wrong.

This approach asks us to identify the legitimate rights of ourselves and others, in a given
situation, as well as our duties and obligations. How well the moral, legal, and contractual rights
of everyone are respected and/or protected by the action and how well those affected are
treated as fully informed, sentient (able to perceive or feel things) beings with the right to free
consent instead of just as a means to an end is focal to the decision-making. As such, the ethical
action would be the one we have a moral obligation to perform that does not infringe on the
rights of others (Johnston 2021, [Link]).

The fairness or justice approach or the social justice approach to ethics has its roots in the
teachings of Aristotle, Plato, and Cicero. The theory hypothesizes that everybody should be
treated fairly or in the same way and not showing favoritism and discrimination. Favoritism gives
benefits to some people without a justifiable reason for singling them out; discrimination
imposes burdens on people who are no different from those on whom the burdens are not
imposed. Both favoritism and discrimination are unjust and wrong ([Link] 2021). The
fairness approach assumes that people should be treated equally regardless of their station in
life.

The common good approach to ethics assumes a society comprising individuals whose own good
is inextricably linked to the good of the community. Community members are bound by the
pursuit of common values and goals. More recently, contemporary ethicist John Rawls defined
the common good as "certain general conditions that are...equally to everyone's advantage."
The common good approach refers to actions that are taken or policies that are put

into place in order to benefit not only a certain group of individuals, but the society as a whole.
In this approach, we focus on ensuring that the ducis buliche society systems, institutions, and
environments on which we depend are beneficial to all Most governments adopt affordable
health care, effective public safety, peace among nations, a just legal system, and an unpolluted
environment. Appeals to the common good urge us to view ourselves as members of the same
community, reflecting on broad questions concerning the kind of society we want to become and
how we are to achieve that society. While respecting and valuing the freedom of individuals to
pursue their own goals, the common good approach challenges us also to recognize and further
those goals we share in common (rampages. us/sultanil/2017). The common good approach
suggests that ethical actions are those that benefit all members of the community. This approach
is reflected in protecting the environment for the good of the people.

Virtue ethics (or virtue theory) is an approach to ethics which emphasizes the character of the
moral agent, rather than rules or consequences, as the key element of ethical thinking. It is an
approach to ethics that emphasizes an individual's character as the key element of ethical
thinking, rather than rules about the acts themselves (deontology) or their consequences
(consequentialism). It teaches that an action is only right if it is an action that a virtuous person
would carry out in the same circumstances. A virtuous person is a person who acts virtuously. A
person acts virtuously if they "possess and live the virtues." Virtue ethics is a philosophy
developed by Aristotle and other ancient Greeks. It is the quest to understand and live a life of
moral character. According to Aristotle, by honing virtuous habits, people will likely make the
right choice when faced with ethical challenges (Davis 2021, [Link]).

The virtue approach to ethics assumes that there are certain ideals toward which people, as
human beings, should strive for the full development of our humanity. Virtues are attitudes or
character traits that enable us to be and to act in ways that develop our highest potential.
Honesty, courage, compassion, generosity, fidelity, integrity, fairness, self-control, and prudence
are all examples of virtues. Virtues are like habits, that is, once acquired, they become ingrained
and become characteristic of a person. A virtuous person will be naturally disposed to act in
ways consistent with moral principles. The virtuous person is the ethical person.

LESSON SUMMARY,

1. The different ethical approaches in making ethical decisions are the utilitarian approach,
rights-based approach, fairness or justice or social justice approach common good approach, and
virtue approach.

2. Utilitarianism is an ethical theory that determines right from wrong by focusing on outcomes,
a form of consequentialism. The theory was conceived in the nineteenth century by Jeremy
Bentham and John Stuart Mill They suggested that ethical actions are those that provide the
greatest balance of good over evil, the greatest benefits and the least harm, and the greatest
good for the greatest number.

3. The second important approach to ethics is the rights-based approach which has its roots in
the philosophy of the eighteenth-century thinker Immanuel Kant who focused on the individual's
right to choose for himself or herself. According to Kant, what makes human beings different
from mere things is that people have dignity based on their free will and they have the right to
make choices and they have a fundamental moral right to have these choices respected.

4. The fairness or justice approach or the social justice approach to ethics has its roots in the
teachings of Aristotle, Plato, and Cicero. The theory hypothesizes that everybody should be
treated fairly or in the same way and not showing favoritism and discrimination.

5. Favoritism gives benefits to some people without a justifiable reason for singling them out;
discrimination imposes burdens on people who are no different from those on whom the
burdens are not imposed.

6. More recently, contemporary ethicist John Rawls defined the common good as "certain
general conditions that are...equally to everyone's advantage." The common good approach
refers to actions that are taken or policies that are put into place in order to benefit not only a
certain group of individuals, but the society as a whole.

7. Virtue ethics (or virtue theory) is an approach that emphasizes an individual's character as the
key element of ethical thinking, rather than rules about the acts themselves (deontology) or
their consequences (consequentialism). Virtue ethics is a philosophy developed by Aristotle and
other ancient Greeks It is the quest to understand and live a life of moral character.

