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Business ethics
syllabus
1.
2.
3.
4.
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13.

Evolution of thought of ethics in business

Culture & ethics
Overview of ethics value system, attitudes, beliefs and life patterns
Social, economical values & responsibilities
Trusteeship management- Gandhian philosophy of wealth
management
Ethics and Indian management
Basic framework of normative ethics
Ethics and decision making
Social responsibility of business
ethical aspects of corporate policy
Morality and rationality in formal organisation
Moral relations between individual and organisations
Relation between ethics and corporate excellence
Approaches for developing various orientate towards ethical business
behaviour.
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Business ethics
&
changing business environment

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Business ethics
Changing business environment

Technological
Legal
Economic
social political

Internet info technology

Globalization
Deregulation
Mergers
Wars
Accelerated
Rate of change

Stakeholders are

Theory of values

Individual
Companies
Groups
nations

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The theory of values

Values can be
as attributes of people
Attributes of objects

Value:
Ishta ( sanskrit) : the object of liking
That which is desired
Fulfillment of needs
Satisfaction of desire
Facts and values are closely connected
Facts are apprehended and values are
realised
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Objective values:

Perceived as attributes of objects

Persons expectation of the object
Likes and dislikes of the people
Ones attitude towards the objective

Subjective values
Values dependant on the changing perception of the valuing
agent
Psychologically conditioned values
Subjective is response of the individual to universal values
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Realisation of value

Indian philosophy on values

Kanada Vaisheka sutra : 1923

Bhandarkar oriental research institute: 1923

Value always associated with

1.
2.
3.
4.

Logical values ( true values)

Ethical values ( good value)
Absolute value (ultimate value)
Aesthetic value

Feeling of pleasure
Appreciated by human beings
Backed by feelings
1. Instrumental Value:
Desired by all
something instrumentally
Value realization has:
good
1. Cognition
1. Intrinsic value
2. Feeling
Good by itself
3. will
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Logical values

Further reading

Logic : science of proof & science of discoveries

1.

Ethical management:

2.

Business ethics

3.

Business ethics

4.

Corporate governance and business ethics

5.
6.

Business ethics
velasquaze
ethos, Indian ethos and management

7.

Business ethics

8.

Business ethics case studes and selected readings

Satish modh

without motives, knowledge is of no use

Joseph weiss

Means of revealing knowledge:

Perception
Inference
Comparison
Postulation
Non-cognition : non comprehension, absence of know
Word or language
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Robert Peterson
U C Mathur

S. Balchandran, K.C.R. Raja

Josph DesJardines
Marianne Jennings

Ethical values

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Elements of ethics

Desires and obligations

1.
2.
3.
4.
5.

(distinction between I want to & I ought to )

Deals with
Moral truth
Virtuous conduct
Concept of obligation
Shift from gratification of desire to fulfillment of duty
Good motives and actions
Covers the logic of

Meta-ethics
Desirable values
Theory of conduct
Ethical behaviour
Applied ethics

What is good and morally right

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Essentials of ethical statement

Learning ethics

Called as normative sentence

Ethical statement contains-

Meta-ethics:
Study of what sort of meaning the sentence
have?
What do we mean, when saymurder is wrong

Good, bad, right, wrong, moral immoral

Or any other word which describes value
Words to morally evaluate
the person
Intentions
Actions

Ethical issues:
Simple birth control measures- sexual morality
Medicines & equipments for prolonging human lifemedical ethics
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Desirable values:

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Theory of conduct:

What sort of things, situations, are good?

Goodness of people and conduct is studied

Defining the person as good or bad
Theory studies

Talking about goodness, desires,

values of things, not of people or actions
Concerned about objects
E.g. political economy

What is right, obligated, permitted

Required by duty, more than duty
Also studies, wrong, forbidden, denied, etc

Policies on tax
Policies on trade and tariff

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Ethical behaviour:

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Applied ethics :

A part of cultural system

Values are part of, what ought to be?
Rules and guidelines of the behaviour
Abstract goals people seek.
Kind of attitude

Branch of ethics deals with

Analysis of specific issues
Abortion, animal rights, euthanasia
Medical ethics, business ethics, sexual, social.

Ethical behaviour= fn (context, content, culture, time )

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Society and value system

according to

Desired in cultured person

tejomayananda & zavalloni

Communicate what is true, pleasant, not disagreeable

and falsehood
Enjoying fruits without offering efforts is social theft
Among all modes of purification, purity of acquisition of
wealth is the best
No treasure equals charity, contentment is perfect wealth
Riches unearned should be earned, earned should be
guarded, guarded should be enlarged and heedfully
invested

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Fearlessness
Purity of heart
Steadfastness in
devotion of
knowledge
Charity
Restraints of senses
Sacrifice
Self study

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uprightness

consistency of purpose
Harmlessness
Truth
Even temper
Unmalicious tongue
Tenderness
Non-covetousness
Gentleness
Modesty..

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Values for indian managers

End state values:

productivity
Market share
Profitability
Innovation
growth

Values as means:
to increase market share
By false means, falsely advt
to publish paper by plagiarizing

Values serve the process of becoming

i.e. transforming the level of consciousness to purer, higher level
Distinguishing between desired and desirable
Between delectable and electable
Between PREYA (pleasant) and SHREYA (the good)

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Value system: Japan

Japanese management by Pascal and Athos

1.
2.
3.
4.
5.
6.
7.
8.

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spiritual values
National service through industry
Fairness
Harmony and cooperation
Struggle for betterment
Courtesy and humility
Adjustment and assimilation
Gratitude
loyalty
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Values for Indian managers

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.

Value system: America

Management in excellent American companies

by peters and Waterman
1.
2.
3.
4.
5.
6.
7.

A belief in the best

A belief in the importance of execution
Importance of people as individuals
Superior quality and service
Most members of the organisation should be innovators
Importance of informality to enhance communication
Importance of economic growth

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Respect the individuality

Cooperation and trust
Jealousy is harmful to mental health
Chitta shudhhi
Top quality product
Work is worship
Containment of greed
ethico moral soundness
Self discipline and self restraint
Customer satisfaction
Creativity
The inspiration to give
Renunciation and detachment

Four goal system for managing human life:

artha- karma- dharma- moksha
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Comparative value profile

US CULTURE

INDIAN CULTURE

individuals can
influence future
I can change work to
achieve objective
data based decisions

life is pre planned,

actions pre determined

I can disagree
protestant ethics
authentic collaboration

I need to adjust
decision from
experiences
supression of negative
feelings
Joint family
self realisation

Some examples.

