Reference books • Business Ethics: An Indian Perspective by Prof. P.S. Bajaj / Dr. Raj Agrawal • Business Ethics: Text & cases by C.S.V. Murthy • A Study in Business Ethics by Rituparna Raj • Business Ethics concepts and cases by Manuel G. Velasquez
Ethics: What Does It Really Mean??? • Derived from Greek word ‘Ethicos’ meaning Character or Manners • Science of character of a person expressed as right or wrong conduct or action. • Set of moral principles prescribing code, explains what is good and right, or bad and wrong.
Meaning of Ethics Good or Bad, Right or wrong, Moral or Immoral Taken together Series of Actions Decided by Conduct of a person Character of a man Leads to Considered As By which we can Judge again Known as Moral Judgement Moral Standards Requires
Ethics can be termed as the science of character of a person expressed as right or wrong conduct or action
Objective of Ethics • Studies human behavior and makes evaluative assessment about them as moral or immoral • Establishes moral standards and norms of behavior • Makes judgment upon human behavior based on these standards and norms • Prescribes moral behavior and makes recommendations about how to or how not to behave • Expresses an opinion or attitude about human conduct in general
Business Ethics: What Does It Really Mean??? • comprises principles and standards that guide behavior in the world of business • According to John Donaldson “Business Ethics can be described as the systematic study of moral (ethical) matters pertaining to business, industry or related activities, institutions, or practices and beliefs. It is the systematic handling of values in business and industry.”
Views on relationship between Business & Ethics Unitarian View: Business & morality cannot be separated and it must play by the rules of ethics of the community. Moral Structure Business Moral Ethics
Separatist view of Ethics • Proposed by Adam Smith and Milton Friedman: Business is a distinct entity and does not include ethics and morality Ethics Business
Integration view of ethics • Proposed by Talcott Parsons Law Government Morality & Ethics Society Market Systems Business Ethics
Business Ethics When business people speak about “business ethics” they usually mean one of three things: 1. Avoid breaking the criminal law in one’s work related activity 2. Avoid action that may result in civil law suits against the company 3. Avoid actions that are bad for the company image Businesses are especially concerned with these three things since they involve loss of money and company reputation.
Relationship between law and moral standards • Laws and moral standards overlap to a certain extent • Law represents a minimum set of standards for producing a desired human behaviour • Ethics often represents a standard that exceeds the legal minimum Frequent Overlap Ethics Law
Common Unethical Acts... • lying and withholding needed information • abusive or intimidating behavior • misreporting time worked • discrimination and sexual harassment • stealing • breaking environmental and safety laws • falsifying records • drug or alcohol abuse • giving or accepting bribes
Why Misconduct Is Not Reported... • belief that nothing will be done • fear of retaliation • fear of being viewed as a troublemaker
Why ethical behavior is important??? • Business is a subsystem of society • Empowers all stakeholders concerned • Reduction in cost of friction with social environment • Important for organizations leaders because they influence the ethical climate for the rest.
Why Ethical problems occur? • Personal gain • Individual values widely differ with organizational goals • Managers values and attitudes • Competitive pressures • Cross-Cultural contradictions
Fellow Workers Regions of Country Family Profession The Individual Conscience Friends Employer The Law Religious Beliefs Society at Large Sources of Ethical Norms Culture
Encouraging Ethical Conduct Ethics Training Key features of effective ethics training programs Top management support. Open discussion. A clear focus on ethical issues. Integration of ethics into the organization. A mechanism for anonymously reporting ethical violations. Reward ethical conduct.
Encouraging Ethical Conduct (cont’d Whistle-Blowing The reporting of perceived unethical matters. Reducing the fear of retaliation against whistleblowers Anonymous hotlines and web sites Personal, confidential guidance Ethical Advocate An ethics specialist who plays a role of critical questioner in top-management’s decision-making. Serves as the Board of directors’ social conscience. Helps prevent groupthink and blind conformity
Encouraging Ethical Conduct (cont’d) Code of Ethics Published statement of moral expectations for employee conduct Requirements for an effective ethics code Must describe specific practices as unethical (e.g., kickbacks, payoffs, gifts, falsification of records, and misleading product claims). Must be firmly supported and fairly enforced by top management.