8. Virtues are attitudes or character traits that enable us to be and to act in ways that develop
our highest potential. Virtues are like habits, that is, once acquired, they become ingrained and
become characteristic of a person. A virtuous person will be naturally disposed to act in ways
consistent with moral principles. The virtuous person is the ethical person.

KEY TAKEAWAYS

1. Utilitarianism is an ethical theory that determines right from wrong by focusing on outcomes,
a form of consequentialism

2 Utilitarianism was conceived in the nineteenth century by Jeremy Bentham and John Stuart
Mill

3. Utilitarianism suggests that ethical actions are those that provide the greatest balance of good
over evil, the greatest benefits and the least harm, and the

greatest good for the greatest number.

4. The rights-based approach has its roots in the philosophy of the eighteenth- century thinker
Immanuel Kant

o. According to Kant, what makes human beings different from mere things is that people have
dignity based on their free will and they have the right to make choices and they have a
fundamental moral right to have these choices respected.

6. The fairness or justice approach or the social justice approach to ethics has its roots in the
teachings of Aristotle, Plato, and Cicero.

7. The fairness or justice approach or the social justice approach hypothesizes that everybody
should be treated fairly or in the same way.

8. Favoritism gives benefits to some people without a justifiable reason for singling them out.

9. Discrimination imposes burdens n people who are no different from those on whom the
burdens are not imposed.

10. Contemporary ethicist John Rawls defined the common good as "certain general conditions
that are...equally to everyone's atdvantage."

11. The common good approach refers to actions that are taken or policies that are put into
place in order to benefit not only a certain group of individuals, but the society as a whole.

12. Virtue ethics (or virtue theory) is an approach that emphasizes an individual's character as
the key element of ethical thinking, rather than rules about the acts themselves (deontology) or
their consequences (consequentialism).

13. Virtue ethics is a philosophy developed by Aristotle and other ancient Greeks It is the quest
to understand and live a life of moral character.

14. Virtues are attitudes or character traits that enable us to be and to act in ways that develop
our highest potential. Virtues are like habits, that is, once acquired, they become ingrained and
become characteristic of a person.
15. The virtuous person is the ethical person.

DISCUSSION QUESTIONS

Instruction: Answer the following questions comprehensively.

1. Discuss the utilitarian approach to ethics.

2. Explain how you make decisions based on the rights-based approach.

3. Elaborate on the fairness or justice approach or the social justice approach

4. Elucidate ethical decision-making using the common good approach.

5. Discuss the virtue approach to ethical decision-making.

CONNECTIONS AND APPLICATIONS

In at least two paragraphs, write your reflections on the following aspects of the lesson
discussed earlier on a separate sheet of paper. Use the grading rubrics in Lesson 8.1.

Acting Ethically: A Challenge

282 INTERNATIONAL BUSINESS AND TRADE

LESSON 8.3. Rich and Poor Countries

LESSON OBJECTIVES:

At the end of the lesson, the students should be able to:

1. discuss how less developed and developing countries use their cheap factors of production to
their advantage;

2. explain how the rich and industrialized countries render aid or advantages to the less
developed and developing countries:

3. explain what the gold tranche is;

4. discuss the General Agreements to Borrow:

5. elucidate on the New International Economic Order (NIEO); and

6. elaborate on the difficulties encountered by less developed and developing countries in

international business and trade

While we always say that all things are created equal, reality says otherwise. Even on a smaller
scale, there are people born with the "golden spoon in their mouth." while there are those who
are poor and have nothing to eat at all. Similarly, there are poor countries and rich countries,
industrialized and well-developed countries. and there are less developed and developing
countries. How do we address the relationship of the rich countries and the poor countries and
how do we protect the poor so that they are not taken advantage of by the rich? Trade relations
between developed and underdeveloped countries have always been the bone of contention
and controversy. The business orientations of the multinational companies (MNCs) which
establish manufacturing and selling in countries where labor and resources are cheaper is seen
as a form of exploitation. It is all up to the governments of the poor countries so that they can
protect their own citizens and their own businesses. In fact, governments and the businesses
within their countries need to work together to protect their own interests and that of the
country as a whole.

Most less developed and developing countries have abundance of labor and materials making
them rich with cheap factors of production. Therefore, most industrialized and well-developed
countries go to these countries to take advantage of cheap labor and cheap materials. It is now
the duty of the governments of the less developed and developing countries to ensure that they
will and can use their cheap labor and cheap materials to their own competitive advantage. It is
up to the governments and businesses of these less developed and developing countries to
ensure that they are protected. It is even incumbent upon these less developed and developed
and developing countries to lower costs to the detriment of their own labor force.