JAPANESE CULTURE
Groupism
Homogeneity
Confusian ethics
High education levels

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August 9, 2000, Firestone recalled 6.5 m

defective tires, were used on fOrd vehicle.
Tires caused 174 deaths and 250 injuries.
Internal documents of Bridgestone /
Firestone showed that company officials
knew the fact.
Ford & Bridgestone blaming each other.

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Sept 11 attacks on WTC and pentagon

moved US to wars realigned international
stakeholders.
There are crisis and issues about security,
ideologies, culture, ethics, national
identities

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Microsoft won the case on monopoly, saw

the government policy can regulate
markets that rely on the innovation,
software and internet.
What balance should be struck between
protecting intellectual properties and
ensuring that new comers get fair chance
to compete?

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Stakeholders management
approach
New air bag scam discovered in Los
Angeles . Croocked mechanics use to
replace the new bags to old.
This was new type of fraud installing
dummy bags not illegal in America.

Special interest
groups
consumer
groups

Local community
groups
Primary
stakeholders

media

customer

secondary
stakeholders

owner

firm

supplier

Society at
A large
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employees

environmental
groups

Civil liberties
groups
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Levels of business ethics

RU 486 : story

Individual level

Organiasational level
Association level
Societal level
International

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Ru 486 drug mfr by french company.

Rossel uclaf mfr mifepriston, abortion pill
Us banned it. Dr. Sakiz, a chairman has
pressure from partner company, Hoechst.
Dr. sakiz, a physician, advocates women
rights.

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Framework to classify the ethical

levels
descriptive

normative

Five myths about business ethics

Information
Is
Neutral and
amoral

analytical
analytical

Ethics of the system

Ethics of the
organization

Good business
Means
Good ethics

Ethics of the
person

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Ethics is
personal

5
myths
Business and
Ethics dont mix

Business ethics
Is relative
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Key questions to resolve ethical

dilemma

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Some examples

What are my core values and beliefs?

What are the core values and beliefs of my
organisation?
Whose values, beliefs, and interests will
be at a risk, why?
Who will be harmed and helped by the
decision?
How will I and my organisation will get
affected?
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Guards stationed at eastern border are tried for manslaughter for

killing of eastern people
In defense, guards argued- they have been ordered to shoot to kill

State statute to provide credit for vehicles with alternative fuels

Intention non pollution
Dealers and companies used propane
Cost $ 600 m to the country

companies and employees may not pursue values of ethics

properly
Firms simply adopt the standard of complying
law carries sanctions or punishment ethical values more important

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Recognizing the ethical dilemmas

ethics has no colour. It has no

shape. But its effect are felt.

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By category:

Taking things doesnt belong to you

Saying things, you know are not true
Giving or allowing false impression
Buying influence or engaging in the conflict of interest

Hiding or divulging information

Taking unfair advantage
Committing act of persona; decadence
Perpetrating interpersonal abuse
Permitting organisational abuse
Violating rules
Condoning unethical actions

The origin of ethics:

From greek words- ethikos- means moral
Ethos - means character
Simply ethics is the study of what we should do ?

It sets the norm for conduct of people in so far as

they are members of social and business
groupings
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Morals are the set of rules of behaviour, whether for the

group at a certain period, or in an absolute manner at any
time and place
no human group can survive without a code of Ethics
Ex: in group of climbers
engaged in adventures of
climbing, each member
must be responsible and
brave, helpful. If not he
will be risking the survival
of group members, if the
rules are not obeyed
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the discipline dealing with what is good and bad with

moral duty and obligation

Ethics is the science of morals

A group can be
A family
A tribe
An association
A company
A nation

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The websters dictionary :

Awarding contract to the known firm

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Dilemmas can be spotted by:

1. Language
a. everybody else dose it
b. if we dont do it someone else will.
C. we will wait until the lawyers tells us its wrong
d. it doesnt really hurt anyone
e. the system is unfair
f. I was just following orders

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Prof. HL stukartmorals can have following roots

a) social
b) intuitive

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c) religious

The social origin of morals:

Morals borned as language
Primitive code of ethics might have been set
of taboos
Thou shalt not kill
Thou shalt not steal
Thou shalt not commit adultery

The forbidden act must have followed by

severe punishment
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Why use ethical reasoning in

business?

Can business ethics be taught and

trained?

1. Many laws insufficient to cover aspects

1. Tobacco co are protected by laws

2. Co agreed to pay $368.5 M for 25 yrs
3. Agreed to pay $15 M every year

1.

2. Free mkt and regulated mkts do not inform

owners and managers how to respond

2.
3.

1. Microsoft act unethically to become dominant

2. Cynamid prohibited working women in toxic areas
3. For intuitive (learned understanding) & concern for

4.
5.
6.
7.

fairness, justice

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Stages of moral development

( 6 stages )

Level-I: PRCONVENTIONAL LEVEL

( SELF ORIENTATION )

Stage1 : PUNISHMENT AVOIDANCE:

AVOIDANCE OF PUNISHMENT BY BREAKING RULES
THE PERSON HAS LITTLE AWARENESS OF OTHERS NEEDS

Stage2 : REWARD SEEKING:

ACTING TO SEEK REWARD FOR ONESELF
AWARENES OF OTHERS NEEDS BUT NO RIGHT & WRONG CONCEPT

Level- II : CONVENTIONAL LEVEL

( others orientation)

Stage3 : GOOD PERSON

ACTING RIGHT TO BE A GOOD PERSON, ACCEPED BY OTHERS

Stage4: LAW AND ORDER

ACTING RIGHT TO COMPLY WITH LAW AND ORDER & NORMS IN THE
SOCIETY

Level-III : POST CONVENTIONAL OR PRINCILPES LEVEL

Stage5: SOCIAL CONTRACT
ACTING RIGHT TO MEET THE AGREEMENT BY MUTUAL AGREEMENT
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ACTING RIGHT ACCORDING
JUSTICE, RIGHTS ETC

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Why to use the stakeholders

approach

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REVIEW Kohlberg levels and stages of moral

development. After careful consideration, briefly explain
which stage predominantly defines your ethical level of
development.
You are applying for a prestigious organisation for
important, highly visible post. The application requires
you to describe an ehtical dilemma in your history.
Describe the ethical dilemma and your ethical position.
Briefly describe some benefits that can be gained from
ethics course and training. In what way it is possible to
teach ethics? Explain.
Is law sufficient to help managers and employees solve
ethical dilemmas. Explain and offer an example from
your experiences or from contemporary event.
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Stakeholders approach

Response to growth of complexity of problems

It touches environment, economy & public
Stockholders approach focus only on
Financial and economical factors

Includes non-market forces, individuals

To act in best interest of

Stakeholders theory of the firm Mitchell, Angel and Woods 1997 stakeholders theory must account for power and urgency as
well as legitimacy, no matter how distressful and unsettled
the results.

