Business Ethics Modified

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Business Ethics

This session will discuss:

What is Ethical Science?

Basic sources of ethical values.

How corporations manage ethics and try to

elevate behavior?


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What is Ethical Science?

Ethics is the science of conduct or

sadaachaara

Ethics is the study of what is right or

good in conduct

Ethical science shows the way in which

human beings behave towards each

other as well as towards other creatures

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Ethical Science (contd)

Ethics is a relative science- what is good

for one, may not be good for another.

Even, what is good at one time may not

be good at another time and at anotherplace. Ethics is relative to the man

himself and to his surroundings.

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Practice of ethics will help you to live in

harmony with your neighbours, friends,

family, society and with the environment.

It will keep your conscience clean.

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One must have bhava-suddhi or

purification of the motive. Act done with

pure motive only will be conducive to

morality. There must be an internalsankalpa or resolution or attitude of will,

to be free from an impure feelings.

Do as you would be done by

do untoothers, as you wish others do unto you

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Character

Character is the essence of a person.

The sum total of her/his virtues or traits

forms her/his character.

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Conduct

Conduct is personal behaviours or

deportment. Character expresses itself

as conduct. Conducts reveals the

character of the man. It moulds thecharacter also. Conduct is the outer

expression of character. Character is

expressed in conduct. They act uponeach other. Character is the inner side

of conduct.

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Behavior

Behavior is the conduct of the person

upon particular occasions. It is the day-

to-day conduct of men/women, at work

at any given time, play, alone, incompany, at home/hostel/school, office

or outside etc. The external behavior is

not always a sure guide in judging onescharacter. In fact humans are very

complex and mysterious beings and

very difficult to predict.

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What are Business Ethics?

Business ethics is the study of good and evil, right andwrong, and just and unjust actions in business.

Although all managers face difficult ethical conflicts,applying clear guidelines resolves the vast majority ofthem.

Ethical traditions that apply to business support truth telling,honesty, protection of life, respect for rights, fairness, andobedience to law.

Eliminating unethical behavior may be difficult, but knowingthe rightness or wrongness of actions is usually easy.

Some ethical decisions are troublesome because althoughbasic ethical standards apply, conflicts between them defyresolution.

Some ethical issues are hidden and hard to recognize.

Some ethical issues are very subtle.

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Major Sources of Ethical Values in

Business

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Religion

The great religions converge in the belief that adivine will reveals the nature of right and wrong

behavior in all areas of life, including business.

Christian managers often seek guidance in the

Bible. Managers believe in Hinduism are influenced by

their religious scriptures like Upanishads, Puranas

etc.

In Islam the Koran is a source of ethicalinspiration.

In the Jewish tradition, managers can turn to

rabbinic moral commentary in the Talmud and the

books of Moses in the Torah. 12


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Philosophy

Even after two millennia, there remains

considerable dispute among ethical thinkers about

the nature of right action.

Greek ethics

Socrates asserted that virtue and ethical behavior were

associated with wisdom and taught that insight into life

would naturally lead to right conduct.

Plato carried this doctrine of virtue as knowledge further

by elaborating the theory that absolute justice exists

independently of individuals and that its nature can be

discovered by intellectual effort.

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Philosophy (continued)

Aristotle spelled out virtues of character in theNicomachean Ethics and advocated a regimen ofcontinuous learning to improve ethical behavior.

Epictetus taught that virtue was found solely

within and should be valued for its own sake,arguing that this inner virtue was a higher rewardthan external riches or worldly success.

The great Catholic theologians St. Augustineand St. Thomas Aquinas both believed that

humanity should follow Gods will; correctbehavior in business and in all worldly activitywas necessary to achieve salvation and life afterdeath.

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Philosophy (continued)

Secular philosophers such as Baruch Spinozatried to demonstrate ethical principles with logicalanalysis rather than ordain them by reference toGods will.

Immanuel Kant tried to find universal andobjective ethical rules in logic.

Jeremy Bentham developed the idea ofutilitarianism as a guide to ethics, validating twodominant ideologies: democracy and industrialism.

John Locke developed and refined doctrines ofhuman rights and left an ethical legacy supportingbelief in the inalienable rights of human beings.

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The Realist School

of Ethics The realists believed that both good and evil were naturally

present in human nature; human behavior would inevitably

reflect this mixture.

Niccol Machiavelli argued that important ends justified

expedient means.

Herbert Spencersupported a harsh ethic that justified

vicious competition among companies because it furthered

evolution.

Friedrich Nietzschesaid that nice ethics were

prescriptions of the timid, designed to fetter the actions ofgreat men whose irresistible power and will were regarded

as dangerous by ordinary mortals.

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Cultural Experience

Every culture transmits between

generations a set of traditional values,

rules, and standards that define

acceptable behavior. Civilization is a cumulative cultural

experience consisting of three stages:

Hunting and gathering stageAgricultural stage

Industrial stage

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Ethical Variation

in Cultures Ethical values differ among nations as historical experiences

have interacted with philosophies and religions to create

diverging cultural values and laws.

The school ofethical universalism holds that in terms of

biological and psychological needs, human nature is

everywhere the same.

The school ofethical relativism holds that although human

biology is everywhere similar, cultural experience creates

widely diverging values, including ethical values.

Because of globalization, corporations struggle with thequestion of how to apply conduct codes across cultures.

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Law

Laws codify, or formalize, ethical

expectations.

Corporations and their managers face a

range of mechanisms set up to:

Deter illegal acts

Punish offenses

Rehabilitate offenders

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Damages

In civil cases courts may assess damages, or

payments for harm done to others by a corporation.

Compensatory damages are payments awarded to

redress concrete losses suffered by injured parties.

Punitive damages are payments in excess of awronged partys actual losses, awarded to deter

similar actions and punish a corporation.

Since the purpose of punitive damages is to punish

and deter misconduct, they must be large enough tocause pain, yet they raise many questions about

fairness.

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Criminal Prosecution of Managers and

Corporations

Managers may be prosecuted for criminal

actions undertaken in the course of their

employment.

Corporations are criminally liable forcorrupt actions or omissions of managers if

those actions are intended to benefit the

corporation.

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Factors That Influence Managerial

Ethics

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Leadership

The example of company leaders is

perhaps the strongest influence on

integrity.

A common failing is for managers toshow by their actions that ethical duties

can be compromised.

If the leader does something, anopportunistic employee can rationalize

his or her entitlement to do it also.

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Strategies and Policies

A critical function of managers is to create

strong competitive strategies that enable

the company to meet financial goals

without encouraging ethicalcompromise.

Unrealistic performance goals can

pressure those who must make them work.

Reward and compensation systems can

expose employees to ethical compromises.

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Corporate Culture

Corporate culture refers to any set of

values, norms, rituals, formal rules, and

physical artifacts that exists in a company.

Three levels of corporate culture:Artifacts

Espoused values

Tacit underlying values

Often inconsistencies are observed

between the levels.

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How Corporations Manage

Ethics

Establish standards and procedures.

Create high-level oversight.

Screen out criminals.

Communicate standards to employees.

Monitor and set up an anonymous hotline.

Enforce standards, discipline violators.

Assess areas of risk, modify the program.

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Concluding Observations

The business environment is rich in sourcesof ethical values. Yet strong forces in bothmarkets and corporations act to depressbehavior.

Managers can use a range of methods todiscourage transgression and encouragehigh ethics.

Individuals also have a range of principleswith which to enrich their ethical thinking andpowerful methods with which to make ethicaldecisions.

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Business Ethics Modified

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