Reyes (2012), in his International Trade Conditions: Challenges for Less Developed Countries, has
extensively studied the relations between less developed countries and the rich industrialized
countries. Inasmuchi as most underdeveloped aunties the rich industrialized conatural
resources-agricultureing tols, and minerals-they excel in the production of primary products.
According to Reyes, due to the highly compete production tile nature of market conditions for
these primary products, these underdeveloped and developing countries claim they are
exploited by buyers in the highly developed world. Similarly, as developing countries attempt to
move into manufacturing and industry, particularly the labor. intensive industries-textiles,
apparel, and footwear-the role played by export markets in the developed countries becomes
vital. However, these labor-intensive industries, which are most likely to be viable in the early
stages of industrialization, are the very ones that receive the strongest protection in
industrialized countries, thereby limiting the export markets available to nations struggling to
industrialize (Johnson 2004).

Research and development (R&D) gives rise to technological innovation, but less developed and
developing countries have limited resources to spend on R&D. In addition, the governments of
the less developed and developing countries have other priorities-the war against narcotics, the
war against poverty, and the war against civil struggles in the countryside. R&D, education, and
science and technology are not included in these priorities. Reyes believes that due to the
international system of patents and to the monopoly power held by some technologically
innovative countries and firms, developing countries feel their development efforts are being
hampered by the high prices charged for borrowed technology.

Reyes also highlighted the role played by various international organizations, which are
concerned with the process of economic development. These organizations include the World
Bank (WB) the International Monetary Fund (IMF) and the World Trade Organization (WTO), as
well as the United Nations Conference on Trade and Development (UNCTAD) and numerous
others. The UNCTAD is the United Nations' (UN) body responsible for dealing with development
issues, particularly international trade the main driver of economic development. Within many
of these organizations, such as the WB and the IMF, a country's voting rights are determined by
the country's economic size. The developing countries claim that this voting system prevents
their voices from being heard even though they represent the majority of the world's population
(Voting Practices in the United Nations 1992).

Reyes has also touched or another issue worth taking into consideration-the flow of and notice
developed to developing countries gording to feel this and accelerated noticeably during the
1950s and 1960s before slowing down through the 1970s, 1980s, 1990s and the first decade of
the twenty-first century. Developing countries are claiming a right to a more stable share of the
gross national product (GNP) of developed countries in the form of aid, preferably administered
multilaterally and with no strings attached. One of the specific spheres in which this
controversial point takes place is regarding environmental use of energy, natural systems, and, in
general, ecological measures.

There are economic adjustment plans carried out in developing nations. When a country joins
the IMF, it pays a subscription, the amount of money it pays into the IMF as a member. Based on
its subscription, a country is granted a quota which defines how much money it can borrow from
the IMF. The gold tranche is the proportion of a member's line of credit at the IMF that can be
automatically borrowed. It equals 25 percent of the country's subscription to the IMF. The
remaining portions of a country's line of credit, called credit tranches, are more difficult to
obtain. Normally, if a country wants to borrow more than 50 percent of its drawing rights, the
letter of intent will contain a request for funds and describe the policies it plans to follow to
overcome difficulties. During the 70s, demands dealing with these issues were known as part of
the claim for a New International Economic Order (NIEO). Promulgated as a United Nations
declaration in 1974, the NIEO was the most widely discussed transnational governance reform
initiative of the 1970s. Its fundamental objective was to transform the governance of the global
economy to redirect more of the benefits of transnational integration toward "the developing
nations"-thus completing the geopolitical process of decolonization and creating a democratic
global order of truly sovereign states. For obvious reasons, some of the demands have met stiff
resistance among the developed countries; other issues currently are the subjects of active
negotiation.

The General Agreements to Borrow (GAB) was a standing agreement that was established by
IMF in 1962 that allowed them to borrow money from 11 (not 10, but called the G-10) of the
world's strongest economies, including Belgium, Canada, France, Germany, Italy, Japan, the
Netherlands, Sweden, the United Kingdom, and the United States and Switzerland, which plays a
minor role in order to assist other nations in economic distress. The GAB countries that faced
financial difficulties that threatened to stall economic growth or harm the international
monetary system, were able to turn to the IMF for supplemental liquidity. The IMF, in turn, relied
on funds offered through the GAB to help those in need of capital.

The difficulties faced by commodity exporters in general, and by developing countries, in

particular, are heavily dependent on commodity export earnings During the 1980s, commodity-
export-dependent developing countries modity prom an enormous setback because of the very
depressed level of commodity prices due to the rapidly increasing supplies. As the law of supply
and demand states, prices go down when supply is high. When the supply is high there is slow
growth In demand. This being the case, commodity producers and exporters experienced
traditional structural problems, such as price and earnings instability and relatively slow growth
in demand. The latter stems from increased productivity and the emergence of new and efficient
producers, which gained high levels of producer support in developed countries. For these less
developed countries, the expansion in supply has also reflected the pressure to increase a wide
range of commodities exports to answer the need to service large foreign debts.

This problem of increased supply was compounded by the inability of inefficient producers to
diversify into other economic activities; hence, they are unable to take advantage of wider
market opportunities. Even where markets work freely, the poor nations participate as unequal
partners. Where developing countries might have a competitive advantage, the markets are
often restricted. In the capital markets, the developing countries have paid extremely high real
interest rates because of their economic weakness and because of perceptions of the risks of
lending to them. They were viewed as default risks.