Approach is based on view

profit maximisation is constrained by justice
Individual should be extended to constituencies of
stakeholders
Organisations are not only economically responsible
but socially responsible too.

Customer, employees, suppliers, stockholders

Respect and fulfill stakeholders rights
Focus on multiple objectives

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Provide people with rationale, ideas, vocabulary to participate

in group discussions
Help people make sense of their environment
Provide intellectual weapon to battle with economical
fundamentalism
Employees can act as alarm system
Enhance conscientiousness and sensitivity to moral issues
Enhanced moral reflectiveness and strengthen moral courage
Provide moral concepts and tools thus improve moral climate

QUESTIONS

Kohlbergs 3 level of moral development

Stage6: UNIVERSAL ETHICAL PRINCIPLES

Law and enforcement are not sufficient to solve

complex problems
Lets understand what ethics course or training does?

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What does the stakeholdes

approach provides to managers?

Microsoft
Bill gates and executives had to address to various stakeholders &
lawsuits
No of constituencies and stakeholders Microsoft interacted shows
the complexity
Illustrated no of problems and its magnitude corporations face today
Controversy migrated to issues like
Bundling, exclusionary agreements, polluting technologies,
monopolizing future technologies, access to internet, etc
This complex situation needs the method to decide what is wrong and right

ABHRAM LINCHOLN- the true role in determing to embrace and

reject anything. Is not whether it have any evil in it, but whether it
have more evil than of good. There are few things wholly evil or
wholly good.

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1. Framework to map and manage

corporations relationships
2. Relationship for win-win collaborative
outcomes
3. Approach used for planning and
implementing collaborative relationships

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How to execute stakeholders

analysis
Stakeholder:
Any individual or group who can affect or is affected by actions,
decisions, policies, practices, or goals of the organisation.

Secondary stakeholders:
all other groups such as media, consumers, lobbyists, courts,
governments, competitors, the public, and society.

Stake:
a stake is any interest, share or claim that a group or individual
has in the outcome of corporations policies, decisions,
procedures, or actions towards others.
Stake may be legal, political, technological, social..
Stake may not be always obvious or explicit
Stake may be past, present, and future oriented
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Assume u r the ceo, working with ur top level mgrs, in a

firm that just has been involved in a major controversy of
international proportions. The media, consumer groups
have called u. u want to get a handle on the situation
without reverting to unnecessary firefighting
management methods. Staff has advised u to adopt
planning approach quickly. Go in what, where, who,
when, why.. Instead of so many hows
Your senior strategic planner suggests you to lead and
participate in stakeholders analysis.
Then what is next step?....

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Mapping stakeholders relationships

Frederick et.al 1988 suggested series of steps

R. Edward freeman questions

Who r our stakeholders currently?
Who r our potential stakeholders?
How does each stakeholders affects us?
How do we affect each stakeholder?
For each division and business, who r stakeholders?
what r current environmental variables?
How do we measure impact of each variable on our
stakeholder?
8. How do we keep score with current stakeholders?

Mapping stakeholders relationships

Mapping stakeholders coalition
Assessing the nature of each stakeholders interest
Assessing the nature of each stakeholdrs power
Constructing a matrix of stakeholders moral
responsibilities
6. Developing specific strategies and tactics
7. Monitoring shifting coalition

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1.
2.
3.
4.
5.
6.
7.

1.
2.
3.
4.
5.

Its completely brainstorming activity

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Hypothetical brainstorming map

STAKEHOLDERS MAP FOR MICROSOFT

OWNERS

GOVERNMENT

spyglass

LICENSEES

browsers

Operating
system

CUSTOMER
apple
CUSTOMER
ADVOCATE
GROUP

COMPETITORS

TRADE
ASSOCIATION

Trade
associations
SHAREHOLDERS
suppliers

IBM

FIRM

DISNEY
HOLYWOOD ONLINE
CBS SPORTSLINE

netscape

ACT`IVIST
GROUP

SUPPLIERS

ISPS & OLS

AT&T WORLDNET
EARTHLINK

OEM
FINANCIAL
COMMUNITY`

competition

POLITICAL
GROUPS

EMPLOYEES

MICROSOFT
CORPORATION

customers

management
Sun
microsystems
Hewlett
packard

UNIONS

U S district
court

software
GOVERNMENT`

EMP`LOYEES
AOL

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What are our strategies and

Objectives

Legal

Who has a stake in our business

What assumptions
Do we make about them?

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Stakeholders moral responsibility

matrix

Stakeholders analysis

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economic

ethical

voluntary

Owners

what assumptions do
They make about us

Customers

What are their strategies and objectives

How critical is their support

To our business

How critical is our support

Interest
Groups

How much power do they

Have?

Public /
citizen

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Strategies for assessing and

managing stakeholders
High

Stakeholders potential for

Cooperation with organisation

Employees

What interdependencies exists

Among them?

