Business ethics

unit-1
1.Meaning of business ethics
Business ethics (also known as corporate ethics)
is a form of applied ethics or professional ethics that
examines ethical principles and moral or ethical
problems that arise in a business environment. Or in
other words , Business ethics refers to contemporary
organizational standards, principles, sets of values
and norms that govern the actions and behavior of
an individual in the business organization.

2 .Definition
According to Andrew Crane,
"Business ethics is the study of business
situations, activities, and decisions where
issues of right and wrong are addressed."

Raymond C. Baumhart,
"The ethics of business is the ethics of responsibility.
The business man must promise that he will not
harm knowingly.
3 .difference between ethics and
moral

BASIS FOR
MORALS ETHICS
COMPARISON

Meaning Morals are the beliefs of Ethics are the guiding

the individual or group as principles which help the
to what is right or wrong. individual or group to decide
what is good or bad.

What is it? General principles set by Response to a specific

group situation

Root word Mos which means custom Ethikos which means character

Governed By Social and cultural norms Individual or Legal and

Professional norms

Deals with Principles of right and Right and wrong conduct

wrong

Applicability in No Yes
Business

Consistency Morals may differ from Ethics are generally uniform.

society to society and
culture to culture.

Expression Morals are expressed in Ethics are abstract.

the form of general rules
 BASIS FOR
MORALS ETHICS
COMPARISON

and statements.

Freedom to think No Yes

and choose

4 .branch of ethics

4.1 Descriptive Ethics

Descriptive ethics deals with what people actually believe
(or made to believe) to be right or wrong, and accordingly
holds up the human actions acceptable or not acceptable
or punishable under a custom or law.
4.2 Normative Ethics
Normative Ethics deals with “norms” or set of
considerations how one should act. Thus, it’s a study of
“ethical action” and sets out the rightness or
wrongness of the actions. It is also called prescriptive
ethics because it rests on the principles which determine
whether an action is right or wrong.
4.meta ethics
Meta Ethics or “analytical ethics” deals with the origin of
the ethical concepts themselves. It does not consider
whether an action is good or bad, right or wrong. Rather,
it questions – what goodness or rightness or morality
itself is? It is basically a highly abstract way of thinking
about ethics.
4.4 Applied Ethics
Applied ethics deals with the philosophical examination,
from a moral standpoint, of particular issues in private
and public life which are matters of moral judgment. This
branch of ethics is most important for professionals in
different walks of life including doctors, teachers,
administrators, rulers and so on.

5 .Scope of business ethics

1.Ethics in Compliance
Compliance is about obeying and adhering to rules and
authority. The motivation for being compliant could be to
do the right thing out of the fear of being caught rather
than a desire to be abiding by the law.

2.Ethics in Finance
The ethical issues in finance that companies and
employees are confronted with include:

 In accounting – window dressing, misleading financial

analysis.
 Related party transactions not at arm’s length
 Insider trading, securities fraud leading to manipulation
of the financial markets.
 Executive compensation.

3.Ethics in Human Resources

Human resource management (HRM) plays a decisive
role in introducing and implementing ethics. Ethics
should be a pivotal issue for HR specialists. The ethics of
human resource management (HRM) covers those ethical
issues arising around the employer-employee relationship,
such as the rights and duties owed between employer and
employee.

4.Ethics in Marketing
Marketing ethics is the area of applied ethics which deals
with the moral principles behind the operation and
regulation of marketing. The ethical issues confronted in
this area include:

 Pricing: price fixing, price discrimination, price

skimming.
 Anti-competitive practices like manipulation of supply,
exclusive dealing arrangements, tying arrangements etc.
 Misleading advertisements