The weakness of developing countries is also evident in the markets for services, where they
would probably earn a lot, if they did not lack the necessary access to capital and finance to be
able to compete on an equal footing. In the labor market, immigration controls were instituted.
In addition, tariff and nontarift barriers restricted the flow of goods and services. Technology
markets are also closely guarded.

The WTO has the potential of improving conditions of international trade for less developed
countries as it fosters international trade negotiations so that developing countries can extract
favorable trade conditions from more developed countries, especially regarding the elimination
of barriers to exports of labor-intensive manufactured goods from these less developed
countries

LESSON SUMMARY

1. Trade belations between developed and underdeveloped countries have always been the
bone of contention and controversy. The business orientations of the multinational companies
(MNCs) which establish manufacturing and selling in countries where labor and resources are
cheaper is seen as a form of exploitation.

2. Most underdeveloped and developing countries are rich in natural resources- agriculture,
metals, and minerals-they excel in the production of primary products, but due to the highly
competitive and volatile nature of market conditions for primary products, these
underdeveloped and developing countries claim they are exploited by buyers in the highly
developed world.

3. Research and development (R&D) gives rise to technological innovation, but less developed
and developing countries have limited resources to spend on R&D. In addition, the governments
of the less developed and developing countries have other priorities the war against narcotics,
the war against poverty, and the war against civil struggles in the countryside. R&D, education,
and science and technology are not included in these priorities
4. The World Bank (WB), the International Monetary Fund (IMF), the World Trade Organization
(WTO), and the United Nations Conference on Trade and Development (UNCTAD) are some of
the world organizations concerned with the process of economic development

5. The WTO has the potential of improving conditions of international trade for less developed
countries as it fosters international trade negotiations so that developing countries can extract
favorable trade conditions from more developed countries, especially regarding the elimination
of barriers to exports of labor-intensive manufactured goods.

6. The UNCTAD is the United Nations' body responsible for dealing with development issues,
particularly International trade-the main driver of economic development.

7. The flow of ald from developed to developing countries is another issue worth taking into
consideration. Developing countries are claiming a right to a more stable share of the gross
national product (GNP) of developed countries in the form of aid, preferably administered
multilaterally and with no strings attached.

8. When a country joins the IMF, it pays a subscription, the amount of money it pays into the IMF
as a member. Based on its subscription, a country is granted a quota which defines how much
money it can borrow from the IMF.

9. The gold tranche is the proportion of a member's line of credit at the IMF that can be
automatically borrowed. It equals 25 percent of the country's subscription to the IMF. The
remaining portions of a country's line of credit, called credit tranches, are more difficult to
obtain.

10. The New International Economic Order (NIEO) was a governance reform initiative
promulgated as a United Nations declaration in 1974. Its fundamental objective was to transform
the governance of the global economy to redirect more of the benefits of transnational
integration toward "the developing nations"-thus completing the geopolitical process of
decolonization and creating a democratic global order of truly sovereign states. transnational

11. The General Agreements to Borrow (GAB) was a standing agreement that was established by
the IMF in 1962 that allowed them to borrow money from 11 (not 10, but called the G-10) of the
world's strongest economies, including Belgium, Canada, France, Germany, Italy, Japan, the
Netherlands, Sweden, the United Kingdom, and the United States and Switzerland, which plays a
minor role.

12. The GAB countries that faced financial difficulties that threatened to stall economic growth
or harm the international monetary system, were able to turn to the IMF for supplemental
liquidity. The IMF, in turn, relied on funds offered through the GAB to help those in need of
capital.

13. The difficulties faced by commodity exporters in general, and by developing countries, in
particular, are heavily dependent on commodity export earnings. For these less developed
countries, the expansion in supply has also reflected the pressure to increase a wide range of
commodities exports to answer the need to service large foreign debts.
14. In the capital markets, the developing countries have paid extremely high real interest rates
because of their economic weakness and because of perceptions of the risks of lending to them.
They were viewed as default risks

15. The weakness of developing countries is also evident in the markets for services, where they
would probably earned a lot, if they did not lack the necessary access to capital and finance to
be able to compete on an equal footing.

16. In the labor market, immigration controls were instituted. In addition, tariff and non-tariff
barriers restricted the flow of goods and services. Technology markets are also closely guarded.

KEY TAKEAWAYS

1. The business drientations of the multinational companies (MNCs) which establish

manufacturing and selling in countries where labor and resources are cheaper is seen as a form
of exploitation.

2. Due to the highly competitive and volatile nature of market conditions for primary products,
which most underdeveloped and developing countries are known for, underdeveloped and
developing countries claim they are exploited by buyers in the highly developed world.

3. The governments of the less developed and developing countries have other priorities-the war
against narcotics, the war against poverty, and the war against civil struggles in the countryside;
hence, they are unable to invest in research and development, education, and science and
technology

4. The World Bank (WB), the International Monetary Fund (IMF), the World Trade Organization
(WTO), and the United Nations Conference on Trade and Development (UNCTAD) are some of
the world organizations concerned with the process of economic development.

5. The WTO fosters international trade negotiations so that developing countries can extract
favorable trade conditions from more developed countries.

