Business Ethics

H A Mazumdar
 Understanding of business
ethics
Concerned with Moral issues
Business ethics in
ethics
Similar to
Morality
Concerned with of medical
Medical ethics
Practices and
Policies
or

Concerned with Morality of

Political ethics
political affairs
 Ethical Objectives
Study of human behavior:
Makes evaluative assessment about that as moral
or immoral (a diagnostic goal)

Establishes moral standards / norms of behavior

Makes judgment upon human behavior

Ethical objectives based on these standards and norms

Prescribes moral behavior; makes recommendations

about how to or how not to behave (therapeutic goal)

Express an opinion or attitude about human

conduct in general
 Nature of ethics—4 Points
Deals Deals with human beings
with As they have : freedom of choice , free wi
Voluntary Distinguish bet good and evil, right
human
conduct and wrong, just and proper
Values and moral conduct.

Science
Of
Ethics Nature
(normative of Concept
science) ethics of
ethics

Judge the values of

the facts in terms of
the ideal situation Study A set of systematic knowledge
Ethics is concerned of about the behavior and conduct.
with what ought to be ethics It is the field of social science
 6 Primary sources of
Ethics
• Genetic inheritance
• Religion
• Philosophical systems
• Codes of conduct
• Legal system
• Cultural experience
 Model of Ethics

• Ethical guidance sources leads to :

• Our belief of what is right or wrong
• ( Type 1 ethics )
• Determines
• Our Actions
• ( Type II ethics )
 Type I and II Ethics
• Type I :the strength of relationship
between what an individual or an
organization believes to be moral and
correct and what available sources of
guidance suggest is morally correct .
• Type II is the strength of the relationship
between what one believes and how one
behaves. It is agreed upon that to do what
one considers wrong is unethical.
 Business and Ethics
relationship
• The Separatist view :
– classical economists like Adam Smith
and Milton Friedman believed that the
only motive of business was profit and
hence business had no right to meddle
with ethics.
• Medieval and pre-medieval
period
– the churches decided to regulate the
moral functioning of the business.
• Unitarian view
– opines that business is the subject of the
 Business and Ethics
relationship
• The Integration view
– Talcott Parsons founder of the
integrated view stated that neither was
business an extension of morality and
ethics nor can business keep itself
absolutely aloof from the ethical
practices of society wherein it exists and
operates
• Theodre Levitt
– believed that if ethics and morality were
allowed to enter the realms of business
then there is a danger of business
values ultimately dominating over social
 Types of Ethics
• Transactional ethics
– e.g. a vendor from whom we buy or sell in
order to survive and is of mutual
dependence.
• Participatory ethics
– is voluntary and for the benefit of the society
and individual and or both.
– e.g. project taken up as a cause
• Recognitional ethics
– This domain covers a large part of traditional
ethical interventions.
– e.g. retirement age 58-60 yrs.
 Characteristics of an
ethical decision
Right-
morally
Correct and Equitable-
due Just and
equal

Nature
Just- of
justice ethics
Done & seen Good-
also Highest
All
concerned

Proper Right-
Appropriate Honest
& &
acceptable due
 FACTORS INFLUENCING
BUSINESS ETHICS
Indivdual
Corporate Character-
culture istics

Nature
of
ethics

Leadership

Strategy
Environment And
Performance
 Scope of business ethics

• Employees
• Shareholders
• Financial institutions
• Government
• Personal policy level
• Societal level
• Internal level
 Kohlberg’s Model

• Preconventional level-level 1
• Stage 1
• Obey rules to avoid punishment
• Stage 2
• Follow the rules only if in own
interest
• Let others also do the same
• Conform to secure rewards
 Kohlberg’s Model

• Conventional level-level 2 Stage 3

• Conform to meet expectations of
others, please others, adhere to the
stereotypical images
• Stage 4
• Doing right is one’s duty, obey the
law ,uphold the social contract and
order
 Kohlberg’s Model
• Post Conventional level-level 3 Stage
5
• Current laws and values are relative
laws and duty are obeyed on rational
calculations to serve the greatest no.
• Stage 6
• Follows self chosen universal ethical
principles . In events of conflicts
principles override laws.
 5 Myths about Ethics

• Ethics are a personal individual affair

& not a public debatable one
• Business and ethics do not mix
• Ethics in business is relative
• Good business means good ethics
• Information and computing are
Amoral
 Business Ethics taught and
trained?
• Provide people with ideas,rationales to help in
ethical decision making process
• Helping people in selecting ethical priorities from
the environments.
• Enable employees to act as alarm systemfor co.
practices that do not meet the society’s ethical
standards
• Increase sensitiveness to moral issues,
commitment to moral solutions,moral
reflectiveness and moral courage
• Create climate to provide ethical codes and do
social audits in the company
 Business Ethics taught and
trained?
• Find a match between employees’
and employers’ values
• Managing a push-back point wherein
the employee’s values are being
tested by the peers, subordinates
and superiors
• Handling an ethical directive from
the boss
• Coping with performance systems
that cuts ethical corners.