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Business Ethics

Dr. VK Arora

Before we start (1) Ethics Understanding the Word with History of life in the universe Human Being (what about animals???)

Government Citizen (ancient India Raja - Praja) Structure of Government

Discussion in the classroom

Before we start (2)

Business Ethics Importance of the word Operations Logistics Business Environment Marketing Business Law Entrepreneurship Human Resource Finance Corporate Strategy

Before we start (3)

Business Ethics (After Globalization) Environmental System Entrepreneur Entrepreneur Competitors Cooperators Employer Employee Boss Subordinate Employee Peers Focal Suppliers Focal Customer (clients)

Introduction Moral and Ethics

Ethics involves the study of moral issues and choices

A set of principles prescribing a behavioral code that explains what is good and right or bad and wrong; ethics may outline moral duty and obligations. Provide the basic rules or parameters for conducting any activity in an acceptable manner.

What is morality?

Taken from the Latin word moralitas "manner, character, proper behavior

A doctrine or system of ideas concerned with right (human) conduct

Norms

Values

Beliefs

Morality

Norms Standard (Pattern;; default expectation) Values Principles (Judgment;; what is important in life) Beliefs Trust (Opinion;; with trust)

Morality

Changes with age and stage But the composition is same 1) Norms 2) Values 3) Beliefs

Norms

Values

Beliefs

Morality

Individual

Community

Right

Wrong

Right

Wrong

Ethics A set of values that describe what is right or wrong, good or bad.
Ethics Definition adapted from UNESCO/ IUBS/ Eubios Bioethics Dictionary: A system of moral principles or standards governing conduct. 1. A system of principles by which human actions and proposals may be judged good or bad, right or wrong; 2. A set of rules or a standard governing the conduct of a particular class of human action or profession; 3. Any set of moral principles or values recognized by a particular religion, belief or philosophy; 4. The principles of right conduct of an individual. Ethical behavior requires the ability to reason, to understand the consequences and to make choices about one s actions. [Latin ethicus or Greek ethikos pertaining to "ethos" or character].

Norms Motive

Values Moral

Belief Ethics

Attitude

Behavior

SUCCESS

Understand the terminology related with ethics

1. Ethical System (system of ethics) being a broad range of cases; should be generalizable. Although generalizable, conflicts will always arise between ethical principles. 2. Ethical problems are linked with ethical and unethical issues. 3. Ethical Principles are the theories to solve ethical problem. 4. Ethical Theories are the application part of the ethics

Individual Vs Group Ethics

Ethics

Individual

Group

Points to remember Individual Ethics are generally personal ethics. Individual Ethics may be right or wrong in one s view. Personal Ethics may vary in a group Group ethics are the collection of individual ethics Image of Group Ethics vary due to its individual components Strong linkage between Individual and Group Ethics

Group Ethics

Unstructured

Structured

Points to remember Unstructured may be formed at any time and situation Unstructured are impulsive and volatile Structured may be referred as Institutional (Institutional Ethics) Both depends upon many factors including culture, civilization etc International diversity play important role in both the ethics

Notes

Important Notes 1. Responsibility for ethical conduct in Business (Global Context) 2. Reasons for Unethical Behavior 3. Two Key Branches of Ethics

Responsibility for ethical conduct in Business (Global Context)

Asia

Top Management

From Top to Bottom

Europe US

Collective Individual

Flows from Group Parallel

Europe Who is responsible Who is the key actor Social Control by the collective Government, Trade Union, Corporate Association Negotiated legal framework of business Social issues in organizing framework of business

US The Individual The Corporation

Asia Top Management Government, Corporations

What are the key guidelines What are the Key issues

Corporate codes of Managerial ethics discretion Misconduct and immorality in single decisions situations Corporate Governance and accountability

What is the dominant stakeholders management approach

Formalized multiple Focus in Implicit multiple stakeholders shareholders value stakeholder approach approach

Reasons for Unethical Behavior

Greed Distinctions between activities at work and activities at home A lack of a foundation in ethics Survival (bottom-line thinking) Reliance on other social institutions to convey and reinforce ethics.

Two Key Branches of Ethics Descriptive ethics involves describing, characterizing and studying morality What is Normative ethics involves supplying and justifying moral systems What should be

Institutional Ethics

Institutional Ethics

Government

Business

Professional

Discussion in the classroom

Government Ethics

Business Ethics

Professional Ethics

Management Ethics

Note: 1. Government - Declaration of Independence 2. Business - The ethics and moral code for a business may be different than that of the government or an individual. 3. Profession - A professional group purporting to represent a profession makes an ethical code. This may again differ from the ethics of an individual.

Government Ethics National Policy and Interest Political Development Political View Development Practices Individuals responsibility and personal interest Dedication towards the citizens Red - tapism and Kickbacks

Professional Ethics

The professional is an expert in a field (e.g., medicine or computing) that the general public may know little about. Customers from the general public rely on the knowledge, expertise, and honesty of the professional. To the extent that a professional advertises expertise, he or she has an obligation to provide it. To the extent that their expertise is required by society, professionals have a responsibility not only to their customers, but to the general public.

Factors influencing Professional Ethics

Honesty

Integrity

Professional Ethics

Fairness

Self-discipline

Respect

Compassion

Business Ethics Ethics involved (governing ) in the conduct of a business Moral code what is right and what is wrong ? Highly subjective nature Public s interest in business ethics increased during the last four decades Public s interest in business ethics spurred by the media

Factors influencing Business Ethics

Technology

Management

Business Ethics

Cultural/ Religion

Political/ Legal

Employee/ Customer

Product/ Services

Management Ethics Why Management Ethics are important Top to Bottom Engine of the Train From Vision Mission Objectives VALUES Important for Brand Strategy

Sources of Ethical Norms

Sources of Ethical Norms


Fellow Workers Fellow Workers Regions of Country

Family The Individual Conscience Friends

Profession

Employer

The Law

Religious Beliefs

Society at Large

Law and Ethics

Friedman s view Law not Ethics Very often it is held that business is not bound by any ethics other than abiding by the law. Milton Friedman is the pioneer of the view. He held that corporations have the obligation to make a profit within the framework of the legal system, nothing more. Friedman made it explicit that the duty of the business leaders is, "to make as much money as possible while conforming to the basic rules of the society, both those embodied in the law and those embodied in ethical custom . Ethics for Friedman is nothing more than abiding by 'customs' and 'laws'. The reduction of ethics to abidance to laws and customs however have drawn serious criticisms.

Discussion in the classroom

Counter to Friedman s View - Ethics not Law Counter to Friedman's logic it is observed that legal procedures are technocratic, bureaucratic, rigid and obligatory where as ethical act is conscientious, voluntary choice beyond normativity. Law is retroactive. Crime precedes law. Law against a crime, to be passed, the crime must have happened. Laws are blind to the crimes undefined in it. Further, as per law, "conduct is not criminal unless forbidden by law which gives advance warning that such conduct is criminal.

Discussion in the Classroom

Law often represents an ethical minimum Ethics often represents a standard that exceeds the legal minimum
Frequent Overlap

Ethics

Law

Law, Economy and Ethics

Slides prepared and presented by

Dr. VK Arora
B.E. (Electronics), MIBM, D. Phil. Subject Domain: Strategic Management and Entrepreneurship

Contact Details: Email: arora_vk@yahoo.com Website: www.manasso.com Phone: + 91 120 2403616, 3115759 Mobile: + 91 9811593059