6 .Nature of Business Ethics

The characteristics or features of business ethics are:-

 Code of conduct : Business ethics is a code of

conduct. It tells what to do and what not to do for the
welfare of the society. All businessmen must follow
this code of conduct.
 Based on moral and social values : Business ethics
is based on moral and social values. It contains moral
and social principles (rules) for doing business. This
includes self-control, consumer protection and
welfare, service to society, fair treatment to social
groups, not to exploit others, etc.
 Gives protection to social groups : Business ethics
give protection to different social groups such as
 consumers, employees, small businessmen,
government, shareholders, creditors, etc.
 Provides basic framework : Business ethics
provide a basic framework for doing business. It
gives the social cultural, economic, legal and other
limits of business. Business must be conducted
within these limits.
 Voluntary : Business ethics must be voluntary. The
businessmen must accept business ethics on their
own. Business ethics must be like self-discipline. It
must not be enforced by law.
 Requires education and guidance : Businessmen
must be given proper education and guidance before
introducing business ethics. The businessmen must
be motivated to use business ethics. They must be
informed about the advantages of using business
ethics. Trade Associations and Chambers of
Commerce must also play an active role in this
matter.
 Relative Term : Business ethics is a relative term.
That is, it changes from one business to another. It
also changes from one country to another. What is
considered as good in one country may be taboo in
another country.
 New concept : Business ethics is a newer concept. It
is strictly followed only in developed countries. It is
 not followed properly in poor and developing
countries.

7.Importance of Business Ethics

 Long-term growth: sustainability comes from an

ethical long-term vision which takes into account all
stakeholders. Smaller but sustainable profits long-
term must be better than higher but riskier short-
lived profits.
 Cost and risk reduction: companies which
recognise the importance of business ethics will
need to spend less protecting themselves from
internal and external behavioural risks, especially
when supported by sound governance systems and
independent research
 Anti-capitalist sentiment: the financial crisis
marked another blow for the credibility of
capitalism, with resentment towards bank bailouts
at the cost of fundamental rights such as education
and healthcare.
 Limited resources: the planet has finite resources
but a growing population; without ethics, those
resources are repleted for purely individual gain at
huge cost both to current and future generations.

8.Advantages of business ethics

More and more companies recognize the link
between business ethics and financial performance.
Companies displaying a “clear commitment to ethical
conduct” consistently outperform companies that do
not display ethical conduct.

1. 1. Attracting and retaining talent

People aspire to join organizations that have high
ethical values. Companies are able to attract the
best talent and an ethical company that is dedicated
to taking care of its employees will be rewarded with
employees being equally dedicated in taking care of
the organization. The ethical climate matter to the
employees. Ethical Organizations create an
environment that is trustworthy, making employees
willing to rely, take decisions and act on the
decisions and actions of the co-employees. In such
a work environment, employees can expect to be
treated with respect and consideration for their
colleagues and superiors. It cultivates strong
teamwork and Productivity and support employee
growth.

2. Investor Loyalty
Investors are concerned about ethics, social
responsibility and reputation of the company in
which they invest. Investors are becoming more and
more aware that an ethical climate provides a
foundation for efficiency, productivity and profits.
Relationship with any stakeholder, including
investors, based on dependability, trust and
commitment results in sustained loyalty.

3. Customer satisfaction
Customer satisfaction is a vital factor in successful
business strategy. Repeat purchases/orders and
enduring relationship of mutual respect is essential
for the success of the company. The name of a
company should evoke trust and respect among
customers for enduring success. This is achieved by
a company that adopts ethical practices. When a
company because of its belief in high ethics is
perceived as such, any crisis or mishaps along the
way is tolerated by the customers as a minor
aberration. Such companies are also guided by their
ethics to survive a critical situation. Preferred values
are identified ensuring that organizational
behaviours are aligned with those values. An
organization with a strong ethical environment
places its customers’ interests as foremost. Ethical
conduct towards customers builds a strong
competitive position. It promotes a strong public
image.

4. Regulators
Regulators eye companies functioning ethically as
responsible citizens. The regulator need not always
monitor the functioning of the ethically sound
company. The company earns profits and
reputational gains if it acts within the confines of
business ethics. To summaries, companies that are
responsive to employees’ needs have lower turnover
in staff.