Stakeholders potential for

Threat to organisation`

Type 1

Mixed blessing

Supportive

Strategy:

Strategy:
Involve

Collaborative
Customers
employees

High

boss

Any other
Person
related
To business

Team member

Other
external
groups

Customer
executives

Suppliers
Trade associations
Share holders
customers

Manager in
A job
Government
agencies

customers

low

Type 3

Type 2

Nonsupportive

Marginal

Strategy:
Defend
Govt
AOL

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Strategy:
Monitor
loEM, media
Apple
iBM

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Moral responsibility of functional

area professionals

low

Type 4

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Various related
departments

Boss's boss

subordinates

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Issue management process

Issue development process

six steps

7 stages
Business lobbies if issue evolve
Into proposed legislation
That could affect them

1.Environmental
Scanning &
Issues
identification

6. Issue evaluation
And monitoring

Litigation

Govt attention

5. Issue response
And
implementation

Issue
management

Business gain awareness

But take no action

1.Issue
analysis

Legislation &
regulation

Leading political jurisdictions

Interest group development and growth
Media coverage public awareness, TV and radio

3.Issue ranking
& prioritizing

4.Issue resolution
strategizing

Felt need- leading events, advocacy, groups, books, movies

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Issue management and

stakeholders analysis

Life cycle issue development

Social
awareness

1. Social expectation and awareness

Social discussion and debate
Interest group attention
2. Political awareness
Media attention
Legislation initiated
Hearing held
3. Legislative engagement
Law passed
Legal involvement
Regulations enacted
4. Social control and litigation
Compliance issues
Legal conflicts
Court rulings

stages

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After identifying the issue, analysis can be

enhanced by following questions
1. Which stakeholders are affected by the issue?
2. Who has an interest in the issue?
3. Who is in a position to exert influence on the
issue?
4. Who has expressed an opinion on the issue?

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STAGE1 STAGE 2

STAGE 3

Crisis
occurs

Predormal Acute
stage
stage

STAGE 4

Lingering

Chronic
stage

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CRISIS MANAGEMENT
RECOMMENDATIONS

Crisis management approach

Precrisis

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Health
restored

Conflict
resolution
stage

FACE THE PROBLEM; DONT AVOID OR MINIMISE

NO COMMENT ANSWERS IMPLY GUILT
IN AGE OF INSTANT NEWS, NOTHING IS SECRET
OBSERVE, HOW YOUR CRISIS PLAN HOLDS UP UNDER
PRESSURE
USE FIRMS PHILOSOPHY, MOTTO, MISSION STATEMENT TO
RESPOND
USE FIRMS CLOSENESS TO CUSTOMERS
Issue management techniques are effective only if.

Warning
symptoms

Point of no
return
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Self- doubt
self analysis

Top management supports & participates

Involvement is cross departmental

Return to
normalcy

Issu management fits the firms culture

Output, instead of process, is focus
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ETHICAL CONCEPTS

How to use ethical reasoning?

Ethical subjectivism:
Morally correct decisions depends on circumstances person making
it
Morally right or wrong depends on the choice of principles

Ethical relativism:
There is no universal set of principles by which to judge morally
Each society has its rules
Ethical interaction with societies possible with tolerance and
conflicts

The guidelines for managers1.

2.

Identify the nature of the problem

Decide course of action

three methods suggested-

Method

Critical determining
factor

Action is ethical
when..

limitations

Utilitarian

Comparing benefits
and cost

Net benefits
exceeds net cost

Difficult to measure
human and social
costs
Right of minority
may be disregarded

Rights

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Basic human rights
are respected

Justice

Distributing fair
shares

Consequentialism:
Concept of value and maximisation of value is focused
Happiness is value, ethical act increases happiness

Ethics of virtue:
Focus on role of individual traits
Virtuous acts are done willfully
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Benefits and costs

Difficult to measure
are fairly distributed costs and benefits
Lack of agreement
on fair share

ethics

Philosophical foundations of ethics

Normative ethics

The seeds of ethics comes from:

meta ethics
do not concerned
with norms and standard
provides meaning of the
words like, wrong & right
one cannot answer normative
issues without meta ethical issues

tries to discover criteria

Or rule for moral judgments
norms & standards are used
concerned with moral
Judgments

Philosophy
Religious preaching
Political system

Philosophy is study of thought and moral

conduct
Ethics is concerned with moral conduct

Judgments
of Moral
obligations
Is about
Rightness &
Wrongness
Of actions

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Difficult to balance
conflicting rights

Judgment
Of moral
values

Judgment
Of non-moral
values

About goodness Concerned

or badness
not with
of person
individuals

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Theories
of ethics

Normative
ethical theories

relativism

Nave
relativism

Cultural
relativism

Teleological
theory

egoism

hedonism

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Deontological Act and rule

theories
utilitarianism

Kants ethical
theory

The basic classification is

1. Teleological
ex: utilitarianism

Meta ethical
theories

The ought
controversy

Categorical
imperative

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2. deontological
Kants Ethical theory

Obligation, duty are fundamental

Moral categories
The rightness of the action is
7 rules by Rossdetermined by amount of good
1. Duties of fidelity- to keep promise
consequences they produce
2. Duty of reparation- to compensate
The concept of good is
people
fundamental in teleological theories
Rightness & obligation , duty are 3. Duties of gratitute- to return favors
4.
Duties
of
justicegoos
are distributed
defined in terms of goodness
equally
5. Duties of beneficence- benefit others
6. Duties of self improvement- improve
own condition
Duties of nonmalaficience- to avoid
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injury to others

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Normative theories:

Relativism:

Classified into:
1. Nave relativism

Maintains that no action can be judged right or

wrong, good or bad by standard that applies to all
people all the time.
All ethical standards regarded as relative and
dependant on the individual and society holding it
Is moral theory and justifies actions
Basic premise ethical beliefs and standards are
different for diff societies and people
Theory propounds that principles are not universal
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2. cultural relativism

Widespread form of relativism

All human being are themselves are
Standards by which their action
Should be judged

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Claims that morality is relative to

particular society, culture or
communities
Cultural relativism tells us to
understand a culture but not to judge
it

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Approaches to business ethics

Teleological theories:

a. Theory of utilitarianism: Jeremy Benthem

john s. Mill
b. Kantian ethical theory:

Greek word teleos- the end

Rightness and wrongness on the end of action
If end of action is balance good and evil then it is right
action

duty as representative of deontological

approach

1. Egoism:

Claims that the criteria for the rightness and wrongness of

the action is the amount of good produced for the agent
The egoist judges the action on the production of amount
of good over evil
1. Theory of hedonism:
Claims good is pleasure and bad lack of pleasure

2. The perfection theory:

Claims good as perfection, more perfection more good

Egoism based on the concept of self interest

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c. Equalitarianism: John Rawls

d. Libertarianism: Robert Nosik
e. Virtue theory: Aristotle

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Utilitarianism
by Jeremy Benthem & J.S. Mill

