Business EthicsBusiness Ethics

H A MazumdarH A Mazumdar

Understanding of business Understanding of business ethicsethics

Business ethics

Medical ethics

Political ethics

Moral issues in

ethics

Morality of medical

Practices andPolicies

Morality of political affairs

Concerned with

Concerned with

Concerned with

Similar to

or

Ethical ObjectivesEthical Objectives

Study of human behavior:Makes evaluative assessment about that as moral or immoral (a diagnostic goal)

Ethical objectives

Establishes moral standards / norms of behavior

Makes judgment upon human behavior 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 PointsNature of ethics—4 Points

Voluntary

Judge the values of the facts in terms of the ideal situation Ethics is concerned with what ought to be

Deals with human beingsAs they have : freedom of choice , free willDistinguish bet good and evil, right and wrong, just and properValues and moral conduct.

A set of systematic knowledge about the behavior and conduct.

It is the field of social science

Deals with

human conduct

Concept of

ethics

Study of

ethics

Science Of

Ethics(normative science)

Nature of

ethics

6 Primary sources of 6 Primary sources of EthicsEthics

• Genetic inheritance Genetic inheritance

• ReligionReligion

• Philosophical systemsPhilosophical systems

• Codes of conductCodes of conduct

• Legal systemLegal system

• Cultural experienceCultural experience

Model of EthicsModel of Ethics

• Ethical guidance sources leads to :Ethical guidance sources leads to :

• Our belief of what is right or wrongOur belief of what is right or wrong

• ( Type 1 ethics ) ( Type 1 ethics )

• Determines Determines

• Our ActionsOur Actions

• ( Type II ethics ) ( Type II ethics )

Type I and II EthicsType I and II Ethics

• Type I :the strength of relationship Type I :the strength of relationship between what an individual or an between what an individual or an organization believes to be moral and organization believes to be moral and correct and what available sources of correct and what available sources of guidance suggest is morally correct .guidance suggest is morally correct .

• Type II is the strength of the relationship Type II is the strength of the relationship between what one believes and how one between what one believes and how one behaves. It is agreed upon that to do what behaves. It is agreed upon that to do what one considers wrong is unethical. one considers wrong is unethical.

Business and Ethics Business and Ethics relationshiprelationship

• The Separatist viewThe Separatist view : : – classical economists like Adam Smith and classical economists like Adam Smith and

Milton Friedman believed that the only Milton Friedman believed that the only motive of business was profit and hence motive of business was profit and hence business had no right to meddle with business had no right to meddle with ethics.ethics.

• Medieval and pre-medievalMedieval and pre-medieval period period – the churches decided to regulate the the churches decided to regulate the

moral functioning of the business.moral functioning of the business.

• Unitarian viewUnitarian view – opines that business is the subject of the opines that business is the subject of the

moral structure of the society moral structure of the society

Business and Ethics Business and Ethics relationshiprelationship

• The Integration viewThe Integration view – Talcott Parsons founder of the integrated Talcott Parsons founder of the integrated

view stated that neither was business an view stated that neither was business an extension of morality and ethics nor can extension of morality and ethics nor can business keep itself absolutely aloof from business keep itself absolutely aloof from the ethical practices of society wherein it the ethical practices of society wherein it exists and operatesexists and operates

• Theodre LevittTheodre Levitt – believed that if ethics and morality were believed that if ethics and morality were

allowed to enter the realms of business allowed to enter the realms of business then there is a danger of business values then there is a danger of business values ultimately dominating over social valuesultimately dominating over social values

Types of EthicsTypes of Ethics• Transactional ethicsTransactional ethics

– e.g. a vendor from whom we buy or sell in e.g. a vendor from whom we buy or sell in order to survive and is of mutual order to survive and is of mutual dependence.dependence.