6. The UNCTAD is the United Nations' body responsible for dealing with development issues,
particularly international trade.

7. Developing countries are claiming a right to a more stable share of the gross national product
(GNP) of developed countries in the form of aid, preferably administered multilaterally and with
no strings attached.

8. When a country joins the IMF, it pays a subscription on which is based the quota granted a
country-how much money it can borrow from the IMF.

9. The gold tranche is the proportion of a member's line of credit at the IMF that can be
automatically borrowed equals to 25 percent of the country's subscription to the IMF.

10. The New International Economic Order (NIEO) was a transnational governance reform
initiative promulgated as a United Nations declaration in 1974, which fundamental objective was
to transform the governance of the global economy to redirect more of the benefits of
transnational integration toward "the developing nations."
religion, the political arena, the environment, bribery and corruption. trading internationally are
expected to fully comply with federal and state safety rights laws. reporting statutes, and

Cultural considerations can also make or break a company engaged in international business and
trade. Every culture and nation has its own history, customs, traditions, and code of ethics.
Cultural barriers include language, gender sensitivity, religion, and the like. Gender can be an
issue in countries where women do not have the same rights as men. Religious holidays and
other cultural events can prohibit trade at certain times. Acting in accordance with ethical and
cultural values is crucial for a multinational company to win clients' support and business and to
achieve a competitive advantage in a particular market.

Every field and every discipline, every firm and every organization, each and every country
around the world needs to know and follow what is right for each and everyone-individuals,
society, organizations, countries, and even the environment. Each discipline has its own code of
ethics-for teachers, CPAs, lawyers, doctors, nurses, and the like. Every organization also follows
its own code of conduct.

Research. Life conducted a webinar titled "Ethical Guidelines in Research and Publishing." The
Philippine Institute of Certified Accountants (PICPA) also conducted several webinars on the
Code of Ethics for CPAs. Ethics, not only in research or accounting, covers a wide range of
protocols, norms, and practices that vary from discipline to discipline. As there is greater
emphasis on collaboration, both within and between different disciplines, it has become
important for professionals and, in fact, for participants in international business and trade to
not only be thoroughly aware of ethical guidelines in their own fields of operation, but also have
some knowledge of ethical guidelines in other fields and in other countries. This simply shows
that ethics covers a wide field and applies, as we have said, to individuals, organizations,
managers and employees, businesses, and countries.

Business ethics laws and regulations dictate a standard of conduct that represents going beyond
doing what is legally right and going to acting what is morally right. Moral norms are imperative;
legal norms are mandatory. It is our moral obligation not to do harm to others and the
environment. Legally, people are punished for doing harm to others and the environment.
Morally, people are expected not to harm anyone, even animals and the environment. Slapping
someone may not be legally punishable, but it is morally irresponsible.

consists of three parts [Link] (2021), a legal norm

1. the hypothesis, which sets forth the conditions under which a person should be guided by the
given legal norm,

2. the disposition, which indicates the rights and duties of the participants in relations arising
under the circumstances envisioned in the hypothesis, and

3. the sanction, which defines the consequences for persons who violate the prescriptions of the
particular legal norm

In criminal law, a legal norm usually consists of two parts:

1. a disposition (the elements of a criminally punishable action), and

2. a sanction (the penalty for committing the particular act).

A legal norm is a mandatory rule of social behavior established by the state. It indicates the
conditions of its execution, the subjects of the relationships that it regulates, the mutual rights
and duties of the subjects, and the sanctions for failure to follow its prescription. The main
function of any legal rule is to suggest a certain behavior, to try to guide and regulate human
activity, as well as to press upon the human conscience the threat of punishment or the actual
punishment that must merit any conduct contrary to what has been established by it. In general,
legal arguments are not applicable to ethical discussions.

On the other hand, the prescriptions of morality refer only to the conscience of each individual.
Anyone who violates them is not exposed to any punishment or material pressure, but is
subjected only to scorn or rejection on the part of society. Moral norms are a guide to good
behavior, based on the customs, habits, and beliefs that guide the behavior of people, about
what should be done because it is good and right and what should not be done because it is bad
and wrong. Moral norms are spontaneous and have a subjective character, arising from the
subject's own consciousness; so they are unilateral and autonomous. Ethicists generally discuss
morality, not legality.

According to [Link] (2021), though it is possible to have morality without law,

or law without morality, the two usually go together. Therefore, it is suggested that law codifies
morality. In other words, the law formulates the culture's morality into legal codes. To a
significant extent, law codifies a society's customs, norms, and moral values. Again, not every
legal code refers to a moral

issue, but most laws do have some moral significance. Moral and legal are connected because
the law embodies many moral precepts. Legal prohibitions incorporate thost of our ordinary
moral rules such as those against lying, killing, cheating, raping, and stealing. For a conscientious
person, what is moral precedes means moral standards take priority over other standards,
including and the law. Of course, that is up to the courts to decide. self-interest