Deontological
theories:

the amount of good brought into being

must be for the greatest possible number
of people

Claims are on duty,

Wrong and right
depends on rules and
principles
Rules and regulation
depends on
experiments,
observations, not on
theory

Mills principle : pleasure to happiness, pain

unhappiness
(people desire pleasure and avoid unhappiness)

e.g. intellectual pleasure are higher than

sensual pleasure
pin ball game AND writing poetry
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Deontological
theories

Act deontological
( act as criteria for
Rightness)

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Rule deontological
(universal
Standards of
Rights- rules of laws
Applicable to
Rational beings)
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Kants ethical theory

immanuel Kant- 1724-1804
famous treatise- foundations of the metaphysics of of ethics

Argues ethics as branch of rational knowledge

Foundation of morality on the feeling of pleasure and
pain
Holds that- rightness of action is discoverable in non
empirical way ( obligation)
Unqualified good is goodwill, IS right as it comes from
self love
Kant dismisses utilitarianism, relativism, egoism , they
do not have unconditional love
Moral obligation has nothing to do with the
consequences
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ACT ACCORDING TO THAT MAXIM BY WHICH YOU

CAN IMPROVE AND THAT BECOMES THE UNIVERAL
LAW

Tell how men ought to act and not how to act

Ought is priori, universal and necessary
Binding for all rational beings

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CONCEPT OF RIGHT:

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Metaethics:

Right play important role in business

Both employee and employer have rights
Beyond business- over abortion, use of life support
system medical care, discrimination
Rights can be understood as entitlements
KINDS OF RIGHTS:
Legal and moral rights
Specific and general rights
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Categorical imperative

Deals issues and problems diff than normative

ethics
It clarifies ethical terms used in theories
Not concerned with norms and standards

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Ethical and value system

suggested to the managers

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Some value systems for managers:

1. Eternal law: ( thomas jeferson)
common set of moral standards are apparent in society
Certain truths are self evident
Golden rule: do unto others as you would have others do unto
you
2. utilitarianism:
arises from teleological theories
stresses the outcome and not intent of action
3. universalism:
arises from deontological theory
Ethics of decision making depends on motives or intention of
decision maker

Forewords universal recognition that we are responsible

for other members of the society to form
standard of moral behaviour.
This leads to ethical value system
But such value systems may not be standard

4. Distributive justice: by john rawls

all rules and laws must be necessarily just
Justice is outcome of ethical process of decision making
Managers should distribute justice equally
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Stages of ethical consciousness in

business
Law of jungle
Anything for profit
Profit maximisation in short term
Profit maximisation in long term
Stakeholders concept
Corporate citizenship

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Percentage of
respondents

Poor quality of goods and services

55%

Misuse of confidential information

71%

Insider trading

48%

Receiving gifts or favours

48%

Promoting conflicting self business interests

47%

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3 basic roles:
Agent acting on behalf of principle / employer
Performing obedience
Loyalty

Trustees for various corporate constituencies

Fiduciary duty to advance the interest of the stakeholders

Partners with govt officials to observe law

Responsibility to respect and honour the law

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Topics for project report and

presentation

Ethics and law

Note: this exercise will carry 30 mark (internal)

6th session will be deadline for submission followed by presentations
the content of the project must contain contemporary or real example

Law: a formal set of rules and standards that is associated with

significant legitimate power and authority in society.
law is obedience to enforceable

Topics:

Ethics is less formal sometimes not written down rules

ethics is obedience to unenforceable

Good men need no law and bad men are not made
better by them
(statement connotes morality is always higher than law)
in fact, it is believed that the best regulation is self regulation, but
the simple facts of business life show that this ideal situation
does not always prevail.; Milton Friedman
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Managerial role and ethics

Areas of ethical violation

Area

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1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.

Environmental ethics
Ethical issues in strategic management
Ethical issues in functional area of business
Insider trading and ethics
Corporate governance- role and responsibility of directors
Whistle blowing
Trusteeship management: focus on values, ethics &morality
Good governance: an example
Scams: an example
Ethics and environment
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Alternative Courses of Action

Available in Ethical Situations
ACTIONS
NOT THINK

ABOUT IT

GO ALONG & GET

ALONG

PROTEST

ADVANTAGES

Alternative Courses of Action

Available in Ethical Situations

DISADVANTAGES

Avoids the danger of

getting into a zero-sum
game with colleagues

The risk of going in the

wrong direction

Same as not think

about it

Same as not to think

about it
Individuals slowly
conform maybe to the
wrong direction

Individual feels good

about making effort to
stop unethical
behavior

SECRETLY BLOW

THE WHISTLE

PUBLICLY BLOW

THE WHISTLE

SECRETLY

THREATEN TO
BLOW THE WHISTLE

ADVANTAGES

OBJECT

LEAVE

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Alternative Courses of Action

Available in Ethical Situations
DISADVANTAGES

Can be very effective

If whistle-blower
remains secret,
retaliation cannot
occur

- Feelings of cowardice
- Creation of atmosphere of
mistrust
- What will whistle-blower do
if confronted by firm - tell the
truth or lie?

Can be effective
Whistle-blower may
be treated as a hero
by many

- Organization may attack the

whistle-blower
- It is difficult to interact with
those one is criticizing
- It may be difficult to work
with those who hold a
grudge

Can be very effective

When it works,
organization is not
hurt by bad publicity
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- Does not permit dialogue

between upper&lower
managers
- Might prevent injured
93
consumers or clients from
receiving remedies

ADVANTAGES

CONSCIENTIOUSLY

Organization disregards
protest & punishes
protester

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ACTIONS

ACTIONS

DISADVANTAGES

Makes clear statement

that one person feels
that action is unethical
Person feels good
about self for making
effort to stop unethical
behavior

Few organizations
recognize individual
rights to object

Signals that
organization will lose
good people if unethical
behavior continues
Person who leaves may
join a competitor, feels
better because he/she
did not cooperate with
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unethical behavior

Most people are

replaceable and if
replacement
cooperates with
unethical behavior,
what is gained?