• Participatory ethicsParticipatory ethics – is voluntary and for the benefit of the society is voluntary and for the benefit of the society

and individual and or both.and individual and or both.– e.g. project taken up as a causee.g. project taken up as a cause

• Recognitional ethicsRecognitional ethics – This domain covers a large part of traditional This domain covers a large part of traditional

ethical interventions.ethical interventions.– e.g. retirement age 58-60 yrs. e.g. retirement age 58-60 yrs.

Characteristics of an Characteristics of an ethical decisionethical decision

Right-morally

Correct and due

Equitable-Just andequal

Right-Honest

&due

ProperAppropriate

&acceptable

Nature of

ethicsGood-

Highest All

concerned

Just-justice

Done & seenalso

FACTORS INFLUENCING FACTORS INFLUENCING BUSINESS ETHICSBUSINESS ETHICS

Corporateculture

IndivdualCharacter-

istics

StrategyAnd

PerformanceEnvironment

Nature of

ethics

Leadership

Scope of business ethicsScope of business ethics

• EmployeesEmployees

• ShareholdersShareholders

• Financial institutionsFinancial institutions

• Government Government

• Personal policy levelPersonal policy level

• Societal levelSocietal level

• Internal levelInternal level

Kohlberg’s ModelKohlberg’s Model

• Preconventional level-level 1Preconventional level-level 1

• Stage 1Stage 1

• Obey rules to avoid punishmentObey rules to avoid punishment

• Stage 2Stage 2

• Follow the rules only if in own interestFollow the rules only if in own interest

• Let others also do the sameLet others also do the same

• Conform to secure rewardsConform to secure rewards

Kohlberg’s ModelKohlberg’s Model

• Conventional level-level 2 Stage 3Conventional level-level 2 Stage 3

• Conform to meet expectations of Conform to meet expectations of others, please others, adhere to the others, please others, adhere to the stereotypical imagesstereotypical images

• Stage 4Stage 4

• Doing right is one’s duty, obey the law Doing right is one’s duty, obey the law ,uphold the social contract and order,uphold the social contract and order

Kohlberg’s ModelKohlberg’s Model

• Post Conventional level-level 3 Stage Post Conventional level-level 3 Stage 55

• Current laws and values are relative Current laws and values are relative laws and duty are obeyed on rational laws and duty are obeyed on rational calculations to serve the greatest no.calculations to serve the greatest no.

• Stage 6Stage 6• Follows self chosen universal ethical Follows self chosen universal ethical

principles . In events of conflicts principles . In events of conflicts principles override laws. principles override laws.

5 Myths about Ethics5 Myths about Ethics

• Ethics are a personal individual affair Ethics are a personal individual affair & not a public debatable one& not a public debatable one

• Business and ethics do not mixBusiness and ethics do not mix

• Ethics in business is relativeEthics in business is relative

• Good business means good ethicsGood business means good ethics

• Information and computing are Information and computing are AmoralAmoral

Business Ethics taught and Business Ethics taught and trained?trained?

• Provide people with ideas,rationales to help in Provide people with ideas,rationales to help in ethical decision making processethical decision making process

• Helping people in selecting ethical priorities from Helping people in selecting ethical priorities from the environments.the environments.

• Enable employees to act as alarm systemfor co. Enable employees to act as alarm systemfor co. practices that do not meet the society’s ethical practices that do not meet the society’s ethical standardsstandards

• Increase sensitiveness to moral issues, Increase sensitiveness to moral issues, commitment to moral solutions,moral commitment to moral solutions,moral reflectiveness and moral couragereflectiveness and moral courage

• Create climate to provide ethical codes and do Create climate to provide ethical codes and do social audits in the company social audits in the company

Business Ethics taught and Business Ethics taught and trained?trained?

• Find a match between employees’ and Find a match between employees’ and employers’ valuesemployers’ values

• Managing a push-back point wherein the Managing a push-back point wherein the employee’s values are being tested by employee’s values are being tested by the peers, subordinates and superiorsthe peers, subordinates and superiors

• Handling an ethical directive from the Handling an ethical directive from the bossboss

• Coping with performance systems that Coping with performance systems that cuts ethical corners.cuts ethical corners.