The word itself, "ethics, " is derived from the Latin word "ethos," which defines the moral values
and characteristics of a society. It means more than merely following the letter of the law,
because laws can always be changed, but instead following the codes of conduct developed
through a culture's religious beliefs, philosophies, and even the special requirements of specific
professions

Ethics are a reflection of the principles held by most individuals that regardless of whether an act
or thought is either always good or always bad, or if they are relative, depending upon a
situation, as human beings we have the ability to perform in a way that is right. Applying ethical
standards to business practices means applying a culture's moral standards, which rise above
legal statutes, to ascertain whether decisions or conduct are appropriate and just, good or bad,
not only for the business, but also for society as a whole. It is a matter of having a moral compass
to guide practices that may increase the bottom line of a company's ledger, but have implications
that create unjust or dangerous ramifications. A business should not produce its products in a
country, though having cheap labor and materials, have lax or nonexistent labor laws to protect
employees from harmful chemicals, dangerous workplaces, or unhealthy work hours nor should
it buy materials from countries that use the income from sales to promote and protect terrorist
activities or religious intolerance.

We are now ready to tackle the different ethical virtues or moral virtues needed by international
business and trade participants to equip them with ethical standards in conducting their
businesses.

First and foremost is integrity. Merriam-Webster Dictionary (2021) defines integrity as a firm
adherence to a code of especially moral or artistic values: incorruptibility. When a person has
integrity, he or she is not corrupt. Cambridge English Dictionary (2021) defines it as the quality of
being honest and having strong moral principles that you refuse to change. Therefore, when one
has integrity, he or she sticks to his or her moral principles and nothing can change that. In
business, most mission statements of companies mention integrity as part of their values.
Brenda Barnes, CPA, of [Link] says that integrity should be the

basic building blocks for doing business. However, she says that it is not that simple for two
reasons:

1. The innate human ability to rationalize behavior

Cheating is bad. Everybody knows that, but students would rationalize that almost everybody
does it. No matter what choice people make, they can convince themselves that the choice was
made with integrity. Choices require personal judgment.

2. Everyone defines integrity differently

This is further exacerbated by differences in culture. In some business cultures, people are
expected to openly do favors for each other, while in other cultures those favors would be
considered as bribes.

More than just a corporate responsibility, integrity is a personal responsibility as well. Integrity is
the quality of being honest and having strong moral principles: moral uprightness. Having
integrity means being straightforward and honest in all relationships, business or otherwise. A
person with integrity consistently adheres to ethics and moral principles.

Truth is in accordance with fact or reality. A fact is verifiable and cannot be denied. Truthfulness
breeds trust. No one can trust a liar. We are supposed to always say the truth. We sin when we
lie. Truthfulness is expected from anyone, particularly in business. Truth in advertising is an issue
marketers are confronted with. Customers expect to get the truth from companies that they
patronize. Truth-telling relates to the disclosure of information in a respectful and
compassionate way. Generally, when someone tells the truth, people trust him.

Trust is the assured reliance on the character, ability, strength, or truth of someone or
something. Cambridge English Dictionary (2021) defines trust as to believe that someone is good
and honest and will not harm you, or that something is safe and reliable. Louei Ali ([Link]
2021) holds that it comes down to "trust" for building long-term international business
relationships. He maintains that trust is the result of behaving credibly, setting the right
expectations, listening and adapting, and sharing knowledge. It leads to successful business
transactions which are repeated for many years. It is the foundation for long-lasting and fruitful
relationships. When someone trusts somebody, that someone can entrust even his own life to
that somebody. And once trust is done with, that someone can no longer be trusted.

Justice, equity, or fairness means treating everyone fairly, equally, and the same, regardless of
origin, race, creed, sex, age, culture, and the like. It is the collective responsibility of a free and
just society, to ensure that civil and human preserved and protected for each individual
regardless of gender, race, ethnicity, nation of origin, sexual orientation, class, physical or mental
ability, and age. Every person receives his or her due from the system, including all rights, both
natural and legal. There is equity if there is an equitable distribution of opportunities so that no
one is left behind. Tasioulas, John ([Link] 2021) mentions that laws are intended to
achieve justice, but the application of an otherwise just law may yield an injustice in the
circumstances of a particular case. He said that this is because laws are framed in terms of
general rules which cannot adequately provide in advance for all possible variations in relevant
circumstances. Equity modifies the rigid application of the law in such cases in order to secure
justice in the light of all the relevant circumstances.

The South African Speech, Language, Hearing Association (SASLHA) has this to say about justice:
Justice is a principle with the following four components:

a distributive justice equitable allocation of resources

b. respect for the law - whether an act is or is not against the law

c.

rights special advantages with correlative duties

d. retributive justice making right when a wrong has been perpetrated

Prudence is the act of being careful, wisdom in the way of caution and provision; discretion;
carefulness. It is the virtue that disposes practical reason to discern our true good in every
circumstance and to choose the right means of achieving it; "the prudent man looks where he is
going. It is prudence that immediately guides the judgment of conscience." ([Link]
2021). The word originates from the Old French word "prudence," which derives from the Latin
word "prudential" meaning "foresight" or "sagacity." It is often associated with wisdom, insight,
and knowledge. Foresight means the ability to anticipate what might happen in the future.
Sagacity means the quality of being discerning, sound in judgment, and farsighted; wisdom.

