Business ethics

Business Ethics

Suggested Readings

Murthy C V S, Business Ethics, Himalaya Publishing House

Banerjee R P, Ethics in Business and Management, Himalaya Publishing House

Business Ethics- Principles & Practices- Daniel Albuquerque

Indian Ethos and Values in Management- R Nandagopal & AjithSankar R N

16-01-2015 S.B.Seshadri,Asst. Prof,NERIM 2

Syllabus in Prescribed book- Business Ethics- Author -CSV Murthy

Unit I:- Introduction Meaning of Ethics- 1.3 Definition of ethics and Business Ethics-

1.4 Objectives-1.9, Nature- 1.10 and sources of ethics- 1.11 Types of ethics – 1.16 Need for Business Ethics-1.17 Importance and nature of Business

Ethics – 1.18 Factors influencing Business Ethics- 1.20 Business and Ethical Responsibility-1.21


Meaning of Ethics

In Latin language-Ethics is called Ethicus

In Greek it is called as Ethicos.Ethos means Character or manners.

Ethics is said to be the source of morals

-recognized rules of conduct.

Business ethics are moral principles that define right and wrong behaviour in the world of business.

What constitutes right and wrong behaviour in business is determined by the public interest groups, and business organisations,as well as an individual’s personal morals and values

16-01-2015 5S.B.Seshadri,Asst. Prof,NERIM

Three tests used forunderstanding business ethics inorganisations

1. Test of agreement with the evidence

2. Test of internal coherence

3. Test of its compatibility


Ethical Performance

Ethical business performance means adhering to society’s basic rules that define right and wrong behaviour.

Major Social challenges faced by business is to balance ethics and economics.

Society wants business to be ethical and economically profitable at the same time


Three terms used to define ethics are

1. Right

2. Proper

3. Just

Terms – bribery, theft and collusion in business unethical practices.

Collusion is a secret agreement to deceive


Sources of Ethics

1. General Inheritance

2. Religion

3. Philosophical Systems

4.Legal System

5. Codes of Conduct


Ethics & Business

Ethics conflicts with profits, whereas

Business always choose profits over ethics


Types of Ethics

There are three different types

1. Transactional Ethics

2. Participatory Ethics

3. Recognitional Ethics


1. Transactional Ethics The domain of ethics covering

transactions that are performed on thebasis of simultaneous or connectedinterests and that are general by theprinciples of

Equality,Honesty and,Reciprocity is indicated as the domain

of transactional ethics.


2. Participatory Ethics It is about the shape of solidarity in an

age of individualisation. It is the ethics of the civil society,

recently rediscovered as a solid ground for collective arrangements where both the marked and the state fail.

By participating on a regular basis, in common projects on behalf of general welfare, a corporation demonstrates that it can take seriously its corporate citizenship. 16-01-2015 S.B.Seshadri,Asst. Prof,NERIM 13

Participation voluntary, guided by the social relations and on two particular moral principles

Principle of Decency-A real opportunity to contribute to the general welfare presents itself and no insurmontableobstacles arise, one should have solid moral reasons not to go for it.

Principle of Emancipation- Special attention is given to the least powerful in order to defend those, who,bythemselves, are defenceless.16-01-2015 S.B.Seshadri,Asst. Prof,NERIM 14

3. Recognitional Ethics The domain of recognitional ethics

covers a large part of traditional ethical interventions.

Ethics in fact is about asymmetrical relations about the rights of interests of the one generating a duty for another.

Principle of Recognition Principle of beneficence or

nonmalificence


Need for Business Ethics

1. Business operates within the society

2. Every business irrespective of size exists more on ethics means or in total regard to its social concern to survive long

Business needs to function as responsible corporate citizens in the country


Importance of Business Ethics

1. Personal gain

2. Individual values vis a visorganisational goals- whistle blowing

3. Managers values and attitudes

4. Competitive pressures

5. Cross-cultural contradictions


Five Factors influencing Business Ethics

A) Leadership

B) Strategy and Performance

C) Environment

D) Corporate Culture

E) Individual Characteristics


Unit II:- (Chapter 2) Values, Norms and standards Values- Norms- Beliefs- Moral Standards, Beliefs and their role- Ethical codes- (Chapter 3) Theories of ethics- Ethical reasoning- Ethical decisions- Normative ethics in Management- Ethical theories


Unit II

Values ,Norms, Beliefs and Moral standards

Values are a general term referring to those things which people regard as good,bad,right,wrong,desirable,justifiableetc.

Business is driven by values. Values determine

What business people do? How others react?


Values are potent sources of conflict as well as of co-operation, control and self-control.

Through Values, business can and does create value in the form goods,services,employment, etc.

Some values prevent this process from working properly or at all.

Ex:- Liquor trade, unethical trades etc.


Types of Values 1. Cultural –represent the expectations

of stakeholders and set of standards of technical skills in business .

2. Moral-Important ones which are deep-seated ideas and feelings that manifest themselves as behaviour or conduct. Difficult to measure or express in words.

3.General & Control Values- capable of judging the acceptability of the prudential and technical value.


Managerial Values In 1975, An international study was done by George from England with focused approach on importance of Goods of organisations like

- productivity - profit maximization - employee welfare - organisationalgrowth,stability,efficiency

- industry leadership, - Social welfare


The Study categorises the primary orientation of the managers are:-

Pragmatic- It is pertaining to public business or skilled in affairs

Moralistic(Ethical –moral code). Evaluative frame work consisting of ethical considerations influencing behaviour towards actions and decisions, judged to be “right” and away from those judged to be wrong.

Affective(Feeling)- Suggests an evaluative framework guided by hedonism- one behaves in ways that increase pleasure and decrease pain.Hedorism is the doctrine that tells happiness is the highest good.


Features of Values-( DNA)

1. Descriptive – (Something like using ‘is’ of ethics)

2. Normative- ( Something like using ‘ought to be ‘ of ethics)

3. Analytical- ( Something like using ‘why’ of ethics)


Norms

Norms are expectations of proper behaviour, not requirements for that behaviour, a major difference between a norm and law.

Each individual within the society has a set of norms,beliefs, and values that together form his or her moral standards.

Norms are the ways an individual expects all people to act, when faced with a given situation.


The norm is not published , may not be obeyed and cannot be enforced- except by the sactions of a small group whose members hold similar norms and use such penalities as disapproval or exclusion.

It is not consistent nor universal.

Norms are just the way we feel about behaviour. They are neither logically consistent nor universally applied because we have never thought through the reasons we hold them.


Beliefs

The beliefs in an ethical code are standards of thought.

Beliefs are criteria of thought. They are the ways an individual expects people to think about given concepts.

Beliefs are different from norms, since we do not find any action- only an abstract way of thinking, no untoward behaviour with others. It tends to support an individual norms.


Moral standards

Law is a dynamic entity since the rules prevalent now will change after some period.

Moral standards- it includes the norms we have about the kinds of actions we believe are morally right and wrong as well as the values we place on the kind of objects we believe are morally good and morally bad.


Ethics of Business competition vs. competition in sports

To win or gain financially , sportspersons take drugs, practice unethical means etc

It is very difficult to win but easy to loose indulging in wrong means – even at conscience level if not caught.


Documents

Business ethics