May hurt chances for

rewards and
advancement

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Alternative Courses of Action

Available in Ethical Situations
ACTIONS
SABOTAGE

ADVANTAGES
Can be effective
Identity of saboteur
might be protected

DISADVANTAGES
Sabotage is not dialogue
Retaliation might occur
against the saboteur or
against others
Innocent people may be
fired

NEGOTIATE

Individual action may

lead to small-group
consensus that will be
more effective than
individual action
Win-win solutions are
possible

Does not work well in

situations that are zero-sum,
lose-win, in nature
Individual who perceives
ethical problem may not
know how to negotiate, my
lose cool

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SELECTED PRINCIPLES OF
ETHICAL CONDUCT

SELECTED PRINCIPLES OF
ETHICAL CONDUCT

KANTS CATEGORICAL IMPERATIVE: Act in a

way that you believe is right and just for any other
person in a similar situation.

THE HEDONISTIC ETHIC: Do whatever you find to be

in your own self-interest

CARRS CONVENTIONALIST ETHIC: Bluff and

take advantage of all legal opportunities and
widespread practices and customs
THE DISCLOSURE RULE: Ask how it would feel to
see the thinking and details of the decision
disclosed to a wide audience
THE GOLDEN RULE: Look at the problem from
the position of another party affected by the
decision and try to determine what response the
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other person would expect

MOORES INTUITION ETHIC: Go with your gut

feeling or what you understand to be right in a given
situation
SMITHS MARKET ETHIC: Take selfish actions and be
motivated by personal gains in business dealings
MACHIAVELLIS MEANS-END ETHIC: Ask whether
some overall good justifies any moral transgression
NIETZSCHE/MARX MIGHT-EQUALS-RIGHT ETHIC:
Seize what advantage you are strong enough to use
without respect to ordinary social conventions and
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laws

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SELECTED PRINCIPLES OF
ETHICAL CONDUCT
THE ORGANIZATION ETHIC: Ask whether actions
are consistent with organizational goals and do what
is good for the organization
GARRETTS PRINCIPLE OF PROPORTIONALITY: Do
whatever you will if there is a proportional reason for
doing so
THE PROTESTANT ETHIC: Do only that which can
be explained before a committee of your peers
THE REVELATION ETHIC: Pray, mediate, or
otherwise commune with a superior force or being

MORAL TYPES

1. Make physical pleasures the supreme goal in

their lives.
KEY QUESTION: Which course of action will
yield the greatest pleasure?

Profit-

2. Goal of making as much money as possible

KEY QUESTION: which course of action will
make the most money?
All their feelings and associations can be
melted down to dollars

maximizer

Socialite

BENTHAM / MILLS UTILITARIAN ETHIC: Determine

whether the harm in an action is outweighed by the
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good

MORAL TYPES
Politician

Self-

actualizer

Craftsman

DESCRIPTORS
4. Life centers around power and glory.
KEY QUESTION: Which course of action will
increase my power and glory?
These people have enormous egos, boundless
ambitions, and undertake reckless actions.
5. Spiritual values predominate
KEY QUESTION: which course of action will
help me become a better person?
These people have new insights, reform old
ways, initiate new ways of thinking, strike out
on new paths
6. A technician
POSITIVES: Creative, knowledgeable,
independent, self-reliant, hardworking
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NEGATIVES:
Sadistic, forceful, manipulative,
non-trustworthy

Models of Personal and

Organizational Moral Development
PERSONAL MORAL

PERSONAL
MORAL
DEVELOPMENT
DEVELOPMENT
1. Physical consequences
determine moral
behavior. Avoidance of
punishment and
deference to power are
typical of this stage
2. Individual pleasure
needs are the primary
concern and dictate
attitudes toward
behavior

ORGANIZATIONAL MORAL

ORGANIZATIONAL
MORAL
DEVELOPMENT
DEVELOPMENT
1. Social Darwinism - Fear of
extinction and the urgency
of financial survival dictate
moral conduct. The direct
use of force is the
acceptable norm.

2. Machiavellianism Organizational gain guides

actions. Successfully
attaining goals justifies the
use of any effective means,
including individual 101
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manipulation

DESCRIPTORS

Hedontist

MORAL TYPES
Company

person

Gamesman

3. A social butterfly, a party animal

KEY QUESTION: Which course of action will
help me best get along with the group?
If you want to know what this person thinks,
find out who
spoke to him or her most 98
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recently

DESCRIPTORS
7. Main goal in life to belong to an organization
POSITIVES: Service oriented, loyal,
responsible, humble, sensitive to the needs
of others, dependable, pleasant, trustworthy
NEGATIVES: Fear, worry, dependency,
lacking vision, risk aversive, low drive,
indecisive, change resistant
8. Dominant goal in life to gain prestige, glory,
fame
POSITIVES: Inventive, flexible, change
oriented, competitive, team player,
independent, risk taker, impartial, high
energy, idealistic
NEGATIVES:
Lack of conviction, rebellious,
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manipulative, lack of intimacy, lonely

Models of Personal and

Organizational Moral Development
PERSONAL MORAL

ORGANIZATIONAL MORAL

PERSONAL
MORAL
DEVELOPMENT
DEVELOPMENT
ORGANIZATIONAL
MORAL
DEVELOPMENT
DEVELOPMENT
3. The approval of others 3. Cultural conformity - A
tradition of standard
determines behavior.
operating procedures and
The good person is one
caring groups. Peer
who satisfies family,
professional pressure to
friends, associates.
adhere to social norms
dictates what is the right and
wrong behavior
4. Compliance with
Allegiance to authorityauthority, upholding of
Directions from legal authority
the social order, and
determine moral standards.
Right and wrong are based on
doing ones duty are
the decisions of those with
primary concerns
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legitimate hierarchical power

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Models of Personal and

Organizational Moral Development
PERSONAL MORAL
ORGANIZATIONAL MORAL
DEVELOPMENT
DEVELOPMENT
PERSONAL
MORAL
ORGANIZATIONAL
MORAL

DEVELOPMENT
DEVELOPMENT
5. Tolerance for rational
5. Democratic participation Participation in decision-making
dissent and acceptance
reliance on majority rule become
of majority rule become
organizational moral standards.
primary ethical concerns Participative management

Corporate values and ethics

pranjal Bezborah

Values means worth, merit usefulness

Denotes the motive and basis for choosing a
course of action
Despite culture religious diversity exists some
values
Loyalty, gratitude, humility, patience,

becomes institutionalized

6. What is right and good is

a matter of individual
conscience and
responsibly chosen
commitment. Morality is
based on principled
personal convictions

integrity, honesty, forgiveness

Organizational integrityJustice and individual rights

are the moral ideals. Balanced
judgment between competing
interests shapes organizational
character which, in turn,
determines the validity of the
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Three basic areas of managerial

decision making

Theories on corporate ethics

1. Choice about law

Major groups:

1. What it should be?

2. Whether or not to obey it?

2. Choice about economic and social

issues beyond domain of law
1. Called as grey areas or people values

3. Choice between self interest and interest

of company
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based on the consequences of managerial

decision making
Teleological theories
Deontological theories
System development ethics
Virtue ethical theories

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Theories of managerial ethics

flexibility
Virtue ethics theories

Virtue ethics theories

Deontological concept:
Concerned with duty
Derived from greek word deontos duty & obligation
Focus is duty & obligation rather than on consequences of action

Teleological concept:
Human relations
theory

Open system
theory

Internal process
theory

Rational goal
theory

internal

Focus on the consequences of action

Greatest good of greatest number
external

Utilitarian concept is teleological

Praxis or system development:

Concept- if decision maker can discuss the decision openly with his
peers then it is ethical

Virtue theory:
Teleological ethics
theories

deontological ethics
theories

control
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Aristotle idea of virtue

Studying the living of heroic persons & following their footsteps

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Ethical formalism :
Individual-organization ethics matrix:
INDIVIDUALS VIEW

ORGANISATIONS
VIEW

COSEQUENCES /
SOLUTION

Unethical practice
not ok

Unethical practice
not ok

Ethical synergy

Unethical practice
ok

Unethical practice
not ok

Whistle blowing

Unethical practice
not ok

Unethical practice
ok

Moral correction/ exit

Unethical practice
not ok

Unethical practice
not ok

Public interest
litigation

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Ethical issues in various corporate

functional areas
Accounting ethics:
Whether and how it is disclosed
Accounting information is asymmetrically
distributed among individuals and groups

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Ethics in Business
Two domains

OVERT approach
External theft
Bribery etc.,

COVERT approach
Internal Merger & Acquisitions.
Insider Trading.

Ethics
Dilemma.- Pricing, advertising, promotion,
Working condition, customer service,
Work force reduction's ,environment
Community relations, supplier relations.
Important of trust (empathy) maturity in relationship

Religious philosophies
Bhagvat gita : the unreal has no existence, and
the real never seizes to be.
Religion- one of the characteristics of man his activities

sprouted out of his mind in response to his

needs ( external and internal )
Definition contains- super human, belief and practice

rituals and rites

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Hinduism
Purush sukta of regveda refers to the origin of chaturverna
So vernashram dharma was earlier effort at social
organisation
The ashrama system is later development
Ashrama means making an effort

Morals from vedas:

Hinduism extremely rich, many faceted religion
Earlier text Rig veda ( 2000-1500 BC)
Contains collection of ceremonial hymes to gods
Agni- god of fire
Varuna- god of sea and air
Indra- god of thunderbolt, sun, moon

Dominance of yagas and yadnya

With ritualism, doctrine of four varnas and four
ashramas began to shape
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Brahmacherya- the period of self control

Grahastha- married life
Vanprashta- stage of progressive retirement
Sanyas- abondoning truth and falsehood, pain,
pleasure

This is guide to high standard of living

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The other activities of dharma ( to gain or

pursue pleasure)
Artha: objective of material gain
Karma: refers to love or pleasure
Moksha: liberating oneself from the worldly
life

The consideration of rightness, duty and virtue is

considered as dharma
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Upanishadhas: ( 600- 400 BC)

Vedas are in 2 parts

1. That articulates the religious and ritualistic aspects
2. That leads to its spiritual significance
( 2nd id is known as vedanta or upanishadhas)

Upanishadha means sitting before teacher, who

impart doctrine
118 upanishadhas
2 concepts by upnishadhas

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brahman

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Upanishadhas opened the new world of thought

and action

Maya- the material world as illusion

Karma action
Mukti- final deliverance
Emphasis in upanishad is on jana kanda i.e
gaining true knowledge
It opposes the sacrificial practices, rituals and
ceremonies
According to it these are aimless
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Atman

Upanishadha focus on salvation, to be achieved by

realisation of atman and brahman are one and
same

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Upanishadhas expound and explain the

concept of
1.
2.
3.

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Knowledge of self and absolute self

Paying attention to individual self
Self realisation peep into the absolute self
Acquire calm, composure, self control and harmony

Brahman is described as
Universal essence
Incomprehensive
Unattached

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the world soul

imperishable
unfettered

The inner soul within all things is described as part of

the universal soul
THAT ART THOU- the complete identity of individual
soul with the world soul
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Two great epics:

Taittetrya upanishadha

The ramayana
The mahabharata

General code of conduct

speak the truth practice virtue what so ever
thou givest give with faith, with grace, with
modesty, with respect, and with sympathy

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Nursed the soul of Indians for past

3000 years

The poetic literature ( adhikaya) composed by

Vlamiki
Love story, love between father and son, brothers,
ruler and ruled
Rama shows how to evaluate the right code of
conducts
Rama righteous person, great preacher, spoke
wise
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The bhagvad gita:

The mahabharata

122

the song of god (5 century BC)

Small part of mahabharta

Bhagvatism- doctrine tought by lord krishna
Message to Arjuna, trusted friend in middle of battle

Composed by sage Vyas

Real phenomenon society undergo
Shanti parva ( 1400 verses)
Anusaan parva (8000 verses)
Richest from ethical point of view
Emphasis is on the supremacy of dharma

Running away from ones obligations and duties from

problems and challenges facing him is a great coward and is
great sin.
Is worthy of ridicule and shame
This is bhakti theism
Theme: you have right to work but for the work sake only, you
have no rights to fruits of work
Disire for the fruit of work must never be your motive at work
Perform every action with your heart fixed on the supreme lord

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Emphasis is life is game play it

pande
There is nothing to be anil
achieved
except the game itself

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Mahavira and jainism

Interpretations of bhagvat gita:
Yagna: not animal sacrifice but the pursuit of all
activities of life in the spirit of sacrifice
Karma: not ritualistic action but all human actions
having moral and spiritual values
Varna: not based on birth but based on guna
Karma: moral activities

Dharma by gita is duty imposed by ones

ideals of life ( swadharma)
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The legendry founder rishabha

1st tirthkar invented cooking, writing, pottery, painting,
sculpture,institution of marriage and seremonies for dead
All the tirthkars were kshatriyas
22nd tirthkar arishanemi- was son of ashvasena of varanasi
and cousin of krishna
Parshva propounded non-injury ( Ahinsa)
3 vows :
1. Truthfulness
2. Not to steal
3. Freedom from possession

mahavira born in kundapura, vaishali

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Jainism:
Universe is divided in two
Alive ( Jiva)
Soul caught by:
Karma- action in sansara
Mukta- liberated
Sidda- perfected
Non living (Ajiva)
Eternal atoms in time and space which can be moved and
stopped

Jiva leads to sense objects (bandhas) by karma and results

in succession of births
Vrtue- punya

5 vows of jainism:
1.
2.
3.
4.
5.