In accounting, prudence is associated with conservatism which means that an entity should not
overestimate its gains, but should always provide for all possible losses. It means an entity must
not overestimate its revenues, assets, and profits and must not underestimate its liabilities,
losses, and expenses. Prudence is ingrained in many, if not the majority of, the International
Financial Reporting Standards (IFRS) ([Link]). This means that readers of the financial
statements can trust that the financial statements present fairly the company's results of
operations and financial condition.

Fidelity is faithfulness to a person, cause, or belief, demonstrated by continuing loyalty and

support. In business, whether domestic or international, stakeholders are looking for fidelity on
those they interact with. Companies want customers who are loyal. Customers are loyal when
they trust the company Fidelity refers a preeting reasonable expectations regarding espast the
company subscribing to a professional code of conduct, following policies and procedures, and
honoring agreements.

Transparency in sciernice means the quality that makes it possible to see through something. A
transparent glass shows what is inside the glass Transparency in ethics means not hiding
something from parties engaged in a transaction. Everything is laid out on the table

Jolene Lampton ([Link] 2021) believes that transparency is the bedrock of ethics. She
believes that transparency can be challenging for leaders when their company faces adversity,
but it is essential for fostering an ethical culture. She maintains that transparency is an attribute
of corporate culture that is revealed through the behaviors of an organization's leaders,
employees, and stakeholders. It is how values are embodied and demonstrated on a day-to-day
basis. Transparent workplaces facilitate healthy relationships among people. Transparency is
seen in the degree of openness of meetings. events, and interactions within the organization and
with other third parties. Building strong relationships involves open communication, honesty,
regular feedback, respect, admitting mistakes and wrongdoing, and offering praise. However,
transparency does not mean divulging confidential information. What should be kept secret
should be kept secret and confidential. Transparency is a direct contrast to fraud. Transparency
leads to trust. The European Parliament ([Link] 2021) has already put in place a
wide range of transparency measures and is committed to making more progress in this area.
They believe that transparency in a democratic system enables people to participate more easily
in the decision-making process. Vasant Raval ([Link] 2021) says that transparency is the
receivers' right to know, to be informed. He maintains that the entity responsible for
transparency carries the duty of a moral agent to its stakeholders.

In accounting and finance, transparency means companies are responsible for certain disclosures
in their financial statements. The general accounting principle of full disclosure means all
material information that will affect the decision of the reader of the financial statements should
be disclosed. It is even included in the financial accounting framework. The goal of transparency
in accounting and finance is to facilitate informed decision-making. In the field of information
and communication technology, the goal is primarily to breed confidence in the system.

Social responsibility means that businesses, in addition to maximizing shareholder value, should
a dact in a na manner that benefits society. Social r is a means of achieving sustainability.
Adopting key social responsibility principles, such as accountability and transparency, can help
ensure the and success of any organization or system. Social responsibility in also known as
corporate social responsibility (CSR), pertains to people and organizations behaving and
conducting business ethically and with sensitivity toward social, cultural, economic, and
environmental issues. Striving for social responsibility helps individuals, organizations, and
governments have a positive impact on development, business, and society. Social responsibility
its seen in the triple bottom line-profit, people, and the planet. Businesses need not only focus
on the bottom line (profit), but should also show care and respect for people-its employees and
third parties it deals with, including customers, suppliers, creditors, the government, and the
society to which it belongs. The planet represents the environment that such businesses are
mandated to protect. responsibility business,

The American Society for Quality (ASQ) holds that social responsibility is seen through
transparent and ethical behavior that:

1. contributes to sustainable development, including health and the welfare of society,

2. takes into account the expectations of stakeholders;

3. is in compliance with applicable laws and consistent with international norms of behavior, and

4. is integrated throughout the organization and practiced in its relationships.

ISO 26000 also defines seven key principles of socially responsible behavior:

1. Accountability

2. Transparency

3. Ethical behavior

4. Respect for stakeholder interests

5. Respect for the rule of law

6. Respect for international norms of behavior

7 Respect for human rights

LESSON SUMMARY

1. Integrity as a firm adherence to a code of especially moral or artistic values: incorruptibility. It

is the quality of being honest and having strong moral principles that you refuse to change.

2 Truth is in accordance with fact or reality. A fact is verifiable and cannot be denied.
Truthfulness breeds trust. No one can trust a liar.

3. Justice, equity, or fairness means treating everyone fairly, equally, and the same, regardless of
origin, race, creed, sex, age, culture, and the like. There is equity if there is an equitable
distribution of opportunities so that no one is left behind.

4. Justice is a principle with the following four components:

a distributive justice equitable allocation of resources

b. respect for the law whether an act is or is not against the law

C rights special advantages with correlative duties

d. retributive justice making right when a wrong has been perpetrated

5 Trust is the assured reliance on the character, ability, strength, or truth of someone or
something. Trust is the result of behaving credibly, setting the right expectations, listening and
adapting, and sharing knowledge.
6. Truth-telling relates to the disclosure of information in a respectful and compassionate way.
Generally, when someone tells the truth, people trusts him or her.