 Shareholders invest their money into a company

and expect a certain level of return from that
money in the form of dividends and/or capital
growth.
 Customers pay for goods, give their loyalty and
enhance a company’s reputation in return for
goods or services that meet their needs.
 Employees provide their time, skills and energy in
return for salary, bonus, career progression, and
learning.

9. Right and its meaning

Rights are those essential conditions of social
life without which no person can generally
realize his best self. These are the essential
conditions for health of both the individual and
his society. It is only when people get and enjoy
rights that they can develop their personalities
and contributes their best services to the
society.
Definition
1. “Rights are those conditions of social life
without which no man can seek in general, to
be himself at his best.” -Laski
2. “Rights are powers necessary for the
fulfillment of man’s vocation as a moral being.” -
T. H. Green
3. “Rights are nothing more nor less than those
social conditions which are necessary or
favourable to the development of personality” -
Beni Prasad

10.Types of rights
1. Natural Rights:
Faith in natural rights is strongly expressed by
several scholars. They hold that people inherit
several rights from nature. Before they came to
live in society and state, they used to live in a
state of nature. In it, they enjoyed certain
natural rights, like the right to life, right to liberty
and right to property. Natural rights are parts of
human nature and reason.
2. Moral Rights:
Moral Rights are those rights which are based
on human consciousness. They are backed by
moral force of human mind. These are based
on human sense of goodness and justice.
These are not backed by the force of law.
Sense of goodness and public opinion are the
sanctions behind moral rights.
3. Civil Rights:
Civil rights are those rights which provide
opportunity to each person to lead a civilized
social life. These fulfill basic needs of human
life in society. Right to life, liberty and equality
are civil rights. Civil rights are protected by the
state.
4. Political Rights:
Political rights are those rights by virtue of
which citizens get a share in the political
process. These enable them to take an active
part in the political process. These rights
include right to vote, right to get elected, right to
hold public office and right to criticise and
oppose the government. Political rights are
really available to the people in a democratic
state.
5. Economic Rights:
Economic rights are those rights which provide
economic security to the people. These enable
all citizens to make proper use of their civil and
political rights. The basic needs of every person
are related to his food, clothing, shelter, medical
treatment etc. Without the fulfillment of these no
person can really enjoy his civil and political
rights. It is therefore essential, that every
person must get the right to work, right to
adequate wages, right to leisure and rest, and
right to social security in case of illness,
physical disability and old age.

11.duties
Duty Old FrenchLatindebtis a term that
conveys a sense of moral commitment or
obligation to someone or something. The moral
commitment should result in action. it is not a
matter of passive feeling or mere recognition.
When someone recognizes a duty, that person
theoretically commits himself to its fulfillment
without considering their own self-interest.
Definition
‘’a task or chore that a person is expe
cted to perform’’
12.list of duties of indian citi
List of Fundamental Duties: Art. 51A, Part
IVA of the Indian Constitution, specifies the list
of fundamental duties of the citizens. It says “it
shall be the duty of every citizen of India:

1. to abide by the constitution and respect its

ideal and institutions;
2. to cherish and follow the noble ideals which
inspired our national struggle for freedom;
3. to uphold and protect the sovereignty, unity
and integrity of India;
4. to defend the country and render national
service when called upon to do so;
5. to promote harmony and the spirit of
common brotherhood amongst all the people
of India transcending religious, linguistic and
regional diversities, to renounce practices
derogatory to the dignity of women;
6. to value and preserve the rich heritage of
our composite culture;
7. to protect and improve the natural
environment including forests, lakes, rivers,
and wild-life and to have compassion for
living creatures.
8. to develop the scientific temper, humanism
and the spirit of inquiry and reform;
9. to safeguard public property and to abjure
violence