Non voilence
Truthfulness
Non-stealing
Chastity( renunciation of sensual pleasures)
Non-possession

Three gems of jainism:

Vice pap
based on karma
Samvara- soul prevents karma by watchfulness and self
discipline of mind , speech, and body
Niranjana- moksha

Each individual determines

its complete destiny, jainism
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have doctrine of individual
responsibility

Right attitude
Right knowledge
Right conduct
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Buddhism

Trishna: the desire of life

Formed 6th century BC reformation of hinduism

Founder Sidhartha Gautama
His salvatio is based on the inevitability of sorrow.
Came across 4 noble truths

One should have freedom from it

Freedom from the cycle of birth and death (nirvana)
Moksha cannot be achieved by mere prayer, sacrifice, chanting
hymes, and self mortification
He advocated yhe m,iddle path for cessation of pain (eight fold
path)

Existence entails sufferings

Suffering is caused by self craving
Self craving can be destroyed
It can be destroyed by eight fold path (astang marg)
1.
2.
3.
4.

Right understanding
Right purpose
Right speech
Right conduct

5. Right vocation
6. Right efforts
7. Alertness
8. concentration

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Sufferings are caused by craving

Episemologically- blind desire is illusonary objects
The cause is ignorance and cure is knowledge
He demanded comlete submission in Buddha, dhamma and his
sangha
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( the buddhist trinity )

The spiritual basis

Schools of buddhism:

Religion and spirituality:

Buddhas 4 cardinal
virtues:
1. Love 3. joy
2. Piety

Principles to be followed areAimsa

Karma
Rebirth

It is diff from religiosity or religiousness

Spirituality is universality and non-divisive

First split

Katzs, Dosley, Edmound- god may be interpreted as an ultimate,

reffering to reality which is universally applicable to whole world for all
time

4. serenity

Zen Buddhism
Rinziroku- 100 years
old
To discover nature
within oneself
Dharma is law of heart
Zen methods employed

mahayana

Madhyamika
( India , China )

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There is an order to the universe, that order is gods

law- ultimate reality
Spirituality is-

hinayana

Yogalara
Theravad
Sthavivadi
(shrilanka, siam
, burma, kampucia)

131

Ultimate values, love for men, justice in all dealings

In every business situations and conflict, striving for divergent
values
Obligation to seek and respect the ideas of others
Man should possess the complete faith in omniscience of
creator and existence of order in universe
Recognition of spiritualanilsignificance
in mans work
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Emphasis of spirituality is on love and justice to all

people and concern for others

It impliesMans mastery over physical environment is true victory

Relationship between man is in terms of order
Humanity- rising above self for common good
Provides strong basis for ethical behaviour
Justice and fairness automatically manifest
One deals with other on the basis of love and concern for each
other
There is no basis for exploitation, discrimination and cheating,
substandard products will not be sold, mistakes will be avoided

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Helps retain faith in the performance of duty

Benefits are happiness and peace of mind, no sense of guilt
Strengthening and focusing ones mind
some are in quest of wealth, for them money is value. Some want
power, for them power is value. Value is that which out forth our
efforts. This value determines the texture and quality of thoughts
Life is facing challenges, the world is full of challenges. If you do not
face them, the problems will come and crush you. Face them
intelligently, and that depends on the values your mind cherish
Hatred, jealousy, greed, passion, lust negative values, you will be
spending time in facing problems

it is law of universe that the shrestha purusha, whatever

he does, the others automatically follows.

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Trusteeship
Trusteeship is a Gandhian concept

All assets be held and used in trust for the benefit of the community
Distribution to be equitable, not equal
Owner, manager, worker, subordinate titles to be removed
There be no use of compulsion, force or exploitation
There be continuous participation
Concept was founded on non-voilence
He thought the idea of ownership is the root for voilence
People can come together if they rise above conflict of interest, envy and
cometition
Trusteeship seen as the means to bring people together

if one has come by a fair amount of wealth, either by the way of

legacy or by means of trade and industry, he must know that all that
wealth does not belong to him
What belongs to him is a right to an honourable livelihood
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Gandhiji advocates- all life as trust and all powers

with it are obligations
2nd oct 1977- J.R.D.TATA on trusteeship:
it did not focus on the matters of immediate concern for the
distributive justice, socialisation, land reforms, ownership of shares,
labour relations, handing over wealth to nation for common good.
Trusteeship is a way of life, making you whatever you do, for the
good of others or even of all.
Trusteeship is similar to the belief in religion, or philosophy, manifesting
in ares like lowering the prices through efficiency and technology,
avoidance of adulteration, devoting the shre of profits, providing
employment tot rurals, transfering skill and technology
anil pande

The concept of trusteeship according to mahabharata:

vidura is the embodiment of all the proper principles.
when dhritrashtra asks vidura for advice, on his son
duryodhanas argument that the throne would indeed
occupied by dhithrashtra but for his blindness, and
should therefore be passed on to son an heir
duryodhana.
Viduras reply is that son inherit only what belongs to
father. The kingdom belongs to king. The king has duty
and responsibility of looking after the welfare of kingdom
and subjects.

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Trusteeship centers around :

Accountability of individuals to others
Making individuals aware of his dependence on others
In Indian family- sharing and accountability is inculcated in various ways
( elders are generous and sacrificing for younger)
Trusteeship is rooted around trust
Trust is bond between individuals
It adds security, dependence, share feelings, faith, integrity, doing right
things, conviction, confidence, openness, consistency, predictability and
faith

What applies to individual should aply to the

corporations too
Ex- mahila udyog lijjat papad
Dairy cooperatives
Tata sold TOMCO to HLL
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