7. Prudence is the act of being careful, wisdom in the way of caution and provision; discretion,
carefulness. The word originates from the Old French word "prudence," which derives from the
Latin word "prudential" meaning "foresight" or "sagacity."

8. Foresight means the ability to anticipate what might happen in the future.

9. Sagacity means the quality of being discerning, sound in judgment, and farsighted; wisdom.

10. In accounting, prudence is associated with conservatism which means that an entity should
not overestimate its gains, but should always provide for all possible losses, not overestimate its
revenues, assets, and profits and must not underestimate its liabilities, losses, and expenses.

11. Fidelity is faithfulness to a person, cause, or belief, demonstrated by continuing loyalty and
support. Companies want customers who are loyal. Customers are loyal when they trust the
company. Fidelity refers to meeting reasonable expectations regarding respect, competence.
professional code of f conduct, following policies and procedures, agreements. honoring

12. Transparency in science means the quality that makes it possible to see through something,
the degree of openness. Everything is laid out on the table. However, transparency does not
mean divulging confidential information. Transparency leads to trust.

13. In accounting and finance, transparency is seen in the general principle of full disclosure,
which means that all material information that will affect the decision of the reader of the
financial statements should be disclosed to facilitate informed decision-making. In the field of
information and communication technology, the goal is primarily to breed confidence in the
system. accounting

14. Social responsibility means that businesses, in addition to maximizing shareholder value,
should act in a manner that benefits society. Social responsibility in business, also known as
corporate social responsibility (CSR), pertains to people and organizations behaving and
conducting business ethically and with sensitivity towards social, cultural, economic, and
environmental issues.

15. The American Society for Quality (ASQ) holds that social responsibility is seen through
transparent and ethical behavior that:

a. contributes to sustainable development, including health and the welfare of society;

b. takes into account the expectations of stakeholders;

c. in compliance with applicable laws and consistent with international norms of behavior; and

d. is integrated throughout the organization and practiced in its relationships.

16. ISO 26000 also defines seven key principles of socially responsible behavior:

a. Accountability
b. Transparency

c. Ethical behavior

d. Respect for stakeholder interests

e. Respect for the rule of law

1. Respect for international norms of behavior

g. Respect for human rights

300 INTERNATIO

KEY TAKEAWAYS

1. Integrity is the quality of being honest and having strong moral principles that you refuse to
change.

2 Truth is in accordance with fact or reality. A fact is verifiable and cannot be denied.
Truthfulness breeds trust.

3. Justice, equity, or fairness means treating everyone fairly, equally, and the same, regardless of
origin, race, creed, sex, age, culture, and the like.

4. Justice is a principle with four components-distributive justice, retributive justice, rights, and
respect for the law.

5. Distributive justice is equitable allocation of resources.

6. Retributive justice is making right when a wrong has been perpetrated.

7. Respect for the law determines whether an act is or is not against the law.

8. Rights are special advantages with correlative duties.

9. Trust is the assured reliance on the character, ability, strength, or truth of someone or
something.

10. Truth-telling relates to the disclosure of information in a respectful and compassionate way.

11. Prudence is the act of being careful, wisdom in the way of caution and provision; discretion;
carefulness.

12. Foresight means the ability to anticipate what might happen in the future.

13. Sagacity means the quality of being discerning, sound in judgment. and farsighted; wisdom.

14. In accounting, prudence is associated with conservatism which means that an entity should
not overestimate its gains, but should always provide for all possible losses.

15. Fidelity is faithfulness to a person, cause, or belief, demonstrated by continuing loyalty and
support.
16. Transparency in science means the quality that makes it possible to see through something.
A transparent glass shows what is inside the glass.

17. Transparency in ethics means not hiding something from parties engaged in a transaction.

18. In accounting and finance transparency is embodied in the general accounting principle of
full disclosure, which means all material that will affect the decision of the reader of the financial
statements should be disclosed. information

19. Social responsibility, also known as corporate social (CSR), means that businesses, in addition
to should act in a manner that benefits society. responsibility maximizing shareholder value

20 ISO 26000 also defines seven key principles of socially responsible behavior accountability,
transparency, ethical behavior, respect for stakeholder interests, respect for the rule of law,
respect for international norms of behavior, and respect for human rights.

DISCUSSION QUESTIONS

Instruction: Answer the following questions comprehensively.

1. Explain the meaning of integrity and its role in business.

2. Discuss justice and its four components.

3. Explain the meaning of prudence in accounting.

4. Elaborate prudence as it applies to international business and trade.

5. Discuss fidelity and its role in building customer support and loyalty.

6. Distinguish between transparency in science, transparency in ethics, and transparency in

accounting.

7. Discuss corporate social responsibility.

CONNECTIONS AND APPLICATIONS

In at least two paragraphs, write your reflections on the following aspects of the lesson
discussed earlier on a separate sheet of paper. Use the grading rubrics in Lesson 8.1.

Ethical Virtues