13.Gandhian concept of justice

Gandhi’s views on social justice were based
on the insights he drew from his encounters
with culture and religion—his own and those
of others. They are all about a spiritual
revolution which has to begin with the
individual, with no regret whatsoever, even if
one has to be alone in the struggle. Many of
his ideals, which emerged in the context of a
nation struggling for political independence,
contained references to a just society. Gandhi
felt that political freedom would mean nothing
unless the oppressed millions in Indian
society are socially and economically free.
Near the end of his life, he asserted “the
Congress [Party] has won political freedom,
but it is yet to win economic freedom, social
and moral freedoms. These freedoms are
harder than the political, if only because they
are constructive, less exciting and not
spectacular” (letter by Gandhi, January 27,
1948, New Delhi, cited in Gangrade, 2005, p.
140).
……Is Gandhi’s outlook on social justice a dull,
drab theory devoid of joy? For a modern mind
in pursuit of happiness that is usually equated
with sensual pleasure, it might seem so.
However, Gandhi’s aims and goals are not
devoid of the principle of happiness. “To the
same extent as we make progress towards
our goal we shall find contentment and
happiness, and to that extent, too, shall we
have contributed towards the bringing into
being of a non-violent society” (Gandhi, 1980,
p. 18). This view is a reality, as has been
established by various spiritual traditions. By
linking the spiritual vision into the material
 world of possession and consumption, Gandhi
is but one more of those few voices, which
have alerted humanity that our happiness
involves finding the right balance (yoga)
between material and spiritual realities.
14.priciples of business ethics

ETHICAL PRINCIPLES

Ethical principles provide a generalized

framework within which particular ethical
dilemmas may be analyzed. As we will see later
in this module, these principles can provide
guidance in resolving ethical issues that codes
of ethics may not necessarily provide. What
follows are definitions of five ethical principles
that have been applied within a number of
professions (Beauchamp & Childress, 1979):

1. Respecting autonomy
2. Doing no harm (nonmaleficence)
3. Benefiting others (beneficence)
4. Being just (justice)
5. Being faithful (fidelity)

Respecting autonomy
The individual has the right to act as a free
agent. That is, human beings are free to decide
how they live their lives as long as their
decisions do not negatively impact the lives of
others. Human beings also have the right to
exercise freedom of thought or choice.

Doing no harm (Nonmaleficence)

Our interactions with people (within the helping
professions or otherwise) should not harm
others. We should not engage in any activities
that run the risk of harming others.

Benefiting others (Beneficence)

Our actions should actively promote the health
and well-being of others.

Being just (Justice)

In the broadest sense of the word, this means
being fair. This is especially the case when the
rights of one individual or group are balanced
against another. Being just, however, assumes
three standards. They are impartiality, equality,
and reciprocity (based on the golden rule: treat
others as you wish to be treated).

Being faithful (Fidelity)

Being faithful involves loyalty, truthfulness,
promise keeping, and respect. This principle is
related to the treatment of autonomous people.
Failure to remain faithful in dealing with others
denies individuals the full opportunity to
exercise free choice in a relationship, therefore
limiting their autonomy.

Ethical principles provide generalized

frameworks that may be employed in the
resolution of ethical dilemmas in our daily lives.
These principles may be applied to our
interpersonal relationships as well as to our
professional lives. However, as members of a
profession, we will encounter more specific
codes of ethics that are designed to govern our
professional behavior and to offer some
guidance for the resolution of commonly faced
ethical issues that occur in the practice of our
chosen professions
15.Eudaimonism Back to Top
Introduction

Eudaimonism (or Eudaemonism or Eudaimo

nia) is a moral philosophy that defines right
action as that which leads to the "well-
being" of the individual, thus holding "well-
being" as having essential value. It makes up
part of the system of Virtue Ethicspropounded
by the ancient Greek philosphers, in which a
lifetime of practising the virtues ("arête") in
one's everyday activities, subject to the
exercise of practical wisdom ("phronesis") to
resolve any conflicts or dilemmas which might
arise, will allow the individual to flourish and
live the good life ("eudaimonia").